DCB Bank Ltd. ನಿರ್ದೇಶಕರ ವರದಿ
Mar 31, 2023
Your directors are pleased to present the Twenty-Eighth Annual Report of DCB Bank Limited (hereinafter referred to as the Bank/Your Bank/DCB Bank) together with the audited accounts for the Financial Year ended March 31, 2023 (FY 2023).
In FY 2023, the Bank has posted an Operating Profit of '' 786.73 Crore (FY 2022''796.98 Crore) and Net Profit of '' 465.56 Crore (FY 2022''28750 Crore).
Total Assets have increased by '' 7,573.31 Crore and reached '' 52,365.87 Crore as on March 31, 2023 ('' 44,792.56 Crore as on March 31, 2022).
Customer Deposits have increased by '' 5,859.50 Crore and Advances have increased by '' 5,284.96 Crore. Your Bank continues to make significant contribution to Priority Sector Lending (PSL) and has achieved the overall PSL target as required by the Reserve Bank of India (RBI).
The Net Interest Margin (NIM) was 3.93% in FY 2023 as compared to 3.56% in FY 2022 and the Current and Savings Accounts (CASA) ratio stood at 26.42% as on March 31, 2023.
Cost to Income Ratio has increased to 63.00% in FY 2023 from 55.96% in FY 2022. Total Branch network stood at 427 as on March 31, 2023 (400 as on March 31, 2022) and Automated Teller Machines (ATMs) network was 396 as on March 31, 2023 (349 as on March 31, 2022).
Provisions Other Than Tax have decreased to '' 159.17 Crore in FY 2023 from '' 40743 Crore in FY 2022. Your Bank has been making conservative provision for Non-Performing Assets (NPA) and Covid-19 related restructured loans. In addition, the Bank has also been making periodic Floating Provision and provision against Standard Assets.
Gross NPAs have decreased to '' 1,122.84 Crore as on March 31, 2023 from '' 1,289.93 Crore as on March 31, 2022. Consequently, Gross NPA Ratio as on March 31, 2023 was 3.19% as compared to 4.32% as on March 31, 2022. Net NPAs have decreased to '' 356.92 Crore as on March 31, 2023 as against '' 573.23 Crore as on March 31, 2022. Consequently, Net NPA Ratio as on March 31, 2023 was 1.04% as compared to 1.97% as on March 31, 2022. The overall NPA Provision Coverage Ratio as on March 31, 2023 was 79.34% (67.84% as on March 31, 2022).
Return on Assets (RoA) Ratio in FY 2023 was 0.97% as compared to 0.70% in FY 2022. Corresponding Return on Equity (RoE) Ratio in FY 2023 was 11.70% as compared to 792% in FY 2022.
Capital Adequacy Ratio (CAR) under Basel III as on March 31, 2023 stood at 17.55% (18.92% as on March 31, 2022).
|
('' in crore) |
|||
|
Balance Sheet |
As at March 31, 2023 |
As at March 31, 2022 |
Increase / (Decrease) |
|
Customer Deposits |
37,139.76 |
31,280.26 |
5,859.50 |
|
Inter Bank Deposits |
4,099.15 |
3,411.43 |
687.72 |
|
Total Deposits |
41,238.91 |
34,691.69 |
6,547.22 |
|
[Including Total CASA*] |
[10,895.61] |
[9,281.08] |
1,614.53 |
|
Advances |
34,380.74 |
29,095.78 |
5,284.96 |
|
Gross - NPA |
1,122.84 |
1,289.93 |
(167.09) |
|
Net - NPA |
356.92 |
573.23 |
(216.31) |
|
Total Assets |
52,365.87 |
44,792.56 |
7,573.31 |
|
* Current and Savings Accounts (CASA) |
|||
|
Profit & Loss |
For the year ended March 31, 2023 |
For the year ended March 31, 2022 |
Increase / (Decrease) |
|
Interest Income |
4,200.27 |
3,512.77 |
687.50 |
|
Interest Expense |
2,483.26 |
2,155.26 |
328.00 |
|
Net Interest Income |
1,717.01 |
1,357.51 |
359.50 |
|
Non-Interest Income |
409.39 |
452.04 |
(42.65) |
|
Total Operating Income |
2,126.40 |
1,809.55 |
316.85 |
|
Operating Cost |
1,339.67 |
1,012.57 |
327.10 |
|
Operating Profit |
786.73 |
796.98 |
(10.25) |
|
Provisions Other than Tax |
159.17 |
407.43 |
(248.26) |
|
Net Profit Before Tax |
627.56 |
389.55 |
238.01 |
|
Tax |
162.00 |
102.05 |
59.95 |
|
Net Profit After Tax |
465.56 |
287.50 |
178.06 |
Your Board is pleased to recommend a dividend of '' 1.25 per equity share of '' 10.00 each in respect of Financial Year ended March 31, 2023 ('' 1.00 per equity share of ''10.00 each for the Financial Year ended March 31, 2022).
MANAGEMENT DISCUSSION AND ANALYSIS VISION
The Bank''s vision is to be the most innovative and responsive neighbourhood bank in India serving entrepreneurs, individuals, and businesses. In line with this vision, the Bank began implementing a new strategy in FY 2010.
Keeping in view its inherent strengths, branch network and expertise, the Bank''s target market is mainly small business owners / self-employed / small business segment (traders, shopkeepers, business owners, Micro, Small & Medium Enterprises (MSMEs) and (Small and Medium-sized Enterprises (SMEs). The MSME/SME sector is a vibrant and dynamic sector of the Indian economy and plays a very important role in the growth of the Indian economy. This segment is usually resilient (once again demonstrated post Covid-19 pandemic) and displays entrepreneurial spirit. Small enterprises create millions of jobs and maintain social stability. The MSME sector plays a pivotal role in the economic and social development of the country. As per estimates the MSME sector contributes around 30% to India''s GDP.
Some useful information on the MSME sector is given below:
⢠Number of Working Enterprises: 63.4 million, Employment: 111 million individuals
⢠Urban: 49%, Rural: 51%
⢠Manufacturing: 32%, Trade 35%, Other Service: 33%
⢠Sole Proprietor: 96%
(Source: Annual Report FY 2021-22 Government of India, Ministry of Micro, Small and Medium Enterprise)
Your Bank provides banking services to a varied base of business owners, self-employed / small businesses for example - Commodity Trader, Gold Trader, Vegetable Trader, Commission Agent, Retailer, Restaurant Owner, Caterer, Baker, Vending Machine Supplier, Consultant, Doctor, Contractor, Interior Decorator, Software Designer, Salon, Beauty Parlour, Printer, Electrical Engineer, Saw Mill, Flour Mill, Rice Mill, Grocery Store, Brick Maker, Builder, Fabricator, Artist, Writer, Auto Repair, Ship Repair, Pharmacy, Computer Specialist, Furniture Maker, Uniform
Maker, Garment Shop, Fashion Tailor, Hardware Shop, Agri Processor, Pesticide Dealer, Auto Dealer, Scrap Dealer, Stationery Supplier, FMCG or Consumer Goods Dealer, Tool Maker, Agri Input Dealer, Tractor Dealer, Plastic Manufacturer, Mattress Manufacturer, Water Supplier, Computer Training Classes, Internet Cafe, Coaching Classes, Tour Operator, Hotel Owner, Transporter, Ticketing Agent, C&F Agent, amongst others. The list of SelfEmployed occupation is endless. The target market is essentially Micro, Small and Medium Enterprises both in Manufacturing and Services. (Please refer to MSMED Act, 2006). Majority of lending to MSME sector qualifies for Priority Sector Lending. A major share of deposits and loans of the Bank are from the self-employed segment.
During the year FY 2023, CRISIL Ratings Limited has reaffirmed the Bank''s rating for Tier II Bonds (under Basel III) as CRISIL AA-/Stable and re-affirmed its rating of the Bank''s Certificates of Deposit Programme and Shortterm Fixed Deposit Programme as CRISIL A1 .
During FY 2023, ICRA Limited has reaffirmed the rating for Tier II Bonds as ICRA A with revision in outlook to Positive from Stable and re-affirmed its rating on the Bank''s Short-term Fixed Deposit Programme as ICRA A1 . Further, at the request of the Bank, ICRA Limited has discontinued the rating of Tier II Bonds that got matured during the year.
Your Bank continued to be recognized for its progress and initiatives across verticals. The details of various awards/ recognitions received by your Bank during FY 2023 are given below:
Corporate Social Responsibility (CSR)
Your Bank was recognized as India''s Best Bank for CSR 2022 by Asiamoney. The Bank won Euromoney Market Leaders CSR (Notable) 2022 by Euromoney. Groundwater depletion, which also endangers the availability of food, is becoming a widespread concern. Community organisations manage and maintain water collecting systems in Banki block, Cuttack district, Odisha to ensure year-round cultivation and sustainable livelihoods for themselves and the next generation. The project''s impact includes the creation or restoration of 6 water harvesting structures, impacting 40,615 beneficiaries, with an estimated 18 Crore liters of water storage capacity, benefiting 2,140 acres of irrigated land, and creating approximately 4.75 lakh square feet surface area by way of ponds and tanks. Within the communities, we are promoting, building capacity for resilience to climate
change. For the Livelihood Improvement Project in Banki, the DCB Bank CSR project has been recognized by Asiamoney as India''s Best Bank for CSR 2022. Moreover, DCB Bank CSR project has been recognized by Euromoney as Market leader CSR (Notable) 2022.
DCB Bank won the Gold in ACE (Asian Leaders Awards for Branding, Marketing, and CSR) 2022. The Bank''s CSR partnership project of Livelihood Improvement Project (LIP) through Integrated Watershed Management in Banki, Odisha in collaboration with Concern India Foundation for water conservation and restoration won the Best Corporate (Non-profit Partnership category).
Your Bank continues to be recognized as a Great Place to Work (GPTW) Certified organization for building a High Trust, High Performance Culture. The Bank has been recognized as Top 40 India''s Best Workplaces in Health & Wellness 2022 and has been featured amongst Top 50 Best places to work in BFSI, both recognitions have been conferred by GPTW.
During FY 2023, your Bank has participated in various events and has been recognized and awarded.
⢠DCB Bank won 3rd Annual BFSI Technology Excellence Awards 2022 for Blockchain Initiatives-automated process for ATM cash replenishment.
⢠DCB Bank won 7th Banking Frontiers Finnoviti Awards 2022 for Social Command Center that helped the Bank in tracking posts more real-time with far better turnaround times.
The number of branches, as on March 31, 2023, stood at 427 [233 Retail branches and 194 branches in Agri and Inclusive Banking (AIB)]. Of these, 80 branches are in rural areas (approximately 19%) and 108 branches are in semi-urban areas (approximately 25%). The new branches have a standard look and feel; and they are designed to provide a unique, positive, and seamless banking experience to customers. The Bank had 396 ATMs as on March 31, 2023.
Retail Banking offers unique products for meeting financial needs of individuals and businesses. The Bank follows a multi-product approach which results in "all products being offered in all branchesâ subject to customer demand
in the branch catchment area. To remain competitive, the Bank is particular about the quality and timeliness of service delivery. The Bank has a wide range of products that caters to the various needs of the customers.
Your Bank continues to be amongst the top banks in India in terms of offering attractive interest rates in both Savings Accounts and Fixed Deposits. In FY 2023, the Bank continued to build its granular deposits by offering attractive benefits and interest rates in Savings Accounts and longer tenor Fixed Deposits. In Fixed Deposits, the Bank has two unique propositions - DCB Suraksha Fixed Deposit and DCB Health Plus Fixed Deposit. DCB Suraksha Fixed Deposit provides free Life Insurance coverage up to ''10 lakh and DCB Health Plus Fixed Deposit provides a basket of health benefits like free consultation with doctors, reimbursement of pharmacy expenses and ambulance services. The Bank has also started offering Non-Callable Fixed Deposits for retail customers (below '' 2 Crore) to boost the retail deposit growth.
The Bank''s Savings Account and Fixed Deposit book recorded a growth of 23 % and 19 % respectively over the FY 2022. The top 20 deposits ratio, which was at 6.31% at start of the year, slightly increased to 6.96 % at the end of FY 2023.
Mortgage and Micro Mortgage Loans
Mortgage is the prime lending product for the Bank and is contributing more than 50% of the Bank''s Advances book. As part of the Mortgage business, the Bank offers both Home Loans and Business Loans to self-employed and salaried segments in the neighbourhood areas of the Bank''s branches. The purpose of these loans, inter alia, are property purchase, home improvement, home repairs, business requirements (purchase of plant and machinery, purchase of stocks, purchase of shops, working capital) and personal expenses such as education, marriage or medical. Micro or small ticket Mortgages are most suitable in Tier 2 to Tier 6 locations. Many people in the rural and semi-urban areas derive cash income from informal sectors or trades. At times, many customers do not have sufficient documents to prove their income / repayment capacity for obtaining loans. The Bank has demonstrated the ability to assess the household income for such customers by adopting a method of in-depth personal discussions with the borrowers and co-borrowers. Apart from creating a robust portfolio, the Bank has been able to achieve financial inclusion goals. Most of these micro loans qualify under the Priority Sector Loan (PSL) norms of the RBI. A part of the Bank''s portfolio qualifies for long term
refinance from National Housing Bank (NHB).
The Mortgages business expanded very well during the year with increased sourcing from the selected segments and more focus on home loans. The Bank increased its distribution in the Mortgage business by adding frontline headcount and expanding geographic presence.
The construction sector is an important contributor to the growth of the economy. Affordable housing in both rural and urban areas is one of the key thrust areas for the Government of India. The implementation of Real Estate Regulation & Development Act, 2016 in most states, has brought in much needed transparency in this sector, creating favorable conditions for home buying and financing. The Bank''s approach is to focus on reputed builders with a strong track record of delivery who are primarily concentrating in the affordable and mid-segment housing segment. At the same time, the strategy is to be cautious and limit exposure per builder / project. The Bank has established processes to monitor sales, collections and utilization of funds towards project completion. In FY 2023, the country witnessed many new projects launches resulting in strong buying in the affordable and midsegment housing units across most of the geographies. The Bank expects sizable opportunity in lending to affordable and mid-segment housing projects.
The Bank offers CV Loans to existing customers. Most of the CV portfolio is categorized as PSL. During difficult Covid-19 pandemic, the Bank supported CV customers on a case-to-case basis by offering regulatory packages and Emergency Credit Linked Guarantee Scheme (ECLGS).
Loan against Gold is offered in most of the branches of the Bank. The Bank has focused on improving customer experience and service by continuously investing in process improvements through in-housing of valuation process and significant overhaul of the front-end system used for loan processing. Most of the verification and validation processes have been automated leading to faster turnaround and improved customer experience. The Bank has invested in improving controls in order to avoid operating errors and fraud losses.
Insurance and Mutual Funds Distribution
The Bank has corporate agency tie-ups for distribution of life insurance, health insurance and general insurance. The Bank also has referral tie ups for mutual fund distribution.
This enables the Bank to deepen customer relationships in addition to increasing fee income.
In FY 2010, with a vision of strengthening neighbourhood banking, the Bank set up a separate vertical to focus on Traditional Community Banking. The aim was to address the specific needs of the vintage neighbourhood community customers and to provide personalized solutions wherever possible. This perhaps is the purest form of neighbourhood banking and is directed towards addressing small credit needs such as education, personal, business and working capital.
Non-Resident Indian (NRI) business
In FY 2023 there was greater focus on growing the NRI deposit base as customers were able to travel to India after Covid-19 disruptions. NRI Savings Account balances grew by 20% and FCNR (B) deposits grew by more than 70% during the year. The Bank has NRI customers from 128 countries and it contributes to 8.55% of total customer deposits.
Government business (Collection of Direct and Indirect Taxes)
The Bank has been authorized by the Reserve Bank of India, Central Board of Direct Taxes (CBDT), Central Board of Indirect Taxes and Customs, Controller General of Accounts and Ministry of Finance to collect various kinds of Direct and Indirect Taxes. After technology integration, DCB Bank account holders will be able to pay their Direct and Indirect Taxes through Internet banking as well as at branches, resulting in significant ease and convenience. Non-account holders will be able to avail of the services at branches. The Bank expects to make collection of Direct Taxes available in the first quarter of FY 2024. In terms of collection of Indirect Taxes, the Bank expects the same to be available in the second half of FY 2024.
The Bank''s in-house Collections unit is a common utility for all products and is present in more than 304 locations across India. The Collection unit played a vital role in assisting customers in a sensitive manner during and post Covid-19 including management of the Restructured Advances. The unit has also been very proactive in identifying vulnerable customers and offering them suitable solutions within RBI guidelines. Despite the challenges posed by Covid-19, the unit has managed to balance its customer-centric approach with maintaining adequate risk management practices. The unit also embraced automation to streamline loan collections
and improve customer experience. The unit has enabled self-service options, allowing customers to initiate and manage their repayment through digital channels. The unit''s use of technology has contributed significantly to its success in managing overall portfolio with improved Non Performing Asset (NPA) while maintaining a customer-centric approach.
STRATEGIC ALLIANCES
One of the key strategies of the Bank is to enter alliances with entities whose products and services enable the Bank to improve customer acquisition and retention. Apart from new and enhanced products, the alliances help in speed to market.
The various strategic alliances and business association of your Bank are given below:
Bancassurance
|
Name of the Partner |
Type of arrangement |
|
Aditya Birla Health Insurance Company Ltd |
Corporate Agency for insurance sales |
|
Aditya Birla Sun Life Insurance Company Ltd |
Corporate Agency for insurance sales |
|
HDFC Life Insurance Company Ltd |
Corporate Agency for insurance sales |
|
ICICI Lombard General Insurance Company Ltd |
Corporate Agency for insurance sales |
|
Royal Sundaram General Insurance Company Ltd |
Corporate Agency for insurance sales |
|
Service Partners |
|
|
Name of the Partner |
Type of arrangement |
|
Euronet Services India Limited |
ATM and Switch Management |
|
Aditya Birla Finance Ltd. |
Lending Business |
|
Fintech Alliances |
|
|
Name of the Partner |
Type of arrangement |
|
Finnew Solutions Private Limited (Niyo) |
Global Niyo Card Management |
|
Greenizon Agritech Consultancy Private Limited |
Agri Supply Chain Financing Business |
|
Dvara E Registry P Limited |
Agri Farmer Loans Business |
|
Ninjacart P Limited |
Agri Supply Chain Financing Business |
|
Trade Receivables Discounting System (TReDS) Alliances |
|
|
Name of the Partner |
Type of arrangement |
|
Mynd Solution Private Limited (M1xchange) |
Lending on TReDS Platform |
|
Receivables Exchange of India Ltd (RXIL) |
Lending on TReDS Platform |
|
A. TReDS Limited (Invoicemart) |
Lending on TReDS Platform |
The Bank''s intention is to have a niche presence in Corporate Banking. This business operates across India with regional offices in Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, and Mumbai. The objective is to provide a complete range of commercial banking solutions including Foreign Exchange, Trade Finance and Cash Management. The Bank has a robust underwriting and credit system to address the inherent risks in Corporate Banking. The emphasis is on building a secured loans portfolio and creating long term relationships with high quality large and mid-corporates. Corporate Bank during the year maintained a stable loan book while continuing to build on the short-term products. This unit is also responsible for cross-selling other products of the Bank including raising wholesale Deposits thereby being self-reliant and enabling to maintain a healthy mix of retail to wholesale deposits across diverse industries. The momentum is likely to carry on in the coming years with the unit leveraging on existing customers as well as focusing on adding new customers to the Bank. The unit added 74 new-to-bank customers across different products in FY 2023.
The intensity and frequency of regular review of exposures continued enabling identification of emerging risks in a timely manner. The focus is to continuously improve understanding of the borrower''s business/prospects, ensuring right mix of products, enhance analytics, strong promoter connect, cash flow understanding and tracking.
Your Bank''s core target segment is MSMEs/SMEs. It is a large and vibrant sector. It is the backbone of our economy. This segment which was unfortunately affected due to Covid-19 pandemic is now clearly showing positive signs of growth and rebound. The Bank strives to be the business partner of MSMEs/ SMEs by offering custom made solutions to meet the credit demand of the segment. The Bank offers a range of products and personalized services including Foreign Exchange, Cash Management, Trade finance and Internet Banking. Given the inherent risks associated with this segment the Bank aims to have large portfolio of small ticket secured exposures.
AGRI AND INCLUSIVE BANKING (AIB)
AIB is a separate unit with the primary objective of achieving financial inclusion, PSL and enhancing the Bank''s footprint in the rural and semi urban areas. At the end of FY 2023, AIB had 194 branches in 13 states of India. There are many opportunities to offer simple innovative products backed by superior technology in the rural and semi urban areas of India. Many of the new branches are in Tier 2 to Tier 6 locations. There is a constant endeavor to cater to underbanked and unbanked population of the country through a wide range of products, for example, zero balance savings account, small recurring deposit account, small loans to match the income and cash flow cycle. AIB also coordinates the entire PSL efforts for the Bank and is primarily responsible for achieving the financial inclusion targets.
Pradhan Mantri Jan-Dhan Yojana (PMJDY)
In FY 2023, the Bank actively participated in PMJDY program. The Bank had 39,908 PMJDY accounts as on March 31, 2023. The Bank has enabled Rupay Debit Cards for PMJDY account holders.
Pradhan Mantri Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Atal Pension Yojana (APY)
The Bank successfully reached out to unbanked and economically weaker population through PMSBY, PMJJBY and APY programs that are designed to bring social security. Your Bank had 5,400 customers under PMSBY, 2,628 customers under PMJJBY and 7,153 customers in APY as on March 31, 2023.
Basic Savings Bank Deposit Account (BSBDA)
BSBDA has replaced "No frills accountâ. This is a wonderful product for achieving financial inclusion especially for those who have limited transaction needs in the low-income group. The Bank had 44,945 BSBDA accounts as on March 31, 2023.
"Kisan Mitraâ as the name suggests, is a deposit product, which fulfils the requirement and enhances the savings habit in rural areas. It is a product specially designed for farmers. It is a modified Savings Account with zero account opening amount and no maintenance charges.
Retail Agriculture Loan and Kisan Credit Card
To meet the credit needs of the farmers, the Bank has retail agriculture products like Kisan Credit Card that aims
at providing adequate and timely credit support to the farmers for crop cultivation and allied activities. Under the KCC program, the Bank offers Cash Credit/Overdraft to farmers for purchasing seeds, fertilisers, pesticide for crops cultivation and Term Loan facilities for land levelling, irrigation and purchasing farm equipment.
Tractor Loans are an integral part of the total agricultural equipment sector and is a direct indicator of growth in the agricultural sector. The Bank has steadily built its business across Tier 2 to Tier 6 branches. Tractor loans helps the Bank to partly meet PSL targets for agriculture and small and marginal farmers set by the RBI. The Bank has benefited small and marginal farmers in farm mechanization improving their yield and allied income.
Microfinance Institutions (MFIs) and Business Correspondents (BCs)
The Bank lends to MFIs who in turn lend directly to end borrowers. Over time, the Bank has created a network of MFI relationships across India. In a few states of India, the Bank has provided Joint Liability Groups (JLGs) unsecured loans through BCs to promote economic activities. Group loans from the Bank has enabled unprivileged customers to avail small loans from the banking sector instead of high-cost borrowing from money lenders. These loans are usually provided to small farmers and weaker sections mainly in rural areas. To support the growth, the Bank has an efficient software system for managing BC Loans. This software helps maintain adequate information about the borrowers under JLGs. It provides a common platform for both, the Bank and the BCs for seamless processing of loans and has added immense value by reducing the loan disbursal cycle time.
The Bank has a lending programme for the education segment by providing loans to schools for infrastructure development which helps to impart quality education to students. The Bank provides loans based on the requirement of schools. Funding is done basis the audited financials and/or the cash flows. This product helps the Bank to cater the education segment and boost the social infrastructure development of the country.
Co-lending is a unique concept enabled by the RBI. The Bank''s intention is to partner with Non- Banking Financial Sector Companies (NBFCs) that may be offering products not currently offered by the Bank or segments not served by the Bank. Further, the Bank has established Co-Lending Partnerships with four new
partners in FY2023 and thereby taking the total to six active Co-lending partnerships as on March 31, 2023. Colending has also contributed significantly to the Bank''s overall advances growth.
ALTERNATE CHANNELS AND DIGITAL BANKING Phone Banking
In FY 2023, the Bank''s Customer Care Associates attended to approximately 75,000 calls per month and 13,000 calls per month are self-serviced on Intelligent Interactive Voice Response (IVR). The Bank has invested in technology and infrastructure to take customer service to new heights. It has implemented self-service options through "IVRâ which allow the customers to access their account easier than before. Moreover, the Bank has also implemented a range of new customer-centric policies, designed to ensure that the customers receive the best-in-class service from the Bank. To provide uninterrupted service and load balancing, the Bank has trained its branch staff to take phone banking calls that are diverted to the branches using a unique technology solution. This has in some ways redefined call centre and customer service in the industry.
The Bank has ensured that its Customer Care Associates can interact with the customers in 8 languages (English, Hindi, Gujarati, Kannada, Marathi, Odiya, Tamil and Telugu).
Adoption of new technology, load balancing, multi skilled officers, regular intervention by the training team inter alia has enabled the contact centre team to provide timely and quality service to the customers. DCB Contact Centre unit has achieved 16% better productivity in comparison with pre Covid-19 and conscious efforts put in people management, knowledge enrichment has resulted in disposing customer queries 15% quicker while improving quality of service.
The Bank has 396 ATMs as on March 31, 2023. The Bank ensured that ATM uptime was maintained at above 94% in the FY 2023. The Bank has closed a few unviable and unprofitable ATMs during the year. The Bank has completed the implementation of cassette swap in ATMs and OTC lock activation in all the 396 ATMs.
DCB Mobile and Internet Banking
Approximately 1,40,000 of the Bank''s customers are actively using the new and improved Mobile Banking Application that is offered in 9 languages. Your Bank continues to get encouraging feedback on Google Play Store. The new version has additional features like biometric based login and Debit Card control management.
DCB Internet Banking is used by more than 70,000 retail and corporate customers. Internet Banking platform is rich with plethora of digitally managed services, which has reduced the need for customers to visit branches for their transactions.
DCB Unified Payment Interface (UPI)
UPI continues to be the dominant channel for digital payments, and the transaction volumes have registered a growth of 90% over the previous year.
The Bank focusses on constantly improving offerings, features, and security on Debit Cards. Your Bank launched a new Debit Card variant, DCB TravelSmart, which is beneficial for international travellers as it offers a competitive foreign exchange mark up, as well as complimentary travel insurance. The Bank also introduced much sought after features like contactless payment (Tap and Pay) and e-mandate for ease of recurring payments. From security and control perspective, the Bank has introduced instant response to customers for failed transactions, as well as tokenisation which enables transactions with masked card details for better safety.
DCB Niyo Global Card is a Debit Card powered by Visa and issued with DCB Niyo Current Account. This program is segmented especially for customers travelling abroad which provides competitive exchange rates making the product a compelling proposition. The Card holders are offered a Mobile Application which supports security features such as switching on or off card usage, changing transaction limits and block or unblock the Card.
Trade Receivables Discounting System (TReDS)
In FY 2022, the Bank commenced participation on TReDS, a unique digital capability that provides assured and faster financing to MSMEs / SMEs who are providing goods and services to larger companies. TReDS is improving flow of finance to MSMEs / SMEs. The Bank has financed more than 10,000 MSMEs through 18,000 Invoices in TReDS platform in FY 2023. Financing on TReDS also qualifies as PSL.
TRANSACTION BANKINGCash Management Services (CMS)
The Bank provides Corporates, MSME/SME and Retail customers sophisticated and cost-effective CMS. This helps customers manage their collection and payment logistics with ease. The Bank has 7 vendors for CMS
cheque collections across India. At the end of FY 2023, the Bank had 3,300 active customers using CMS facilities.
Business Internet Banking (BIB)
The Bank offers state of the art BIB especially designed for MSME/SME customers. The adaptive and responsive feature of the application makes it user friendly for customers across devices. At the end of FY 2023, BIB facility had 32,615 users.
TREASURY, MONEY MARKET AND FOREIGN EXCHANGETreasury
Treasury actively manages liquidity, compliance with Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), trading in fixed income securities & currencies, and participating in Initial Public Offers (IPOs). It also shares the responsibility of interest rate risk management of the Bank. In FY 2023, the Bank was cautious in maintaining fixed income securities as central banks across the globe were increasing interest rates in response to inflationary pressures. Yields on bonds across the world rose sharply thereby negatively impacting the bond portfolios. The Bank selectively invested in equity IPOs and booked profits by way of listing gains.
Tightening in global policy has been accompanied by a deceleration in global money supply growth. Recent earnings have continued to moderate corroborating a growth slowdown. While slow growth could be headwind for risk assets, it may also help alleviate the inflation challenge. As inflation moderates, expect part of the economy to recover even as exports driven sectors face headwinds. RBI started increasing policy rates in the month of May 2022. Domestic bond markets have tracked the global yield curves since the onset of the US and European banking crisis. At the same time, bond yields across most of the developed markets have substantially retraced the easing seen since July 2022, in a flattening trend. Repo Rate has been increased from 4.40% in May 2022 to present level of 6.50%.
During FY 2023, the global financial market encountered numerous challenges, including geopolitical tensions, banking crisis, recession fears; and higher interest rates, resulting in high volatility in major currencies. Major central banks such as US Federal Reserve System, European Central Bank (ECB); and Bank of England (BOE) increased
interest rates and maintained hawkish policies to control inflation. The InternationalMonetary Fund (IMF) and World Bank predicted a downward trend in global growth because of policy actions by central banks.
The US Federal Reserve increased its benchmark interest rate from 4.75% to 5.00%, which caused a surge in global securities yields and the USD index to reach their highest levels. The USD Index reached 114 against a basket of six major currencies, and US 10YT almost touched 4.30%. Commodity prices experienced significant fluctuations over the course of the year. Initially, due to geopolitical tensions, crude oil prices reached a peak of $125 per barrel, but later dropped to $70 per barrel because of the global economic slowdown, particularly in China, brought on by Covid-19 related restrictions. However, unexpected output cuts from Organization of the Petroleum Exporting Countries (OPEC ) resulted in a rise in prices, and by the end of the financial year, Brent Crude oil was trading at $85 per barrel.
The Indian Rupee depreciated by nearly 8% against the US Dollar due to geopolitical tensions, increased interest rates, and global recession fears. However, the RBI measures limited excessive volatility and slowed down the pace of Rupee''s depreciation, which helped Indian rupee to perform better than several other currencies. Despite the volatile USD index caused by the financial crisis in the US banking system, the Indian Rupee demonstrated resilience by gaining 0.7% against the US Dollar in the last quarter. By the end FY 2023, the Indian Rupee closed at 82.18 to a dollar, which is weaker than the 75.79 rate recorded a year ago. Looking forward, the US Federal Reserve may consider further interest rate hikes, but market predictions suggest that the rate hike cycle may approach its peak soon.
Risk is an integral part of the banking business and the Bank''s aim is to maintain portfolio quality by making appropriate risk/reward trade-offs. The Bank inter alia is exposed to credit, concentration, market, country and counterparty bank exposure, liquidity, operational, fraud and reputation risk. The Board of Directors of the Bank has oversight of risks assumed by the Bank and has delegated its power to manage risks to Risk Management Committee (RMC) of the Board.
The Credit Risk unit ensures alignment with the objectives of achieving growth while maintaining portfolio quality by making appropriate risk / reward trade-offs. The idea
is to ensure long-term sustainable performance across business cycles. On-going efforts are made to improve risk assessment and controls. Credit Risk over time has developed capabilities to assess the risks associated with various products and business segments. As far as possible, efforts are made to standardize the entire process pan India while considering geographic nuances. The Bank has implemented a rating model that considers both quantitative and qualitative factors and produces a rating that becomes one of the key inputs to credit decisions. To continuously improve the quality of the portfolio, the Credit Risk unit uses SAS analytics and has created several insightful models that helped in refining the product offering, choosing the target segment of customers, collections and recoveries. Key processes in credit underwriting were examined and duplication was reduced to improve speed of processing. Periodic portfolio reviews were conducted with the business units that helped improve portfolio quality.
Concentration risk is monitored and managed both at the customer level and at the aggregate level. The Bank, inter alia, monitors portfolio concentrations by segment, product, business, ratings, borrower, group, sensitive sectors, unsecured exposures, industry, and geography. The Bank adopts a conservative approach within the regulatory prudential exposure norms.
The Bank has an established process to measure, monitor and manage Interest Rate, Exchange Rate and Equity Risk as part of Market Risk Management. Besides the usual monitoring of Structural Liquidity, Interest Rate Sensitive Gap limits and Absolute Holding limits, the Bank also monitors interest rate risks using Value at Risk limits. Exposures to Foreign Exchange and Capital Markets are monitored within pre-set exposure limits, margin requirements and stop-loss limits.
Country Exposure Risk and Counterparty Bank Risk
The Bank has established specific country exposure limits which is capped at 15% of its Capital Funds. The limit also depends upon rating of individual countries. The Bank mitigates risks using insurance cover available through the Export Credit and Guarantee Corporation (ECGC), where appropriate.
The Bank has established framework for setting up of limits for counterparty banks, basis their rating and monitors counterparty bank exposures against the approved limits.
As part of the liquidity management and contingency planning, the Bank assesses potential trends, demands, events and uncertainties that could result in adverse liquidity conditions. The Bank''s Asset Liability Management (ALM) policy defines the gap limits for the structural liquidity and the liquidity profile is analysed on both static and dynamic basis by tracking cash inflow and outflow in the maturity ladder based on the expected occurrence of cash flow. The Bank undertakes behavioural analysis of the non-maturity products, namely CASA, Cash Credit and Overdraft accounts on a periodic basis to ascertain the volatility of balances. The renewal pattern and premature withdrawals of Fixed Deposits and drawdowns of un-availed credit limits are also captured through behavioural studies. The liquidity profile is estimated on an active basis by considering the growth in Deposits, Advances, and Investment obligations. The concentration of large deposits is monitored on a periodic basis. Emphasis has been placed on growing Retail Deposits and avoid as far as possible Bulk Deposits. The Bank periodically conducts liquidity stress testing.
Operational Risk is the risk of loss resulting from inadequate or failed internal processes, people or systems, or external events. The Bank''s operational risk management framework is defined in the Operational Risk Management Policy approved by the Board of Directors. While the policy provides a broad framework, Operational Risk Management Committee (ORCO) oversees the operational risk management in the Bank. The policy specifies the composition, roles, and responsibilities of the ORCO. The framework comprises identification, assessment, management and mitigation of risks through advanced tools and analysis.
The Bank pays attention to issues that may create reputational risks. Events that can negatively affect the Bank''s reputation are handled cautiously ensuring utmost compliance and in line with the values of the Bank.
Information / Cyber Security Risk
The Bank operates in a highly automated environment and makes use of the latest technologies to support the business and functions. The Bank has put in place a robust governance framework, information security practices and a business continuity plan to mitigate IT and cyber security related risks. The Bank ensures that it''s information and
cyber security policies are updated periodically to ensure protection of customer sensitive information, transaction integrity, availability of banking services and be resilient to emerging cyber security risks. The Bank has a 24x7 Security Operations Centre to monitor security alerts and take timely appropriate actions.
The Bank strives to continuously improve process controls and customer satisfaction. The Bank has a separate cross functional committee - Management Committee for Approval of Processes (MCAP). In general, new processes are subjected to review by MCAP. The Committee is tasked with identifying operational and compliance risks in new processes and ensuring that steps are taken to mitigate risks. Also, MCAP regularly reviews and approves existing processes for further improvement. In the FY 2023, 79 processes were reviewed and approved by the MCAP.
IMPLEMENTATION OF BASEL III GUIDELINES
In accordance with the RBI guidelines, the Bank has migrated to Basel III capital adequacy disclosures with effect from Q1 FY 2014. The Bank continues to review and improve its risk management systems and practices to align with industry best practices. The Bank has implemented Standardized Approach for Credit Risk, Standardized Duration Approach for Market Risk and Basic Indicator Approach for Operational Risk.
Once again, FY 2023 has seen increased focus on digital technologies for banking needs. Accordingly, the Bank inter alia is looking forward to adopting emerging technologies like Artificial intelligence (AI) / Machine Learning (ML), Blockchain, Internet of things (IoT), Edge Computing, Robotic Process Automation, Application Programming Interface (API) Banking, Metaverse, Conversational Banking, and Big Data. By embracing aforesaid technologies, the Bank aims to offer its customers futuristic services and newer business models while achieving operational excellence. Implementation of these technologies will also enable the Bank to automate customer interactions, enhance the security and offer personalized services based on real-time data, and create new ways of engaging with customers.
Following were some of products/features launched in your Bank during FY 2023:
1. DCB EazyBee Online Mutual Fund
⢠DCB EazyBee is a paperless and user-friendly platform that is accessible via desktop and mobile
devices. It enables quick and seamless investing in mutual funds, facilitates automatic payments, and provides up to date information to customers on their portfolios.
⢠The online platform inter alia comes with several attractive features such as no registration fees and transaction charges, easy mutual funds selection options to invest in products of reputed Asset Management Companies (AMCs), access to risk ratings and factsheets of all the funds, online uploading of Know your Customer (KYC) documents and facility to download National Securities Depository Limited (NSDL) consolidated account statement.
2. My Documents Portal
⢠A secure platform designed to streamline communication with customers. This user-friendly portal is the go-to source for all relevant documents and communications related to customers.
⢠Customers can access their documents from anywhere, at any time, after a secure authentication process. By centralizing all essential documents and communications in one easily accessible location, My Documents Portal enhances transparency and simplifies the customer experience. From welcome letters to account statements, everything is available in one convenient location, making it easier than ever for customers to stay up to date.
⢠New documents uploaded are communicated to customers through SMS and e-mail on the registered mobile number and e-mail address.
3. Zippi
⢠Paperless and end-to-end digital Savings Account and Fixed Deposits Account opening application that has a wide range of products (DCB Premium Savings, DCB Privilege, DCB Classic Savings Bank Accounts) and other options.
4. Video Based Personal Discussion for Credit Team
⢠Online validation of applicant''s identity, documents, mobile number or e-mail id.
⢠Improved turn-around time and can be done at customer convenience.
⢠GPS validation of applicant''s location.
5. Issuance of Contactless Card
⢠The contactless (Tap & Pay) features enabled for DCB Visa Debit Cards.
⢠DCB Debit Contactless Visa cards is accepted by leading merchants in India.
6. CUBE - digital end-to-end branch application for
customer on boarding of deposit products
⢠Over 1 lakh customer accounts opened via CUBE, online interfaces with NSDL, Aadhaar etc for instant verification
⢠Turnaround time and errors have been substantially reduced with the introduction of CUBE.
7. Customer Service
⢠Customer self-service, in-branch kiosk enabled for real time KYC up-dation by existing customers of the Bank.
⢠Customer login for KYC verification enabled via valid DCB Debit Card and PIN or biometric authentication via Aadhaar/Virtual ID (VID).
⢠Biometric authentication in branches using kiosks.
⢠DCB Bank Loan Repayment Collection via Payment Gateway Partner & Bharat Bill Payment System (BBPS)
⢠Dispatch Management Solution implemented for end-to-end tracking of deliverables.
⢠DCB Travel Smart Debit Card - travel worldwide without any hassle of currency conversion.
⢠Customisable kit for Loan disbursal including agreements/policies.
⢠Branches can offer higher limits for Personal Internet Banking and Mobile Banking to select customers.
⢠Declined Debit Card transactions instant alert via SMS to customers.
8. DCB Mobile Banking
⢠Save and manage favourite transactions.
⢠EMI calculator for loans.
⢠Event based and personalized notifications.
⢠Multilingual - 9 language options.
⢠Biometric authentication.
⢠Positive pay functionality.
⢠Failed login alert to customers..
9. Internet banking Enhancements
⢠DCB Suraksha Fixed Deposit functionality in Personal Internet Banking.
⢠Financial Year addition in Statement of Account Module in Personal Internet Banking.
10. Automation of Group Personal Accident (GPA)
Policy Daily Issuance Benefits:
⢠Enhanced customer experience and significant improvement in turnaround times.
⢠Insurance policy and coverage commences from the next business day.
⢠Minimum manual intervention.
11. Intelligent Interactive Voice Response (IVR)
Interactive Voice Response (IVR) technology offers customers self-service options with DTMF (such as landline or mobile phone dial pad keys) tones input. In addition to identification and segmentation of the callers, it also facilitates the routing of customer calls to the most appropriate customer care/ service resource at the Bank''s Customer Care centre. .
⢠Preference for calls based on the customer''s requirement for example, a customer call for a debit card emergency will be allocated to a customer care representative with the appropriate expertise.
⢠Based on the registered mobile number, the system will identify the customer and, accordingly, the call will get transferred to the correct customer care associate.
⢠For calls received via non-registered mobile numbers an OTP validation option for customer verification has been provided.
12. Enhancement of UPI Transaction limit for specific categories
⢠DCB Bank customers can make ASBA payments up. to '' 5 lakhs per IPO
13. Customer Investment Declaration form (CIDF) enhancement for the customer
⢠Digital journey for Customer Investment Declaration Form for third-party product distribution
14. Mortgage Sales Support Application
⢠Tracking leads and monitoring appointments and activities
⢠Product details
⢠Monitor frontline productivity and performance.
BUSINESS INTELLIGENCE UNIT (BIU)
The core objective of BIU is to leverage data analytics to drive decision-making and improve business outcomes. Bank has invested in building modern & scalable data & Tech stack in areas of Big Data, Machine Learning and Deep Learning comprising of an Enterprise Data Lake and GPU servers enabling capability to deploy multiple use cases. The Bank''s stack includes Cloudera, Hadoop, Kafka, SAS Viya, R, Python and Spark etc. Bank has launched a focused BIU transformation project
D2V which encompasses BI & Analytics uses cases in self-service MIS, Cross-sell, Revenue & cost efficiency. These business cases cover decision enablement across customer journeys for both Asset as well as Liability products from units across business lines. These projects are being initiated across work streams (but not limited to) to scale up Underwriting, Personalization, productivity optimization & Data driven collection.
Operations unit''s continuous endeavour to improve efficiency and offer best in class services to customers continues to remain as the primary objective. During the year, there has been unprecedented growth in volumes across every unit and some of the units like Centralized Payments Centre and Clearing units operate 24/7 to cater to the customer needs. The focus on automation and improvements in productivity are yielding desired results as the growth in volumes and 24/7 operational shifts are managed without any significant increase in headcount and/or costs.
The new state of the art customer onboarding platform CUBE that was implemented two years ago to support operations at National Processing Centre (NPC), was further enhanced during the year to make it more robust, faster, resilient and offer more functionalities. The number of applications processed on CUBE crossed the magic number of 100,000 during the year. About 86% of the account opening forms duly submitted on CUBE application by branches, are processed and customer''s accounts opened by NPC within the same day against an average of about 5 days prior to implementation of CUBE thus providing superior and faster customer experience.
Centralized Payments Centre (CPC) which caters to all customer payments processing like RTGS/NEFT, CMS payments, and electronic banking transactions on 24/7 basis, handled about 208.20 lakh transactions with zero operational loss during the year. A new innovative state of the art NEFT /RTGS technology solution was implemented during the year to support 24/7 services and cater to increased volumes. Clearing unit continues to operate on 24/7 basis as well and during the year processed 86.78 lakh transactions with zero operational loss. Cash Management Services Unit which provides cash to branches and ATMs ensured that the average cash holding throughout the year was maintained at 15% of the approved limit through proactive management of cash logistics thus ensuring that idle cash levels were maintained at barest minimum levels.
Several initiatives taken during the recent few years with respect to implementation of newer technology solutions,
strengthening of quality checks, process revamp, continuous training of staff including newly recruited staff and ensuring the staff remain motivated and focussed have helped various operations units to provide faster services to customers with zero operational losses and handle increased volumes seamlessly. Grooming next generation leaders and creating second line leaders across various unit continues to be a key focus area along with efforts for further automation and improvements in productivity.
Internal Audit (IA) function has employees with varied domain background and experience across Banking operations. It has a mix of Chartered Accountants and domain/technical experts and veterans. The IA team comprises of freshers, experienced bankers and specialists. IA function reports into the Audit Committee of the Board (ACB) which constitutes members with strong domain and audit knowledge. ACB oversees the IA function, monitors performance, and provides regular guidance for improving risk control and compliance across the Bank. In FY 2023, IA adopted different models for audits which included extensive use of data analytics, document verification, testing of design and effectiveness along with walkthrough. The IA team makes use of various tools for analysis in the audits like SAS. In FY 2023, IA conducted 186 branch audits, 46 periodic audits and 12 IT audits. IA team members attended multiple online and in person training programmes in various domains including audit framework / methodology, soft skills, risk management and Banking, for continuous enhancement of knowledge and skills.
In line with previous years, the Fraud Risk Monitoring (FRM) unit has enhanced the fraud detection and monitoring capabilities through enrichment of data points embedded into the monitoring tools. It has also enhanced the capabilities to identify and address the risks through their assessment methods and investigation. The unit also identifies learning from industry practices to enhance the capability of the function in the Bank. The team has been given continuous training on technical and functional aspects. The unit continues to have 24x7 monitoring to enable fraud detection across various channels and transactions.
The Bank''s Compliance function is independent of business and operation functions. The Compliance function has created procedures and checks to ensure
compliance with applicable regulations. In addition to ensuring timely submission of various returns to regulatory authorities, the Compliance function ensures that the Bank''s internal procedures and processes are in adherence with the applicable regulatory and statutory provisions. The Compliance function is also responsible for AML / KYC monitoring, the Bank relies on advanced software and analytics. Within the Compliance function, a separate unit for Compliance Monitoring and Testing has been created to carry out compliance testing on an ongoing basis. This unit also provides compliance risk assessment to various units / functions.
The Bank deeply believes that its employees are the driving force for business growth, branding, and customer satisfaction. The employees are an invaluable asset which deliver sustainable performance and shareholder value. The Bank''s HR unit is built on following four pillars:
⢠In FY 2023, the Bank''s substantially increased headcount especially that of the frontline to create capacity for stepping up business growth. The Bank headcount stood at 9,905 as on March 31, 2023, an increase of 23% over FY 2022 (headcount 8,077). The recruitment team doubled its efforts in hiring through referrals, social media, and career websites. Further, to provide in-house talent with opportunities, the Bank, in FY 2023, provided new assignments through Internal Job Posting to 616 employees (470 in FY 2022).
⢠The Bank continued its flagship B-school competition that has been recognized as one of the best practices in the industry. The Bank scaled up its "The Top Recruitâ program and campus engagement initiatives across various regions, covering around 4,000 participants from 200 B- Schools in cities like Delhi, Mumbai, Pune and smaller towns in India. The higher participation helped to bolster the brand value of the Bank amongst the future job seekers.
⢠On Linkedin platform, which is a primary source of employer branding and portal for attracting talent, the Bank at the end of FY 2023 has over 3.55 lakhs follower''s vis-a-vis 2.74 lakh followers as at the end of FY 2022.
The Bank continued to provide training through classroom and e-learning to employees covering key modules like Ethics, Prevention of Sexual Harassment (POSH), Gender Sensitization, Code of Conduct, Capacity Building and AML/KYC. Examples of classroom and e-learning provided during FY 2023 are as follows:
⢠1,900 training workshops were conducted internally
and employees underwent through over 3.54 lakh hours of e-learning.
⢠"Olympiadâ platform was initiated in FY 2021 to continuously strengthen the culture of assessment on critical areas. During FY 2023, the Bank continued to do product, process, and compliance assessments through the "Olympiadâ platform.
⢠Signature interventions like RISE, ASPIRE and Budding programs under "Grow with Usâ umbrella are being conducted for over 10 years. These programs have helped create a talent pool to take up leadership roles within the Bank.
⢠Capacity building initiatives have been undertaken through internal and external certification especially in the areas of risk management and credit. Cyber security programs were conducted for Senior Management employees with the Institute of Development and Research in Banking Technology (IDRBT).
⢠Critical employees in branch operations underwent Gold Loan appraisal workshops which helped them provide quick service to customers at our branches.
⢠Supervisory capability training continued to be driven through the ABCD program which builds foundation for being a good supervisor on four pillars of Appreciation, Building Ownership, Communication and Development (ABCD).
⢠S-PEAK survey achieved 100% participation from the Bank. The objective is to help supervisors reach their PEAK by deploying various Coaching, Mentoring and Developmental plans. Over a learning journey of 6 months, theme-based training programs are deployed to improve overall people management Competency of 800 supervisors.
⢠Power of Three - Empathy, Speed and Quality (ESQ) is the Bank''s approach and philosophy to customer service. To enhance ESQ amongst employees, the Bank conducted various Bootcamps, a one-day classroom training program with focus on creating delightful customer experiences at every touch point the Bank. More than 90% of employees were covered in the ESQ training programs. Also, to promote ESQ on an ongoing basis, a digital platform was created to recognize and reward notable contributions.
The Bank took special care of its employees by focusing
on well-being:
⢠To inculcate the habit of regular exercise and walking, the Bank launched DCB Walkathon Challenge 2022 for all employees across India. Over 2,300 employees'' steps were monitored round the clock. Encouraged by the huge participation and enthusiasm amongst the employees, the unit extended the challenge from 5 days to 12 days. Within a span of 12 days, 70 million steps were clocked which equals 58,459 kms or is equivalent to 1.5 times the distance of walking around the world.
⢠Health Carnival 2022 was organized across all regional offices in the month of November 2022 which saw participation from over 3,000 employees for onsite activities such as health check-up wherein weight, height, sugar levels, ECG, and blood pressure etc. were checked. Apart from onsite activities, there were online webinar sessions organized as well, covering topics such as awareness on diabetes, conjunctivitis; and ways to keep heart healthy. Discussions were held on nutrition and gastric related issues.
⢠Doctor on Call service ensures that DCB Bank employees can have access to qualified doctors 24x7 by simply downloading a free mobile application (available on Android and IOS). This application facilitates an instant video call with doctors who are available for consultation across various fields such as ENT, Ortho, Lifestyle diseases, Physiotherapy, Ayurveda, and Dental issues.
⢠Leadership and top management team are setting new examples of conducting self-driven wellness sessions for employees. Recently a yoga session was led by the CFO where he shared healthy habits and asanas for living and adapting a healthy lifestyle
⢠Employee loan processing was automated through the Bank''s HR Management System. The transition to (digital application saves significant amount of paperwork and reduces cycle time.
⢠During the year, emotional well-being assumed great importance for which the Bank drove wellness initiatives for employees under its Employee Assistance Program (EAP) wherein assistance was provided for psychological / mental health.
⢠The Bank negotiated a more comprehensive Mediclaim plan this year for its employees where inter alia Intensive Care Unit (ICU) charges at actuals, genetic disorders and waiver of co-pay in case of an unfortunate demise of employee and / or dependent were included.
⢠The Bank also conducted special programs for supervisors to monitor and report instances of poor mental health amongst their team to facilitate timely intervention. The Employee Assistance Program (EAP) partner, 1 to 1 help explained reasons for stress and encouraged supervisors to help employees to seek counselling.
⢠"Doing good does you goodâ - employee volunteering in large numbers for tree plantation, habitat
restoration, clean-up of parks, lakes, and other water bodies. This year over 1600 employee volunteers participated in CSR activities.
⢠Towards improving the environment, the Bank planted over 1,01,120 trees during FY 2023.
⢠The Bank has regional recognition program called "DCB Spotlightâ for felicitating top performers in different regions. This year, the Bank recognized over 800 awardees in eleven locations. This event also provides a unique opportunity to employees to showcase their talent in various areas.
⢠The Bank''s annual signature reward and recognition ceremony, the Movers & Shakers, was held at NCPA, Mumbai. Over 100 awardees were felicitated for their performance. The winners of the regional talent hunt, "Funkaar Beatsâ also competed for the top spot.
⢠"Hour HRâ (the live radio show), unique communication platform for the employees to interact with the HR team and seniors directly on topics such as managing leave, dress code, doctor''s help, promotion process, rewards platform and Mediclaim.
⢠"RegionalForumsâ are conducted for leaders to address issues that could be resolved within their units through mutual collaboration.
⢠The quarterly newsletter, "High Decibelâ is a communication channel where the employees contribute articles of personal experience and professional achievements. "High Decibelâ is also used for communicating the latest updates, events, and happenings in the Bank.
⢠The Bank''s signature employee connect program "Each One Reach Oneâ (EORO) went digital and over 95% of employees participated. Employees rated their satisfaction with respect to job, supervisor, work environment and career aspirations. The Bank initiated interventions and focus group discussions to address employee issues and receive their suggestions for improvements.
⢠The Bank continued the "EORO Supervisor Surveyâ for first time supervisors. The feedback was with reference to approachabi lity, helpfulness, care, development, and their alignment with the team. Counselling was completed for those supervisors who had a low score.
⢠In its effort to attract talent and boost the internal branding, various initiatives have been taken. The Bank launched "MANCO Bytesâ (MANCO denotes Management Committee) series where the senior leaders spoke of their experience and how they overcame challenges to become successful.
CORPORATE SOCIAL RESPONSIBILITY (CSR) & ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG)
The Bank''s CSR thrust areas are Water, Waste Management, Renewable Energy, Recycling, Support Technology incubators related with the Bank''s thrust areas, Preserve Archaeological and Historic sites, and Disaster relief. The CSR and HR team work together to engage employees in tree plantation, habitat restoration, clean-up of parks, lakes, beaches, and water bodies. In FY 2023, the Bank''s DCB Social volunteers engaged in various clean-up and environment restoration initiatives across Bank''s footprint. Meaningful contribution of time and effort by 1,600 CSR volunteers across DCB Bank locations has greatly helped drive awareness on saving water in households, reducing usage of single use plastic, encouraging local communities to segregate recyclable and organic waste, enhance green cover in rural and urban locations.
The ESG working group adheres to the established framework of the ESG Principles. The Bank''s Business Reporting and Sustainability Report (BRSR) is an outcome of the deliberations and application of the framework to the activities of the Bank.
Delighting customer in every interaction is the core aim of the Bank. On a regular basis, customer complaints and satisfaction levels are monitored by the Managing Director & Chief Executive Officer along with the Senior Management team. The Bank has constituted an independent "Service Excellenceâ team to analyse customer complaints, identify root cause for service issues, make process improvements and work with the various businesses and functions to continuously enhance service levels. The Bank has an "Integrated Centralised Complaint Managementâ system and service standards to ensure that customer queries and complaints are addressed in a timely and quality manner.
The Bank continues to make steady progress on the service concept of Empathy Speed Quality (ESQ). In FY2023, the Bank conducted an independent customer satisfaction survey. The survey indicated that 98% customers have expressed their satisfaction on the services rendered by the Bank. Additionally, there have been measures taken by the Bank in FY2023 to make customer services automated or system driven. As a result, there has been a reduction of complaints by 9% across categories and 28% in the top 10 categories in comparison to FY2022. The Bank will continue to improve its processes to provide faster resolutions and efficiently. The Bank continuously works on the six pillars of Service Excellence - Voice of Customer, Service Recovery, Attrition Calling, Process Simplification, Service Culture
and Measures and Metrics. The Service Excellence team continuously interacts with the frontline staff and key stakeholders to obtain customer feedback. Branch surprise visits and "mystery shoppingâ activities are undertaken by the Service Excellence team and instant feedback is provided to the branch staff and supervisors. The Bank has constituted three committees at different levels to monitor customer service - Branch Level Customer Service Committees (BLCSCs), Standing Committee on Customer Service (SCCS), and Customer Service Committee of the Board (CSCB). The Bank on a regular basis, through various means, educates its customers to be vigilant on the rising incidents of cyber-crimes.
In FY 2023, the Bank took several initiatives to create brand awareness and improve visibility for its products and services. This resulted in quality lead generation and new customer acquisitions. Examples of the various activities during the year are given below:
⢠Nearly 10,000 micro marketing activities / customer engagement programs were conducted in the branch neighbourhood across regions by branch banking teams
⢠DCB Fixed Deposit print campaign in mainline publications was undertaken across Andhra Pradesh, Delhi, Gujarat, Kolkata, Mumbai, and Telangana.
⢠Airport branding was undertaken at Ahmedabad, Bhubaneshwar, Delhi, Kolkata, and Raipur. DCB Fixed Deposit, DCB Savings Account and DCB Remit communication were prominently displayed at these airports.
⢠Mobile van activation programs were executed in the states of Andhra Pradesh, Karnataka, Odisha, Tamil Nadu, and Telangana to promote DCB Savings Account and DCB Gold Loan. This medium was effective in generating quality leads to the branches.
⢠The Bank''s signature customer event "Ek Mulaqat Kuch Baateinâ was organised in Bengaluru, Delhi, Hyderabad, Kolkata, Mumbai and Pune. Senior officers of the Bank along with select Directors interacted face-to-face with hundreds of customers who appreciated the Bank''s service, products, and CSR activities.
⢠Around 2,000 "Store Boardsâ with "DCB Gold Loanâ product branding was installed in the branch neighbourhood in Odisha and Tamil Nadu.
⢠Almost 90 events were organised at various residential societies across the country to engage with the prospects / residents to promote products and services.
⢠Throughout the year, both internal and external branding campaigns were done to promote new branches, products, and services.
⢠DCB Fixed Deposit and DCB Remit online campaigns were done on Google and Facebook.
⢠The Bank actively engaged customers, prospects, and employees with regular informative posts in the social media.
The Ministry of Corporate Affairs (MCA), Government of India has notified the Companies (Indian Accounting Standards) Rules, 2015 on February 16, 2015. Further, a press release was issued by the MCA on January 18, 2016 outlining the roadmap for implementation of Indian Accounting Standards (IND AS) converged with International Financial Reporting Standards (IFRS) for banks. As per earlier instructions, banks in India were required to comply with the IND AS for financial statements for accounting periods beginning from April 1, 2018 onwards, with comparatives for the periods ending March 31, 2018 or thereafter. On April 05, 2018, the RBI had announced deferment of implementation date by one year with IND AS being applicable to banks for accounting periods beginning April 01, 2019 onwards. On March 22, 2019, the RBI has announced deferment of the implementation of IND AS by banks till further notice.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY THE BANK
Particulars of Loans, Guarantees or Investments outstanding Pursuant to Section 186(11) of the Companies Act, 2013, loans made, guarantees given, securities provided or acquisition of securities by a banking company in the ordinary course of its business are exempted from the disclosure requirement under Section 134(3)(g) of the Companies Act, 2013.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All the transactions with related parties are in the ordinary course of business and on arm''s length basis and there are no ''material'' contracts or arrangement or transactions with related parties and thus disclosure in Form no. AOC-2 is not required.
POLICY ON RELATED PARTY TRANSACTIONS OF THE BANK
The Bank has a policy on Related Party Transactions and the same has been displayed on the Bank''s website at the following link: https://www.dcbbank.com/uDload/pdf/ Policv-on-Related-Partv-Transactions-June-2022.pdf
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT (BRSR)
In terms of Regulation 34(2)(f) of the SEBI Listing Obligations and Disclosure Requirements (LODR) Regulations 2015, the Bank''s Business Responsibility and Sustainability Report describing the initiatives taken by the Bank from an environmental, social and governance perspective forms part of this Report and has been hosted on the website of the Bank at the following Link: https://www.dcbbank.com/pdfs/DCB-Bank-Business-Responsibility-and-Sustainability-Report-2022-23.pdf
Being a Banking company, your Bank is not required to maintain cost records as specified by the Central Government under Section 148(1) of the Act.
REPORTING OF FRAUDS BY AUDITORS
During the year under review, no instances of fraud committed in the Bank by its officers or employees were reported by the Statutory Auditors and Secretarial Auditor under Section 143(12) of the Act, to the Audit Committee or the Board of Directors of the Bank.
Corporate Social Responsibility:
1. Brief outline on CSR Policy of the Company.
CSR Activities shall mean all the Corporate Social Responsibility activities / programs / initiatives of the Bank, either ongoing or new, dealing with the activities mentioned in thrust areas. The activities shallconform to those specified in Schedule VII to the Act (as amended from time to time) and as recommended by the CSR and ESG Committee and approved by the Board.
Thrust areas or activities ascribed to them are defined in the Policy, as amended by the Board, from time to time.
Projects/ Programmes to be undertaken:
CSR Thrust Areas for DCB Bank
Thrust areas shall mean and include any one or more of the following CSR activities:
a) Conservation of water / water storage / water usage / protecting water bodies
b) Waste Management
c) Recycling
d) Promote waste-to-energy
e) Promote start-ups
f) Preservation of historical and heritage sites in situ focus on water conservation, waste management, recycling and, or waste-to-energy.
g) Support Disaster Relief
2. Composition of CSR & ESG Committee:
|
Sl. No. |
Name of Director |
Designation / Nature of Directorship |
Number of the Committee meetings held during the year |
Number of the Committee meetings attended during the year |
|
1 |
Ms. Rupa Devi Singh* |
Chairperson & Independent Director |
4 |
3 |
|
2 |
Mr. Rafiq Somani |
Independent Director |
4 |
4 |
|
3 |
Mr. Mur all M Natrajan |
Managing Director & CEO |
4 |
4 |
|
4 |
Mr. Thiyagarajan Kumar |
Independent Director |
4 |
2 |
|
5 |
Mr. Farokh Subedar** |
Chairman & Independent Director |
4 |
1 |
* till January 21, 2023 ** w.e.f. January 29, 2023
3. Provide the web-link where Composition of CSR & ESG Committee, CSR Policy and CSR projects approved by the board are disclosed on the website of the company.
https://www.dcbbank.com/corDorate-social-responsibilitv Policies & https://www.dcbbank.com/upload/pdf/DCB-Bank-CSR-Proiects-list-FY-7077-7073.pdf
4. Provide the details of Impact assessment of CSR projects carried out in pursuance of sub-rule (3) of rule 8 of the Companies (Corporate Social responsibility Policy) Rules, 2014, if applicable (attach the report).
NA
5. Details of the amount available for set off in pursuance of sub-rule (3) of rule 7 of the Companies (Corporate Social responsibility Policy) Rules, 2014 and amount required for set off for the financial year, if any.
NA
|
Sl. No. |
Financial Year |
Amount available for set-off from preceding financial years (in '') |
Amount required to be set-off for the financial year, if any (in '') |
|
1 |
FY 2021-22 |
0.01 crore |
0.07 crore |
|
2 |
FY 2022-23 |
0.06 crore |
0.05 crore |
|
Total |
0.07 crore |
0.12 crore |
6. Average net profit of the company as per section 135(5). INR 439.81 crore
7. (a) Two percent of average net profit of the company as per section 135(5) INR 8.80 crore
(b) Surplus arising out of the CSR projects or programmes or activities of the previous financial years. 0.12 crore
(c) Amount required to be set off for the financial year, if any: NIL
(d) Total CSR obligation for the financial year (7a 7b-7c). INR 8.80 crore
8 (a) CSR amount spent or unspent for the financial year: NIL
(b) Details of CSR amount spent against ongoing projects for the financial year: NIL
(c) Details of CSR amount spent against other than ongoing projects for the financial year:
9. (a) Details of Unspent CSR amount for the preceding three financial years: NIL
(b) Details of CSR amount spent in the financial year for ongoing projects of the preceding financial year(s): NIL
10. In case of creation or acquisition of capital asset, furnish the details relating to the asset so created or acquired through CSR spent in the financial year: NIL
11. Specify the reason(s), if the company has failed to spend two per cent of the average net profit as per section 135(5): Not Applicable
CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES AND INDEPENDENCE OF A DIRECTOR
⢠The Board shall have minimum 6 and maximum 15 Directors, unless otherwise approved. No person of age less than 21 years shall be appointed as a Director on the Board.
⢠The Bank shall have such person on the Board who complies with the requirements of the Companies Act, 2013, the Banking Regulation (BR) Act, 1949, Provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations), the ''Fit & Proper'' criteria prescribed by the Reserve Bank of India (RBI), Memorandum of Association and Articles of Association of the Bank and all other statutory provisions and guidelines as may be applicable from time to time.
⢠Composition of the Board shall be in compliance with the requirements of Regulation 17 (1) of the Listing Regulations.
⢠Majority of the Directors as required under BR Act shall have specialized knowledge/experience in the areas like Agriculture, Banking, SSI, Legal, Risk Management, Accountancy, Economy, Accountancy and Audit, Finance etc.
⢠All Directors shall abide by the Code of Conduct.
⢠Directors shall not attract any disqualification and shall be persons of sound integrity and honesty, apart from knowledge, experience, etc. in their respective fields
POLICY RELATING TO THE REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES
⢠MD & CEO, Company Secretary and Chief Financial Officer shall be the Key Managerial Personnel (KMPs) of the Bank.
⢠Except for the Chairman and the MD & CEO, no other Directors are paid remuneration. The Chairman and the MD & CEO are paid remuneration as approved by the RBI and other applicable authorities. All Directors except the MD & CEO are entitled to sitting fees for attending various Board and its Committee meetings.
⢠Independent Directors are not entitled for Employee Stock Options.
⢠Remuneration of all employees including Senior Management and KMPs are decided as per the Compensation Policy of the Bank. The details are given on website at the following Link: https://www. dcbbank.com/pdfs/Policy for Remuneration for the Directors Key managerial personnel and other Employees of the Bank.pdf
PARTICULARS OF EMPLOYEES
The Bank had 9905 employees as on March 31, 2023. 10 employees employed throughout the year were in receipt of aggregate remuneration of not less than ''1.02 crore per annum and no employee was employed for a part of the year. The details of top 10 employees in terms of remuneration drawn pursuant to provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 (2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are appended separately (Annexure-I) and form part of this Report.
The Report and Accounts are being sent to the Shareholders excluding these particulars and any Shareholder interested in obtaining the said details may write to the Company Secretary at the Registered Office of the Bank at [email protected].
EMPLOYEE STOCK OPTION PLAN (ESOP) AND CASH SETTLED STOCK APPRECIATION RIGHTS (CSAR)
The Bank has formulated and adopted the DCB Bank Limited -Employee Stock Option Plan in 2005 approved by shareholders on December 15, 2006 and amended from time to time in order to:
⢠provide means to enable the Bank to attract and retain appropriate human talent in the employment of the Bank;
⢠motivate the employees of the Bank with incentives and reward opportunities;
⢠achieve sustained growth of the Bank and to create shareholder value by aligning the interests of the employees with the long-term interests of the Bank; and
⢠create a sense of ownership and participation amongst the employees of the Bank. The Employee Stock Options ("ESOPsâ) and the Cash Settled Stock Appreciation Rights ("CSARsâ) granted to the employees of the Bank currently operate under the following Schemes:
i. DCB Bank Limited - Employees Stock Option Plan 2005 ("ESOP Schemeâ)
ii. DCB Bank Limited -Cash Settled Stock Appreciation Rights Scheme 2022 ("CSARs Schemeâ).
During the year, the Bank has not granted any ESOPs. However, 1,170,786 CSARs were granted on October 15, 2022 at the exercise price of '' 96.70 per unit of CSAR to the eligible employees of the Bank in accordance with the CSARs Scheme and as approved by the Nomination and Remuneration Committee ("NRCâ).
The provisions of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SEBI (SBEB&SE) Regulations, 2021â), do not apply to cash settled SARs Scheme. As the Bank''s SARs Scheme provides only for cash settlement on stock appreciation, the provisions of SEBI (SBEB&SE) Regulations, 2021, are no longer applicable.
The aforesaid Schemes complied SEBI (SBEB&SE) Regulations, 2021, to the extent applicable. During the year under review, no material changes were made to the Schemes.
The relevant details of the aforesaid Schemes, as required under the SEBI (SBEB&SE) Regulations 2021, are available on the Bank''s website viz., URL: https://www.dcbbank. com/cms/showpaae/paae/disclosures These details, along with the certificates from the Secretarial Auditor, as required under the SEBI (SBEB&SE) Regulations 2021, stating that the ESOP Scheme and the SARs Scheme have been implemented in accordance with the SEBI (SBEB&SE) Regulations, 2021 and the resolution passed by the members, would be placed and available for inspection by the members during the AGM.
PARTICULARS PURSUANT TO SECTION 197(12) AND THE RELEVANT RULES
a) The ratio of the remuneration of each Director to the median employee''s remuneration for the financial year ended March 31, 2023 and such other details as prescribed are as given below:
|
Name |
Ratio |
|
Mr. Farokh Subedar |
1:1 |
|
(Chairman from January 31, 2023) |
|
|
Mr. Mur all M Natrajan |
102:1 |
|
(Managing Director & CEO) |
b) The percentage increase in remuneration of each Director, Chief FinancialOfficer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year:
|
Name |
Ratio |
|
Mr. Farokh Subedar (Chairman from 31-01-2023): |
0% |
|
Mr. Mur all M Natrajan (Managing Director& CEO): |
0% |
|
Mr. Satish Gundewar (Chief Financial Officer): |
5% |
|
Ms. Rubi Chaturvedi Company Secretary: |
15% |
c) The percentage increase in the median remuneration of employees in the financial year: 7.5%
d) The number of permanent employees on the rolls of Bank: 9846
e) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year ended March 31, 2023 and its comparison with the percentile increase in the managerialremuneration and justification thereof and any exceptional circumstances for increase in the managerial remuneration: Average increase in remuneration is 8.22 % for employees other than Managerial Personnel & 0 % for Managerial Personnel (KMP and Senior Management). There are no exceptional circumstances for increase in the managerial remuneration.
f) If remuneration is as per the Compensation Policy of the Bank: Yes
PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The provisions of Section 134(3)(m) of the Companies Act, 2013 relating to conservation of energy and technology absorption do not apply to the Bank. However, as mentioned in earlier part of the Report, the Bank has been continuously and extensively using technology in its operations. Foreign Exchange earnings and outgo are part of the normal banking business of the Bank.
ESTABLISHMENT OF VIGIL MECHANISM
The Bank has in place a vigil mechanism pursuant to which a Whistle Blower Policy has been in vogue for the last several years. The policy was last reviewed in FY2022-23. This Policy, inter alia, provides a direct access to a Whistle Blower to the Chief Compliance Officer (CCO) on his dedicated e-mail whistleblower@dcbbank. com and Chairman of the Audit Committee of the Board (ACB) on his dedicated e-mail-ID cacb@dcbbank. com. The Whistle Blower Policy covering all employees and Directors is hosted on the Bank''s website at
httn://www.ricbbank.com/cms/shownaaa/naaa/whLstla-
None of the Bank''s personnel have been denied access to the Audit Committee
THE DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS
The Bank has designed and implemented a process driven framework for Internal Financial Controls ("IFCâ) within the meaning of the explanation to Section134 (5)(e) of the Companies Act, 2013. For the year ended March 31, 2023, the Board is of the opinion that the Bank has sound IFC commensurate with the nature and size of its business operations wherein controls are in place and operating effectively and no material weaknesses exist. The Bank has a process in place to continuously monitor the existing controls and identify gaps, if any, and implement new and/or improved controls wherever the effect of such gaps would have a material effect on the Bank''s operation.
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of your Bank had appointed M/s. S. N. ANANTHASUBRAMANIAN & Co., Company Secretaries, Thane, to act as the Secretarial Auditor of the Bank for FY 2022-23. The Secretarial Audit Report for the financial year ended March 31, 2023, as required under Section 204 of the Act and Regulation 24A of the SEBI Listing Regulations, is annexed to this Report. Your Bank is in compliance with the applicable Secretarial Standards issued by The Institute of Company Secretaries of India and approved by the Central Government under Section 118(10) of the Act for FY 2022-23. The Secretarial Auditor''s Report does not contain any qualifications, reservations, adverse remarks or disclaimers except an observation pertaining to appointment of Woman Independent Director on the Board.
In terms of the SEBI circular dated February 8, 2019, your Bank has submitted the Annual Secretarial Compliance Report for FY 2022-23 to the Stock Exchanges within the prescribed time and the same is available on websites of the Stock Exchanges i.e. BSE Limited (www.bseindia.com). National Stock Exchange of India Limited (www.nseindia.com) and on the Bank''s website viz., URL: https://www.dcbbank.com/upload/pdf/
BSENSEAnnualSecretarialComnlianceRenortFY202223. pdf
DIRECTORSâ RESPONSIBILITY STATEMENT
Based on the frame work of internal financial controls and compliance systems established and maintained by the Bank, the work performed by the Internal, Statutory and Secretarial Auditors and the reviews performed by the Management and the relevant Board Committees, including the Audit Committee of the Board, the Board is of the opinion that the Bank''s internal financial controls were adequate and effective during the year ended March 31, 2023. Accordingly, pursuant to Section 134(5) of the Companies Act, 2013, based on the above and the representation received from the Operating Management, the Board of Directors, to the best of their knowledge and ability confirms that
(i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there were no material departure there from;
(ii) they have, in the selection of the accounting policies, consulted the Statutory Auditors and have applied their recommendations consistently and made judgments and estimates that are reasonable and prudent as to give a true and fair view of the state of affairs of the Bank as at March 31, 2023 and of the profit of the Bank for the year ended on that date;
(iii) they have 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 Bank and for preventing and detecting fraud and other irregularities;
(iv) they have prepared the annual accounts on a going concern basis;
(v) they have laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively during the year ended March 31, 2023; and
(vi) proper system has been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively during the year ended March 31, 2023.
A copy of the Annual Return as of March 31, 2023 pursuant to the sub-section (3) of Section 92 of the Companies Act, 2013 read with Rule 11(1) of the Companies (Management and Administration) Rules, 2014 and forming part of this Report is placed on the
website of the Bank as per provisions of Section134(3) (a) and is available at the following link:
https://www.dcbbank.com/upload/pdf/Form-MGT-07-
CORPORATE GOVERNANCE
The Bank has been continuously observing the best corporate governance practices and benchmarks itself against each such practice. A separate section on Corporate Governance and a Certificate from M/s S. N. Ananthasubramanian & Co, Practicing Company Secretaries, regarding compliance with the conditions of Corporate Governance as stipulated in Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Annual Report.
DIRECTORS
During the year under review, Mr. Shaffiq Dharamshi a Non-Executive Director and Ms. Rupa Devi Singh an Independent Director have ceased to be the Directors of the Bank with effect from January 12, 2023 and January 21, 2023 respectively, after completing their term of eight consecutive years (the maximum permissible) as per the provisions of the Banking Regulation Act, 1949. Further Mr. Ashok Barat has ceased to be an Independent Director of the Bank with effect from March 21, 2023 after completing his term of five years as Independent Director.
Mr. Farohk Nariman Subedar was appointed as an Additional Independent Director of the Bank with effect from October 15, 2022 and as the Non-Executive Part Time Chairman of the Bank with effect from January 31, 2023. The Shareholders had approved the appointment of Mr. Subedar as Independent Directors through Postal Ballot concluded on December 20, 2022 and subsequently RBI has approved his appointment as NonExecutive, Part-Time Chairman of the Bank with effect from January 31, 2023.
Mr. Iqbal Khan, Non Executive Non Independent Director of the Bank is liable to retire by rotation and being eligible, has offered him for re-appointment.
Ms. Lakshmy Chandrasekaran was appointed as an Additional Independent Director on April 14, 2023 for a term of three (3) years i.e. up to April 13, 2026. Her appointment is recommended for approval of shareholders in the 28th Annual General Meeting.
A brief resume relating to the persons who are to be appointed/re-appointed as Directors and recommended for approval of Shareholders, are furnished in the notice
of the 28th AGM and Corporate Governance Report Based on the disclosures provided by them. None of the above mentioned persons is disqualified from being appointed as a Director in terms of Section 164 of the Companies Act, 2013. The Certificate dated May 5, 2023 issued by M/s. Ananthasubramanian & Co., Practicing Company Secretaries in this regard is attached to and forming part of this report.
In the opinion of the Board of Directors, all the above mentioned Directors being appointed /re-appointed, possess the required integrity, expertise and experience (including the proficiency) of the Independent Director appointed during the year/as on date of this report
None of the Directors of the Bank is related to each other per se
CHANGE IN KEY MANAGERIAL PERSONNEL
Mr. Bharat Laxmidas Sampat ceased to be a Chief Financial Officer of the Bank on June 30, 2022 due to his retirement and Mr. Satish Subhash Gundewar was appointed as Chief Financial Officer of the Bank effective July 01, 2022.
Please note that Mr. Gundewar has tendered his resignation from the services of the Bank to pursue his career outside the Bank. His last working day with the Bank would be June 3, 2023. The Bank has identified Mr. Ravi Kumar as "officer in chargeâ to take over from Mr. Gundewar from June 4, 2023 onwards.
A STATEMENT INDICATING THE MANNER IN WHICH FORMAL ANNUAL EVALUATION HAS BEEN MADE BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS
As per the Board Evaluation Policy of the Bank, evaluation exercise of all Directors, Board as a whole and its various Committees was conducted during the year.
The Board review focused on governance, board structure and composition, relationship and dynamics of the Board, frequency of meetings, information flow and agenda etc.
The Committee review focused on the composition, adequacy of terms of reference of various committees, frequency of meetings etc.
The individual Board members review focused on relevant qualification/skillsets, understanding of the Bank and banking industry, contribution in meetings, attendance etc.
The findings of the exercise were discussed in the meetings of Independent Directors and the Board. The appropriate feedback was conveyed to each Director. The Board was satisfied with the performance of each Member, the Board and various Committees.
The details of familiarisation programme arranged for independent directors have been disclosed on website of the bank and are available at the following link:
https://www.dcbbank.com/upload/pdf/Familarisation-
Programme-for-IndeDendent-Directors.pdf
In the Twenty Sixth Annual General Meeting (26th AGM) held on August 13, 2021, the terms of S R Batliboi & Associates LLP, Chartered Accountants (RegistrationNo.101049W/E300004) were revised from 4 years to 3 years from the FY 2020-21 till (and including)the FY 2022-23 as Statutory Auditors of the Bank to hold office for three (3) years from their original appointment at the Twenty Fifth Annual General Meeting as per the requirements of the guidelines dated April 27, 2021, issued by Reserve Bank of India (RBI). Pursuant to the said RBI Guidelines, M/s Sundaram &Srinivasan, Chartered Accountants, (ICAI Registration No. 004207S), were also appointed as Joint Statutory Auditors of the Bank in the 26th AGM. As such, both the statutory auditors are working as joint statutory auditors for the Bank from FY 2021-22.
As per the extant provisions, the RBI gives permission for appointment of auditor on year-to-year basis till expiry of the tenure of the Statutory Auditors. Accordingly relevant application have been made to RBI requesting its approval for appointment of S R Batliboi & Associates LLP, Chartered Accountants (Registration No. 101049W/ E300004) and M/s Sundaram & Srinivasan, Chartered Accountants, (ICAI Registration No. 004207S) as the Joint Statutory Auditors of the Bank for FY 2022-23.
Pursuant to the requirements of the Companies Act,2013, the Bank has appointed M/s. Ananthasubramanian & Co., Practicing Company Secretaries (COP 1774) as the Secretarial Auditor for FY 2022-23 and their report is attached separately to this Report.
Your Board wishes to thank the principal Shareholder and Promoters, the Aga Khan Fund for Economic Development S.A. (AKFED) and all the other Shareholders for the confidence and trust they have reposed in the Bank. Your Board also acknowledges with appreciation the Reserve Bank of India (RBI) for its valuable guidance and support to the Bank. Your Board similarly expresses gratitude for the assistance and co-operation extended by SEBI, BSE, NSE, NSDL, CDSL, NPCIL, Central Government and the Governments of various States, Union Territories and the National Capital Region of Delhi where the Bank has its branches.
Your Board acknowledges with appreciation, the invaluable support provided by the Bank''s auditors,lawyers, business partners and investors. Your Board is also thankful for the continued co-operation of various financial institutions and correspondents in India and abroad.
Your Board wishes to sincerely thank all its customers for their patronage. Your Board records with sincere appreciation the valuable contribution made by employees at all levels and looks forward to their continued commitment to achieve further growth and take up more challenges that the Bank has set for the future.
On behalf of the Board of Directors
SD/-
Farokh N. Subedar Chairman
Place: Mumbai Date: May 05, 2023
Mar 31, 2022
Your Directors are pleased to present the Twenty Seventh Annual Report of DCB Bank Ltd (hereinafter referred to as the Bank/Your Bank/DCB Bank) together with the audited accounts for the year ended March 31, 2022 (FY 2022).
In FY 2022, the Bank has posted an Operating Profit of '' 796.98 crore (FY 2021''885.81 crore) and a Net Profit of '' 287.50 crore (FY 2021''335.79 crore).
Total Assets have increased by '' 5,238.01 crore and reached '' 44,840.14 crore as on March 31, 2022 ('' 39,602.13 crore as on March 31, 2021).
Customer Deposits have increased by '' 4,176.64 crore and Advances have increased by '' 3,358.58 crore. Your Bank continues to make significant contribution to Priority Sector Lending (PSL) and has achieved the overall PSL target as required by the Reserve Bank of India (RBI).
The Net Interest Margin (NIM) was 3.56% in FY 2022 as compared to 3.59% in FY 2021 and the Current and Savings Accounts (CASA) ratio stood at 26.8% as on March 31, 2022.
Cost to Income Ratio has increase to 56.0% in FY 2022 from 48.9% in FY 2021. Total Branch network stood at 400 as on March 31, 2022 (352 as on March 31, 2021) and ATM network was 349 as on March 31, 2022 (410 as on March 31, 2021).
Provisions Other Than Tax have decreased to '' 407.43 crore in FY 2022 from '' 433.01 crore in FY 2021. Your Bank has been making conservative provision for Non-Performing Assets (NPA) and Loans restructured on account of Covid-19 stress. In addition, the Bank has also been making Floating Provision and provision against Standard Assets.
Gross NPAs have increased to '' 1,289.93 crore as on March 31, 2022 from '' 1,083.44 crore as on March 31, 2021. Consequently, Gross NPA Ratio as on March 31, 2022 was 4.32% as compared to 4.13% as on March 31, 2021. Net NPAs have decreased to '' 573.23 crore as on March 31, 2022 as against '' 594.15 crore as on March 31, 2021. Consequently, Net NPA Ratio as on March 31, 2022 was 1.97% as compared to 2.31% as on March 31, 2021. The overall NPA Provision Coverage Ratio as on March 31, 2022 was 67.84% (62.35 % as on March 31, 2021).
Return on Assets (RoA) Ratio in FY 2022 was 0.70% as compared to 0.87% in FY 2021. Corresponding Return on Equity (RoE) Ratio in FY 2022 was 7.92% as compared to 9.99% in FY 2021.
Capital Adequacy Ratio (CAR) under Basel III as on March 31, 2022 stood at 18.92% (19.67% as on March 31, 2021).
|
FINANCIAL SUMMARY ('' in crore) |
|||
|
Balance Sheet |
As at March 31, 2022 |
As at March 31, 2021 |
Increase / (Decrease) |
|
Customer Deposits |
31,280.26 |
27,103.62 |
4,176.64 |
|
Inter Bank Deposits |
3,411.43 |
2,600.24 |
811.19 |
|
Total Deposits |
34,691.69 |
29,703.86 |
4,987.83 |
|
[Including Total CASA*] |
[9,281.08] |
[6,786.51] |
2,494.57 |
|
Advances |
29,095.78 |
25,737.20 |
3,358.58 |
|
Gross - NPA |
1,289.93 |
1,083.44 |
206.49 |
|
Net - NPA |
573.23 |
594.15 |
(20.92) |
|
Total Assets |
44,840.14 |
39,602.13 |
5,238.01 |
|
Profit & Loss |
For the year ended March 31, 2022 |
For the year ended March 31, 2021 |
Increase / (Decrease) |
|
Net Interest Income |
1,357.51 |
1,286.61 |
70.90 |
|
Non Interest Income |
452.04 |
445.83 |
6.21 |
|
Total Operating Income |
1,809.55 |
1,732.44 |
77.11 |
|
Operating Cost |
1,012.57 |
846.63 |
165.94 |
|
Operating Profit |
796.98 |
885.81 |
(88.83) |
|
Provisions Other than Tax |
407.43 |
433.01 |
(25.58) |
|
Net Profit Before Tax |
389.55 |
452.80 |
(63.25) |
|
Tax |
102.05 |
117.01 |
(14.96) |
|
Net Profit After Tax |
287.50 |
335.79 |
(48.29) |
|
* Current and Savings Accounts (CASA) |
|||
Your Board is pleased to recommend a dividend of '' 1.00 per equity share of '' 10.00 each in respect of Financial Year ended March 31, 2022.
MANAGEMENT DISCUSSION AND ANALYSIS VISION
The Bank''s vision is to be the most innovative and responsive neighbourhood bank in India serving entrepreneurs, individuals, and businesses. In line with our vision, we began implementing a new strategy in FY 2010.
Keeping in view its inherent strengths, branch network and expertise, the Bank''s target market is mainly small business owners / self-employed / small business segment (traders, shopkeepers, business owners, MSMEs and SMEs). The Bank has chosen to have limited presence in the salaried segment. The MSME / SME sector is a vibrant and dynamic sector of the Indian economy and plays a very important role in the growth of the Indian economy. This segment is usually resilient and displays entrepreneurial spirit. Small enterprises create millions of jobs and maintain social stability. The MSME sector plays a pivotal role in the economic and social development of the country. As per estimates the MSME sector contributes around 30% to India''s GDP. Some useful information on the MSME sector is given below:
⢠Number of Working Enterprises: 64 million, Employment: 111 million individuals
⢠Urban: 49%, Rural: 51%
⢠Manufacturing: 31%, Trade 36%, Other Service: 33%
⢠Sole Proprietor: 96%
(Source: Annual Report FY2020-21 Government of India, Ministry of Micro, Small and Medium Enterprise)
Your Bank provides banking services to a varied base of business owners, self-employed / small businesses for example - Commodity Trader, Gold Trader, Vegetable Trader, Commission Agent, Retailer, Restaurant Owner, Caterer, Baker, Vending Machine Supplier, Consultant, Doctor, Contractor, Interior Decorator, Software Designer, Salon, Beauty Parlour, Printer, Electrical Engineer, Saw Mill, Flour Mill, Rice Mill, Grocery Store, Brick Maker, Builder, Fabricator, Artist, Writer, Auto Repair, Ship Repair, Pharmacy, Computer Specialist, Furniture Maker, Uniform Maker, Garment Shop, Fashion Tailor, Hardware Shop, Agri Processor, Pesticide Dealer, Auto Dealer, Scrap Dealer, Stationery Supplier, FMCG or Consumer Goods Dealer, Tool Maker, Agri Input Dealer, Tractor Dealer, Plastic Manufacturer, Mattress Manufacturer, Water Supplier,
Computer Training Classes, Internet Cafe, Coaching Classes, Tour Operator, Hotel Owner, Transporter, Ticketing Agent, C&F Agent, amongst others. The list of SelfEmployed occupation is endless. The target market is essentially Micro, Small and Medium Enterprises both in Manufacturing and Services. (Please refer to MSMED Act, 2006). Majority of lending to MSME sector qualifies for Priority Sector Lending. A major share of deposits and loans of the Bank are from the self-employed segment.
At the beginning of FY 2022, India was impacted by severe Covid-19 second wave. The infection spread very fast and although both Central and State governments made tremendous efforts to contain the situation, unfortunately the death toll was high. Yet again, to curb the spread of infection, lockdowns and restrictions had to be imposed which resulted in loss of business especially for the small businesses, shops and self-employed (Bank''s target segment). The Bank followed a growth strategy underpinned by prudence and caution, prioritizing supporting existing customers in their period of stress and uncertainty. Wherever possible, the Bank within the regulatory framework provided relief / restructure, to eligible borrowers, to tide over the difficult times. Like Covid-19 first wave, after the restrictions were cautiously lifted, economic conditions started improving. Towards Q3 FY 2022, the country was impacted by Covid-19 third wave. However, in comparison to the second wave, the third wave was mild, and the negative impact was limited. By Q4 FY 2022, the economic situation was pretty much back to pre-Covid-19 level and most of the restrictions have been relaxed by both Central and State Governments. As a result of lockdowns affecting the self-employed segment, the Bank''s NPAs and Restructured Loans increased in Q1 FY 2022. From Q2 FY 2022, as the Bank stepped up its Collections and Recovery efforts, NPA slippages started declining while recoveries / upgrades steadily improved.
During the current year, CRISIL Limited reaffirmed the Bank''s rating for Tier II Bonds (under Basel III) to CRISIL AA-/Stable and reaffirmed its rating on the Bank''s Certificates of Deposit Programme and Short-term Fixed Deposit Programme at CRISIL A1 . The Bank continues to enjoy ICRA A / (stable) rating for Basel III Compliant Tier II Bonds Programme and ICRA A1 rating for Short Term Fixed Deposits Programme.
Your Bank continued to be recognized for its progress and initiatives in various functions.
DCB Bank won the Gold in ACEF (Asian Leaders Forum & Awards, Branding, Marketing & CSR) 2021. The Bank''s CSR partnership project of Achari Kunta in Hyderabad, Telangana with iNaturewatch foundation associated with water conservation, and restoration won in Best Corporate - Non-profit Partnership category.
DCB Bank was given Special Commendation, The CSR Journal Excellence Awards 2021. The CSR Journal recognizes institutional and systematic efforts to address development challenges in the social space. The Bank was felicitated for its efforts in climate change mitigation, protecting biodiversity, restoring land and carbon sequestration over the long term. The Bank had initiated a pilot project to plant 10,000 saplings of indigenous tree species at INS Hamla, Madh Island in Mumbai.
⢠The Bank continues to be certified by the âGreat Place to Work Instituteâ for building a High Trust and High-Performance culture
⢠The Bank also received a coveted industry recognition by the Great Manager Institute (GMI) featuring in Forbes India. The Bank made it to India''s Top 30 list of Companies with Great People Managers. Two of the Bank''s Managers featured in the top 100 list of Great Managers in India.
⢠The Bank''s unique and best practice known as "EORO - Each One Reach One'' was recognized by ACEF Asian Leaders Awards in the Best Employee Engagement Gold Category.
⢠The Bank was featured in CII (Confederation of Indian Industry) in their Compendium of Best Practices in the employee wellbeing category. The Bank''s initiatives such as employee benevolent fund, Employee Assistance Program, vaccination drive, enhanced medical benefits etc were highlighted and appreciated.
The Bank was adjudged as Winner in the Ecosystem-Led Innovation Category of Infosys''s Client Innovation Award 2021. The Bank was recognized for Open Banking Transformation and Zippi Plus Deposit.
The Bank received the Best Data Management Project award at BFSI EXCELLENCE AWARDS 2021. This was on account of initiatives taken in Robotic Process Automation, Open Banking and Block Chain initiatives.
The Bank''s ''ATMCHAIN''- first blockchain based project was recognized as BLOCKCHAIN SOLUTION OF THE YEAR -BANKING 2021 at Alden Global Valye Advisor''s INFLECTION Awards.
ASSOCHAM National E-Summit & Awards -April 2021
⢠Winner for category of Digital Deposits, Private Sector Bank
⢠Runner up for category of Digital Services, Private Sector Bank
5th NXT CX Summit and Awards for Excellence in Banking Services - February 2022
BRANCH EXPANSION / ATMs
The number of branches, as on March 31, 2022, stood at 400 [221 Retail branches and 179 branches in Agri and Inclusive Banking (AIB)]. Out of which 71 branches are in rural areas and 106 branches are in semi-urban areas. The new branches have a standard, uniform and pleasing look and feel, and they are designed to provide a unique, positive, and seamless banking experience to customers. The Bank had 349 ATMs as on March 31, 2022.
RETAIL BANKING
RetailBanking offers unique products for meeting financialneeds of individuals and businesses. The Bank follows a multi-product approach which results in "all products being offered in all branchesâ subject to customer demand in the branch catchment area. To remain competitive, the Bank is particular about the quality and timeliness of service delivery. The Bank has a wide range of products that caters to the various needs of the customers.
Term Deposits
DCB Bank is usually amongst the top 5 banks in India in terms of offering attractive Term Deposit interest rates especially for longer tenor retail deposits. DCB Bank offers DCB Health Plus Fixed Deposit product which has unique health insurance benefits at "zero costâ to customers (subject to terms and conditions). During FY 2022, the Bank has substantially changed the liquidity profile and mix of its deposits. The continuous focus was on obtaining granular deposits. Consequently, the top 20 deposits ratio which was at 6.98% at the start of the year further declined to 6.31% at the end of FY 2022.
Mortgage and Micro Mortgage Loans
Mortgage is the prime lending product for the Bank and is contributing more than 45% of bank''s advances book. As part of the mortgage business, the Bank offers
both Home Loans and Business Loans to self-employed and salaried segments in the neighborhood areas of the Bank''s branches. The purpose of these loans, inter alia, are property purchase, home improvement, home repairs, business requirements (purchase of plant and machinery, purchase of stocks, purchase of shops, working capital) and personal expenses such as education, marriage or medical. Micro or small ticket mortgages are most suitable in Tier 2 to Tier 6 locations. Many people in the rural and semi-urban areas derive cash income from informal sectors or trades. At times, many customers do not have sufficient documents to prove their income / repayment capacity for obtaining loans. The Bank has demonstrated the ability to assess the household income for such customers by adopting a method of in-depth personal discussions with the borrowers and co-borrowers. Apart from creating a robust portfolio, the Bank has been able to achieve financial inclusion goals. Most of these micro loans qualify under the Priority Sector Loan (PSL) norms of the RBI. A part of the Bank''s portfolio qualifies for long term refinance from National Housing Bank (NHB).
In FY 2022, within the regulatory guidelines, the Bank continued to provide assistance to customers affected by Covid-19 disruptions.
As soon as the Covid-19 second wave abated, the Mortgages business bounced back strongly with increased sourcing from the selected segments and more focus on home loans. The Bank continued to remain cautious and maintained its focus on small ticket secured lending. The Bank expanded its distribution in the Mortgage business by increasing frontline headcount and deepening geographic presence. By the end of FY 2022, new business writing was ahead of pre-Covid-19 volumes.
The construction sector is an important contributor to the growth of our economy. Affordable housing in both rural and urban areas is one of the key thrust areas for the Government of India. The implementation of Real Estate Regulation & Development Act, (RERA) 2016 in most states, has brought in much needed transparency in this sector, creating favorable conditions for home buying and financing. The Bank''s approach is to focus on reputed builders with a strong track record who are primarily concentrating in the affordable housing segment. At the same time the strategy is to be cautious and limit exposure per builder / project. The Bank has established processes to monitor sales, collections, and utilization of funds towards
project completion. Having faced the brunt of Covid-19 disruptions until June 2021, the housing construction sector responded very well to the enhanced demand from home buyers. The country witnessed many new projects launches during FY 2022 with very robust buying in the affordable and mid-segment housing units across most of the key geographies. The Bank expects ample opportunity in lending to affordable and mid-segment housing projects in line with Government of India impetus on addressing the credit gap / housing shortage in the affordable housing sector.
Commercial Vehicle Loans (CV) significantly improves the PSL composition in the Bank. Most of the CV portfolio is categorised as PSL. This facility is offered across 110 locations. The CV industry have been facing headwinds on account of weak economic conditions and pandemic. Recently the sector is also impacted by raising fuel prices. CV industry have been among the worst affected by Covid-19, impacted more than 90% of customers. However, the CV sector is on the path of recovery post Q3 FY 2022. The Bank''s CV frontline reached out to each customer through daily visits / calling. In a sensitive and sensible manner, the Bank offered relief to various customers within the regulatory framework. The Bank believes that the CV business, which is integral to the growth of the economy, will see revival in the times to come.
Loan against gold is offered in most of the branches of the Bank. The Bank has focused on improving customer experience and service by continuously investing in process improvements through in-housing of valuation process and significant overhaul of the front-end system used for loan processing. Most of the verification and validation processes have been automated leading to faster turnaround and improved customer experience. The bank has invested to improve control and risk mitigation processes.
Insurance and Mutual Funds Distribution
The Bank has corporate agency tie-ups for distribution of life insurance, health insurance and general insurance. The Bank also has referral tie ups for mutual fund distribution. This enables the Bank to deepen customer relationships in addition to increasing fee income.
In FY 2010, with a vision of strengthening neighbourhood banking, the Bank set up a separate vertical to focus on Traditional Community Banking. The aim was to address the specific needs of the vintage neighbourhood community customers and to provide personalized solutions wherever possible. This perhaps is the purest form of neighbourhood banking and is directed towards addressing small credit needs such as education, personal, business and working capital.
Non-Resident Indian (NRI) business
The Bank has NRI customers from 130 countries, which contribute to 9.26% of the total customer deposits.
Government business (Collection of Direct and Indirect Taxes)
The Bank has been authorised by the Reserve Bank of India, Central Board of Direct Taxes, Central Board of Indirect Taxes and Customs, Controller General of Accounts and Ministry of Finance to collect various kinds of Direct and Indirect Taxes. After technical integration, DCB Bank customers will be able to pay their Direct and Indirect Taxes through Mobile banking or Internet banking platforms as well as through all our branches, resulting in immense ease and convenience for customers.
Collection Team operates out of 250 locations with a hub and spoke model. Being a critical and important function team has developed robust capabilities to collect overdue payments and ensure portfolio quality across products. Extensive use of data analytics to improve predictability has been critical in improving the productivity and performance of the unit.
During the Covid-19 second wave, the Collections team was in regular touch with the customers to understand difficulties faced by them and wherever possible extend relief / support within the regulatory framework. The Collections team also provided financial education on default, moratorium etc to help customers tide over difficult times. The Collections team actively embraced digital payment options to reduce face-to-face (for health and safety) interactions and provide convenience to
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One of the key strategies of the Bank is to enter alliances with entities whose products and services enable the Bank to improve customer acquisition and retention. Apart from new and enhanced products alliances help in speed to market.
The various strategic alliances and business association of your Bank is given below:
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Name of the Partner |
Type of arrangement |
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Aditya Birla Health Insurance Company Ltd |
Corporate Agency insurance sales |
for |
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Aditya Birla Sun Life I nsurance Com pany Ltd |
Corporate Agency insurance sales |
for |
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HDFC Life Insurance Company Ltd |
Corporate Agency insurance sales |
for |
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ICICI Lombard General Insurance Company Ltd |
Corporate Agency insurance sales |
for |
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Royal Sundaram General Insurance Company Ltd |
Corporate Agency insurance sales |
for |
|
Service Partners |
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Name of the Partner |
Type of arrangement |
|
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Euronet Services India Limited |
ATM and Switch Management |
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Business Alliances |
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Name of the Partner |
Type of arrangement |
|
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Aditya Birla Finance Ltd. |
Lending Business |
|
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Fintech Alliances |
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Name of the Partner |
Type of arrangement |
|
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Finnew Solutions Private Limited (NiYo) |
Global NiyO Card Management |
|
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Greenizon Agritech Consultancy Private Limited |
Lending Business |
|
|
Trade Receivables Discounting System (TReDS) Alliances |
|
|
Name of the Partner |
Type of arrangement |
|
Mynd Solution Private Limited (M1xchange) |
Lending on TReDS Platform |
|
Receivables Exchange of India Ltd (RXIL) |
Lending on TReDS Platform |
|
A. TReDS Limited (Invoicemart) |
Lending on TReDS Platform |
The Bank''s intention is to have a limited presence exposure Corporate Banking. This business operates across India with regional offices in Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, and Mumbai. The objective is to provide a complete range of commercial banking solutions including Foreign Exchange, Trade Finance and Cash Management. The Bank has a robust underwriting and credit system to address the inherent risks in Corporate Banking. The emphasis is on building a secured loans portfolio and creating long term relationships with high quality large and mid-corporates.
Corporate Bank during the year maintained a stable loan book while continuing to build on the short-term products. This unit is also responsible for providing liquidity through deposits and achieved robust growth in the deposits momentum which is likely to carry on in the coming years. The number of products per customers also increased thereby improving depth.
The intensity and frequency of regular review of exposures continued enabling identification of emerging risks in a timely manner. The focus is to continuously improve understanding of the borrower''s business/prospects, ensuring right mix of products, enhance analytics, strong promoter connect, cash flow understanding and tracking. Corporate Banking portfolio quality remained stable during the year.
In FY 2022, the Bank added 30 new customers and leveraged existing customer relationships. Your Bank understands that the RMs must have in-depth knowledge of various industries and corporates. To meet this need, the Bank has introduced and reinforced RM Knowledge Improvement Programs wherein information on various industries, corporates, credit ratings etc are shared with the RMs on a regular basis.
AGRI AND INCLUSIVE BANKING (AIB)
AIB is a separate unit with the main aim of achieving financial inclusion, PSL and enhancing the Bank''s
footprint in the Rural and Semi Urban areas. At the end of FY 2022, AIB had 179 branches in 13 states of India. There are many opportunities to offer simple innovative products backed by superior technology in the Rural and Semi Urban areas of India. Many of the new branches are in Tier 2 to Tier 6 locations. There is a constant endeavor to cater to underbanked and unbanked population of the country through a wide range of products, for example, zero balance savings account, small recurring deposit account, small loans to match the income and cash flow cycle. AIB also coordinates the entire PSL efforts for the Bank and is primarily responsible for achieving the financial inclusion targets.
Pradhan Mantri Jan-Dhan Yojana (PMJDY)
In FY 2022, the Bank actively participated in PMJDY program. The Bank had 34,362 PMJDY accounts as on March 31, 2022. The Bank has enabled Rupay Debit Cards for PMJDY account holders.
Pradhan Mantri Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Atal Pension Yojana (APY)
The Bank successfully reached out to unbanked and economically weaker population through PMSBY, PMJJBY and APY programs that are designed to bring social security. Your Bank had 5,733 customers under PMSBY, 2,905 customers under PMJJBY and 4,719 customers in APY as on March 31, 2022.
BSBDA has replaced "No frills accountâ. This is a wonderful product for achieving financial inclusion especially for those who have limited transaction needs in the low-income group. The Bank had 45,493 BSBDA accounts as on March 31, 2022.
"Kisan Mitraâ as the name suggests, is a deposit product, which fulfils the requirement and enhances the savings habit in rural areas. It is a product specially designed for farmers. It is a modified Savings Account with zero account opening amount and no Average Quarterly Balance maintenance charges.
Retail Agriculture Loan and Kisan Credit Card
To meet the credit needs of the farmers, the Bank has retail agriculture products like Kisan Credit Card that aims at providing adequate and timely credit support to the farmers for crop cultivation and allied activities. Under the KCC program, the Bank offers Cash Credit
to farmers for purchasing seeds, fertilizers, pesticide for crops cultivation and Term Loan facilities for land levelling, irrigation and purchasing farm equipment.
Tractor Loans are an integral part of the total agricultural equipment sector and is an direct indicator of growth in the agricultural sector. The Bank has steadily built its business across Tier 2 to Tier 6 branches. Tractor loans helps the Bank to partly meet PSL targets for agriculture and small and marginal farmers set by the RBI. Rural economy has remained more or less despite Covid-19 disruptions and the Bank has expanded in new locations that has benefited small & marginal farmers.
Microfinance Institutions (MFIs) and Business Correspondents (BCs)
The Bank lends directly to MFIs who in turn lend to end borrowers. Over time, the Bank has created a network of MFI relationships across India. In a few states of India, the Bank is also providing Self-Help Groups (SHGs) and Joint Liability Groups (JLGs) unsecured loans through BCs for economic activities. Group loans from bank has enabled unprivileged customers to avail small loans from the banking sector instead of high-cost borrowing from money lenders. These loans are usually provided to small farmers and weaker sections mainly in rural areas. To support the growth, Bank has an efficient software system for managing BC Loans. This software helps maintain adequate information about the borrowers under SHGs & JLGs. It provides a common platform for both, Bank and BC for smooth processing of loans and has added immense value by reducing the loan disbursal cycle time. The Covid-19 pandemic disruptions resulted in increase in NPAs in the BC MFI loans. The Bank took several steps to address the various issues and put the BC lending back on track.
Co-lending is a unique concept enabled by the RBI. The Bank''s intention is to partner with NBFCs that may be offering products not currently offered by the Bank or segments not served by the Bank. In FY 2022, the Bank has entered co-lending partnerships with two leading NBFCs for Gold Loans. Co-lending is likely to be an integral part of Bank''s business growth plans in the coming months.
ALTERNATE CHANNELS AND DIGITAL BANKING Phone Banking
In FY 2022, the Bank''s Customer Care Associates attended to approximately 86,000 calls per month. Despite the pandemic disruptions, the Call Center maintained 100% uptime. The Bank also upgraded its technology to enable Work from Home (WFH) capabilities. With the help of technology and training, Bank was able to seamlessly redirect calls to branch staff to achieve load balancing of calls at the Call Center. This was unique initiative which helped to achieve continuous service to customers, job enrichment to branch staff and cost efficiency.
Bank has also upgraded its technology to SIP based on traditional PRI based, thus improving the clarity of voice, improving the connect time and enhancing the uptime. Considering the pan India presence, the Bank has ensured that its Customer Care Associates can interact with the customers in 8 languages (English, Hindi, Gujarati, Kannada, Marathi, Odiya, Tamil and Telugu). The Customer Care unit conducts programs such as ''Voice of Customer'' for effective complaint resolution and process improvements. One of the key measures initiated is customer retention calling team was to contact customers to restart using the Bank''s services and do a deep dive to understand issues that may have been faced by customers. It is a window provided to the customers to provide feedback which are then relayed to the various business and functions corrective action.
ATMs
The Bank has 349 ATMs as on 31st March 2022. The Bank ensured that ATM uptime was maintained at above 90% despite ground level challenges on account of pandemic. The Bank has reduced several unviable and unprofitable ATMs during the year. The Bank has implemented Win Win 10 operating system, TLS, and Hard Disk encryption in ATMs.
DCB Mobile and Internet Banking
The Bank''s customers, more than 130,000, are actively using the new and improved Mobile Banking App. The users have given a rating of 4.6 which is "best in classâ amongst the peers group. The new version of the app is multilingual (12 languages) and also has Gold Loans.
DCB Internet Banking is also used by more than 60,000 retail and corporate customers. Internet Banking platform is rich with plethora of digitally managed services, which has reduced the need to visit branches. The platform is aligned to service the HNI customers by offering even higher limit for channels.
DCB Unified Payment Interface (UPI)
Lockdown and restrictions have further given boost to UPI channel which has now become one of the most popular digital mode for small transactions. The Bank''s UPI transactions have registered 116% growth in FY 2022.
DCB Open Banking
The Bank has a wide range of Application Programming Interface (APIs) to integrate the Bank systems in a seamless manner with alliance partner.
DCB Debit Cards
The Bank continuously focusses on increasing Debit Card usage and constantly enhancing its security features like we have stopped fallback transactions to avoid Card skimming cases, we have restricted our Card transactions made through non EMV compliant ATMs, along with that we have implemented BIN level limit & velocity control at NPCI & Visa under program TFD (Tailored Factor Defence) & GDC (Gross Debit Cap). Various validation and channel control as instructed by RBI in guideline "Enhancing Card securityâ are implemented on online Banking channels for easy use by customers.
The Bank from time to time, the Bank also offers seasonal promotional benefits such as healthcare, insurance etc.
DCB Niyo Global Cards
DCB Niyo Global Card is a Debit Card issued to DCB Niyo Current Account holders. This program is uniquely designed such that unlike forex cards, frequent top up of the card is not required since the card is linked to the Current Account. Card holders are offered security features to switch on or off card usage, change transaction limit and block or unblock the card. Also, the DCB Niyo Global Card provides exchange rates which are competitive, making the product a compelling proposition.
TReDS
In FY 2022, the Bank commenced participation on Trade Receivables Discounting System (TReDS), a unique digital capability that provides assured and faster financing to MSMEs / SMEs who are providing goods and services to larger companies. TReDS is improving flow of finance to MSMEs / SMEs. During FY 2022, the Bank has financed more than 500 MSMEs (almost 6,000 invoices) in TReDS platform. Financing on TReDS also qualifies as PSL.
The Bank continuously focusses on increasing Debit Card usage and constantly enhancing its security features. Instead of using static password, Debit Card users can complete their online payments with OTP. Debit Card users have security features enabling customers to activate or deactivate their Card on POS / ATM / online channels, customers can also change transaction limit and block or unblock their card. The Bank has an exciting "cashbackâ program to delight customers who increase their card usage provided the customers maintain the stipulated average minimum balance. In addition, from time to time, the Bank also offers seasonal promotional benefits such as healthcare, insurance etc.
TRANSACTION BANKINGCash Management Services (CMS)
The Bank provides Corporates, MSME/SME and Retail customers sophisticated and cost-effective CMS. This helps customers manage their collection and payment logistics with ease. The Bank has 7 vendors for CMS cheque collections across India. The Bank has upgraded the CMS system for both Payments and Collections enhancing its features and benefits. At the end of FY 2022, the Bank had 5,579 active customers using the CMS facilities.
Business Internet Banking (BIB)
The Bank offers state of the art BIB product especially designed for MSME/SME customers. The adaptive and responsive feature of the application makes it user friendly for customers across devices. At the end of FY 2022, BIB facility had 31,887 users
TREASURY, MONEY MARKET AND FOREIGN EXCHANGETreasury
Treasury actively manages liquidity, compliance with important regulatory tools- CRR & SLR, trading in fixed income securities & currencies, and investment in Initial Public Offers (IPOs). It also shares the responsibility of interest rate risk management of the Bank.
In FY 22, the Bank made gains in a cautious manner by utilizing the trading opportunities in G-Sec presented by rising yields and policy rate. The Bank selectively invested in equity IPOs and booked profits by way of listing gains.
India''s Gross Domestic Product (GDP) grew by 6.90% on annualised basis and 3% on two year CAGR basis. Economic activity seems to be recovering quickly after the Covid-19 third wave in December 2021 / January 2022. February 2022 CPI inflation rose to 6.07% which is the above 6% tolerance level of RBI.
Globally, the interest rate and liquidity back drop are turning adverse in the face of rising inflationary pressures. Indian market rates have also inched up in past three months. RBI has so far kept the policy rates (Repo: 4.00%, Reverse Repo: 3.35% and MSF rate: 4.25%) unchanged along with the accommodative policy stance.
However, the market seems to have already discounted possible rate hike. The effective operating Reverse Repo Rate has increased from 3.37% to 3.90% under the Variable Reverse Repo Rate (VRRR) system. The 10 Years Benchmark G Sec which was at 6.15% at the beginning of FY 2022, touched high of 6.99% in February 2022 and was trading at 6.80% in the third week of March 2022.
Covid-19 second wave hit India hard at the start of FY 2022. The Indian Rupee which was at 73.50 against US Dollar at the beginning of the first quarter weakened to 75.30 by end of the first quarter. But as the second wave plateaued, supply disruptions around the world and accommodative monetary policies from major central banks caused inflation. The Federal Reserve System (Fed) started hinting at raising interest rates. As a result, US Dollar Index rose to 99. On February 16, 2022, Fed increased its rate by 25 basis points and few more increase in rates may be expected during the year 2022. This may have a contagion effect on other country / global interest rates.
As of now, given India''s economic environment, RBI appears to be preferring an accommodative stance to support growth. The Indian Rupee has steadily weakened against the US Dollar in line with the strengthening of US Dollar Index. Towards the end of the year, the Ukraine war and geo-political tensions resulted in spike in crude oil price and the Indian Rupee hit an all-time high of 77.20 against the US Dollar.
Alternative Reference Rate (ARR) for foreign currency loans: LIBOR ceased to be benchmark rate from 31 December 2021. The Bank shifted to ARR before LIBOR ceased to exist. It ensured seamless flow of foreign currency assets and liabilities. Shifting to ARR was key to superior customer service as it did not disrupt flow of
foreign currency denominated credit. The Bank has been one of the earliest movers in this segment.
Risk is an integral part of the banking business and the Bank''s aim is to maintain portfolio quality by making appropriate risk/reward trade-offs. The Bank inter alia is exposed to credit, concentration, market, country and counterparty bank exposure, liquidity, operational, fraud and reputation risk. The Board of Directors of the Bank has oversight of risks assumed by the Bank and has delegated its power to manage risks to Risk Management Committee (RMC) of the Board.
The Credit Risk unit ensures alignment with the objectives of achieving growth while maintaining portfolio quality by making appropriate risk / reward trade-offs. The idea is to ensure long-term sustainable performance across business cycles. On-going efforts are made to improve risk assessment and controls. Credit Risk over time has developed capabilities to assess the risks associated with various products and business segments. As far as possible, efforts are made to standardize the entire process pan India while considering geographic nuances. The Bank has implemented a rating model that considers both quantitative and qualitative factors and produces a rating that becomes one of the key inputs to credit decisions. To continuously improve the quality of the portfolio, the Credit Risk unit uses SAS analytics and has created several insightful models that helped in refining the product offering, choosing the target segment of customers, collections and recoveries. Key processes in credit underwriting were examined and duplication was reduced to improve speed of processing. Periodic portfolio reviews were conducted with the business units that helped improve portfolio quality.
Concentration risk is monitored and managed both at the customer level and at the aggregate level. The Bank, inter alia, monitors portfolio concentrations by segment, product, business, ratings, borrower, group, sensitive sectors, unsecured exposures, industry, and geography. The Bank adopts a conservative approach within the regulatory prudential exposure norms.
The Bank has an established process to measure, monitor and manage Interest Rate, Exchange Rate and Equity Risk as part of Market Risk Management. Besides the
usual monitoring of Structural Liquidity, Interest Rate Sensitive Gap limits and Absolute Holding limits, the Bank also monitors interest rate risks using Value at Risk limits. Exposures to Foreign Exchange and Capital Markets are monitored within pre-set exposure limits, margin requirements and stop-loss limits.
Country Exposure Risk and Counterparty Bank Risk
The Bank has established specific country exposure limits which is capped at 15% of its Capital Funds. The limit also depends upon rating of individual countries. The Bank mitigates risks using insurance cover available through the Export Credit and Guarantee Corporation (ECGC), where appropriate.
The Bank has established framework for setting up of limits for counterparty banks, basis their rating and monitors counterparty bank exposures against the approved limits.
As part of the liquidity management and contingency planning, the Bank assesses potential trends, demands, events and uncertainties that could result in adverse liquidity conditions. The Bank''s Asset Liability Management (ALM) policy defines the gap limits for the structural liquidity and the liquidity profile is analysed on both static and dynamic basis by tracking cash inflow and outflow in the maturity ladder based on the expected occurrence of cash flow. The Bank undertakes behavioural analysis of the non-maturity products, namely CASA, Cash Credit and Overdraft accounts on a periodic basis to ascertain the volatility of balances. The renewal pattern and premature withdrawals of Term Deposits and drawdowns of un-availed credit limits are also captured through behavioural studies. The liquidity profile is estimated on an active basis by considering the growth in Deposits, Advances, and investment obligations. The concentration of large deposits is monitored on a periodic basis. Emphasis has been placed on growing Retail Deposits and avoid as far as possible Bulk Deposits. The Bank periodically conducts liquidity stress testing.
Operational Risk is the risk of loss resulting from inadequate or failed internal processes, people or systems, or external events. The Bank''s operational risk management framework is defined in the Operational Risk Management Policy approved by the Board of Directors. While the policy provides a broad framework,
Operational Risk Management Committee (ORCO) oversees the operational risk management in the Bank. The policy specifies the composition, roles, and responsibilities of the ORCO. The framework comprises identification, assessment, management and mitigation of risks through advanced tools and analysis.
The Bank strives to continuously improve process controls and customer satisfaction. The Bank has a separate cross functional committee - Management Committee for Approval of Processes (MCAP). In general, new processes are subjected to review by MCAP. The Committee is tasked with identifying operational and compliance risks in new processes and ensuring that steps are taken to mitigate risks. Also, MCAP, on an ongoing basis reviews and approved existing processes for further improvement. In the FY 2022, 85 processes were reviewed and approved by MCAP.
The Bank pays attention to issues that may create reputational risks. Events that can negatively affect the Bank''s reputation are handled cautiously ensuring utmost compliance and in line with the values of the Bank.
Information / Cyber Security Risk
The Bank operates in a highly automated environment and makes use of the latest technologies to support various operations. We have in place a robust governance framework, information security practices and a business continuity plan to mitigate information technology and cyber security related risks. The Bank ensures that it''s Information and Cyber Security policies are updated regularly and implemented to ensure protection of customer sensitive information, transactions integrity, availability of banking services and be resilient to risks from an ever changing cyber threat landscape. The Bank has a 24x7 security operations centre to monitor security alerts and taking immediate response and recovery actions..
IMPLEMENTATION OF BASEL III GUIDELINES
In accordance with the RBI guidelines, the Bank has migrated to Basel III capital adequacy disclosures with effect from Q1 FY 2014. The Bank continues to review and improve its risk management systems and practices to align with industry best practices. The Bank has implemented Standardized Approach for Credit Risk, Standardized Duration Approach for Market Risk and Basic Indicator Approach for Operational Risk.
INFORMATION TECHNOLOGY (IT)
FY 22 has seen increased dependence on digital technologies for banking needs. DCB Bank is looking forward to adopting emerging technologies like AI/ ML, Blockchain, IoT, Edge Computing, Robotic Process Automation, API Banking, Metaverse, conversational banking, Big Data to bring much more needed futuristic customer services, newer business models, operational excellence with automation.
Bank has been already progressed on various such initiatives through innovation, collaboration and integration its services with fintech, startup and partner ecosystem to offer customers newer and efficient technologies for better, convenient and personalized banking experiences
Following were some of key initiatives during FY 2022.
⢠aunched fully digitized end to end customer on boarding product (CUBE), for quicker and seamless onboarding process.
⢠Implemented a new and scalable Payment System for NEFT/ RTGS
⢠Online Dispute Resolution for UPI Payments
⢠Launched WhatsApp Banking extending specific services to customers.
⢠Assisted Journey for customers using Zippi - Cobrowsing solution using Cogno.AI to help customers online during onboarding process.
⢠NPA Automation as per IRAC norms.
⢠Implemented Social Command center - This is to scan across different social networking sites and to respond to specific requests by our customers / prospects
⢠Implemented international SMS alerts to customers who are outside India
⢠Paperless E joining kit for new employees
⢠Added several unique / new features in New Mobile Banking Application that enhanced customer experience including Multilingual menus
⢠Enhanced Self Service Kiosk with aadhar authentication to provide more STP services.
⢠Enhanced DR site with extended capability to have needed resilience and recovery.
⢠Internet Banking Enhancements - 25 Feature & Digital Payment Security Controls like Third Party Verification, Connected Banking, Income Tax 2.0
⢠New Mobile Banking and Enhancements like Card Management, MPIN Management, Multilingual Support
BUSINESS INTELLIGENCE UNIT (BIU)
The core objective of BIU is to support all businesses and functions to make decisions using data analytics. The Bank has a scalable analytical stack in areas of Big Data, Machine Learning and Deep Learning comprising of an Enterprise Data Lake and GPU servers. The analytical platforms used in the Bank include SAS Viya, R, Python and Spark. This has assisted businesses and functions in several "Use Casesâ in the field of Machine Learning and Artificial Intelligence such as building predictive models like default behaviour scorecards, using techniques such as time-series forecasting and optimisation for cash loading at ATMs, text mining and NLP for sentiment analysis, Big Data capabilities for analysing behavioural patterns for campaigns, product selection, ADF submissions, etc. amongst other initiatives combining power of Analytics and Technology.
Operations unit was once again put under real "stress testâ due to the disruptions of Covid-19 second wave. The character and zeal of the employees in Operations units is a testament of fact that there was no major disruption of customer services / operations during FY 2022. Operations continues to focus on automation to serve customers faster and more efficiently. New state-of-the-art customer onboarding software "CUBEâ was implemented which has built in automated checks and facilitates customer account opening within a few minutes while providing a superior onboarding experience to the customers. Several new initiatives to bring about transformational changes to processes using technology as an enabler were implemented during the year. Centralized Clearing platforms and applications were revamped to make the service more robust and resilient. Quality assurance functions were further strengthened for continuous improvements to ensure consistency and predictability in services while keeping a close watch on costs, productivity, and operational excellence.
Grooming next generation leaders and creating second line leaders across various unit is a key focus area in Operations and during the year two employees from Operations featured in the India''s Top 100 Great People Managers'' List of 2021.â
IA function has employees with varied domain background and experience. The IA team comprises of professionals, experienced bankers, specialists, and "freshersâ. IA function reports into the Audit Committee of the Board (ACB) which constitutes members with strong domain and
audit knowledge. ACB oversees the IA function, monitors performance, and provides regular guidance for improving control and compliance. During FY 2022, the IA Adopted three models of audits namely remote, hybrid (limited review through physical presence at branches and units with detailed remote data analysis) and complete onsite audits to continue doing audits through the year. The IA team makes use of data analysis in the audits through use of SAS. In FY 2022, IA conducted 178 branch audits, 31 periodic audits and 9 IT audits. IA team members attended multiple online training programmes for continuous enhancement of knowledge and audit methodology.
The Fraud Risk Monitoring (FRM) unit has been enhanced through inclusion of additional data points into the review mechanism. The scope and coverage have also been expanded with 24x7 monitoring. The Bank is enabled fraud detection across channels with the aim of early detection of possible fraud transactions / usage. Through process improvements, the Vigilance unit has improved reporting, investigation and response to queries received from various law enforcement agencies. The Vigilance unit had continued to conduct fraud risk awareness using online training sessions. FRM and Vigilance units have continued to identify process gaps, (if any), in respect of fraud risks and provided recommendations for fraud prevention and detection. The unit has created training and awareness modules on cyber fraud for employees and customers.
The Bank''s Compliance unit is independent of business and operation functions. The Compliance function has created procedures and checks to ensure compliance with applicable regulations. In addition to ensuring timely submission of various returns to regulatory and statutory authorities, the Compliance unit ensures that the Bank''s internal procedures and processes are in adherence with the applicable regulatory and statutory guidelines. The Compliance unit is also responsible for AML / KYC monitoring and for executing the same, the Bank relies on advanced software and analytics. Within the Compliance function, a separate unit for Compliance Monitoring and Testing has been created to carry out compliance testing on an ongoing basis. This unit also provides compliance risk assessment to various units / functions..
The Bank believes that employees are the driving force for business growth, branding, and customer satisfaction. Employees are an invaluable asset who deliver sustainable
performance and shareholder value.
During Covid-19 second and third wave, the Bank made systematic efforts to ensure health and safety of employees while ensuring continuity of business operations. Several activities were carried out digitally to maintain social distance and reduce crowding.
The Bank''s HR is built on four pillars.
Build
After the end of Covid-19 second wave, the Bank revved up its growth engines which required HR to step up hiring. By the end of FY 2022, the Bank''s headcount was 8,077 (as compared to 6,432 by end of FY 2021).
Prioritising internal talent for elevation has always been our motto. This year we have been able to provide growth opportunities within the Bank to 470 employees vis-a-vis 239 employees last year.
The Bank continued its flagship B-school competition that has been recognized as one of the best practices in the industry. The Bank scaled up "The Top Recruitâ program and campus engagement initiatives across various regions, covering around 8,075 participants from 200 B- Schools in cities like Delhi, Mumbai, Pune and smaller towns in India.
The Bank launched many digital applications for assisting employees during FY 2022.
The Bank has vastly improved its Social Media presence and it is noteworthy to mention that the Bank has over 2.74 lakh followers as compared to 1.61 Lakh followers in the previous year on Linked In, which is a major source of employer branding and attracting talent
Develop
The Bank continued to provide training through classroom and online / e-learning to employees covering key compliance modules like Ethics, POSH, Gender Sensitization, Code of Conduct, Capacity Development and AML/ KYC.
⢠During the year Bank employees completed over 253,670 hours of e learning.
⢠"Olympiadâ a quiz covering products, processes and compliance was initiated in FY 2022 to continuously strengthen the culture of compliance. Initiatives such as "Project Prayasâ and "Project First Time Rightâ helped employees to build on their learning and help them to appreciate / address risk issues proactively.
⢠Masterclass on Leadership sessions, ABCT - Anybody Can Train, Skill Pill and DCB Podcast continued to be digital interventions where senior management and employees shared their insights on a variety of subjects with a large section of employees.
⢠Signature interventions like RISE and ASPIRE are running for over 9 years. These programs have helped create a talent pool to take up leadership roles within the organization.
⢠Capacity Development initiatives through internal and external certification especially in the areas of risk management and credit covered more than 90% of the eligible population. Cyber security programs were conducted for senior management employees with IDRBT.
⢠Women Leadership training opportunity in partnership with XLRI Jamshedpur was provided to women leaders from select units to equip them for leadership roles.
⢠One of the Bank''s flagship initiatives SPEAK (employee satisfaction survey for supervisors) recorded participation of 100%.
⢠Talent Management and Succession Planning with several initiatives such as 360-degree feedback and individual development plans were implemented
⢠The Bank conducted special programs for supervisors to be aware of and report instances of potential mental wellbeing issues amongst teammates to provide timely assistance wherever needed.
⢠During Covid-19 pandemic, emotional well-being assumed greater importance for which wellness sessions were organized for employees under our Employee Assistance Program wherein external professional assistance was provided.
⢠Covid-19 vaccination drives were conducted pan India for employees and their immediate family members
⢠7 Days additional Covid-19 recovery leave was provided to employees who were affected.
⢠Doctor on Call services were made available for employees and their family members
⢠The Bank has a regional recognition program called "DCB Spotlightâ for felicitating top performers in
different regions. In FY 2022, in the presence of over 2,000 virtual audience, the Bank recognized more than 500 employees.
⢠The Bank''s quarterly newsletter, "High Decibelâ is a communication channel where employees contribute articles of personal experience and professional achievements. The same is also used for communicating the latest updates, events, and happenings in the Bank.
⢠"Hour HRâ (live radio show which is an Industry recognized program) a unique communication platform for our employees to interact with the HR team and seniors directly.
⢠Signature employee connect programâ Each One Reach One(EORO) helped employees to rate their satisfaction with respect to Job, supervisor, work environment. A similar survey for Supervisor helped gather feedback with reference top helpfulness, care, development and approachability.
⢠The Bank launched a "Women@DCB BANKâ series where our senior female leaders spoke of their secrets to success
Corporate Social Responsibility (CSR)
The Bank''s CSR thrust areas are Water, Waste Management, Renewable Energy, Recycling, Supporting Tech Incubators, Preserve Archaeological and Historic Sites, and Disaster Relief. CSR and HR team work together to engage employees in tree plantation, habitat restoration, clean-up of parks, lakes, beaches, and water bodies. In FY 2022, despite Covid-19 disruptions, wherever possible, within Covid-19 guidelines, the Bank engaged large number of employees in CSR activities.
Delighting customer in every interaction is the core aim of the Bank. On a regular basis, customer complaints and satisfaction levels are monitored by the Managing Director & Chief Executive Officer along with the Senior Management team. The Bank has constituted an independent "Service Excellenceâ team to analyse customer complaints, identify root cause for service issues, make process improvements and work with the various businesses and functions to continuously enhance service levels. The Bank has an "Integrated Centralised Complaint Managementâ system and standards to ensure that customer queries and complaints addressed in a timely manner.
The Bank continues to make steady progress on the concept of Power of Three - Empathy, Speed and Quality (ESQ) initiative launched many years ago. The Bank
continuously works on the six pillars of Service Excellence
- Voice of Customer, Service Recovery, Attrition Calling, Process Simplification, Service Culture and Measures and Metrics. The Service Excellence team periodically conducts review of progress on six pillars with key stakeholders, calls with frontline staff to obtain feedback, surprise visits to various units, customer meetings, focus groups and "mystery shoppingâ to understand frontline service culture and competence. The Bank has constituted three committees at different levels to monitor customer service
- Branch Level Customer Service Committees (BLCSCs), Standing Committee on Customer Service (SCCS), and Customer Service Committee of the Board (CSCB). The Bank on a regular basis , through various means educates its customers to be vigilant on the rising incidents of cyber crimes.
MARKETING/BRAND AWARENESS
In FY 2022, despite lockdown and restrictions in the first half, the Bank continuously took numerous measures to create brand awareness and improve visibility for its products and services. Throughout the year, engagement programs were conducted for DCB Savings Accounts and DCB Gold Loans in print, outdoor and digital media. One of the major FMCG type marketing initiative was the mobile vans campaign for DCB Gold Loans in the branch neighbourhood areas. Across India, external and internal branding along with customised marketing programs / campaigns were successfully executed to engage both customers and employees. Customer friendly awareness videos in regional languages were created and circulated in digital channels for DCB Gold Loan and DCB KCC Loans. A separate video was created to promote the interest rate benefits of DCB Savings Account. DCB Remit was promoted actively on digital media channels throughout the year. A concept book ''My Finances'' was created for customers and prospects wherein a record of financial and investment details can be created for reference. The Bank actively and continuously posted interesting information in the social media of the Bank.
IND AS IMPLEMENTATION
The Ministry of Corporate Affairs (MCA), Government of India has notified the Companies (Indian Accounting Standards) Rules, 2015 on February 16, 2015. Further, a Press Release was issued by the MCA on January 18, 2016, outlining the roadmap for implementation of Indian Accounting Standards (IND AS) converged with International Financial Reporting Standards (IFRS) for banks. As per earlier instructions, banks in India were required to comply with the IND AS for financial statements for accounting periods beginning from April 1, 2018, onwards, with comparatives for the periods ending March 31, 2018, or thereafter. Progressing towards IND AS, the Bank had prepared pro forma financials as on June 30,
2017, as per extant regulatory guidelines and submitted the same to the RBI. On April 05, 2018, the RBI had announced deferment of implementation date by one year with IND AS being applicable to banks for accounting periods beginning April 01, 2019, onwards. In preparation for the same, the Bank has been submitting quarterly pro-forma financials to the RBI from quarter ended June 30, 2018. On March 22, 2019, the RBI has announced deferment of the implementation of IND AS by banks till further notice; however, the Bank continues to submit to the RBI pro forma financials on half yearly basis.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY THE BANK
Not applicable being a banking company.
PARTICULARS OF CONTRACTS ORARRANGEMENTS WITH RELATED PARTIES
All the transactions with related parties are in the ordinary course of business and on arm''s length basis and there are no ''material'' contracts or arrangement or transactions with related parties and thus disclosure in Form no. AOC-2 is not required.
POLICY ON RELATED PARTY TRANSACTIONS OF THE BANK
The Bank has a policy on Related Party Transactions and the same has been displayed on the Bank''s website at the following link:https://www.dcbbank.com/pdfs/Policy-on-Related-Party-Transactions-2019-20.pdf
BUSINESS RESPONSIBILITY REPORT
In terms of Regulation 34(2)(f) of the SEBI Listing Obligations and Disclosure Requirements (LODR) Regulations 2015, the Bank''s Business Responsibility Report describing the initiatives taken by the Bank from an environmental, social and governance perspective forms part of this Report and has been hosted on the website of the Bank at the following Link: http://www.dcbbank. com/cms/showpage/page/for-shareholder 2021-22.pdf
CORPORATE SOCIAL RESPONSIBILITY (CSR)
1. Brief outline on CSR Policy of the Company.
CSR Activities shall mean all the Corporate Social Responsibility activities / programs / initiatives of the Bank, either ongoing or new, dealing with the activities mentioned in its thrust areas. The activities shall conform to those specified in Schedule VII to the Companies Act, 2013, (the Act), as amended from time to time and as recommended by the CSR Committee and approved by the Board of the Bank.
CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES AND INDEPENDENCE OF A DIRECTOR
⢠The Board shall have minimum 3 and maximum 15 Directors, unless otherwise approved. No person of age less than 21 years shall be appointed as a Director on the Board.
⢠The Bank shall have such person on the Board who complies with the requirements of the Companies Act, 2013, the Banking Regulation (BR) Act, 1949, Provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations), the ''Fit & Proper'' criteria prescribed by the Reserve Bank of India (RBI), Memorandum of Association and Articles of Association of the Bank and all other statutory provisions and guidelines as may be applicable from time to time.
⢠Composition of the Board shall be in compliance with the requirements of Regulation 17 (1) of the Listing Regulations.
⢠Majority of the Directors as required under BR Act shall have specialized knowledge/experience in the areas like Agriculture, Banking, SSI, Legal, Risk Management, Accountancy, Economy, Accountancy and Audit, Finance etc.
⢠All Directors shall abide by the Code of Conduct.
⢠Directors shall not attract any disqualification and shall be persons of sound integrity and honesty, apart from knowledge, experience, etc. in their respective fields
POLICY RELATING TO THE REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES
⢠MD & CEO, Company Secretary and Chief Financial Officer shall be the Key Managerial Personnel (KMPs) of the Bank.
⢠Except for the Chairperson and the MD & CEO, no other Directors are paid remuneration. The Chairperson and the MD & CEO are paid remuneration as approved by the RBI and other applicable authorities. All Directors except the MD & CEO are entitled to sitting fees for attending various Board and its Committee meetings.
⢠Independent Directors are not entitled for Employee Stock Options.
⢠Remuneration of all employees including Senior Management and KMPs are decided as per the Compensation Policy of the Bank.
PARTICULARS OF EMPLOYEES
The Bank had 8077 employees as on March 31, 2022. 10 employees employed throughout the year were in receipt of aggregate remuneration of not less than Rs.1.02 crore per annum and no employee was employed for a part of the year. The details of top 10 employees in terms of remuneration drawn pursuant to provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 (2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are appended separately (Annexure-I) and form part of this Report.
The Report and Accounts are being sent to the Shareholders excluding these particulars and any Shareholder interested in obtaining the said details may write to the Company Secretary at the Registered Office of the Bank
EMPLOYEE STOCK OPTIONS
The information pertaining to the Employee Stock Options is given in Annexure-II to this Report.
PARTICULARS PURSUANT TO SECTION 197(12) AND THE RELEVANT RULES
a) The ratio of the remuneration of each Director to the median employee''s remuneration for the financial year ended March 31, 2022 and such other details as prescribed are as given below:
|
Name Ratio |
|
|
Mr. Nasser Munjee (Chairman till 18-08-2021) |
2.3:1 |
|
Mr. Mur all M Natrajan (Managing Director &CEO) |
142:1 |
|
b) The percentage increase in remuneration of each Director, Chief FinancialOfficer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year: |
|
|
Name |
Ratio |
|
Mr. Nasser Munjee (Chairman till 18-08-2021) |
0% |
|
Mr. Mur all M Natrajan (Managing Director& CEO) |
0% |
|
Mr. Bharat Laxmidas Sampat (Chief Financial Officer) |
7% |
|
Ms. Rubi Chaturvedi (Company Secretary) |
25% |
c) The percentage increase in the median remuneration of employees in the financial year: 0%
d) The number of permanent employees on the rolls of Bank: 8029
e) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year ended March 31, 2022 and its comparison with the percentile increase in the managenalremuneration and justification thereof and any exceptional circumstances for increase in the managerial remuneration: Average increase in remuneration is 7.83 % for employees other than Managerial Personnel & 4.42 % for Managerial Personnel (KMP and Senior Management). There are no exceptional circumstances for increase in the managerial remuneration.
f) If remuneration is as per the Compensation Policy of the Bank: Yes
PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The provisions of Section 134(3)(m) of the Companies Act, 2013 relating to conservation of energy and technology absorption do not apply to the Bank. However, as mentioned in earlier part of the Report, the Bank has been continuously and extensively using technology in its operations. Foreign Exchange earnings and outgo are part of the normal banking business of the Bank.
ESTABLISHMENT OF VIGIL MECHANISM
The Bank has in place a vigil mechanism pursuant to which a Whistle Blower Policy has been in vogue for the last several years. The policy was last reviewed in FY 2021-22. This Policy, inter alia, provides a direct access to a Whistle Blower to the Chief of Internal Vigilance (CIV) and a dedicated e-mail id for this purpose is in place [email protected] having direct access to CIV and Chairman of the Audit Committee of the Board (ACB).
Chairman of the ACB also has dedicated email-ID cacb@ dcbbank.com for getting complaint directly. The Whistle Blower Policy covering all employees and Directors is hosted on the Bank''s website at http://www.dcbbank. com/cms/showpage/page/whistle-blower-Dolicv.
None of the Bank''s personnel have been denied access to the Audit Committee during the year.
THE DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS
The Bank has designed and implemented a process driven framework for Internal Financial Controls ("IFCâ) within the meaning of the explanation to Section134 (5)(e) of the Companies Act, 2013. For the year ended March 31, 2022, the Board is of the opinion that the Bank has sound IFC commensurate with the nature and size of its business operations wherein controls are in place and operating effectively and no material weaknesses exist. The Bank has a process in place to continuously monitor the existing controls and identify gaps, if any, and implement new and/or improved controls wherever the effect of such gaps would have a material effect on the Bank''s operation.
DIRECTORSâ RESPONSIBILITY STATEMENT
Based on the frame work of internal financial controls and compliance systems established and maintained by the Bank, the work performed by the Internal, Statutory and Secretarial Auditors and the reviews performed by the Management and the relevant Board Committees, including the Audit Committee of the Board, the Board is of the opinion that the Bank''s internalfinancial controls were adequate and effective during the year ended March 31, 2022. Accordingly, pursuant to Section 134(5) of the Companies Act, 2013, based on the above and the representation received from the Operating Management, the Board of Directors, to the best of their knowledge and ability confirms that:
(i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there were no material departure there from;
(ii) they have, in the selection of the accounting policies, consulted the Statutory Auditors and have applied their recommendations consistently and made judgments and estimates that are reasonable and prudent as to give a true and fair view of the state of affairs of the Bank as at March 31, 2022 and of the profit of the Bank for the year ended on that date;
(iii) they have 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 Bank and for preventing and detecting fraud and other irregularities;
(iv) they have prepared the annual accounts on a going concern basis;
(v) they have laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively during the year ended March 31, 2022; and
(vi) proper system has been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively during the year ended March 31, 2022.
A copy of the Annual Return as of March 31, 2022 pursuant to the sub-section (3) of Section 92 of the Companies Act, 2013 read with Rule 11(1) of the Companies (Management and Administration) Rules, 2014 and forming part of this Report is placed on the website of the Bank as per provisions of Section134(3) (a) and is available at the following link:
https://www.dcbbank.com/cms/showpaae/paae/about-
The Bank has been continuously observing the best corporate governance practices and benchmarks itself against each such practice. A separate section on Corporate Governance and a Certificate from M/s S. N. Ananthasubramanian & Co, Practicing Company Secretaries, regarding compliance with the conditions of Corporate Governance as stipulated in Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Annual Report.
During FY 2022, Mr. Tarun Balram and Mr. Thiyagarajan Kumar, Independent Directors were appointed as the Additional Directors of the Bank with effect from January 24, 2022 and February 10, 2022 respectively. The Shareholders had approved their appointment as Independent Directors through Postal Ballot concluded on March 22, 2022.
Mr. Iqbal Khan (DIN-07870063) is liable to retire by rotation and being eligible, has offered him for re-appointment.
Mr. Nasser Munjee (DIN 00010180), Non-Executive Part Time Chairman of the Bank has retired as Director and the Non-Executive Part Time Chairman of the Bank on August 18, 2021 on completion of the tenure approved by the Reserve Bank of India.
The Board of Directors of the Bank at its Meeting held on January 14, 2022 appointed Ms. Rupa Devi Singh (DIN
02191943), Independent Director, as the Non-Executive (Part-Time) Chairperson of the Bank, subject to approval of the Reserve Bank of India (RBI) and shareholders. The RBI approval is still awaited. The Shareholders approval will be sought thereafter.
The Board of Directors on April 7, 2022 had taken on record the approval of the Reserve Bank of India vide letter Ref. DOR.GOV.No.S4841/29.03.001/2021-22 dated March 30, 2022 approving re-appointment of Mr. Murali M. Natrajan as the MD & CEO of the Bank for a period of two year from April 29, 2022 till April 28, 2024. The Board of Directors of the Bank recommends his re-appointment at the ensuing AGM for approval of Shareholders.
A brief resume relating to the persons who are to be re-appointed as Director for approval of Shareholders and Managing Director & CEO, are furnished in the notice of the 27th AGM. and Corporate Governance Report Based on the disclosures provided by them, none of the above mentioned persons is disqualified from being appointed as a Director in terms of Section 164 of the Companies Act, 2013. The Certificate dated May 7, 2022 issued by M/s. Ananthasubramanian & Co., Practicing Company Secretaries in this regard is attached to and forming part of this report.
In the opinion of the Board of Directors, all the above mentioned Directors being re-appointed during the year, possess the required integrity, expertise and experience.
None of the Directors of the Bank is related to each other per se.
CHANGE IN KEY MANAGERIAL PERSONNEL
There was no change in the Key Managerial Personnel of the Bank during the year ended March 31, 2022
A STATEMENT INDICATING THE MANNER IN WHICH FORMAL ANNUAL EVALUATION HAS BEEN MADE BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS
As per the Board Evaluation Policy of the Bank, evaluation exercise of all Directors, Board as a whole and its various Committees was conducted during the year.
The Board review focused on governance, board structure and composition, relationship and dynamics of the Board, frequency of meetings, information flow and agenda etc.
The Committee review focused on the composition, adequacy of terms of reference of various committees,
frequency of meetings etc.
The individual Board members review focused on relevant qualification/skillsets, understanding of the Bank and banking industry, contribution in meetings, attendance etc.
The findings of the exercise were discussed in the meetings of Independent Directors, Nomination and Remuneration Committee and the Board. The appropriate feedback was conveyed to each Director. The Board was satisfied with the performance of each Member, the Board and various Committees. Since Mr. Tarun Balram and Mr. T. Kumar joined the Board in last quarter, they did not participate in the evaluation exercise..
THE DETAILS OF FAMILIARISATION PROGRAMME ARRANGED FOR INDEPENDENT DIRECTORS HAVE BEEN DISCLOSED ON WEBSITE OF THE BANK AND ARE AVAILABLE AT THE FOLLOWING LINK:
https://www.dcbbank.com/upload/pdf/Familarisation-
Programme-for-IndeDendent-Directors.pdf
STATUTORY AUDITORS
In the Twenty Sixth Annual General Meeting (26th AGM) held on August 13, 2021, the terms of M/s S R Batliboi & Associates LLP, Chartered Accountants (Registration No.101049W/E300004) were revised from 4 years to 3 years from the FY 2020-21 till (and including) the FY 2022-23 as Statutory Auditors of the Bank to hold office for three (3) years from their original appointment at the Twenty Fifth Annual General Meeting as per the requirements of the guidelines dated April 27, 2021, issued by Reserve Bank of India (RBI). Pursuant to the said RBI Guidelines, M/s Sundaram & Srinivasan, Chartered Accountants, (ICAI Registration No. 004207S), were also appointed as Joint Statutory Auditors of the Bank in the 26th AGM. As such, both the statutory auditors are working as joint statutory auditors for the Bank from FY 2021-22.
As per the extant provisions, the RBI gives permission for appointment of auditor on year-to-year basis till expiry of the tenure of the Statutory Auditors. Accordingly relevant application have been made to RBI requesting its approval for appointment of M/s. S R Batliboi & Associates LLP, Chartered Accountants (Registration No. 101049W/E300004) and M/s Sundaram & Srinivasan, Chartered Accountants, (ICAI Registration
No. 004207S) as the Joint Statutory Auditors of the Bank for FY 2022-23.
SECRETARIAL AUDIT REPORT
Pursuant to the requirements of the Companies Act, 2013, the Bank has appointed M/s. Ananthasubramanian & Co., Practicing Company Secretaries (COP 1774) as the Secretarial Auditor for FY 2021-22 and their report is attached separately to this Report.
ACKNOWLEDGEMENTS
Your Board wishes to thank the principal Shareholder and Promoters, the Aga Khan Fund for Economic Development S.A. (AKFED) and all the other Shareholders for the confidence and trust they have reposed in the Bank. Your Board also acknowledges with appreciation the Reserve Bank of India (RBI) for its valuable guidance and support to the Bank. Your Board similarly expresses gratitude for the assistance and co-operation extended by SEBI, BSE, NSE, NSDL, CDSL, NPCIL, Central Government and the Governments of various States, Union Territories and the National Capital Region of Delhi where the Bank has its branches.
Your Board acknowledges with appreciation, the invaluable support provided by the Bank''s auditors, lawyers, business partners and investors. Your Board is also thankful for the continued co-operation of various financial institutions and correspondents in India and abroad.
Your Board wishes to sincerely thank all its customers for their patronage. Your Board records with sincere appreciation the valuable contribution made by employees at all levels and looks forward to their continued commitment to achieve further growth and take up more challenges that the Bank has set for the future.
On behalf of the Board of Directors
SD/- SD/-
Murali M. Natrajan Mr. Somasundaram PR
MD & CEO Independent Director
Place: Mumbai Date: May 7, 2022
Mar 31, 2019
The Directors are pleased to present the Twenty Fourth Annual Report of DCB Bank Ltd (hereinafter referred to as the Bank/Your Bank/DCB Bank) together with the audited accounts for the year ended March 31, 2019.
In FY 2019, the Bank has posted an Operating Profit of Rs. 646.60 crore (FY 2018 Rs. 524.97 crore) and a Net Profit of Rs. 325.37 crore (FY 2018 Rs. 245.34 crore).
Total Assets have increased by Rs. 5,569.74 crore and reached Rs. 35,791.83 crore as on March 31, 2019 (Rs. 30,222.09 crore as on March 31, 2018). Customer Deposits have increased by Rs. 5,173.94 crore and Advances have increased by Rs. 3,231.31 crore. Your Bank has been contributing significantly to Priority Sector Lending (PSL) and has achieved the overall PSL target as required by the Reserve Bank of India (RBI). The Net Interest Margin (NIM) was 3.83% in FY 2019 as compared to 4.16% in FY 2018 and the Current and Savings Accounts (CASA) ratio stood at 23.9% as on March 31, 2019.
Cost to Income Ratio has decreased to 56.9% in FY 2019 from 59.8% in FY 2018. Total Branch network stood at 333 as on March 31, 2019 (318 as on March 31, 2018) and ATM network was 504 as on March 31, 2019 (533 as on March 31, 2018).
Provisions Other Than Tax have increased to Rs. 140.06 crore in FY 2019 from Rs. 138.80 crore in FY 2018. The increase was mainly due to provision for existing and fresh Non Performing Assets (NPA) slippages, higher Floating provision and provision against Standard Assets.
Gross NPAs have increased to Rs. 439.48 crore as on March 31, 2019 from Rs. 369.03 crore as on March 31, 2018. Consequently Gross NPA Ratio as on March 31, 2019 was 1.84% as compared to 1.79% as on March 31, 2018. Net NPAs have increased to Rs. 153.77 crore as on March 31, 2019 as against Rs. 146.72 crore as on March 31, 2018. Consequently Net NPA Ratio as on March 31, 2019 was 0.65% as compared to 0.72% as on March 31, 2018. The overall NPA Provision Coverage Ratio as on March 31, 2019 was 78.77 % (75.72% as on March 31, 2018).
Return on Assets (RoA) Ratio in FY 2019 was 0.99% as compared to 0.94% in FY 2018. Corresponding Return on Equity (RoE) Ratio in FY 2019 was 12.08% as compared to 10.31% in FY 2018.
Capital Adequacy Ratio (CAR) under Basel III as on March 31, 2019 stood at 16.81% (16.47% under Basel III as on March 31, 2018).
FINANCIAL SUMMARY
(Rs. in Crore)
|
Balance Sheet |
As at March 31, 2019 |
As at March 31, 2018 |
Increase / (Decrease) |
|
Customer Deposits |
24,046.06 |
18,872.12 |
5,173.94 |
|
Inter Bank Deposits |
4,389.05 |
5,134.74 |
(745.69) |
|
Total Deposits |
28,435.11 |
24,006.86 |
4,428.25 |
|
[Including Total CASA*] |
[6,809.90] |
[5,840.32] |
[969.58] |
|
Advances |
23,568.00 |
20,336.69 |
3,231.31 |
|
Gross â NPA |
439.48 |
369.03 |
70.45 |
|
Net - NPA |
153.77 |
146.72 |
7.05 |
|
Provision for Standard Assets** |
97.11 |
89.65 |
7.46 |
|
Total Assets |
35,791.83 |
30,222.09 |
5,569.74 |
|
Profit & Loss |
For the year ended March 31, 2019 |
For the year ended March 31, 2018 |
Increase / (Decrease) |
|
Net Interest Income |
1,149.29 |
995.43 |
153.86 |
|
Non Interest Income |
350.16 |
310.27 |
39.89 |
|
Total Operating Income |
1,499.45 |
1,305.70 |
193.75 |
|
Operating Cost |
852.85 |
780.73 |
72.12 |
|
Operating Profit |
646.60 |
524.97 |
121.63 |
|
Provisions |
140.06 |
138.80 |
1.26 |
|
Net Profit Before Tax |
506.54 |
386.17 |
120.37 |
|
Tax |
181.17 |
140.83 |
40.34 |
|
Net Profit After Tax |
325.37 |
245.34 |
80.03 |
*Current and Savings Accounts (CASA)
**Including provision for unhedged foreign currency exposure and provision for specific Standard Assets
DIVIDEND
Your Board is pleased to recommend a dividend of Rs. 1.00 per equity share of Rs. 10.00 each in respect of Financial Year ended March 31, 2019.
STAFF PARTICIPATION IN CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Bank employees enthusiastically participated in Clean Up and Green Up (tree planting) activities around the branch neighbourhood. In FY 2019, over 700 employees pan India participated in CSR activities of the Bank availing the unique two days paid CSR leave per year. The Bank has identified CSR volunteers at various locations across the Bank. The activities executed range from lake clean up, waste management, habitat restoration, park clean up, tree planting, creating awareness amongst people on water conservation and waste management.
Trees are critical for human existence on earth. The world and our country urgently need a sustainable model that allows development without damage to the environment. As part of this thinking, the Bank facilitated planting of 118,137 trees during FY 2019. Extensive tree plantation was undertaken in the buffer zones of wildlife sanctuaries for mitigating climate change and improving the microclimate. Tree plantation activities create gainful employment especially tribal communities living in the periphery of the wildlife sanctuaries. As part of reducing water usage and reducing pollution the Bank has a program to install âwaterlessâ urinals. In water starved regions, the Bank has CSR initiative to fix non-electric bio-sand water filters in village schools. In order to promote renewable energy, solar panel lighting was installed in remote tribal villages that cannot be connected with electricity grids. In FY 2019, the Bank was recognized for its CSR efforts:
1) CSR Summit & Awards of UBS Forum, BFSI Category - DCB Bank was awarded for Project Participatory Natural Resource Management along watershed lines in the Tribal Belt of South Rajasthan.
2) Bombay Chamber Civic Awards & Good Corporate Citizen Awards - 2018 for âGood Corporate Citizen Awards - Banking & Finance Companiesâ.
3) Asian Customer Engagement & Forum - ACEF HR & CSR Forum & Awards- DCB Bank garnered Bronze for Best Environmental Behaviour Change Award - Project Participatory Natural Resource Management along watershed lines in the Tribal Belt of South Rajasthan.
CUSTOMER SERVICE
Customer delight and satisfaction with every banking interaction is central to the Bankâs effort in building a strong business franchise across India. An established process followed rigorously, customer complaints and satisfaction levels are monitored by the Managing Director and Chief Executive Officer along with the Senior Management team. The Bank has constituted the Service Excellence team to analyse customer complaints, identify root causes, make suggestions for process improvements and works with the various business and service teams to adapt, adopt and implement processes and standards. The Bank has a âCentralised Complaint Managementâ system and rigorous standards to ensure that customer queries and complaints are not missed out and are resolved in a timely manner. The Bank continues to make steady progress on the concept of Power of Three - Empathy, Speed and Quality (ESQ) initiative launched eight years ago. The Bank continuously works on the six pillars of Service Excellence â Voice of Customer, Service Recovery, Attrition Calling, Process Simplification, Service Culture and Measures and Metrics. The Service Excellence team regularly conducts review of progress on six pillars with key stakeholders, weekly calls with frontline staff to obtain feedback, surprise visits to various units, customer meetings, focus groups and âmystery shoppingâ to understand frontline service culture and competence. The progress on Service Excellence is regularly monitored by the Customer Service Committee (CSC) of the Board.
NON-BRANCH CHANNELS
Your Bank provides multiple channels for customers to access the Bank. DCB 24-hour Customer Care Phone Banking, ATMs, Internet and Mobile Banking provide customers the means to view, transact and make service requests from anywhere and at any time. The Bank strives to provide best-in-class technology and service platform. In FY 2019, the Bankâs Customer Care Associates attended to almost 17 lakh calls with one of the best âspeed to answerâ response time across the industry. At DCB Bankâs 24 Hour Toll Free Customer Care, customers directly get connected with the customer care associates without having to go through seemingly endless Interactive Voice Response (IVR) menu. Considering the fact that it has an all India presence, the Bank has ensured that its customer care associate can interact with the customers in 8 languages (English, Hindi, Gujarati, Kannada, Marathi, Odiya, Tamil and Telugu). This helps in providing uninterrupted service to the customer in the language of their choice at all times.
The Bank provides state-of-the-art internet and mobile banking platforms to customers. More than one lakh customers have used the personal internet banking facility and more than fifty five thousand customers have used the mobile banking of the Bank.
MARKETING/BRAND AWARENESS
The Bank continuously undertakes numerous measures to create brand awareness and improve its brand presence and image. The Bank has a unique concept called âmicro marketingâ. Low cost small scale promotions are held in the neighbourhood areas on a regular basis. In FY 2019, the Bank executed almost 8,000 micro marketing activities. In FY 2019, your Bank created and re-launched its various product communication in English and other Indian languages with the theme âIsse Mujhe Kya Milegaâ to promote its unique propositions in a very engaging fashion.
Like every year, as part of its culture to engage directly with customers and take their feedback in informal forums, the Bank conducted several customer events and mega musical programs. Customers were delighted to be part of the musical evenings and some even sang alongside the professional singers. The Bank also successfully conducted its 4th golf event with top Indian Navy personnel in Gurugram.
IND AS IMPLEMENTATION
The Ministry of Corporate Affairs (MCA), Government of India has notified the Companies (Indian Accounting Standards) Rules, 2015 on February 16, 2015. Further, a Press Release was issued by the MCA on January 18, 2016 outlining the roadmap for implementation of Indian Accounting Standards (IND AS) converged with International Financial Reporting Standards (IFRS) for banks. As per earlier instructions, banks in India were required to comply with the IND AS for financial statements for accounting periods beginning from April 1, 2018 onwards, with comparatives for the periods ending March 31, 2018 or thereafter. Progressing towards IND AS, the Bank had prepared proforma financials as on June 30, 2017 as per extant regulatory guidelines and submitted the same to the RBI. On April 05, 2018, the RBI had announced deferment of implementation date by one year with IND AS being applicable to banks for accounting periods beginning April 01, 2019 onwards. In preparation for the same, the Bank has been submitting quarterly pro-forma financials to the RBI from quarter ended June 30, 2018.
On March 22, 2019, the RBI has announced deferment of the implementation of IND AS by banks till further notice.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY THE BANK.
Not applicable being a banking company.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All the transactions with related parties are in the ordinary course of business and on armâs length basis and there are no âmaterialâ contracts or arrangement or transactions with related parties and thus disclosure in Form no. AOC-2 is not required.
POLICY ON RELATED PARTY TRANSACTIONS OF THE BANK
The Bank has a policy on Related Party Transactions and the same has been displayed on the Bankâs website: http://www. dcbbank.com/pdfs/Policy_on_Related_Party_ Transactions%20_2018_19.pdf
BUSINESS RESPONSIBILITY REPORT:
In terms of Regulation 34(2)(f) of the SEBI Listing Obligations and Disclosure Requirements (LODR) Regulations 2015, the Bankâs Business Responsibility Report describing the initiatives taken by the Bank from an environmental, social and governance perspective forms part of this Report and has been hosted on the website of the Bank at the following Link: http://www.dcbbank.com/cms/showpage/page/for-shareholder
CORPORATE SOCIAL RESPONSIBILITY (CSR)
DCB Bankâs CSR projects and activities are focused on water crisis, climate change and sustainability. The CSR thrust areas are - water and protection of water sources; recycling; waste management; renewable energy & waste-to-energy, protecting and preservation of archaeological and heritage sites in India.
The Bank achieved a milestone of 118,187 saplings planted in FY 2018-19 and surpassed the target of One Lakh saplings. The milestone was achieved with the help of DCB Bank staff volunteers, and CSR implementation partners. The Bank will continue the initiative on tree plantation along rivers, streams, ponds, lakes and green zones. Increasing the green cover improves bio diversity, aids the absorption of water into the ground, prevents soil loss and absorbs carbon. For communities abutting forest areas, trees also provide economic sustenance.
Communities in tribal hamlets, villages, schools and institutions of learning in rural areas are the locales where the Bankâs projects reach. Tackling the water crisis is as much an urban issue, and the Bankâs outreach touch institutions in urban areas such as Bengaluru, Chennai, Delhi, Hyderabad, Jaipur, Mumbai, Pune amongst other locations. It is heartening to note that the Bankâs projects in the CSR field have been recognized by print and online media, peers in the CSR community, by the Bankâs customers, and well-wishers at large. The CSR projectsâ underlying theme also are in consonance with the United Nations Sustainable Development Goals (SDG).
Awards & recognition conferred to DCB Bank CSR Projects in FY 2018-19:
1) Awarded by Bombay Chamber of Commerce and Industry, Mumbai
Recognized for âSustainable Environmental Initiativesâ for CSR projects.
2) Asian Customer Engagement & Forum - ACEF HR & CSR Forum & Awards, Mumbai
DCB Bank awarded for Best CSR Project
3) CSR Summit â UBS Forums, Bengaluru
DCB Bank awarded for Best CSR Sustainability Project India extracts a lot of ground water for farming and non-farming needs, the depletion of ground water is severe and the country is water stressed than ever before. The Bankâs CSR thrust areas are aimed to work with communities that are hit by - the loss of forestland, unabated use of groundwater and rivers, unmanageable waste polluting our sources of water. The Bankâs CSR activities focus on this crisis. The major CSR projects during the year were - installation of waterless urinals to stop wastage of water and reduce pollution of water, roof top rainwater harvesting and installation of non-electric bio-sand water filters in village schools in water-starved regions. Watershed development including water audit, tree plantation, desilting of village tanks and wells, creating percolation tanks, trenches and ponds in drought prone water starved villages are some other projects. Extensive tree plantation in the buffer zones of wildlife sanctuaries for climate change mitigation and improving the microclimate was undertaken; this also provided and will continue to provide gainful employment for tribal communities living in the periphery of the wildlife Sanctuaries. The Bank also propagated use of renewable energy by installing solar panels in remote tribal hamlets and village communities. The Bank also undertook development of butterfly parks as a means to increase the green cover and provide a haven for bio diversity. The recycling effort took an innovative approach with the Bank adopting t-shirts made from recycled PET soft drink bottles. The drive to reduce usage of plastic in our daily lives saw the Bank link up with a self-help group from Chembur, Mumbai, to fabricate 100% cotton recyclable carry bags. These bags are used by local delivery services of pharmacists, restaurants and provision stores. It is to encourage people to shun plastic carry bags.
Communication and messaging is an important supplement to drive the message of sustainable living. The Bank in a major outreach activity is using videos of the projects on social media. Moreover in a unique initiative, the Bank launched âRide for Goodâ with Ms. Shilpa Balakrishnan a renowned long distance motorcyclist. This initiative spread the message of Swachh Bharat, Clean India & Green India during her India record setting solo ride to the four corners of India. She covered 15,219 km in twenty-nine days, covering Mumbai to Kanyakumari to Leh to Kibithu (Arunachal Pradesh) to Koteshwar (Gujarat) to Mumbai. Enroute she visited schools, met customers at branches, addressed the DCB Bank employees and travellers. DCB Bank planted a sapling for every kilometre covered in the âRide for Goodâ. The journey was covered extensively in print media, both local and English language newspapers, FM radio and online social media to encourage people to step up and do their bit to protect trees, save water, segregate trash and give up plastic bags to save the environment.
Clean Up & Green Up! - STAFF PARTICIPATION IN CORPORATE SOCIAL RESPONSIBILITY (CSR)
DCB Social is the CSR employee volunteer formation that participate in Clean Up and Green Up projects and campaigns across India at locations having DCB Bank branch presence. DCB Social volunteers undertook tree plantation and habitat restoration projects at various locations such as lake restoration in Bengaluru, tree plantation at Anantapur, A.P., butterfly parks at Karnala and Jahwar in Maharashtra. Seven hundred and twenty nine (729) employee volunteers opted for the Bankâs unique 2-day CSR leave policy. Employees volunteered for tree plantation in Andhra Pradesh, Gujarat, Punjab, Maharashtra, Rajasthan and Tamil Nadu and participated in clean-up activities as well as habitat restoration in various parts of India.
DCB Bank CSR volunteers have worked on CSR projects that range from local lake clean up; locality based waste management, natural habitat restoration and creation of nature parks. Tree plantation, tree count, propagation of fruit bearing trees in tribal villages to enhance long-term income earning capability are other employee initiatives. The Bank has spent an amount of Rs. 3.87 crores (Previous year: Rs. 1.77 crores) in respect of CSR activities across the Country.
REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR):
A Board level committee for CSR has already been in place as stated in the section on Corporate Governance. The report on CSR is given below:
6. Reason for not spending the two per cent of the average net profit of the last three financial years or any part thereof:
DCB Bank has incrementally added scale, increased scope and coverage of CSR projects. The scaling up of projects has come on the back of learning from earlier projects. This approach helps in assessing outcome in a community over a period of time and then set up efforts to help communities. In this Financial Year CSR, projects were initiated in new geographies such as Madhya Pradesh, Uttar Pradesh, Uttrakhand, and Tamil Nadu. This increased the scale and scope of the Bankâs activities to address climate change. The outcome of these projects will directly result in protecting water bodies both above and below the ground.
The Bank also stepped up awareness building, and communication through audio visuals, short documentaries and social media for issues related to availability and use of water, plastic pollution, tree plantation and waste management.
Impetus was given to renewable energy projects with solar street lighting in remote tribal hamlets, over a hundred hamlets and upward of 4,000 people stand to benefit. Some other new initiatives were - recycling waste PET used soft beverage bottles into t-shirts for CSR volunteers; co-opting a self-help group to produce durable canvas shopping bags as substitute for harmful plastic carry bags and creating butterfly bio diversity zones to increase green and tree cover. CSR resources deployed and project spend have increased over the previous Financial Year. The Bank continues to assess projects that benefit communities for the long term.
7. Responsibility Statement:
The CSR Committee of the Bank hereby states that the implementation and monitoring of CSR Policy complies with CSR objectives and policy of the Bank.
CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES AND INDEPENDENCE OF A DIRECTOR
- The Board shall have minimum 3 and maximum 15 directors, unless otherwise approved. No person of age less than 21 years shall be appointed as a director on the Board.
- The Bank shall have such person on the Board who complies with the requirements of the Companies Act, 2013, the Banking Regulation (BR) Act, 1949, Provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations), the âFit & Properâ criteria prescribed by the Reserve Bank of India (RBI), Memorandum of Association and Articles of Association of the Bank and all other statutory provisions and guidelines as may be applicable from time to time.
- Composition of the Board shall be in compliance with the requirements of Regulation 17 (1) of the Listing Regulations.
- Majority of the Directors as required under BR Act shall have specialized knowledge / experience in the areas like Agriculture, Banking, SSI, Legal, Risk Management, Accountancy, Finance etc.
- All Directors shall abide by the Code of Conduct
- Directors shall not attract any disqualification and shall be persons of sound integrity and honesty, apart from knowledge, experience, etc. in the irrespective fields.
POLICY RELATING TO THE REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES
- MD & CEO, Company Secretary and Chief Financial Officer shall be the Key Managerial Personnel (KMPs) of the Bank.
- Except for the Chairman and the MD & CEO, no other Directors are paid remuneration, but are paid only sitting fees. The Chairman and the MD & CEO are paid remuneration as approved by the RBI and other applicable authorities, but are not paid sitting fees.
- Independent Directors are not entitled for ESOPs
- Remuneration of all employees including Senior Management and KMPs are decided as per the Compensation Policy of the Bank.
PARTICULARS OF EMPLOYEES
The Bank had 6,134 employees as on March 31, 2019. 8 employees employed throughout the year were in receipt of aggregate remuneration of not less than Rs. 1.02 Crore per annum and no employee was employed for a part of the year. The details of top 10 employees in terms of remuneration drawn pursuant to provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 (2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are appended separately(Annexure-I) and form part of this Report. The Report and Accounts are being sent to the shareholders excluding these particulars and any shareholder interested in obtaining the said details may write to the Company Secretary at the Registered Office of the Bank.
EMPLOYEE STOCK OPTIONS
The information pertaining to the Employee Stock Options is given in ANNEXURE-II to this Report.
PARTICULARS PURSUANT TO SECTION 197(12) AND THE RELEVANT RULES:
a) The ratio of the remuneration of each director to the median employeeâs remuneration for the financial year ended March 31, 2019 and such other details as prescribed are as given below:
|
Name |
Ratio |
|
|
Mr. Nasser Munjee (Chairman) Mr. Murali M Natrajan (Managing Director & CEO) |
6:1 142:1 |
|
|
b) |
The percentage increase in remuneration of each director, Chief Financial Officer,Chief Executive Officer, Company Secretary or Manager, if any, in the financial year: |
|
|
Mr. Nasser Munjee-(Chairman): Mr. Murali M Natrajan â (Managing Director & CEO): Mr. Bharat Laxmidas Sampat â (Chief Financial Officer): Ms. Rubi Chaturvedi â Company Secretary: |
0% 0% 7% 7% |
|
|
c) |
The percentage increase in the median remuneration of employees in the financial year: 9% |
|
d) The number of permanent employees on the rolls of Bank: 6,084
e) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year ended March 31, 2019 and its comparison with the percentile increase in the managerial remuneration and justification thereof and any exceptional circumstances for increase in the managerial remuneration: Average increase in remuneration is 8 % for Employees other than Managerial Personnel & 4 % for Managerial Personnel (KMP and Senior Management). There are no exceptional circumstances for increase in the managerial remuneration.
f) If remuneration is as per the remuneration policy of the Bank:Yes
PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION ANDFOREIGN EXCHANGEEARNINGSANDOUTGO
The provisions of Section 134(3)(m) of the Companies Act, 2013 relating to conservation of energy and technology absorption do not apply to the Bank. However, as mentioned in earlier part of the Report, the Bank has been continuously and extensively using technology in its operations. Foreign Exchange earnings and outgo are part of the normal banking business of the Bank.
ESTABLISHMENT OF VIGIL MECHANISM
The Bank has in place a vigil mechanism pursuant to which a Whistle Blower Policy has been in vogue for the last several years. The policy was last reviewed in FY2015-16. This Policy, inter alia, provides a direct access to a Whistle Blower to the Chairman of the Audit Committee of the Board (ACB) on his dedicated email-ID [email protected]. The Whistle Blower Policy covering all employees and directors is hosted on the Bankâs website at âhttp:// www.dcbbank.com/cms/ showpage/page/whistle-blower-policyâ.
None of the Bankâs personnel have been denied access to the Audit Committee.
THE DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS
The Bank has designed and implemented a process driven frame work for Internal Financial Controls (âIFCâ) within the meaning of the explanation to Section134(5)(e) of the Companies Act, 2013. For the year ended March 31, 2019, the Board is of the opinion that the Bank has sound IFC commensurate with the nature and size of its business operations wherein controls are in place and operating effectively and no material weaknesses exist. The Bank has a process in place to continuously monitor the existing controls and identify gaps, if any, and implement new and/or improved controls wherever the effect of such gaps would have a material effect on the Bankâs operation.
DIRECTORSâ RESPONSIBILITY STATEMENT
Based on the frame work of internal financial controls and compliance systems established and maintained by the Bank, the work performed by the Internal, Statutory and Secretarial Auditors and the reviews performed by the Management and the relevant Board Committees, including the Audit Committee of the Board, the Board is of the opinion that the Bankâs internal financial controls were adequate and effective during the year ended March 31, 2019. Accordingly, pursuant to Section 134 (5) of the Companies Act, 2013, based on the above and the representation received from the Operating Management, the Board of Directors, to the best of their knowledge and ability confirms that:
(i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there were no material departure there from;
(ii) they have, in the selection of the accounting policies, consulted the statutory auditors and have applied their recommendations consistently and made judgments and estimates that are reasonable and prudent as to give a true and fair view of the state of affairs of the Bank as at March 31, 2019 and of the profit of the Bank for the year ended on that date;
(iii) they have 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 Bank and for preventing and detecting fraud and other irregularities;
(iv) they have prepared the annual accounts on a going concern basis;
(v) they have laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively during the year ended March 31, 2019; and
(vi) proper system has been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively during the year ended March 31, 2019.
EXTRACT OF THE ANNUAL RETURN
An extract of the Annual Return as of March 31, 2019 pursuant to the sub-section (3) of Section 92 of the Companies Act, 2013 read with Rule 12 (1) of the Companies (Management and Administration) Rules, 2014 and forming part of the report is placed on the website of the Bank as per provisions of Section 134(3)(a) and is available at the following link: https://www.dcbbank.com/cms/showpage/page/about-us-corporate-governance
CORPORATE GOVERNANCE
The Bank has been continuously observing the best corporate governance practices and benchmarks itself against each such practice. A separate section on Corporate Governance and a Certificate from the Statutory Auditors M/s. Deloitte, Haskins & Sells, Chartered Accountants (Registration No. 117365W) regarding compliance of the conditions of Corporate Governance as stipulated in Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Annual Report.
DIRECTORS
During FY 2018-19, there was no change in directorate of the Bank. The re-appointment of Mr. Murali M. Natrajan as MD & CEO for a period of three years w.e.f. April 29, 2018 was approved by the shareholders in the 23rd AGM subject to approval of the Reserve Bank of India (RBI). The RBI vide letter no. DBR. Appt. No. 9537/29.03.001/2017-18 dated April 23, 2018 had approved the same.
The first term of five years of the four Independent Directors viz. 1) Mr. Altaf Jiwani (DIN 05166241) 2) Mr. Imran Contractor (DIN 06382169) 3) Mr. C. Narasimhan (DIN 02133263) and 4) Mr. S. Sridhar (DIN 00004272) got expired on March 31, 2019 and they were eligible for re-appointment as Independent Directors for one more term of upto five years or such period that their total tenure will not exceed the period of eight years from their original appointments as permitted under the Banking Regulations Act 1949. As all the above four directors continue to meet criteria of Independence and had consented for their re-appointment as Independent Directors, the Board, considering their past performance, had approved their reappointment w.e.f. April 1, 2019 as Independent Directors of the Bank for the second term of up to five years or for such permissible period that their total tenure with the Bank shall not exceed eight years, subject to approval of the shareholders in the forthcoming 24th Annual General Meeting Mr. Amin Manekia (DIN 00053745) was liable to retire by rotation and being eligible has offered himself for re-appointment.
A brief resume relating to the persons who are to be appointed / re- appointed as Directors is furnished in the notice of the 24th AGM as well as in the report on Corporate Governance. Based on the Disclosures provided by them, none of the above mentioned persons is disqualified from being appointed as a Director in terms of Section 164 of the Companies Act, 2013.
None of the Directors of the Bank is related to each other per se.
CHANGE IN KEY MANAGERIAL PERSONNEL
There was no change in Key Managerial Personnel during the year ended March 31, 2019
A STATEMENT INDICATING THE MANNER IN WHICH FORMAL ANNUAL EVALUATION HAS BEEN MADE BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS
1. The Chairman of the Nomination and Remuneration Committee of the Board sent draft parameterized feedback forms for evaluation of the Board, the Committees, Directors and the Chairman.
2. Independent Directors at a meeting without anyone from the NonIndependent Directors and management, considered/evaluated the Boardâs performance, performance of the Chairman and other Non-Independent Directors.
3. The Board subsequently evaluated performance of the Board, the Committees and Independent as well as Non-Independent Directors (without participation of the relevant director). The members of the Board and committees evaluated the respective entity. Every individual Director evaluated every other Director. The results were collated and the Chairman informed that the performance of the Board as a whole and its Committees was satisfactory.
The Chairman also commented that individual performance of the Directors was also satisfactory.
THE DETAILS OF FAMILIARISATION PROGRAMME ARRANGED FOR INDEPENDENT DIRECTORS HAVE BEEN DISCLOSED ON WEBSITE OF THE BANK AND ARE AVAILABLE AT THE FOLLOWING LINK:
http://www.dcbbank.com/pdfs/Familarisation_Programme_for_Independent_Directors.pdf
STATUTORY AUDITORS
M/s. Deloitte, Haskins & Sells, Chartered Accountants (Registration No. 117365W) were appointed as Statutory Auditors at the 21st Annual General Meeting. Their appointment for FY 2018-19 was ratified in the last AGM. They are eligible for re-appointment for the FY 2019-20. Section 139 of the Companies Act, 2013 and the Rules made there under provide that a company can appoint a firm as auditor for maximum two terms of five consecutive years. In other words, company can make appointment of auditor for five years at a time. However the Bank is also governed by the provisions of Banking Regulation Act,1949 and the circulars/notification/guidelines issued by Reserve Bank of India (RBI) from time to time.
As per the extant provisions, the RBI gives permission for appointment of auditor on year to year basis. Further as per RBIâs directive, it is mandatory to rotate the Auditor after completion of four years. M/s. Deloitte, Haskins & Sells, Chartered Accountants (Registration No.117365W) has already completed term of three years. Taking this into consideration, ratification of the appointment of the auditors has been recommended for financial year 2019-20, which is also subject to prior approval of the RBI. The Reserve Bank of India has been approached for their re-appointment. Your Board recommends ratification of their appointment as Statutory Auditors at the ensuing Annual General Meeting, subject to the RBI approval.
SECRETARIAL AUDIT REPORT
Pursuant to the requirements of the Companies Act, 2013, the Bank has appointed M/s. Ananthasubramanian & Co., Practicing Company Secretaries (COP 1774) as the Secretarial Auditor for FY 2018-19 and their report of April 16, 2019 is attached separately to this report.
ACKNOWLEDGEMENTS
Your Board wishes to thank the principal shareholder and promoters, the Aga Khan Fund for Economic Development S.A. (AKFED) and all the other shareholders for the confidence and trust they have reposed in the Bank. Your Board also acknowledges with appreciation the Reserve Bank of India (RBI) for its valuable guidance and support to the Bank. Your Board similarly expresses gratitude for the assistance and co-operation extended by SEBI, BSE, NSE, NSDL, CDSL,NPCIL, Central Government and the Governments of various States, Union Territories and the National Capital Region of Delhi where the Bank has its branches.
Your Board acknowledges with appreciation, the invaluable support provided by the Bankâs auditors, lawyers, business partners and investors. Your Board is also thankful for the continued co-operation of various financial institutions and correspondents in India and abroad.
Your Board wishes to sincerely thank all its customers for their patronage. Your Board records with sincere appreciation the valuable contribution made by employees at all levels and looks forward to their continued commitment to achieve further growth and take up more challenges that the Bank has set for the future.
On behalf of the Board of Directors
Place: Mumbai Nasser Munjee
April 18, 2019 Chairman
Mar 31, 2018
DIRECTORSâ REPORT
The Directors are pleased to present the Twenty Third Annual Report of DCB Bank Ltd (hereinafter referred to as the Bank/Your Bank/ DCB Bank) together with the audited accounts for the year ended March 31, 2018.
In FY 2018, the Bank has posted an Operating Profit of Rs, 524.97 crore (FY 2017 Rs, 418.21 crore) and a Net Profit of Rs, 245.34 crore (FY 2017 Rs, 199.68 crore).
Total Assets have increased by Rs, 6,175.71 crore and reached Rs, 30,222.09 crore as on March 31, 2018 (Rs, 24,046.38 crore as on March 31, 2017). Customer Deposits have increased by Rs, 2,929.10 crore and Advances have increased by Rs, 4,519.06 crore. Your Bank has been contributing significantly to Priority Sector Lending (PSL) and has achieved the overall PSL target as required by the Reserve Bank of India (RBI). The Net Interest Margin (NIM) has improved to 4.16% in FY 2018 from 4.04% in FY 2017 and the Current and Savings Accounts (CASA) ratio stood at 24.3% as on March 31, 2018.
Cost to Income Ratio has decreased to 59.8% in FY 2018 from 60.0% in FY 2017. The Bank was able to lower the ratio despite increase in number of branches, increase in number of staff and higher business volumes.
Total Branch network stood at 318 as on March 31, 2018 (262 as on March 31, 2017) and ATM network increased to 533 as on March 31, 2018 (515 as on March 31, 2017).
Provisions Other Than Tax have increased to Rs, 138.80 crore in FY 2018 from Rs, 111.49 crore in FY 2017. The increase was mainly due to provision for existing and fresh NPA slippages, higher Floating provision and provision against Standard Assets.
Gross NPAs have increased to Rs, 369.03 crore as on March 31, 2018 from Rs, 254.20 crore as on March 31, 2017. The overall NPA Provision Coverage Ratio as on March 31, 2018 was 75.72 %. Net NPAs have increased to Rs, 146.72 crore as on March 31, 2018 as against Rs, 124.41 crore as on March 31, 2017.
Capital Adequacy Ratio (CAR) under Basel III as on March 31, 2018 stood at 16.47% (13.76% under Basel III as on March 31, 2017).
In April 2017, the Bank issued 21,770,000 equity shares through Qualified Institutional Placement (QIP) at Rs, 174 per share amounting to Rs, 378.80 crore.
In November 2017 and January 2018, the Bank issued Basel III compliant Tier II Bonds in two tranches amounting to Rs, 450 crore.
FINANCIAL SUMMARY
(Rs, in Crore)
|
As at March 31, 2018 |
As at March 31, 2017 |
Increase / (Decrease) |
|
|
Balance Sheet |
|||
|
Customer Deposits |
18,872.12 |
15,943.02 |
2,929.10 |
|
Inter Bank Deposits |
5,134.74 |
3,346.19 |
1,788.55 |
|
Total Deposits |
24,006.86 |
19,289.21 |
4,717.65 |
|
[Including Total CASA*] |
[5,840.32] |
[4,689.18] |
[1,151.14] |
|
Advances |
20,336.69 |
15,817.63 |
4,519.06 |
|
Gross â NPA |
369.03 |
254.20 |
114.83 |
|
Net - NPA |
146.72 |
124.41 |
22.31 |
|
Provision for Standard Assets** |
89.65 |
85.05 |
4.60 |
|
Total Assets |
30,222.09 |
24,046.38 |
6,175.71 |
|
For the year ended March 31, 2018 |
For the year ended March 31, 2017 |
Increase / (Decrease) |
|
|
Profit & Loss |
|||
|
Net Interest Income |
995.43 |
797.09 |
198.34 |
|
Non Interest Income |
310.27 |
248.84 |
61.43 |
|
Total Operating Income |
1,305.70 |
1,045.93 |
259.77 |
|
Operating Cost |
780.73 |
627.72 |
153.01 |
|
Operating Profit |
524.97 |
418.21 |
106.76 |
|
Provisions |
138.80 |
111.49 |
27.31 |
|
Net Profit Before Tax |
386.17 |
306.72 |
79.45 |
|
Tax |
140.83 |
107.04 |
33.79 |
|
Net Profit After Tax |
245.34 |
199.68 |
45.66 |
*Current and Savings Accounts (CASA)
**Including provision for unhedged foreign currency exposure
DIVIDEND
Your Board is pleased to recommend a dividend of Rs, 0.75 per equity share of Rs, 10.00 each in respect of the Financial Year ended March 31, 2018.
MANAGEMENT DISCUSSION AND ANALYSIS
According to recent reports, going forward, in FY 2019, the Indian economy is expected to gather further momentum benefitting from conducive domestic and global environment. Economic activity is expected to accelerate with the strengthening of investment activity, supported by consumption demand and robust credit growth. Further, the upgradation in Indiaâs Sovereign Rating by Moodyâs to Baa2 with stable outlook, the bank recapitalization plan by Government of India and resolution of stressed loans under Insolvency and Bankruptcy Code, amongst other factors is likely to have a favorable impact on the economy.
VISION
The Bankâs vision is to be the most innovative and responsive neighborhood bank in India serving entrepreneurs, individuals and businesses. In line with our vision, we began implementing a new strategy in FY 2010, which has now completed 8 years. The Bank continues to make steady progress and improvements are clearly visible in most areas of its business. In order to accelerate the business momentum further, in October 2015, the Bank announced its plan to increase its network by 150 more branches in 24 months. This plan was successfully completed by October 2017 and the total number of branches as on March 31, 2018 stood at 318.
TARGET MARKET
Keeping in view its inherent strengths, branch network and expertise, the Bankâs target market is mainly small business owners / self-employed / small business segment (traders, shopkeepers, business owners, MSMEs and SMEs). The Bank has chosen to have limited presence in the salaried segment. The MSME / SME sector is a vibrant and dynamic sector of the Indian economy and plays a very important role in the growth of the Indian economy. This segment is resilient and displays entrepreneurial spirit.
MSME sector plays a pivotal role in the economic and social development of the country. In the long run, Goods & Service Tax (GST) and other reforms are expected to be beneficial to the economy If MSME/SMEs reflect their business/sales completely in their bank accounts, then banks will find it easier to extend credit facilities for business expansion and working capital.
Some useful information on MSME sector is given below:
- Number of Working Enterprises: 51 million, Employment: 117 million individuals
- Urban: 45%, Rural: 55%
- Manufacturing: 32%, Service: 68%
- Sole Proprietor: 94%
- Market value of Fixed Assets: '' 14,719 billion
(Source: Annual Report FY 2015-16 Government of India, Ministry of Micro, Small and Medium Enterprise)
DCB BANK CUSTOMERS
Your Bank provides banking services to a varied base of business owners, self-employed / small businesses for example - Commodity Trader, Gold Trader, Vegetable Trader, Commission Agent, Retailer, Restaurant Owner, Caterer, Baker, Vending Machine Supplier, Consultant, Doctor, Contractor, Interior Decorator, Software Designer, Salon, Beauty Parlour, Printer, Electrical Engineer, Saw Mill, Flour Mill, Rice Mill, Grocery Store, Brick Maker, Builder, Fabricator, Artist, Writer, Auto Repair, Ship Repair, Pharmacy, Computer Specialist, Furniture Maker, Uniform Maker, Garment Shop, Fashion Tailor, Hardware Shop, Agri Processor, Pesticide Dealer, Auto Dealer,
Scrap Dealer, Stationery Supplier, FMCG or Consumer Goods Dealer, Tool Maker, Agri Input Dealer, Tractor Dealer, Plastic Manufacturer, Mattress Manufacturer, Water Supplier, Computer Classes, Internet Cafe, Coaching Classes, Tour Operator, Hotel Owner, Transporter, Ticketing Agent, C&F Agent, amongst others. The list of Self Employed occupation is endless. The target market is essentially Micro, Small and Medium Enterprises both in Manufacturing and Services. (Please refer to MSMED Act, 2006). Majority of lending to MSME sector qualifies for Priority Sector Lending.
It is estimated that over 89% of CASA and 86% of Mortgage loans are in the self-employed segment for the Bank.
CREDIT RATINGS
The Bank continues to enjoy ICRA A (hyb) / (stable) and CRISIL A /(stable) rating for Long Term â Subordinated Debt, ICRA A1 rating for Short Term Fixed Deposits, CRISIL A1 rating for both Certificate of Deposits and Short Term - Fixed Deposits.
AWARDS
Yet again, in FY 2018, the Bank continued to receive many awards and recognitions.
In the Small Bank category, DCB Bank was recognized as the Runner-Up Fastest Growing Bank in Business world magazineâs Business world Magna Awards.
Human Resource
Your Bank has once again been Great Place to Work® Certified for building a High Trust and High Performance Culture.
The âHigh Decibelâ, the Bankâs quarterly staff newsletter, won the Gold for Best In-House publication in ACEF HR and CSR Forum & Awards.
Information Technology
Your Bankâs efforts in modernizing technology and being in the forefront of innovation was amply recognized by many associations and forums. The Bank received the following awards;
1) âInnovative Company for implementation of VMWARE solutionâ award by VMWARE
2) âExcellence in Omni Channel Experienceâ award for new internet banking by IDC
3) âFinnoviti award for GST Packageâ by Banking Frontiers magazine
4) âBest Innovative Initiativeâ for Innovation Carnival at BFSI Innovative Technology Awards 2018 event, by ELETS
5) âDigital Leadership Awardâ at Business World Innovations event by Business world
6) âBFSI IT Leadership Award 2017â for being among TOP 20 Leader in BFSI sector by Exit
7) Award in the category of âEnterprise Mobilityâ by Express Computer
8) âInnovative CIO 17 Awardâ by CIOAXIS
DCB Hackathon story got published by Economic Times, Dynamic CIO, Elets Magazine and Business world magazine.
BRANCH EXPANSION / ATMs
In October 2015, the Bank announced its intention to increase the number of branches by 150 in 24 months. This key initiative was successfully completed in October 2017. The number of branches as on March 31, 2018 stands at 318 [Retail branches 181 and 137 branches in Agri and Inclusive Banking (AIB)]. Approximately 20 percent of the branches are in rural areas and 25 percent in semi-urban areas. All new branches have been created with similar âlook and feelâ. Over time existing branches will also be refurbished to meet the new standards. The branch expansion business model is designed to deliver âbreak evenâ between 18 to 22 months from the start of business. The success of branch expansion is a result of close coordination and team work between Finance, Business, Sales, Property & Admin, Operations, Human Resources, Technology, Product, Credit, Compliance, Marketing and Internal Audit. The Bank has increased its ATMs from 515 in FY 2017 to 533 in FY 2018.
RETAIL BANKING
Retail Banking has taken up initiative to make the best of neighborhood banking through (a) micro marketing initiatives focused on catchment areas and (b) continuous customer engagements. Wherever possible, in all locations, the Bank follows the principle of âall branches all productsâ. It is a multi-product approach. This enables the branch to address nearly all the banking needs of the customers in the catchment area. It also helps to improve productivity and service quality.
Mortgage and Micro Mortgage
Over the last few years, Mortgage has been the lead product of the Bank addressing primarily the requirements of the self-employed segment. As far as possible tailor-made solutions for home loans and business loans are offered to meet customer needs. Customer may use the loan for various purposes, such as, home purchase, home improvement, home repairs, business growth and personal expenses such as marriage, education. Mortgages and Micro Mortgages together contribute approximately 40 percent of Total Advances. The Bank has engaged with various reputed builders for approval of projects for home loan. Almost all retail branches offer Mortgage and Micro Mortgage loans. Dedicated sales teams are present in 95 locations across India and during the year, 17 new locations were added. Micro or small ticket mortgage loans are most useful for customers in the Tier 2 to Tier 6 locations. Mortgage and Micro Mortgage programs are reviewed on ongoing basis to take into account changes in the economy, for example, demonetization, GST and Real Estate (Regulation & Development) Act (RERA). Many in the rural and semi-urban areas generates income from employment in the unorganized sector. At times this creates difficulty in estimating repayment capacity. Therefore, the Bank needs to have the ability to assess the household income in order to determine loan eligibility. For almost every loan, personal discussions are held with the borrowers and co- borrowers to improve credit assessment.
Construction Finance (CF)
Housing is a necessity and a part of the construction sector, thus an important contributor to the growth of the economy. The Government of Indiaâs various programme/initiatives for providing affordable housing to both rural and urban areas and regulation of real estate industry will increase the demand for housing across country. This will create favourable conditions for construction of affordable housing in India. For banks, financing construction is a good opportunity. The Bankâs approach is to focus on reputed builders with a strong track record. Thus far the Bank has financed over 100 projects across 17 locations in India.
Commercial Vehicle (CV)
CV financing was restarted in FY 2013 to improve the Bankâs ability to achieve PSL targets. The facility is currently offered across 146 locations. Almost 90% percent of the CV portfolio can be categorized as PSL. Although economic conditions were weak, the portfolio quality has been maintained at an acceptable level. The CV industry is an essential part of the Indian economy and in the coming years, the Bank foresees an opportunity to build a strong CV portfolio.
Loan against Gold
Loan against Gold is offered in almost all Retail and AIB branches across country. In FY 2018, the gold loan front end system âGradatimâ, was relaunched with additional features that had a favorable impact on frontline staff and customer experience. In order to compete with bigger gold loan financing companies, the Bank launched the âOne Hour Gold Loanâ processing at most of the branches. The Bank has unique gold loan products and the intention is to continuously build a solid portfolio across the footprint.
Bharat Bill Payment System (BBPS)
DCB Bank during the year has launched BBPS which offers integrated and interoperable pan India bill payment services. BBPS is considered to be safe, timely and convenient.
Bill payment is a major component of the retail payment transactions in India and is characterized by the presence of large number of billers, who provide a variety of payment options to their customers.
DCB Debit Cards
The Bank offers cash back benefits for using its Debit Cards subject to maintaining prescribed average balance in CASA. At the end of FY 2018, the Bank had approximately 560,000 Debit Cards (approximately 450,000 at the end of FY 2017). The overall focus on ââDigital Indiaâ is helping to increase digital transactions rapidly. DCB Debit Cards also offer additional promotional benefits from time to time.
DCB NiYo Cards
During the year your Bank has launched DCB NiYo Cards in partnership with Finnew Solutions Pvt. Ltd. DCB NiYo Card has the capability to provide seamless compliant payroll benefits to employees. The product has the potential to simplify the human resource payroll processes of any organization.
DCB Moneykit Cards
DCB Moneykit Cards was launched in January 2018, in partnership with Sienna Systems Resources Pvt Ltd This is a distinctive proposition wherein loans get disbursed instantly for purchase of consumer durables or any other merchandise. The card has the unique feature of money on swipe, wherein the customers pay only when the loan limit is utilized.
DCB Payless Cards
This is a unique product offered by the Bank and is a preferred card for those self-employed and small businessmen that are unable to provide sufficient income proof or do not have an acceptable credit track record. During FY 2018 there is a clear jump in usage of DCB Payless Cards in Point of Sale (POS) and e-commerce.
DCB Bank Prepaid Cards
DCB Bank has full suite of payment products on its prepaid platform. It has a platform for product providers and businesses with small ticket transactions that are currently conducted in cash. It helps drive adoption of digital payments and the platform covers solutions across Card, Mobile and a combination of Card and Mobile.
DCB Cippy Wallet
DCB Cippy Wallet is a simple Mobile App that helps customers do a number of transactions. DCB Cippy Wallet has so far attracted approximately 10,000 customers.
Bharat QR
This is an elegant way for customers to âpoint and payâ at shops using their smartphones. This product is suited for small merchants and shopkeepers. Your Bank is amongst the first few banks to have gone live on Bharat QR code solution. It is now available for both existing and new Current Account customers.
DCB Unified Payment Interface (UPI):
DCB BHIM UPI App is an easy, cost effective and convenient way to send and receive payments. Customers can simply create a Virtual Payment Address (VPA) that can be used to link their bank accounts. The country is moving towards digital. Clearly digital transactions are increasing rapidly. Your Bank has built a state-of-the-art UPI Payment collection system called Ezetap. This will enable payment collection from various channels like merchant websites, Mobile Apps, POS and MPOS devices and Bharat QR. This micro app will enable merchants to have access to UPI features like Register Mobile, Login, VPA, Pay, Collect, Check Status, Balance Enquiry and Transaction List.
DCB Remit
During the year under review, your Bank has implemented a revolutionary service âDCB Remitâ that allows online fund transfer from India to over 20 countries including USA, Canada, Australia, UK, UAE and Germany. The transactions can be tracked on smartphone or web. Your Bank has signed an agreement with Instate India Pvt. Ltd. for outbound money transfer to individuals from India.
DCB Travel Smart Multi-Currency Visa Card
Your Bank has developed DCB Travel Smart Multi-Currency Visa Card in association with a large private bank in India. This product is hassle free, less expensive than using credit cards, secure and convenient for using while traveling outside the country. Customers can load up to 16 currencies on the card and it can be used across the world. The card can be used in ATMs and Internet transactions as well. The unutilized portion can be encased upon returning to India.
Distribution of Mutual Funds and Insurance
The Bank distributes Life Insurance, Health Insurance, General Insurance and Mutual Fund products to new and existing customers.
This helps in deepening relationship with Deposits and Advances customers. In case of death or critical illness, lack of adequate insurance coverage can cause major financial stress to the family. Keeping this in mind, the Bank strives to make customers aware of their insurance needs and be prepared for unforeseen events.
Traditional Community Banking
With a vision of strengthening neighborhood banking, the Bank set up a separate vertical in FY 2010 to focus on Traditional Community Banking. The aim was to address the specific needs of the Community and provide personalized solutions wherever possible. This perhaps is purest form of neighborhood banking and is directed towards addressing small credit needs of education, personal, business and working capital.
Non-Resident Indian (NRI) business
In FY 2018, NRI deposits contributed to 8% of the Total Retail Deposits of the Bank. During the year, almost 2,000 new customers were acquired and over 3,000 NRI accounts were opened. The Bank now has close to 14,000 customers across the world. The Bank has a dedicated team of Relationship Managers (RMs) and Customer Care Associates in the call centre to address the needs of NRI customers. The Bank intends to continue to build its NRI business as it is an important source for deposits and remittance fee income.
COLLECTIONS AND RECOVERIES
Collections and Recoveries is a critical function for the Bank. Over time, this function has developed robust capabilities to collect overdue payments and ensure portfolio quality across products. The senior officers in Collections are experienced to understand the issues faced by customers and strive to find legal and compliant ways to rehabilitate them during stressed times. The team operates out of 236 locations in India. Collections and Recoveries team uses data analytics to improve predictability, targeting and collector productivity. The m-Collect Mobile App for providing system-generated receipts on the field is working efficiently and provides real time updates to the loan system.
STRATEGIC ALLIANCES
One of the key strategies of the Bank is to look for alliances with entities that may have matching business objectives. The idea is to enhance product benefits in order to facilitate new customer acquisitions and customer retention. Over time we expect stronger customer loyalty and increased fee income.
Your Bank is very active in pursuing strategic alliances.
The list of various strategic alliances and business associations of your Bank is given overleaf;
Banc assurance:
|
Partner Name |
Type of arrangement |
|
Aditya Birla Health Insurance Company Ltd. |
Corporate Agency |
|
Aditya Birla Sun Life Insurance Company Ltd. |
Corporate Agency |
|
HDFC Standard Life Insurance Company Limited |
Corporate Agency |
|
ICICI Lombard GIC Ltd. |
Corporate Agency |
|
Royal Sundaram General Insurance Company Ltd. |
Corporate Agency |
Prepaid Solutions:
|
Partner Name |
Type of arrangement |
|
Adhikar Microfinance Pvt. Ltd. (MFI) |
Prepaid Solution |
|
Fullerton India Credit Company Limited |
Prepaid Solution |
|
(NBFC) |
|
|
Midland Microfin Limited (MFI) |
Prepaid Solution |
|
Muthoot Finance Limited (NBFC) |
Prepaid Solution |
Remittance Solutions:
|
Partner Name |
Type of arrangement |
|
Avenues Payments India Pvt. Ltd. (DCB Remit) |
Remittance Solution |
|
INSTAREM India Pvt. Ltd. |
Remittance Solution |
|
Paul Merchant Ltd. |
Trade Remittance |
|
UAE Exchange Financial Services Ltd. |
Remittance Solution |
|
Weizmann Forex Ltd. |
Trade Remittance |
|
Western Union Business Solution (WUBS) |
Trade Remittance |
Service Partners:
|
Partner Name |
Type of arrangement |
|
Atos World line India Pvt. Ltd. |
Merchant Acquiring |
|
CMS Info Systems Limited |
ATM deployment and cash management |
|
Euronet Services India Pvt. Ltd. |
ATM and Switch management |
|
Ezetap Mobile Solutions Private Limited |
UPI Merchant Solution |
|
M2P Solutions Pvt. Ltd. |
Program Partner (Prepaid programs) |
|
Skilworth Technologies Pvt. Ltd. (Bijlipay) |
Merchant Acquiring |
Business Alliances:
|
Partner Name |
Type of arrangement |
|
Aditya Birla Finance Ltd. (NBFC) |
Lending Business |
Fintech Alliances:
|
Partner Name |
Type of arrangement |
|
Credit One Payment Solutions Pvt. Ltd. (Credit One) |
Fintech Lending |
|
Datasigns Technologies Pvt. Ltd. (Shubh Loans) |
Fintech Lending |
|
Social Worth Technologies Pvt. Ltd. (Early Salary) |
Fintech Prepaid Solution |
|
Finnew Solutions Private Limited (NiYo) |
Digital Salary Account |
|
Sienna Systems Resources Pvt. Ltd. (Slonkit & Moneykit) |
Money Management Solution |
|
Usekiwi Infolabs Pvt. Ltd. (Afford Plan) |
Health Care Solution |
Other Alliances:
|
Partner Name |
Type of arrangement |
|
Credit Sudhaar Services Pvt. Ltd. (NBFC) |
Payless Cards partner |
|
SRS Live Technologies Pvt. Ltd. |
Payment Collection |
|
(Sabpaisa) |
Solution |
|
Techbins Solutions Private Limited |
Niki Chat Bot |
MSME and SME
Your Bankâs core target segment is MSMEs / SMEs. It is a large and vibrant sector. It is the backbone of our country. In the last two years this segment had to make adjustments to their business models due to implementation of demonetization and GST. The Bank held several customer meetings in various locations to explain GST. This was immensely appreciated by various forums. The Bank created a specific product for GST namely DCB GST Package, a unique Current Account for MSMEs/SMEs. The Bank strives to be the business partner of MSMEs/SMEs by offering custom made solutions to meet the credit demands of this segment. The Bank offers a range of products and personalized services including Foreign Exchange, Cash Management, Trade Finance and Internet Banking. Given the inherent risks associated with this segment the Bank aims to have large portfolio of small ticket exposures. As this space is becoming increasingly competitive, the Bank has created a dedicated portfolio team to address specific needs of customers.
CORPORATE BANKING
The Bankâs intention is to have a limited exposure in Corporate Banking. This business operates across India with regional offices in Ahmadabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, and Mumbai. The business objective is to provide a complete range of commercial banking solutions including Foreign Exchange, Trade Finance and Cash Management. The Bank has a robust underwriting and credit system to address the inherent risks in Corporate Banking. The emphasis is on building a secured loan portfolio and creating long term relationships with high quality large and mid-corporate. Regular review exposures are conducted with the aim of initiating timely action in case of any emerging risks. In order to ensure the quality, the focus is to continuously improve understanding of the borrowerâs business/ prospects, ensuring right mix of products, enhance analytics and tracking. Corporate Banking portfolio quality remained stable during the year.
In FY 2018, the Bank added 47 new relationships in Corporate Banking. Your Bank understands that the Relationship Managers (RMs) must have in-depth knowledge of various industries and corporate. In order to meet this need, the Bank has introduced RM Knowledge Improvement Programs wherein information on various industries, corporate, credit ratings etc. are shared with the RMs on a regular basis. Your Bank has also started âUnderwriters Pathshalaâ, a periodic bulletin for the benefit of credit underwriting team across India.
AGRI AND INCLUSIVE BANKING (AIB)
AIB is a separate unit with the main aim of achieving financial inclusion. The Bank continued to expand its rural footprint. At the end of FY 2018, AIB had 137 branches in 10 states. There are many opportunities to offer simple innovative products backed by superior technology in the Rural and Semi-Urban areas of India. Many of the new branches are located in Tier 2 to Tier 6 locations. There is a constant Endeavour to cater to under banked and unbanked population of the country through a wide range of products, for example, zero balance savings account, small recurring deposit account, small loans to match the income and cash flow cycle. AIB also coordinates the entire PSL efforts for the Bank and is primarily responsible for achieving the financial inclusion targets.
Pradhan Mantri Jan-Dhan Yojana (PMJDY)
In FY 2018, your Bank actively participated in PMJDY. The Bank had 29,689 PMJDY accounts as on March 31, 2018. The Bank has enabled Rupay Debit Cards for PMJDY account holders.
Pradhan Mantri Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Atal Pension Yojana (APY)
The Bank successfully reached out to unbanked and economically weaker population through PMSBY, PMJJBY and APY programs that are designed to bring social security. Your Bank had 7,424 customers under PMSBY, 3,782 customers under PMJJBY and 1,336 customers in APY as on March 31, 2018.
Basic Savings Bank Deposit Account (BSBDA)
BSBDA has replaced âNo frills accountâ. This is a wonderful product for achieving financial inclusion especially for those who have limited transaction needs in the low income group and may not have proper identity, address, date of birth or signature proofs. The Bank had 55,627 BSBDA accounts as on March 31, 2018.
Kisan Mitra
âKisan Mitraâ as the name suggests, is a liability product, which fulfils the requirement and enhances the saving habit in rural areas. It is a product specially designed for members of co-operative institutions (example dairy co-operative, sugar co-operative). It is a modified Savings Account with zero account opening amount and no Average Quarterly Balance maintenance charges. Co-operative institution payments are routed through this account.
Warehouse Construction Loan
There is a huge need in the country to provide farmers with safe and scientific storage so that wastage and stock deterioration can be reduced. In addition, proper warehousing helps famers to retain their produce and obtain fair pricing for their produce instead of selling in distress.
Retail Agriculture Loan and Kisan Credit Card
In order to meet the credit needs of the farmers, the Bank has several retail agri products namely crop loans (example purchasing seeds, fertilizers, pesticides, manure, irrigation), animal husbandry loans, and loans for investment purpose like land improvement, irrigation and hi-tech agriculture.
Tractor Loans
Tractor Loans is an integral part of the total agricultural equipment sector and is an indirect indicator of growth in the agricultural sector. The Bank has slowly built its business across Tier 2 to Tier 6 branches. Providing tractor loans helps the Bank to partly meet PSL targets for agriculture and small and marginal farmers set by RBI.
For Tractor Loans, the Bank has launched Tab Banking where the sales team can provide doorstep processing to the customers and quickly inform them regarding the status of their loans.
Microfinance Institutions (MFIs) and Business Correspondents (BCs)
The Bank lends directly to MFIs who in turn lend to end borrowers. Over time, the Bank has created a strong network of MFI relationships across India. The Bank is also providing unsecured loans through BCs in few locations. Loans are given to members of Self Help Groups (SHGs) and Joint Liability Groups (JLGs) for activities thereby enabling them to avail small loans from the banking sector instead of high cost borrowing from money lenders. These loans are primarily provided to small farmers and weaker sections mainly in rural areas. In order to support the volume growth, your Bank has an efficient software system for managing BC Loans. This software helps maintain adequate information about the borrowers under SHGs, JLGs and microenterprises categories. It provides a common platform for both, Bank and BC for smooth processing of loans and has added immense value by reducing the loan disbursal cycle time. In FY 2018, MFI industry faced a lot of stress. This was mainly due to cash flow cycle of SHG/JLG members getting impacted post demonetization and reluctance in loan repayment by borrowers in few geographies where farm loan waiver programs were announced. The Bank has always adopted a cautious approach towards this sector and it is taking several steps to maintain portfolio quality. In an endeavour to diversify the portfolio of products being offered through BCs, your Bank has introduced micro business loans which would cater to the credit need of micro business segment.
Commodity Based Finance (CBF)
The Bank is engaged in lending to farmers and processors against agricultural produce stored in the designated warehouses. The Bank has a list of approved commodities against which the loans are given. Given the volatile market conditions, the Bank has chosen to be cautious in pursuing CBF opportunities.
TREASURY, MONEY MARKET AND FOREIGN EXCHANGE Treasury
Treasury actively manages Liquidity, Fixed Income Securities Trading and Investment in Equity through Initial Public Offers (IPOs), Foreign Exchange Trading and Customer Sales. Treasury ensures compliance with regulatory requirements such as Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). In FY 2018, the Bank made gains in a cautious manner by utilizing the trading opportunities in G-Sec presented by declining interest rates in the initial part of the year. The Bank selectively invested in a few Equity IPOs and booked moderate listing gains. The Bank also invested in medium term AAA Corporate bonds, short term Commercial Papers and Certificate of Deposits of other banks in order to earn interest income on liquidity mismatches.
Money Market
India reported Gross Domestic Product (GDP) growth of 6.6% in FY 2018. The GST implementation and other reforms are likely to benefit the economy in the long run. The Index of Industrial Production (IIP) growth recovered due to growth in the manufacturing sector, electricity and mining. The Consumer Price Index (CPI) inflation increased to 5.07% in March, 2018 from 3.81% in March, 2017. RBI conducted variable rate REPO and Open Market Operations to maintain sufficient liquidity. Indian stock market indices went up by more than 11% on the back of liquidity. The bullishness in the market helped the IPO markets which were well received giving opportunities for investors to book listing gains.
Foreign Exchange
As usual a few geo-political events in FY 2018 affected the global and Indian markets. This included a strong stance taken by US Fed on hiking interest rates and a slew of measures announced by both US policy makers and European policy makers. North Korea conducted missile tests in defiance of international sanctions cast a shadow across global economies. Oil prices moved higher with the Brent Crude prices steadily inching up. The USD was range bound in relation to the Indian Rupee which depreciated towards the end of the year. The Euro Zone currencies were volatile. India witnessed strong domestic and foreign flows which kept the Sensex buoyant.
TRANSACTION BANKING Cash Management Services (CMS)
The Bank provides Corporate, MSME/SMEs and Retail customers sophisticated and cost effective CMS. This helps customers manage their collection and payment logistics with ease. In the last few years, the Bank has steadily increased CMS customers. The Bank added three more vendors for CMS cheque collections across India. At the end of FY 2018, the Bank had 6,418 active customers using the CMS facility.
E-mandate as a âDestination Bankâ went live in January 2018 this year.
Business Internet Banking (BIB)
In FY 2018, your Bank implemented a new BIB application for Business users. The new system has several additional benefits. It offers one time payee registration for all transactions, new cooling period policy on addition of payee, payment to multiple beneficiaries with single One Time Password (OTP), 24X7 funds transfer through IMPS, straight through RTGS funds transfer and scheduling future payments. Status updating of BIB requests through a tracking mechanism has been made available online to branches and CMS service team for improving customer service. At the end of FY 2018, this BIB application is availed by 28,181 users.
RISK MANAGEMENT
Risk is an integral part of the banking business and the Bankâs aim is to maintain portfolio quality by making appropriate risk/reward tradeoffs. The Bank is exposed to credit, concentration, market, country exposure, liquidity, operational, fraud and reputation risk. The Board of Directors of the Bank has oversight of all the risks assumed by the Bank and has delegated its power to manage risks to Risk Management Committee (RMC) of the Board.
Credit Risk
The Credit Risk unit ensures alignment with the objectives of achieving growth while maintaining portfolio quality by making appropriate risk / reward trade-offs. The idea is to ensure long-term sustainable performance across business cycles. Ongoing efforts are made to improve risk assessment and controls. Credit Risk unit over time has developed capabilities to assess the risks associated with various products and business segments. As far as possible, efforts are made to standardize the entire process pan India while taking into account geographic nuances. The Bank has implemented a rating model that takes into account both quantitative and qualitative factors and produces a rating that becomes one of the key inputs to credit decisions. In FY 2018, the Credit Risk unit ably supported the business / branch expansion agenda of the Bank. One of the focus areas for the Credit function was improving productivity and customer experience. In order to continuously improve the quality of the portfolio, the Credit Risk unit uses SAS analytics and has created several insightful models that helped in refining the product offering, targeting, collections and recoveries. Key processes in credit underwriting were examined and duplication was reduced to improve speed of processing. Periodic portfolio reviews were conducted with the business units that helped improve portfolio quality.
Concentration Risk
Concentration risk is monitored and managed both at the customer level and at the aggregate level. The Bank, inter alia, continuously monitors portfolio concentrations by segment, ratings, borrower, group, sensitive sectors, unsecured exposures, industry and geography. The Bank adopts a conservative approach within the regulatory prudential exposure norms.
Market Risk
Besides the usual monitoring of Structural Liquidity, Interest Rate Sensitive Gap limits and Absolute Holding limits, the Bank also monitors interest rate risks using Value at Risk limits. Exposures to Foreign Exchange and Capital Markets are monitored within pre-set exposure limits, margin requirements and stop-loss limits.
Country Exposure Risk
The Bank has established specific country exposure limits which is capped at 1.5% of Total Assets. The limit also depends upon rating of individual countries. The Bank mitigates risks using insurance cover available through the Export Credit and Guarantee Corporation (ECGC), where appropriate.
Liquidity Risk
As part of the liquidity management and contingency planning, the Bank assesses potential trends, demands, events and uncertainties that could result in adverse liquidity conditions. The Bankâs Asset Liability Management (ALM) policy defines the gap limits for the structural liquidity and the liquidity profile is analyzed on both static and dynamic basis by tracking cash inflow and outflow in the maturity ladder based on the expected occurrence of cash flow. The Bank undertakes behavioral analysis of the non-maturity products, namely CASA, Cash Credit and Overdraft accounts on a periodic basis to ascertain the volatility of balances in these accounts. The renewal pattern and premature withdrawals of Term Deposits and drawdownâs of unveiled credit limits are also captured through behavioral studies. The liquidity profile is estimated on an active basis by considering the growth in Deposits, Advances and investment obligations. The concentration of large deposits is monitored on a periodic basis. Emphasis has been placed on growing Retail deposits and avoid as far as possible bulk deposits. The Bank periodically conducts liquidity stress testing.
Operational Risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people or systems, or external events. The Bankâs operational risk management framework is defined in the Operational Risk Management Policy approved by the Board of Directors. While the policy provides a broad framework, Operational Risk Management Committee (ORCO) oversees the operational risk management in the Bank. The policy specifies the composition, roles and responsibilities of the ORCO. The framework comprises identification, assessment, management and mitigation of risks through advanced tools and analysis.
New products or services introduced are subject to a risk review and sign-off process so that relevant risks are identified and assessed independently from the unit proposing the product.
Process Review
Your Bank strives to continuously improve process controls and customer satisfaction. The Bank has a separate committee â Management Committee for Approval of Processes (MCAP). This Committee has experienced bankers from various units who review new products and processes prior to launch. The Committee is tasked with identifying operational and compliance risks in new processes/ products and ensuring that steps are taken to mitigate the risks. Also, the Committee, on an ongoing basis reviews existing processes for further improvement. In the FY 2018, 87 process notes and requests for system changes were examined by the MCAP.
Reputational Risk
The Bank pays attention to issues that may create a Reputational risk. Events that can negatively affect the Bankâs position are handled cautiously ensuring utmost compliance and in line with the values of the Bank.
IMPLEMENTATION OF BASEL III GUIDELINES
In accordance with RBI guidelines, the Bank has migrated to Basel III capital adequacy disclosures with effect from Q1 FY 2014. The Bank continues to review and improve on its risk management systems and practices to align them with international best practices. The Bank has successfully implemented Standardized Approach for Credit Risk, Standardized Duration Approach for Market Risk and Basic Indicator Approach for Operational Risk.
INFORMATION TECHNOLOGY (IT)
Banking is changing rapidly. Traditional models and approaches are getting challenged by new players. Customers are demanding high level of digitization. Every day the landscape is shifting. Your Bank has taken several initiatives to keep pace with the changes. It has created a detailed and dynamic âdigitizationâ plan that is being executed in a systematic manner. The intention is to provide disruptive cut through products and services and take advantage of the digital environment to improve cost efficiencies. During FY 2018, the Bank implemented many new applications/up gradations like
1) New Internet Banking for Retail and Business Banking.
2) âDCB Loan on the Goâ Mobile App for servicing Retail Loan customers
3) Robotic Process Automation (RPA) â These are specifically designed software with Artificial Intelligence (AI) capabilities to handle high-volume, repetitive tasks that previously required staff to perform. The Bank has successfully implemented 23 RPAs. This has helped reduce costs, lessen errors and improve cycle time.
4) Omni channel CASA account opening - The frontline staff can now open customer accounts using tabs and web based solution anywhere in India. DCB Delight Instakit further enhances this facility as customers can get their debit card, cheque book and ATM Pin instantly.
5) Application Supported Blocked Amount (ASBA)- Your Bank has now introduced ASBA. This capability was not available in the past and was missing from the product suite.
6) Application Programming Interface (API) Banking â The industry worldwide is moving towards âOpen Bankingâ. DCB Bank needs to keep pace with changes. On a pilot basis, your Bank has created APIs, that can be used by customers, fintech companies and associates.
7) Integration of gold loan processing system Gradatim with Finacle Core Banking for Straight Through Processing
8) Launch of Fraud Risk Monitoring System for timely identification of frauds
9) Aadhaar Enrolment Centres for ease of Aadhaar issuance
10) Implementation of C-KYC platform to update Know Your Customer (KYC) details of new and existing customers
11) Blockchain - Your Bank has become the knowledge partner with Bankchain, Assocham and The Economic Times for Blockchain implementation and mentoring more than 15 Fintech companies for Blockchain implementation in India.
The Bank also rolled out Global Level Innovation Program âInnovation Carnivalâ under which the Bank is working closely with peer banks, Government, Accelerators, Corporates, Fintechs and Academia. It has carried out various Hackathon sessions in cities like Ahmedabad, Bengaluru, Gurugram, Hyderabad, Mumbai and Pune. These events received a lot of participation from start-ups and college students.
12) Big Data â Your Bank has implemented a scalable and robust framework to handle the four Vâs of data namely Volume, Variety, Velocity and Veracity. The team has been able to bring in machine learning/deep learning expertise across various business units in the areas of predictive analytics, prescriptive analytics, optimization and clustering.
OPERATIONS
The Bankâs focus is on creating a cost effective scalable Operations unit that can deliver superior customer experience. The Bank intends to achieve optimum centralization of activities in National Processing Centre (NPC) Chennai with the idea of creating a centre of excellence. In FY 2018, many processes were in-sourced resulting in cost savings and reduction in potential errors. The Bank created Clearing Hubs at Thane (Maharashtra) and Krishna Nagar (Delhi) which has resulted in better cut off timing for cheque pickups from branches hugely benefitting customers. During the year, advanced software to automate reconciliation of ATM, POS and Nostro etc. was implemented.
INTERNAL AUDIT (IA) AND VIGILANCE
IA continued to be the effective tool of control and compliance in your Bank. The team comprises of professionals, experienced bankers and domain experts. Every year IA inducts and grooms newcomers with audit and finance background to strengthen the IA capacity. IA team functions under the able guidance of Audit Committee of the Board (ACB), which reviews the Audit Charter/Manual on an annual basis and ensures that IA has put in place a detailed risk assessment and audit planning process. On a pilot basis, a centralised Continuous Monitoring System has been implemented to help identify control issues as early as possible.
In FY 2018, IA conducted 221 branch audits, 37 periodic audits, 2 compliance audits and 6 IT audits. Out of the total audits conducted during the year, nearly 30% were snap audits. In order to improve the effectiveness, the Bank has started in-housing the Concurrent Audits in a phased manner.
The Vigilance unit is a small high quality team. This team reviews âtriggersâ received from various sources to identify and control frauds. In order to further enhance fraud control mechanisms a new software âFraud Risk Monitoringâ has been introduced. Over the coming months this software will be made more and more sophisticated to catch intricate frauds.
COMPLIANCE AND RISK BASED SUPERVISION BY RBI
The Bankâs Compliance unit is independent of its business and functions. It has created detail procedures to ensure compliance with all applicable regulations. In addition to ensuring timely submission of various returns to regulatory and statutory authorities, the Compliance unit also ensures that the Bankâs internal procedures and processes are in adherence with the applicable regulatory and statutory guidelines.
The Compliance unit is also responsible for AML / KYC monitoring and for executing the same the Bank relies on advanced software and analytics. The Bank is a member of Banking Codes and Standards Board of India (BCSBI). The Bank is covered under the Banking Ombudsman Scheme of RBI wherein escalated customer complaints received through the Office of the Banking Ombudsman are addressed under a well-defined Customer Grievance Redressal mechanism.
Like most banks in the industry, your Bank continues to be under Risk Based Supervision (RBS) introduced by RBI for supervision of banks.
HUMAN RESOURCES (HR)
Your Bank strives to provide a conducive and enabling work environment for all its employees. The intention is to create a culture of caring and performance. Continuous efforts are made to improve team work, productivity, empathy for customers, respect for compliance and controls.
In FY 2018, the Bankâs headcount went up to 5,790 (4,979 in FY 2017). In order to create a diverse pool of new hires, the Bank launched a âCandidate Portalâ. Your Bank also scaled up its âThe Top Recruitâ program and campus engagement initiatives across various regions. Over 2,000 participants from Tier 3 and Tier 4 business schools in cities like Bengaluru, Kolkata, Delhi and various towns in Maharashtra participated.
Your Bank believes in continuous learning and skill development. The Bank has sustained a strong culture of learning through the Individual Learnings & Development Scorecard (ILDS) spanning the employee lifecycle. Besides, all new joinees undergo certain mandatory classroom trainings including an elaborate induction program. Several product training sessions are conducted to improve knowledge and skill levels. This helps in productivity and customer service. More than 97% of employees were covered under at least one workshop or e-learning module as compared to 95% coverage in FY 2017. The Bank also has online learning academy âLUMOSâ which facilitates ease of learning. Almost 76% of employees used at least one module in LUMOS.
In addition to the above, the Bank started a personalized training for its employees for improving their English language skills.
The Bankâs flagship programme on fostering the culture of teamwork âCREWâ (Collaborate, Respect, Encourage and Win) was launched during the year and appreciated tremendously by its employees. The Managing Director & Chief Executive Officer personally conducted 9 sessions across 8 locations and personally interacted with more than 2,000 employees.
SPEAK survey is a unique initiative to get feedback on supervisors. 96% of the employees participated in the survey. The results of the survey were shared with the supervisors. This helps them to understand their strengths and areas for improvements. SPEAK is an effective method to improve supervisor quality which in turn helps to reduce attrition and enhance productivity.
The employees need to be communicated regarding the employee benefits being offered by the Bank. The HR team conducted âDCB Chaupalâ which helped employees to interact with HR team and seniors. Since your Bank branches are now in many locations, the HR team launched the first interactive âlive radio showâ called Hour HR to engage with large number of employees at one go.
The Bank continued its various signature programs namely Global Leadership Development Programme, Budding Branch Manager, ASPIRE, LEAP and RISE. In order to ensure compliance, âProject Prayasâ was launched with the aim of improving knowledge and understanding of various RBI Circulars.
DCB Allympics, the mega sports event across the country remained one of the most awaited events. This year a new program called âKnowFestâ was implemented. This gave an opportunity to all business and functions to creatively showcase their unit in the form of exhibition stalls. The participation was superb. As part of the learning culture, the top team of the Bank was given âMasterclassâ by seniors in various topics.
The Bank has two powerful and popular programs for employee recognition. âDCB Spotlightâ is held at a regional level at least twice a year. This platform provides an opportunity to meet the star performers from various businesses and functions. âMovers & Shakersâ is a yearly grand event. In this program top performers and teams on pan India basis are recognized. This event gives additional opportunity to DCBians to show off their talent in terms of singing and dancing as well.
STAFF PARTICIPATION IN CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Bank employees eagerly and enthusiastically participated in Clean Up and Green Up (tree planting) activities around the branch neighborhood. In FY 2018, over 500 employees pan India participated in CSR activities of the Bank availing the unique 2 days paid CSR leave per year. The Bank has created CSR volunteers at various locations. The activities executed range from lake clean up, waste management, habitat restoration, park clean up, tree planting, creating awareness amongst people on water conservation and waste management etc. The Bank has contributed 3,147 people-daysâ for the projects executed by the staff.
Trees are critical for sustained growth. Unfortunately, green cover is giving way to development. The citizens of India must come together to create a sustainable development model. Towards improving our environment, the Bank planted 65,271 trees during FY 2018. Extensive tree plantation was undertaken in the buffer zones of wildlife sanctuaries for mitigating climate change and improving the microclimate. This is also likely to provide gainful employment to tribal communities living in the periphery of the wildlife sanctuaries. Installation of waterless urinals to reduce wastage of water and cut pollution levels, roof top rainwater harvesting and installation of nonelectric bio-sand water filters in village schools in water-starved regions are some of the unique efforts undertaken by the Bank to conserve water.
The Bank also propagated waste-to-energy âbio mechanizationsâ to use organic waste in a manner to stop methane emission. Usage of renewable energy by installing solar panels for use by remotely located tribal village communities where electricity grid supply was not available was an effort from your Bank to improve life of tribalâs.
Your Bank was recognized for its CSR efforts. The list of recognition is given below:
1) International Advertising Association â IAA Olive Crown Awards 2018- DCB Bank won for Gold for the Waterless Urinal Project -Wagah border, Punjab and DCB Bank offices and branches.
2) International Advertising Association - IAA Olive Crown Awards 2018- DCB Bank was awarded Silver for School Rooftop Rainwater Harvesting & Bio-sand Filters Project in Nuh, Haryana
3) CSR Journal Excellence Awards 2017- DCB Bank was awarded âBest project in the Environment Categoryâ for Project Hirve, Maharashtra
4) Appreciation Certificate from Bombay Chamber of Commerce and Industry- Recognized for âSustainable Environmental Initiativesâ for solar water pump, storage and drip irrigation project - Project Hirve, Maharashtra.
5) Asian Customer Engagement & Forum - ACEF HR & CSR Forum & Awards- DCB Bank garnered Bronze for Best CSR Event - Project Hirve, Maharashtra
CUSTOMER SERVICE
Ensuring customer delight and satisfaction in every interaction remains the Bankâs core desire for building its business franchise across India. On an ongoing basis, customer complaints and satisfaction levels are monitored by the Managing Director and Chief Executive Officer along with the Senior Management team. An independent Service Excellence team analyses customer complaints, identifies the root cause, makes suggestions for process improvements and follows up with the respective units for rectification. The Bank has a âCentralized Complaint Managementâ system and rigorous standards to ensure that customer queries and complaints are not missed out and are resolved in a timely manner. The Bank continues to make steady progress on the concept of Power of Three - Empathy, Speed and Quality (ESQ) initiative launched 7 years ago. The Bank is continuously working on the six pillars of Service Excellence â Voice of Customer, Service Recovery, Attrition Calling, Process Simplification, Service Culture and Measures and Metrics. The Service Excellence team regularly conducts review of progress on six pillars with key stakeholders, weekly calls with frontline staff to obtain feedback, surprise visits to branches, customer meetings, focus groups with branch staff and âmystery shoppingâ to understand frontline service culture and competence. The progress on Service Excellence is regularly monitored by the Customer Service Committee (CSC) of the Board.
NON-BRANCH CHANNELS
The Bankâs customers have ease of access to DCB 24-hour Customer Care Phone Banking, ATMs, Internet and Mobile Banking for completing their banking needs. The Bank strives to provide best-in-class technology and service platform. In FY 2018, the Bankâs Customer Care Associates attended to almost 13 lakh calls with one of the best âspeed to answerâ response time across the industry. At DCB Bankâs 24 Hour Toll Free Customer Care, customers directly get connected with the Customer Care Associates without having to go through painful Interactive Voice Response (IVR) menu. The Bankâs call centre can interact with the customers in 8 Indian languages (Hindi, English, Marathi, Gujarati, Tamil, Telugu, Odiya and Kannada). This makes it one of the best in the industry. During the year, your Bank has initiated âVoice of Customerâ program for improving customer complaint re solution/satisfaction. Your Bank has also established second call centre at Secunderabad to act as a support for the Mumbai centre. The idea is to provide uninterrupted service delivery at all times.
MARKETING/BRAND AWARENESS
The Bank continuously undertakes numerous effective measures to create brand awareness and improve its brand presence and image. The Bank has a unique concept called âmicro marketingâ. Low cost small scale product promotions are held in the neighborhood areas of the branch almost every week. In FY 2018 the Bank executed almost 7,000 micro marketing activities. This approach has helped in improving brand presence and sales.
During the year, your Bank created short commercials in Hindi and other Indian languages to promote the brand and its unique DCB Savings Accounts in a very engaging and humorous way. This commercial was screened in 90 popular cinema halls in various parts of the country. This campaign was made available on social media as well. The Bank did a massive newspaper campaign across 28 cities to promote DCB Home Loans.
Your Bank was on the forefront of helping MSMEs/SMEs understand GST and its implications. Throughout our branch network several meetings were held. Over 15,000 customers/prospects were met as part of the GST campaign. A unique DCB GST Package was created to meet the customer needs.
Every year, as part of its culture to directly engage with customers and take their feedback in informal forums, the Bank conducts numerous customer events. In FY 2018 the Bankâs signature event âEk Mulaquat Kuch Baateinâ was held in Delhi, Lucknow and Mumbai. The Bank also hosted Musical Night programs in a few locations in India. Customers were delighted to be part of the musical evening and some even sang alongside the professional singers.
IND AS IMPLEMENTATION
The Ministry of Corporate Affairs (MCA), Government of India has notified the Companies (Indian Accounting Standards) Rules, 2015 on February 16, 2015. Further, a Press Release was issued by the MCA on January 18, 2016 outlining the roadmap for implementation of Indian Accounting Standards (IND AS) converged with International Financial Reporting Standards (IFRS) for banks. Banks in India shall comply with the Indian Accounting Standards (IND AS) for financial statements for accounting periods beginning from April 1, 2018 onwards, with comparatives for the periods ending March 31, 2018 or thereafter. Progressing towards IND AS, the Bank had prepared proforma financials as on June 30, 2017 as per extant regulatory guidelines and submitted the same to the RBI. On April 05, 2018, the RBI has announced deferment of implementation date by one year with IND AS now being applicable to banks for accounting periods beginning April 01, 2019 onwards.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY THE BANK.
Not applicable being a banking company.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All the transactions with related parties are in the ordinary course of business and on armâs length basis and there are no âmaterialâ contracts or arrangement or transactions with related parties and thus disclosure in Form no. AOC-2 is not required.
POLICY ON RELATED PARTY TRANSACTIONS OF THE BANK
The Bank has a policy on Related Party Transactions and the same has been displayed on the Bankâs website:
BUSINESS RESPONSIBILITY REPORT:
In terms of Regulation 34(2)(f) of the SEBI LODR Regulations, the Bankâs Business Responsibility Report describing the initiatives taken by the Bank from an environmental, social and governance perspective forms part of this Report and has been hosted on the website of the Bank at the following Link:
http://www.dcbbank.com/cms/showpage/page/for-shareholder
CORPORATE SOCIAL RESPONSIBILITY (CSR)
DCB Bankâs CSR projects and activities focused on water and protection of water sources; recycling; waste management; renewable energy & waste-to-energy.
Together with the help of our implementation partners, we planted 65,146 trees. The aim is to scale up this movement and plant over one lakh trees by the next financial year.
Communities continue to reap the benefits of DCB Bank CSR projects. We are delighted to note that the Bankâs efforts in CSR are being recognized by communities, customers, well-wishers at large. The CSR projects have contributed to mitigate the issues we set out to address, subject to capacity of the project to bring about impact.
Notable acclaim & recognition conferred to DCB Bank CSR Projects in FY 2017-18:
1) International Advertising Association â IAA Olive Crown Awards 2018
DCB Bank won for Gold for the Waterless Urinal Project - Wagah border, Punjab and DCB Bank offices and branches Date & Place: March 2018, Mumbai
2) International Advertising Association - IAA Olive Crown Awards 2018
DCB Bank awarded Silver for School rooftop Rainwater Harvesting & Bio-sand Filters Project in Nuh, Haryana Date & Place: March 2018, Mumbai
3) CSR Journal Excellence Awards 2017
DCB Bank awarded âBest project in the Environment Categoryâ for project Hirve, Maharashtra
Date & Place: November 2017, Mumbai
4) Appreciation Certificate from Bombay Chamber of Commerce and Industry
Recognized for âSustainable Environmental Initiativesâ for solar water pump, storage & drip irrigation project - project Hirve, Maharashtra. Date & Place: October 2017, Mumbai
5) Asian Customer Engagement & Forum - ACEF HR & CSR Forum & Awards
DCB Bank garnered Bronze for Best CSR Event - Project Hirve, Maharashtra
Date & Place: September 2017, Mumbai
India faces a mammoth waste and water crisis. The environment crisis requires decisive action by individuals and institutions. The Bankâs CSR activities focus on this crisis. CSR projects namely were -installation of waterless urinals to stop wastage of water and reduce pollution of water, roof top rainwater harvesting and installation of non-electric bio-sand water filters in village schools in water-starved regions. Watershed development including water audit, tree plantation, desalting of village tanks and wells, creating percolation tanks, trenches and ponds in drought prone water starved villages are other projects. Extensive tree plantation in the buffer zones of wildlife sanctuaries for climate change mitigation and improving the microclimate was undertaken; this also provided and will continue to provide gainful employment for tribal communities living in the periphery of the wildlife Sanctuaries. The Bank also propagated waste-to-energy bio mechanizations to use organic waste in a manner to stop methane emission in to the atmosphere; usage of renewable energy by installing solar panels for use by remotely located tribal village communities where electricity grid supply was not forthcoming.
Clean Up & Green Up! - STAFF PARTICIPATION IN CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Bankâs focus areas for its employees for this Financial Year were â Clean Up and Green Up. Employees participated in tree plantation and clean-up of unkempt civic spaces. We had 529 employees who volunteered and availed of our unique 2-day CSR leave policy. Employees volunteered for tree plantation in Maharashtra, West Bengal, Tamil Nadu, Gujarat, Punjab, Rajasthan, Orissa, Delhi NCR, and Madhya Pradesh; lakes, streams and pond clean-up activities as well as habitat restoration in various parts of India.
DCB Bank CSR volunteers have worked on CSR projects that range from local lake cleanup; locality based waste management, natural habitat restoration and creation of nature parks. Tree plantation, tree count, propagation of fruit bearing trees in tribal villages to enhance long-term income earning capability are other employee initiatives. DCB Bank has also contributed â3,174 hours for the projects executed by employees.
The Bank has spent an amount of Rs, 1.77 crore (Previous year: Rs, 0.98 crore) in respect of CSR activities across the country
REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR):
A Board level committee for CSR has already been in place as stated in the section on Corporate Governance. The report on CSR is given overleaf:
|
Sr. No. |
Description |
Particulars/Details |
|
1. |
A brief outline of the companyâs CSR policy, including overview of projects or programs proposed to be undertaken and a reference to the web-link to the CSR policy and projects or programs |
Outline: CSR Activities shall mean all the Corporate Social Responsibility activities / programs / initiatives of the company, either ongoing or new, dealing with the activities mentioned in thrust areas. The activities shall conform to those specified in Schedule VII to the Act (as amended from time to time) and as recommended by the CSR Committee and approved by the Board. The Bankâs thrust area is also in keeping with the Government of Indiaâs Swachh Bharat initiative. Thrust areas or activities ascribed to them are defined in the Policy, as amended by the Board, from time to time. Projects/ Programmes to be undertaken: CSR Thrust Areas for DCB Bank Thrust areas shall mean and include any one or more of the following CSR activities: a) Conservation of water / water storage / water usage / protecting water bodies b) Waste Management c) Recycling d) Promote waste-to-energy e) Promote start-ups f) Preservation of historical and heritage sites with in situ focus on water conservation, waste management, recycling and, or waste-to-energy. Project/s supported: The availability of potable water fit for both human consumption and agriculture faces severe stress. Day-by-day the situation turns grim, while mismanagement of waste and the general disinclination towards a sustainable lifestyle is cause for a waste crisis. Sustainable methods for preservation of water bodies is a dire need not only for the current generation but also for all times to come. The Water situation is a grave one despite the availability of technical knowhow on rainwater harvesting, water recharging structures, which can give small and marginal farmers a better quality of life and livelihood. DCB Bankâs CSR Projects are at Amritsar, Punjab; Anantapur in Andhra Pradesh; Guntur in Andhra Pradesh; Karjat in Maharashtra; Sitamata in Rajasthan; Chintamani and Kolar in Karnataka; Koraput in Odisha. DCB Bank CSR employee volunteer projects undertook various across locations across India, such as Bhopal, Coimbatore, Delhi, Chennai, Gurgaon/ Sohna, Hyderabad & Pune, amongst other locations. The Bankâs CSR thrust areas projects for FY 2017-18 are: a. Ground water resource development in acutely water starved villages. c. Rainwater harvesting structures and bio-sand water filters for village schools. d. Waste-to-energy bio mechanizations to produce cooking gas e. Renewable energy, solar power streetlights network across villages and hamlets f. Waterless urinals to save precious water and prevent ground water pollution. g. Rainwater harvesting and installation of bio-sand filters for schools in arid and drought prone regions Website link for DCB Bank CSR policy: http://www.dcbbank.com/pdfs/DCB-Bank-CSR-Policy.pdf |
|
2. |
The Composition of the CSR Committee. |
The members of the CSR Committee are Mr. Nasser Munjee (Chairman), Ms. Rupa Devi Singh, Mr. Imran Contractor and Mr. Murali M. Natrajan. |
|
3. |
Average net profit of the company for last three financial years (after adjusting for brought forward accumulated losses) |
Rs, 245.56 crore |
|
4. |
Prescribed CSR Expenditure (two per cent. of the amount as in item 3 above) |
Rs, 4.91crore |
|
5. |
Details of CSR spent during the financial year: a) Total amount to be spent for the financial year; b) Amount unspent, if any; c) Manner in which the amount spent during the financial year is detailed on the following page |
Rs, 1.77 crore Rs, 3.14 crore - Please refer to the table on the following page- |
|
(1) |
(2) |
(3) |
(4) |
(5) |
(6) |
(7) |
(8) |
|
S. No |
CSR project or activity identified. |
Sector in which the Project is covered |
Projects or programs (1) Local area or other (2) Specify the State and district where projects or programs were undertaken |
Amount outlay (budget) Project or programs wise |
Amount spent on the Projects or programs Sub-heads: (1)Direct expenditure on projects or programs. (2)Overheads: |
Cumulative expenditure up to the reporting period |
Amount spent Direct or through implementing agency * |
|
1 |
Groundwater development â creation of water storage structures for farming, community use and recharge of ground water and underground reservoirs |
Water resource management & sustainable livelihood for water starved village communities |
State of Andhra Pradesh, Guntur District. |
Rs, 3,160,680 |
(1) Direct expenditure Rs, 3,110,680 (2) Overheads Rs, 50,000 |
Complete amount disbursed |
Project through implementing CSR agency Concern India Foundation |
|
2 |
Renewable energy project solar electrical street lights |
Renewable energy solar power streetlights network across villages and hamlets. Creating a village user committees, training for tribal residents for operations & maintenance of street lights. |
State of Maharashtra, in Karjat district |
Rs, 872,035 |
(1) Direct expenditure Rs, 848,035 (2) Overheads Rs, 24,000 |
Complete amount disbursed |
Project through implementing CSR agency Concern India Foundation |
|
3 |
Renewable energy project solar electrical street lights |
LED street lamps, all weather solar panels, lithium ion storage batteries & installation poles |
State of Maharashtra, in Karjat district |
Rs, 2,904,736 |
(1) Direct expenditure Rs, 2,904,736 |
Complete amount disbursed |
Direct spend |
|
4 |
Rainwater harvesting and bio-sand water filters in water starved village schools. |
Creation of self-sustaining water conservation structures for village schools in areas with acute water shortage |
State of Andhra Pradesh, in Anantapur District |
Rs, 1,828,050 |
(1) Direct expenditure Rs, 1,741,000 (2) Overheads Rs, 87,050 |
Complete amount disbursed |
CSR project amount spent through implementation agency SM Sehgal Foundation |
|
5 |
Installation of waterless urinals in water stressed areas to reduce usage of a scarce resource |
Saving water with waterless urinals in locations, facing severely depleted underground water availability. Reducing sewerage discharge and ground water pollution |
State of Punjab, in Amritsar District |
Rs, 185,769 |
Direct expenditure Rs, 185,769 (2) Overheads NIL |
Complete amount disbursed |
CSR project amount spent through implementation agency Ekam Ecosolutions |
|
6 |
Waste-to-energy |
Bio-methanisation of organic waste to produce cooking gas. Climate change mitigation. |
State of Punjab, in Amritsar District |
Rs, 2,676,300 |
(1) Direct expenditure Rs, 2,676,300 (2) Overheads NIL |
Complete amount disbursed |
CSR project amount spent through implementation agency Ekam Ecosolutions |
|
7 |
Reforestation of buffer areas around National Sanctuaries, and gainful employment generation for communities dependent on forests. Climate change mitigation |
Regeneration of lost forest cover through extensive plantation of native trees in the buffer zones of critical natural animal habitat. |
Planted over 50,000 trees in States of Karnataka, Maharashtra, Odisha & Rajasthan Locations: Chintamani & Kolar Karnataka, Nimbhora Maharashtra, Koraput Orissa, Sitamata, Rajasthan, |
Rs, 4,590,000 |
(1) Direct expenditure Rs, 4,590,000 (2) Overheads NIL |
Complete amount disbursed |
CSR project amount spent through implementation agency Growtrees. com |
|
8 |
Awareness building, education and promotion of judicious use of water |
Audio visuals on Waterless Urinals and Rain Water Harvesting respectively |
Promotion of Waterless Urinals, Wagah, Amritsar & Rain Water Harvesting, Nuh, Haryana via online and digital platform |
Rs, 360,000 |
Rs, 360,000 |
Complete amount disbursed |
Freelance Production |
|
(1) |
(2) |
(3) |
(4) |
(5) |
(6) |
(7) |
(8) |
|
S. No |
CSR project or activity identified. |
Sector in which the Project is covered |
Projects or programs (1) Local area or other (2) Specify the State and district where projects or programs were undertaken |
Amount outlay (budget) Project or programs wise |
Amount spent on the Projects or programs Sub-heads: (1)Direct expenditure on projects or programs. (2)Overheads: |
Cumulative expenditure up to the reporting period |
Amount spent Direct or through implementing agency 1 |
|
9 |
Awareness building, education and promotion of judicious use of water |
Case studies of community and individual led, extremely sustainable water conservation and usage practices across India |
Promotionand distribution of The Water Catchers, the Water Blue Book â 12 inspirational stories of how communities went form scarcity to plenty. |
Rs, 390,000 |
Rs, 390,000 |
Complete amount disbursed |
Content Services & Publishing Pvt. Ltd. |
|
10 |
CSR impact projects with DCB Bank CSR Employee volunteers |
Various activities in line with the BankRs,s CSR thrust areas: such as, waste management, waste recycling, protection of water bodies, rejuvenation of natural habitat, protection of flora and fauna, bio waste composting, community areas and localities clean up, river, streams, lakes and ponds clean up, amongst other initiatives, |
Projects in Ahmedabad, Bhopal, Chennai, Coimbatore, Delhi, Erode, Kolkata, Mumbai, Navi Mumbai, Pune, Raipur, & Trichy |
Rs, 728,426 |
Rs, 728,426 |
Complete amount disbursed |
Implemented directly as well as with agencies, CSR partners such as Ladybird Environment Consulting LLP; Green Yatra; Mission Green Mumbai; Oxford Golf resort; Karnataka Golf Association; Khalsa College, Amritsar |
|
TOTAL |
Rs, 17,695,996 |
(1) Rs, 17,534,946 (2) Rs, 161,050 |
CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES AND INDEPENDENCE OF A DIRECTOR
- The Board shall have minimum 3 and maximum 15 directors, unless otherwise approved. No person of age less than 21 years shall be appointed as a director on the Board.
- The Bank shall have such person on the Board who complies with the requirements of the Companies Act, 2013, the Banking Regulation (BR) Act, 1949, Provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations) , the âFit & Properâ criteria prescribed by the Reserve Bank of India (RBI), Memorandum of Association and Articles of Association of the Bank and all other statutory provisions and guidelines as may be applicable from time to time.
- Composition of the Board shall be in compliance with the requirements of Regulation 17 (1) of the Listing Regulations.
- Majority of the Directors as required under BR Act shall have specialized knowledge/experience in the areas like Agriculture, Banking, SSI, Legal, Risk Management, Accountancy, Finance etc.
- All Directors shall abide by the Code of Conduct
- Directors shall not attract any disqualification and shall be persons of sound integrity and honesty, apart from knowledge, experience, etc. in their respective fields.
POLICY RELATING TO THE REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES
- MD & CEO, Company Secretary and Chief Financial Officer shall be the Key Managerial Personnel (KMPs) of the Bank.
- Except for the Chairman and the MD & CEO, no other directors are paid remuneration, but are paid only sitting fees. The Chairman and the MD & CEO are paid remuneration as approved by the RBI and other applicable authorities, but are not paid sitting fees.
- Independent Directors are not entitled for ESOPs
- Remuneration of all employees including Senior Management and KMPs are decided as per the Compensation Policy of the Bank.
PARTICULARS OF EMPLOYEES
The Bank had 5,790 employees as on March 31, 2018. 8 employees employed throughout the year were in receipt of remuneration of more than Rs, 1.02 Crore per annum. The details of such employees in terms of Section 197(12) of the Companies Act, 2013 read with Rule
5 (2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are appended separately (Annexure-I) and form part of this Report. The Report and Accounts are being sent to the shareholders excluding these particulars and any shareholder interested in obtaining the said details may write to the Company Secretary at the Registered Office of the Bank.
EMPLOYEE STOCK OPTIONS
The information pertaining to the Employee Stock Options is given in ANNEXURE-II to this Report.
PARTICULARS PURSUANT TO SECTION 197(12) AND THE RELEVANT RULES:
a) The ratio of the remuneration of each director to the median employeeâs remuneration for the financial year ended March 31, 2018 and such other details as prescribed are as given below: Name Ratio Mr. Nasser Munjee (Chairman) 7 : 1 Mr. Murali M Natrajan (Managing Director & CEO) 155 : 1
b) The percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year:
Mr. Nasser Munjee â (Chairman): 33 %
Mr. Murali M Natrajan â (Managing Director & CEO): 10 %
Mr. Bharat Laxmidas Sampat â (Chief Financial Officer): 9 %
Mr. Hemant Vinayak Barve â (Company Secretary till December 31, 2017): 6 %
Ms. Rubi Chaturvedi â (Company Secretary w.e.f. January 01, 2018): N.A.
c) The percentage increase in the median remuneration of employees in the financial year : 5 %
d) The number of permanent employees on the rolls of Bank: 5,741
e) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year ended March 31, 2018 and its comparison with the percentile increase in the managerial remuneration and justification thereof and any exceptional circumstances for increase in the managerial remuneration: Average increase in remuneration is 9 % for Employees other than Managerial Personnel & 9 % for Managerial Personnel (KMP and Senior Management). There are no exceptional circumstances for increase in the managerial remuneration.
f) If remuneration is as per the remuneration policy of the Bank: Yes
PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The provisions of Section 134(3)(m) of the Companies Act, 2013 relating to conservation of energy and technology absorption do not apply to the Bank. However, as mentioned in earlier part of the Report, the Bank has been continuously and extensively using technology in its operations. Foreign Exchange earnings and outgo are part of the normal banking business of the Bank.
ESTABLISHMENT OF VIGIL MECHANISM
The Bank has in place a vigil mechanism pursuant to which a Whistle Blower Policy has been in vogue for the last several years. The policy was last reviewed in FY2015-16.This Policy inter alia provides a direct access to a Whistle Blower to the Chairman of ACB on his dedicated email-ID [email protected]. The Whistler Blower Policy covering all employees and directors is hosted on the Bankâs website at âhttp:// www.dcbbank.com/cms/showpage/page/whistle-blower-policyâ.
None of the Bankâs personnel have been denied access to the Audit Committee.
THE DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS
The Bank has designed and implemented a process driven framework for Internal Financial Controls (âIFCâ) within the meaning of the explanation to Section 134 (5) (e) of the Companies Act, 2013. For the year ended March 31, 2018, the Board is of the opinion that the Bank has sound IFC commensurate with the nature and size of its business operations wherein controls are in place and operating effectively and no material weaknesses exist. The Bank has a process in place to continuously monitor the existing controls and identify gaps, if any, and implement new and /or improved controls wherever the effect of such gaps would have a material effect on the Bankâs operation.
DIRECTORSâ RESPONSIBILITY STATEMENT
Based on the framework of internal financial controls and compliance systems established and maintained by the Bank, the work performed by the Internal, Statutory and Secretarial Auditors and the reviews performed by the Management and the relevant Board Committees, including the Audit Committee of the Board, the Board is of the opinion that the Bankâs internal financial controls were adequate and effective during the year ended March 31, 2018. Accordingly, pursuant to Section 134 (5) of the Companies Act, 2013, based on the above and the representation received from the Operating Management, the Board of Directors, to the best of their knowledge and ability confirms that:
(i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there were no material departure there from;
(ii) they have, in the selection of the accounting policies, consulted the statutory auditors and have applied their recommendations consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as at March 31, 2018 and of the profit of the Bank for the year ended on that date;
(iii) they have 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 Bank and for preventing and detecting fraud and other irregularities;
(iv) they have prepared the annual accounts on a going concern basis;
(v) they have laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively during the year ended March 31, 2018; and
(vi) proper system has been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively during the year ended March 31, 2018.
EXTRACT OF THE ANNUAL RETURN
An extract of the Annual Return as of March 31, 2018 pursuant to the sub-section (3) of Section 92 of the Companies Act, 2013 and forming part of the report is attached separately as ANNEXURE-III to this report..
CORPORATE GOVERNANCE
The Bank has been continuously observing the best corporate governance practices and benchmarks itself against each such practice.
A separate section on Corporate Governance and a Certificate from the Statutory Auditors M/s. Deloitte, Haskins & Sells, Chartered Accountants (Registration No. 117365W) regarding compliance of the conditions of Corporate Governance as stipulated in Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Annual Report.
DIRECTORS
During FY 2018, Mr. Keki Elavia, an Independent Director of the Bank, has ceased to be a Director of the Bank on July 15, 2017 on account of his resignation. Mr. Nalin Shah, an Independent Director of the Bank has ceased to be a Director of the Bank on March 31, 2018 on attaining age of 70 years, as per upper age limit of RBI. The Board of Directors places on record its deep sense of appreciation of the valuable contributions made by Mr. Keki Elavia and Mr. Nalin Shah during their association of more than 5 years as Independent Directors of the Bank.
Mr. Shaffiq Dharamshi (DIN-06925633) was liable to retire by rotation and being eligible has offered him for re-appointment. The Board of Directors at the meeting held on July 15, 2017 had approved appointment of Mr. Iqbal Khan (DIN-07870063) as an Additional Non-Executive Director, liable to retire by rotation. Mr. Ashok Barat (DIN-00492930) was also appointed as an Additional Independent Director of the Bank on March 22, 2018. Mr. Jamal Pradhan informed about change in his status from Independent Director to No independent Director, which was taken on record by the Board in its meeting, held on October 16, 2017 with immediate effect. The Board of Directors re-appointed him as a Non- Executive Director w.e.f. October 16, 2017, liable to retire by rotation.
With approval of the Reserve Bank of India, the Board of Directors of the Bank re-appointed Mr. Nasser Munjee as Non-Executive (Part-time) Chairman of the Bank for a period of three years from 19 th August, 2017 on an honorarium of '' 24 lakh per annum and reimbursement of actual business related expenses and annual club membership fee. The Board of Directors of the Bank recommends his re-appointment and payment of honorarium in the ensuing AGM. Subject to approval of the Reserve Bank of India, the Board of Directors, in its meeting held on October 16, 2017 approved the reappointment of Mr. Murali M. Natrajan as MD & CEO of the Bank for a period of three years i.e. from 29th April, 2018 to 28th April, 2021 on the remuneration as detailed in the explanatory statement of the notice of the 23rd AGM. The Board of Directors of the Bank recommends his re-appointment and payment of remuneration at the ensuing AGM.
A brief resume relating to the persons who are to be appointed /re-appointed as Directors is furnished in the notice of the 23rd AGM as well as in the report on Corporate Governance. Based on the Disclosures provided by them, none of the above mentioned persons is disqualified from being appointed as a Director as specified in terms of Section 164 of the Companies Act, 2013.
None of the Directors of the Bank is related to each other per se.
CHANGE IN KEY MANAGERIAL PERSONNEL
Mr. H.V. Barve ceased to be Company Secretary of the Bank on December 31, 2017 on account of his retirement. Ms. Rubi Chaturvedi was appointed as Company Secretary of the Bank w.e.f. January 1, 2018.
The Board of Directors places on record its deep sense of appreciation of the valuable contributions made by Mr. H.V.Barve during his long association as the Company Secretary of the Bank.
A STATEMENT INDICATING THE MANNER IN WHICH FORMAL ANNUAL EVALUATION HAS BEEN MADE BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS;
1. The Chairman of the Nomination and Remuneration Committee of the Board sent draft parameterized feedback forms for evaluation of the Board, the Committees, Directors and the Chairman.
2. Independent Directors at a meeting without anyone from the non independent directors and management, considered/evaluated the Boardâs performance, performance of the Chairman and other non-independent Directors.
3. The Board subsequently evaluated performance of the Board, the Committees and Independent as well as Non-Independent Directors (without participation of the relevant director). The members of the Board and committees evaluated the respective entity. Every individual Director evaluated every other Director. The results were collated and the Chairman informed that the performance of the Board as a whole and its Committees was satisfactory.
The Chairman also commented that individual performance of the Directors was also satisfactory.
THE DETAILS OF FAMILIARISATION PROGRAMME ARRANGED FOR INDEPENDENT DIRECTORS HAVE BEEN DISCLOSED ON WEBSITE OF THE BANK AND ARE AVAILABLE AT THE FOLLOWING LINK:
http://www.dcbbank.com/pdfs/Familarisation_Programme_for_
Independent_Directors.pdf
STATUTORY AUDITORS
M/s. Deloitte, Haskins & Sells, Chartered Accountants (Registration No. 117365W) were appointed as Statutory Auditors at the 21st Annual General Meeting. Their appointment for FY 2017-18 was ratified in the last AGM. They are eligible for re-appointment for the FY 2018-19. Section 139 of the Companies Act, 2013 and the Rules made there under provide that a company can appoint a firm as auditor for maximum two terms of five consecutive years. In other words, company can make appointment of auditor for five years at a time. However the Bank is also governed by the provisions of Banking Regulation Act, 1949 and the circulars/notification/ guidelines issued by Reserve Bank of India (RBI) from time to time.
As per the extant provisions, RBI gives permission for appointment of auditor on year to year basis. Further as per RBIâs directive, it is mandatory to rotate the Auditor after completion of four years. M/s. Deloitte, Haskins & Sells, Chartered Accountants (Registration No.117365W) has already completed term of two years. Taking this into consideration, ratification of the appointment of the auditors has been recommended for financial year 2018-19, which is also subject to prior approval of RBI. The Reserve Bank of India has been approached for their re-appointment. Your Board recommends ratification of their appointment as Statutory Auditors at the ensuing Annual General Meeting, subject to RBI approval.
SECRETARIAL AUDIT REPORT
Pursuant to the requirements of the Companies Act, 2013, the Bank has appointed M/s. Ananthasubramanian & Co., Practicing Company Secretaries (COP 1774) as the Secretarial Auditor for FY 2018 and their report of April 11, 2018 is attached separately to this report.
ACKNOWLEDGEMENTS
Your Board wishes to thank the principal shareholder and promoters, the Aga Khan Fund for Economic Development S.A. (AKFED) and all the other shareholders for the confidence and trust they have reposed in the Bank. Your Board also acknowledges with appreciation the Reserve Bank of India (RBI) for its valuable guidance and support to the Bank. Your Board similarly expresses gratitude for the assistance and co-operation extended by SEBI, BSE, NSE, NSDL, CDSL,NPCIL, Central Government and the Governments of various States, Union Territories and the National Capital Region of Delhi where the Bank has its branches.
Your Board acknowledges with appreciation, the invaluable support provided by the Bankâs auditors, lawyers, business partners and investors. Your Board is also thankful for the continued co-operation of various financial institutions and correspondents in India and abroad.
Your Board wishes to sincerely thank all its customers for their patronage. Your Board records with sincere appreciation the valuable contribution made by employees at all levels and looks forward to their continued commitment to achieve further growth and take up more challenges that the Bank has set for the future.
On behalf of the Board of Directors
Place: Bengaluru Nasser Munjee
April 14, 2018 Chairman
Mar 31, 2017
The Directors are pleased to present the Annual Report of DCB Bank Ltd (hereinafter referred to as the Bank/Your Bank/DCB Bank) together with the audited accounts for FY 2017.
In FY 2017, the Bank has posted an Operating Profit of Rs, 418.21 crore (FY 2016 Rs, 349.03 crore) and a Net Profit of Rs, 199.68 crore (FY 2016 Rs, 194.52 crore).
Total Assets have increased by Rs, 4,927.86 crore and reached Rs, 24,046.38 crore as on March 31, 2017 (Rs, 19,118.52 crore as on March 31, 2016). Customer Deposits have increased by Rs, 3,141.13 crore and Advances have increased by Rs, 2,896.24 crore. The Bank has achieved the overall Priority Sector Lending (PSL) target as required by the Reserve Bank of India (RBI).
The Net Interest Margin (NIM) has improved to 4.04% in FY 2017 from 3.94% in FY 2016 and the Current and Savings Accounts (CASA) ratio stood at 24.3% as on March 31, 2017 (23.4% as on March 31, 2016).
Cost to Income Ratio has increased to 60.0% in FY 2017 from 58.4% in FY 2016. The Bankâs Operating Cost increased mainly due to increase in number of branches, increase in number of staff and higher business volumes.
Total Branch network stood at 262 as on March 31, 2017 (198 as on March 31, 2016) and ATM network increased to 515 as on March 31, 2017 (410 as on March 31, 2016).
Provisions Other Than Tax have increased to Rs, 111.49 crore in FY 2017 from Rs, 87.91 crore in FY 2016. The increase was mainly due to provision for existing and fresh NPA slippages, higher Floating provision and Provision against Standard Assets.
Gross NPAs have increased to Rs, 254.20 crore as on March 31, 2017 from Rs, 197.38 crore as on March 31, 2016. The overall NPA Provision Coverage Ratio as on March 31, 2017 was 73.80%. Net NPAs have increased to Rs, 124.41 crore as on March 31, 2017 as against Rs, 97.46 crore as on March 31, 2016.
Capital Adequacy Ratio (CAR) under Basel III as on March 31, 2017 stood at 13.76% (14.11% under Basel III as on March 31, 2016).
In November 2016, the Bank issued Basel III compliant Tier II Bonds and raised Tier II capital of Rs, 150 crore.
FINANCIAL SUMMARY
(Rs, in crore)
|
As at March 31, 2017 |
As at March 31, 2016 |
Increase / (Decrease) |
|
|
Balance Sheet |
|||
|
Customer Deposits |
15,943.02 |
12,801.89 |
3,141.13 |
|
Inter Bank Deposits |
3,346.19 |
2,124.10 |
1,222.09 |
|
Total Deposits |
19,289.21 |
14,925.99 |
4,363.22 |
|
[Including Total CASA] |
[4,689.18] |
[3,489.87] |
[1,199.31] |
|
Advances |
15,817.63 |
12,921.39 |
2,896.24 |
|
Gross â NPA |
254.20 |
197.38 |
56.82 |
|
Net - NPA |
124.41 |
97.46 |
26.95 |
|
Provision for Standard Assets (including provision for unhedged foreign currency exposure) |
85.05 |
63.38 |
21.67 |
|
Total Assets |
24,046.38 |
19,118.52 |
4,927.86 |
|
For the year ended March 31, 2017 |
For the year ended March 31, 2016 |
Increase / (Decrease) |
|
|
Profit & Loss |
|||
|
Net Interest Income |
797.09 |
619.50 |
177.59 |
|
Non Interest Income |
249.45 |
220.46 |
28.99 |
|
Total Operating Income |
1,046.54 |
839.96 |
206.58 |
|
Operating Cost |
628.33 |
490.93 |
137.40 |
|
Operating Profit |
418.21 |
349.03 |
69.18 |
|
Provisions |
111.49 |
87.91 |
23.58 |
|
Net Profit Before Tax |
306.72 |
261.12 |
45.60 |
|
Tax |
107.04 |
66.60 |
40.44 |
|
Net Profit After Tax |
199.68 |
194.52 |
5.16 |
DIVIDEND
Your Board is pleased to recommend a dividend of Rs, 0.50 per equity share of Rs, 10.00 each in respect of the financial year ended March 31, 2017.
MANAGEMENT DISCUSSION AND ANALYSIS Vision
The Bankâs vision is to be the most innovative and responsive neighborhood bank in India serving entrepreneurs, individuals and businesses. In line with our vision, we began implementing a new strategy in FY 2010 which has now completed 7 years. The Bank continues to make steady progress and improvements are clearly visible in most areas of its business. In order to accelerate the business momentum further, in October 2015, the Bank announced its plan to increase its network by 150 more branches in 24 months.
Target Market
Keeping in view its inherent strengths, branch network and expertise, the Bank''s target market is mainly small business owners /self-employed / small business segment (traders, shop keepers, business owners, MSMEs and SMEs). The Bank has chosen to have limited presence in the salaried segment. The MSME / SME sector plays a very important role in the growth of the Indian economy.
MSME sector plays a pivotal role in the economic and social development of the country. Some important information on MSME sector is given below:
- Number of Working Enterprises â 49 million, Employment â 111 million
- Urban â 45%, Rural â 55%
- Manufacturing â 32%, Service â 68%
- Sole Proprietor â 94%
- Market value of Fixed Assets â INR 13,637 billion
(Source: Annual Report 2014-15 Government of India, Ministry of Micro, Small and Medium Enterprise)
Also, as per DNA survey, June 2013, the Indian workforce consists of 51% self-employed.
DCB Bank Customers
Your Bank deals with several types of business owners, self-employed / small businesses for example - Trader, Commodity, Gold Trader, Vegetable Trader, Commission Agent, Retailer, Restaurant Owner, Caterer, Baker, Vending Machine Supplier, Consultant, Doctor, Contractor, Interior Decorator, Software Designer, Salon, Beauty Parlour, Printer, Electrical Engineer, Saw Mill, Flour Mill, Rice Mill, Grocery Store, Brick Maker, Builder, Fabricator, Artist, Writer, Auto Repair, Ship Repair, Pharmacy, Computer Specialist, Furniture Maker, Uniform Maker, Garment Shop, Fashion Tailor, Hardware Shop, Agri Processor, Pesticide Dealer, Auto Dealer, Scrap Dealer, Stationery Supplier, FMCG Dealer, Tool Maker, Agri Input Dealer, Tractor Dealer, Plastic Manufacturer, Mattress Manufacturer, Water Supplier, Computer Classes, Internet Cafe, Coaching Classes, Tour Operator, Hotel Owner, Transporter, Ticketing Agent, C&F Agent etc. The list of Self Employed occupation is endless. The target market is essentially Micro, Small and Medium Enterprises both in Manufacturing and Services. (Please refer to MSMED Act, 2006). Majority of lending to MSME sector qualifies for Priority Sector Lending. It is estimated that over 80% of CASA accounts and 80% of Mortgage loans are in the self-employed segment for the Bank.
Credit Rating
The Bank continues to enjoy ICRA A (hyb)/(stable) rating for Long Term â Subordinated Debt, ICRA A1 rating for Short Term Fixed Deposits, CRISIL A1 rating for both Certificate of Deposits and Short Term - Fixed Deposits.
Awards
Your Bank received a number of awards and recognition in FY 2017:
- Best Data Center Design â Data Center Summit 2016
- Indian Express Award for Innovation â Aadhaar Based ATM
- BFSI Digital Innovators Award â Innovative Usage of Emerging Technology
- Finnoviti Innovation Award â Aadhaar Based ATM
- Best Prepaid Program â Drivers of Digital Awards 2016
Branch Expansion / ATMs
In October 2015, the Bank announced its intention to increase the number of branches by 150 in 24 months. Accordingly, in FY 2017, your Bank increased its branch network by 64 branches â 30 in Retail and 34 in Agri and Inclusive Banking (AIB). The year ended with 262 branches (150 in Retail and 112 in AIB) in 18 states and 2 union territories. Approximately 22 percent of the branches are in rural areas and 25 percent in semi-urban areas. Your Bank has created fair degree of standardization in terms of âlook and feelâ of the branches across India. Based on the business model adopted by the Bank, new branches generally âbreak evenâ between 18 to 22 months from the date of operation. Over time the Bank has been able to make step by step improvements in the execution of business model. The Bank believes in hiring suitable talent and ensuring proper grooming / mentoring through in-house training programs. In order to improve the overall performance, controls and customer service, the Bank strengthened the organization structure of managing branch network. The concept of Cluster Services Operations Managers (CSOM) independent of the sales team was introduced in the previous year. The entire network is grouped into manageable clusters for closer supervision. One of the key focus areas for the Branch Operations team is to simplify the existing processes in order to provide better service to customers. Accordingly, the Branch Operations team simplified 42 processes in FY 2017. Simultaneously risk management and monitoring aspects were also strengthened. The Bank has increased its ATMs from 410 in FY 2016 to 515 in FY 2017. Unfortunately, during demonetization there was not enough cash available and therefore, a large number of ATMs could not be operated. This resulted in customer inconvenience and loss of business to the Bank. While all ATMs have been recalibrated and become operational, they will become fully functional in the coming months as cash availability is steadily improving.
RETAIL BANKING
Retail Banking offers comprehensive range of Deposits and Advances products. At the end of FY 2017, Retail Banking has 150 branches and has a multi-product approach with focus on productivity and service excellence. In the deposit side a number of new products were introduced to address the needs of institutions as well as individuals. A large part of the retail banking responsibility is to steadily increase CASA and Term Deposits in order to provide cost effective and stable funding for Advances. In FY 2017, CA balances grew by 30 percent and SA balances grew by 36 percent. Some part of the CASA growth was due to demonetization that resulted in cash deposits into both existing and new accounts. CASA ratio was 24 percent at the end of FY 2017. Overall Term Deposits registered 29 percent growth. One of the highlights of FY 2017 is the launch of DCB Suraksha Deposit â a unique product where customers get insurance cover at zero cost if they opt for longer tenor term deposit (subject to conditions).
Mortgage and Micro Mortgage
Mortgage is the lead product of the Bank addressing primarily the self-employed segment offering tailor made solutions. It contributes approximately 43 percent of Advances of the Bank. Both home loans and business loans are offered. Almost all retail branches offer Mortgage/Micro Mortgage loans. In order to support business growth, dedicated sales teams are present in 76 locations across India. Micro or small ticket mortgage loans are most useful for customers in the Tier 2 to Tier 6 locations. Many in the rural and semi-urban areas are deriving incomes from unorganized sector. At times it becomes difficult to get proof of their capacity to repay. Therefore, the Bank needs to have the ability to assess the household income in order to determine eligibility. Personal discussion with the customer is an essential part of the credit assessment. The purpose of the loan, inter alia, may include home construction, home purchase, home repairs, business enhancement, marriage and education. In FY 2017, the retail Mortgages grew by approximately 22 percent as compared to the previous year.
Construction Finance (CF)
Construction of flats and providing housing is a critical part of a growing economy. India has a huge population which does not own flat/house. For banks, financing construction is a good opportunity. However, there are numerous risks that need to be taken into consideration. Demonetization has impacted construction business. Therefore, the Bank needs to be very cautious in CF portfolio. The focus is on reputed builders with a strong track record who are targeting the end users with reasonably priced homes catering mainly to middle and lower incomes. The positive side effect of CF is growth in CA balances and providing home loans to home buyers. Real Estate (Regulation and Development) Act 2016 (RERA) is likely to bring about major changes in the Construction Business and consequently financing.
Commercial Vehicle (CV)
CV financing was restarted in FY 2013 and is now offered in 108 locations. The main objective behind re-entering the business was to improve the Bankâs ability to achieve PSL. More than 85 percent of CV portfolio falls under PSL. Although economic conditions were weak, so far the portfolio quality has been maintained at an acceptable level. CV industry is an essential part of the Indian economy and in the coming years the Bank has a good opportunity to build a large CV portfolio. Overall CV business achieved growth of 54 percent in FY 2017 as compared to the previous year.
Loan against Gold
Loan against Gold is offered in almost all branches (Retail and AIB). In FY 2017, as part of process improvement initiatives the Bank further expanded âOne hour loan approval / disbursal processâ in many more branches. The Loan against Gold business slowed down during demonetization. With the increase in branches your Bank hopes to steadily build a large Loan against Gold portfolio to provide further diversity to the overall business.
Debit Cards
In FY 2017, as compared to the previous year, Cards in Force (CIF) increased by 107 percent. The number of Point of Sale (POS) transactions increased by 149 percent in comparison to the previous year. The number of e-commerce transactions increased by 60 percent in comparison to the previous year. The demonetization initiative has been one of the key factors in rapid increase in digital transactions.
DCB Payless Cards
This is a unique product offered by the Bank and is a preferred card for those self-employed segment that are unable to provide sufficient income proof or do not have an acceptable credit track record. In FY 2017, as compared to the previous year, CIF increased by 32 percent, the number of transactions on POS increased by 45 percent and the number of e-commerce transactions increased by 46 percent.
DCB Janajeevan Prepaid Card
The Bank launched Indiaâs first co-branded prepaid card for disbursal of small loans by Janalakshmi Microfinance in FY 2014. The product is administered in association with Jana Urban Foundation. The program aims to provide cashless disbursal which has a major positive impact on financial inclusion. In FY 2017, the total cards issued crossed 57 lakhs. As mentioned in the earlier year report the program also won two prestigious awards - (a) âThe Best Prepaid Product of the Yearâ at the 5th IAMAI Digital Awards (b) âThe Most Innovative Prepaid Cardâ at the Finnoviti 2015.
Distribution of Mutual Funds and Insurance
The Bank distributes Mutual Funds, Life Insurance and General Insurance products to new and existing customers. This helps in deepening relationship with Deposit and Advances customers.
Traditional Community Banking
With a vision of strengthening neighborhood banking, the Bank set up a separate vertical in FY 2010 with the aim of providing personalized attention to the community customers and winning back lost relationships. In FY 2017, as compared to the previous year, Traditional Community Banking Deposits grew by 12 percent and Advances increased by 22 percent.
Non-Resident Indian (NRI) business
In FY 2017, NRI deposits contributed 8 percent of the Total Deposits. During the year approximately 1,683 new customers were acquired. The Bank has customers across 128 countries. The NRI deposits achieved growth of 16 percent in FY 2017 as compared to the previous year.
Collections
Collections is an important function for the Bank. It helps to provide timely reminders to customers and also ensure portfolio quality. The Bankâs in-house Collections team is a common utility for all products and is present in 179 locations pan India. In the previous year, in order to assist field collections, the Bank introduced m-Collect, a smart phone based application that helps in providing system generated receipts on the field. The application also instantly provides real time updates to the loan system helping improve efficiency and provide customer convenience. Collections and recovery process was impacted by demonetization. The Bank made extra efforts to ensure portfolio quality.
Strategic Alliances
One of the key strategies of the Bank is to look for alliances with entities that may have similar business objectives. The idea is to improve the product benefits to customers that helps to improve fee income and loyalty.
- Aditya Birla Health Insurance â Corporate Agency â Health Insurance
- Birla Sunlife Insurance â Corporate Agency - Life Insurance
- HDFC Standard Life Insurance â Corporate Agency - Life Insurance
- ICICI Lombard GIC â Corporate Agency - General Insurance
- Annapurna Micro finance, Lok Management Services, New Opportunity Consultancy, Pahal Financial Services, Peopleâs Forum, Taraashna Services - Business Correspondents for sourcing Small Savings Accounts, Deposit Accounts and providing Micro Loans to JLG, SHG, individuals and micro-enterprises.
- Western Union Business Solutions (USA) â Technology Services -Foreign Exchange Remittances
- Weizmann Forex â Referral Agent Trade Related Outward Remittances
- Paul Merchants, Thomas Cook â Referral Agent Trade Related Outward Remittances
- TVS Credit Services âCar Loan Business
- Janalakshmi Financial Services â Co-branded Prepaid Card
- Madura Microfinance â Prepaid Card
- Belstar Microfinance â Prepaid Card
- India Infoline (IIFL) â Co-branded Prepaid Card
- Muthoot Finance & Muthoot Forex â Co-branded Prepaid Card
- Midland Microfinance â Prepaid Card
- Fullerton India Credit Company (FICC) â Co-branded Prepaid Card
- Satin Creditcare Network, Utkarsh Microfinance, Annapurna Microfinance, Swaabhimaan Microfinance, SV Creditline, Taraashna Services, Namra Finance, Svatantra Microfin, Fusion Micro finance, Kamal FinCap, Saarthi Credit Co-Op Society, CashPor Micro Credit - Bajaj Allianz Death Claim Settlement on Prepaid Card
- Slonkit â Co-branded Prepaid Card cum Wallet
- Euronet â ATM and switching services provider
- ATOS Worldwide â POS deployment service provider
- M2P â Prepaid program manager
- India Infoline Ltd. (IIFL) â Partner for offering security trading accounts to customers
- Transcorp â Money transfer services
- Thomas Cook - Prepaid Alliance
- Cinqo - Prepaid Alliance
- Sabpaisa - Payment Collection Solution
The Bank is also working with many âFintechâ companies to introduce new products and or unique way of acquiring / servicing customers. The Bank has partnered with Niyopay to launch a unique salary account solution. In addition the Bank has partnered with Seynse technologies and Zest Money for digital lending solutions. DCB Bank is also amongst the first few banks to have gone live on Bharat QR code solution. The Bank also launched its own wallet during the year named as âCippyâ.
MSME and SME
The importance of MSME and SME to Indiaâs economy and the Bankâs strategy of targeting this segment have already been mentioned earlier in this discussion. The Bank has created robust sales, underwriting and portfolio monitoring capability for growing the MSME/SME business, offering a wide range of products and personalized services including Foreign Exchange, Cash Management, Trade Finance and Internet Banking. The aim is to become the business partner of this vibrant entrepreneurial segment of the economy. The Bank targets largely small ticket size MSME / SME customers. In FY 2017, MSME/SME Advances grew by approximately 18 percent as compared to the previous year. Competition is intense and therefore the Bank put in place a special unit to ensure that quality customers are retained through constant relationship efforts. MSME / SME segment needs to embrace the digitization agenda of the country. They also need to make appropriate adjustments to their business models to take advantage of Goods and Service Tax (GST) which is likely to be implemented in the coming months.
CORPORATE BANKING
Corporate Banking is present across India with regional offices in Ahmadabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, and Mumbai. The business objective is to provide a complete range of commercial banking solutions including Foreign Exchange, Trade Finance and Cash Management. In FY 2017, the Bank added 36 new relationships in Corporate Banking. The Bank has a robust underwriting and credit systems to address the inherent risks in Corporate Banking exposure. The emphasis is on building a secured advances portfolio and building long term relationships with high quality large and mid-corporate houses. Regular review of the existing exposure is done with the aim of initiating timely action in case of any emerging risks. In FY 2017, we had some slippages into NPA primarily on account of economic stress in some sectors. As a result of the early warning systems in place and timely management of risky exposures, Corporate Banking portfolio quality remained stable.
AGRI AND INCLUSIVE BANKING (AIB)
AIB is a separate business unit formed to achieve financial inclusion. At the end of FY 2017, this unit had 112 branches in 10 states. There are many opportunities to offer simple yet innovative products backed by superior technology in the rural and semi-urban areas of India. Many of the new branches are located in Tier 2 to Tier 6 locations. There is a constant Endeavour to cater to under and unbanked population of the country through a wide range of products, for example, zero balance savings accounts, small recurring deposit account, small loans to match the income and cash flow cycle. AIB also coordinates the entire PSL efforts for the Bank and is primarily responsible for achieving the financial inclusion targets. In FY 2017, AIB Advances grew by approximately 25 percent as compared to the previous year.
Pradhan Mantri Jan-Dhan Yojana (PMJDY)
In FY 2017, your Bank actively participated in PMJDY and opened 26,306 PMJDY accounts as on March 31, 2017. The Bank has enabled Rupay Debit Cards for PMJDY account holders.
Pradhan Mantri Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Atal Pension Yojana (APY)
The Bank successfully reached out to unbanked and economically weaker population through PMSBY, PMJJBY and APY programs that are designed to bring social security. Your Bank had 7,597 customers under PMSBY, 10,952 customers under PMJJBY and 1,331 customers in APY as on March 31, 2017.
Basic Savings Bank Deposit Account (BSBDA)
BSBDA has replaced âNo frills accountâ. This is a wonderful product for achieving financial inclusion especially those who have limited transaction needs in the low income group and may not have proper identity, address, date of birth or signature proofs. Bank had 57,967 BSBDA accounts as on March 31, 2017.
Kisan Mitra
âKisan Mitraâ as the name suggests, is a liability product which fulfils the requirement and enhances the saving habit in rural areas. It is a product specially designed for members of co-operative institutions (example dairy co-operative, sugar co-operative). It is a modified Savings Account with zero account opening amount and no Average Quarterly Balance maintenance charges. Co-operative institution payments are routed through this account.
Warehouse Construction Loan
There is a huge need in the country to provide farmers with scientific storage so that wastage and stock deterioration can be reduced. Also, proper warehousing helps famers to retain their produce and obtain fair pricing for their produce instead of selling in distress.
Retail Agriculture Loan and Kisan Credit Card
In order to meet the credit needs of the farmers, the Bank has several retail agri products namely Crop loans (example purchasing seeds, fertilizers, pesticides, manures, irrigation), Animal Husbandry loans, and loans for investment purpose like land improvement, irrigation and hi-tech agriculture.
Tractor Loans
Tractors form an integral part of the total agricultural equipment sector and is an indirect indicator of growth in the agricultural sector. The Bank has slowly built its business across Tier 2 to Tier 6 branches. Providing tractor loans helps the Bank to partly meet PSL targets for agriculture set by the RBI.
Microfinance Institutions (MFI) and Business Correspondents (BCs)
The Bank lends directly to MFIs who in turn lend to end borrowers. Over time, the Bank has created a strong network of MFI relationships across India. The Bank is also providing unsecured loans through BCs in a few states of the country. The loans are given to members of SHGs and JLGs for livelihood activities thereby enabling them to avail small loans from banking sector instead of high cost borrowing from informal channels. These loans are primarily provided to small farmers and weaker sections mainly in rural areas. In order to support the volume growth, your Bank introduced new software system for managing BC Loans. This software helps maintain adequate information about the borrowers under SHG, JLG and Microenterprises categories. It provides a common platform to both Bank and BC for smooth processing of loans and has added immense value by reducing the loan disbursal cycle time. In recent months there is some stress being faced by the entire industry in the MFI / BC business. The Bank has always adopted a cautious approach towards this sector and it is taking measured steps to maintain portfolio quality.
Commodity Based Finance (CBF)
The Bank is engaged in lending to farmers and agri processors against agricultural produce stored in the designated warehouses. The Bank has a list of approved commodities against which the loans are given. Given the volatile market conditions the Bank has chosen to be cautious in pursuing CBF opportunities.
TREASURY, MONEY MARKET AND FOREIGN
EXCHANGE
Treasury
Treasury actively manages liquidity, Fixed Income Securities Trading, Investment in Equity through Initial Public Offers (IPOs), FX Trading and Customer Sales. Treasury ensures compliance with regulatory requirements such as CRR and SLR. As the Bank''s performance continues to improve, many reputed Financial Institutions (FIs) have started subscribing to Certificate of Deposits (CDs) issued by the Bank. In FY 2017, the Bank made cautious gains by utilizing the trading opportunities in G-Sec presented by declining interest rates. The Bank invested in a number of Equity IPOs and booked moderate listing gains. The Bank also invested in medium term AAA Corporate bonds, short term Commercial Papers and Certificate of Deposits of other banks in order to earn interest income on liquidity mismatches.
Money Market
The country reported Gross Domestic Product (GDP) growth of 7.1% in FY 2017. The Index of Industrial Production (IIP) growth was low mainly due to contraction in manufacturing because of decline in demand for Capital Goods. The Consumer Price Index (CPI) inflation declined to 3.81% in March, 2017 from a high of 6.07% in July, 2016 primarily driven by food and fuel prices. RBI conducted variable rate REPO and OMO in the market to maintain sufficient liquidity. Decline in global commodity prices and expectation of rate cuts by RBI led to softening of 10 year G-SEC yields. Demonetization created excess liquidity and markets remained somewhat uncertain. The Monetary Policy Committee has targeted inflation at 4% and is likely to act accordingly with respect to monetary policy in the coming months.
Foreign Exchange
There were a few geo-political events in FY 2017 that affected the global and Indian markets. The two main events were Presidential Election in USA and Brexit in UK. Both British Pound vs US Dollars and Euro vs US Dollars were impacted by these massive events. In anticipation of large contracted outflow of FCNR funds, INR depreciated. However, sentiments improved towards later part of the year due the ruling party winning some crucial state assembly elections. This resulted in strengthening of INR vs US Dollars. Oil price remained range bound. Both domestic and foreign flows helped to liven up the Sensex.
TRANSACTION BANKING Cash Management Services (CMS)
The Bank provides Corporate, MSME / SMEs and Retail customers sophisticated and cost effective CMS. This helps customer to manage their payment logistics in a hassle free manner. In the last few years, the Bank has steadily increased CMS customers. At the end of FY 2017, the Bank had 4,379 active customers using the CMS facility.
Business Internet Banking (BIB)
The Bank offers state-of-the-art BIB features especially designed for MSME / SME customers. At the end of FY 2017, BIB facility was availed by 19,772 users. The BIB software is likely to be upgraded in FY 2018.
Credit Risk
The Credit Risk unit ensures alignment with the objectives of achieving growth while maintaining portfolio quality by making appropriate risk / reward trade-offs. The idea is to ensure long term sustainable performance across business cycles. Regular efforts are made to improve risk assessment and control processes. Credit Risk unit over time has developed capabilities to assess the risks associated with various products and business segments. As far as possible, efforts are made to standardize the entire process pan India while taking into account geographic nuances. The Bank has implemented a rating model that takes into account both quantitative and qualitative factors and produces a rating that becomes one of the key inputs to credit decisions. In FY 2017, the Credit Risk unit ably supported the business / branch expansion agenda of the Bank. One of the main focus areas for the Credit function was improving productivity and customer experience. In order to continuously improve the quality of the portfolio, the Credit Risk unit invested in SAS analytics and created several insightful analysis/models which helped in refining the product offering and collections/recoveries. Key processes in credit underwriting were examined and duplication was reduced to improve speed of processing and costs. Periodic portfolio reviews were conducted with business units which helped to improve customer targeting and profitability.
Concentration Risk
Concentration risk is monitored and managed both at the customer level and at the aggregate level. The Bank continuously monitors portfolio concentrations by segment, ratings, borrower, group, sensitive sectors, unsecured exposures, industry and geography. The Bank adopts a conservative approach within the regulatory prudential exposure norms.
Market Risk
Besides the usual monitoring of Structural Liquidity, Interest Rate Sensitive Gap limits and Absolute Holding limits, the Bank also monitors interest rate risks using Value at Risk limits. Exposures to Foreign Exchange and Capital Markets are monitored within pre-set exposure limits, margin requirements and stop-loss limits.
Country Exposure Risk
The Bank has established specific country exposure limits which is capped at 1.5% of Total Assets. The limit also depends upon rating of individual countries. The Bank uses the mitigant of insurance cover available through the Export Credit and Guarantee Corporation (ECGC), where appropriate.
Liquidity Risk
As part of the liquidity management and contingency planning, the
Bank assesses potential trends, demands, events and uncertainties that could result in adverse liquidity conditions. The Bankâs Asset Liability Management (ALM) policy defines the gap limits for the structural liquidity and the liquidity profile is analyzed on both static and dynamic basis by tracking cash inflow and outflow in the maturity ladder based on the expected occurrence of cash flow. The Bank undertakes behavioral analysis of the non-maturity products, namely CASA, Cash Credit and Overdraft accounts on a periodic basis to ascertain the volatility of balances in these accounts. The renewal pattern and premature withdrawals of Term Deposits and drawdownâs of unveiled credit limits are also captured through behavioral studies. The liquidity profile is estimated on an active basis by considering the growth in Deposits, Advances and investment obligations. The concentration of large deposits is monitored on a periodic basis. Emphasis has been placed on growing Retail deposits and avoid as far as possible bulk deposits. The Bank periodically conducts liquidity stress testing.
Operational Risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people or systems, or external events. The Bankâs operational risk management framework is defined in the Operational Risk Management Policy approved by the Board of Directors. While the policy provides a broad framework, Operational Risk Management Committee (ORCO) oversees the operational risk management in the Bank. The policy specifies the composition, roles and responsibilities of the ORCO. The framework comprises identification, assessment, management and mitigation of risks through advanced tools and analysis.
New products or services introduced are subject to a risk review and sign-off process so that relevant risks are identified and assessed independently from the unit proposing the product. There is a separate Management Committee for Approval of Process (MCAP) constituted to approve and review various processes in the Bank. The said committee consists of experienced bankers and subject matter experts. Internal Audit also reviews the processes that are implemented as part of the audit function.
Reputational Risk
The Bank pays attention to issues that may create a Reputational risk. Events that can negatively impact the Bankâs position are handled cautiously ensuring utmost compliance and in line with the values of the Bank.
Implementation of Basel III guidelines
In accordance with RBI guidelines, the Bank has migrated to Basel III capital adequacy disclosures with effect from Q1 FY 2014. The Bank continues to review and improve on its risk management systems and practices to align them with international best practices. The Bank has successfully implemented Standardized Approach for Credit Risk, Standardized Duration Approach for Market Risk and Basic Indicator Approach for Operational Risk.
INFORMATION TECHNOLOGY (IT)
The Bank has been making good progress towards âdigitizationâ. The demonetization initiative has been a major impetus in moving
India rapidly towards a âless cashâ economy. Smart phone is steadily becoming ubiquitous and customers want everything on their mobile phone. The Bank is on transformational journey to stay ahead of competition. Last year the Bank launched India''s first Aadhaar based ATM and has installed close to 91 Aadhaar based ATMs pan India. The Bank''s IT strategy has four pillars â 1) Core Applications â continuously upgrade to support digital transformation, 2) Mobile/ Tab â create customer convenience by optimum use of mobile devices,
3) Payments â offer innovative solutions that are dynamic, secure and fast, 4) Infrastructure â modernize to support business growth in a cost effective and secure manner. In FY 2017, the Bank implemented many new applications/upgrades for example - a) Aadhaar IRIS based tab banking solution for instant verification of KYC, b) DCB Delight (Instakit) instant account opening for Savings Account customers,
c) Online Foreign Exchange platform for retail customers, d) Loans on the Go mobility application for providing information on loans
e) Automated trade finance inward remittances process through seamless integration of SWIFT and NEFT f) Successful migration to and certification of Information Security Management based on ISO 27001:2013 standard, g) Online Mutual Funds module for ease of buying and redeeming mutual funds. The Bank also participated in a two day event âDigi Dhan Melaâ organized by Ministry of Electronics and Information Technology.
OPERATIONS
The Bank''s focus is on creating a cost effective scalable Operations unit that can deliver superior customer experience. The Bank intends to achieve optimum centralization of activities to National Processing Center (NPC) Chennai with the idea of creating a centre of excellence. The NPC faced enormous volume pressures during demonetization period (November and December 2016). In FY 2017, Cheque Truncation System process was in-housed resulting in cost savings and reduction in potential errors. On a pilot basis, the printing of debit cards and PIN was also in-housed at NPC, Chennai.
INTERNAL AUDIT (IA)
IA has a team of professionals, experienced bankers, domain experts and new comers with audit and finance background. The Audit Committee of the Board (ACB) provides direction and monitors the effectiveness of the IA function. IA forms the third line of defense in the overall risk management framework of the Bank. IA is independent and continuously evaluates and tests the internal controls to identify gaps, inadequacies and residual risks. The IA function incorporates RBI guidelines, aims to embrace the best practices from the industry, professional bodies and strives to follow high standards. IA has put in a detailed risk assessment and audit planning process in place. IA approaches each audit with adequate preparation relying on analytics to help identify areas of focus. In FY 2017, IA conducted 216 branch audits, 12 periodic audits, 7 compliance audits, 7 information system audits and 8 snap audits. IA also undertook a special audit after the demonetization exercise was completed. IA continues to appraise the Board, the ACB and the Management teams in terms of newer emerging control issues and recommend appropriate mitigating measures.
HUMAN RESOURCES
Your Bank has a dynamic and creative HR unit. In FY 2017, the HR unit continued people agenda of developing, caring, engaging and building a culture that supports performance and growth. The Bank''s headcount went up from 4,248 in FY 2016 to 4,979 in FY 2017. More than 90% of the new employees were covered by the HR induction program. The HR unit has a special focus on ânew generationâ employees. This is necessary in order to build a pipeline of supervisors and leaders for the future. In order to improve the quality of supervision and supervisors, an internal survey titled âSpeakâ was administered in which 96% of the employee strength participated giving feedback on 7 key dimensions of people management. The survey generated 557 supervisor scorecards. As part of the talent development initiative, ACE program was launched especially for staff identified as âHi-potentialâ and âCriticalâ. The Bank improved its Great Place to Work score from 73% in FY 2016 to 75% in FY 2017. New program called Wizcom covering four âCsâ of communication was introduced in order to improve the skills of employees. Fun elements were added to Wizcom by introduction of informal âDCB Toastmasters Clubâ and âAdarshâ mascot. The Bank already has several signature development programs that have been in existence for more than 5 years namely Budding Branch Manager, ASPIRE, LEAP and RISE. DCB Allympics (staff sports event) which was introduced in FY 2016 became much bigger and more exciting. All major locations in India where the Bank has its offices / branches conducted DCB Allympics in FY 2017. In order to explain the employee benefits in a creative manner a unique concept called DCB Chaupal was organised in many locations providing an opportunity to directly connect with the staff and explain the employment benefits in the Bank.
STAFF PARTICIPATION IN CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Bank has a unique concept whereby each employee is allowed 2 days paid leave every year for participating in the Bank''s CSR thrust areas. Over 300 employees participated in various activities across Bengaluru, Bhopal, Delhi, Hyderabad, Mumbai and Pune. For example the Bank staff organised delivery of water tankers for 25 days to severely drought affected Saarul (population of approximately 2,000) situated in Maharashtra. The village has only one well which had dried up. In Dongri area of Mumbai, the Bank staff joined hands with the local seniors and school children who went door to door to deliver garbage bins while conveying message of cleanliness. The event was attended by local MLA and senior BMC staff. A large contingent of the Bank staff visited Sanjay Gandhi National Park in Mumbai to learn about waste segregation and manure creation process. In Bengaluru, the Bank staff volunteered in de-weeding of Putenahalli lake. The Bank helped the Border Security Force at Wagah Border in providing visitor friendly facilities such as wheel chairs and garbage bins.
CUSTOMER SERVICE
Ensuring customer delight in every interaction remains the Bank''s core desire for growth and success. Customer complaints and satisfaction levels are monitored by the MD & CEO and Senior Management team. An independent Service Excellence team analyses customer complaints, identifies the root cause, makes suggestions for process improvements and follows up with the respective units for rectification. The Bank has a âCentralized Complaint Managementâ system to ensure that customer queries and complaints are not missed out. Customer queries and complaints are followed up to ensure timely resolution and quality standards are imposed on the Bankâs staff. The Bank continues to make steady progress on the concept of Power of Three - Empathy, Speed and Quality (ESQ) initiative launched 5 years ago. During demonetization most of the branches dealt with huge walk-ins (existing and new customers). The Bank staff âlived ESQâ under volume pressure and many positive comments were received on Face book, Twitter and media for the services rendered during demonetization. The Bank is continuously working on the six pillars of Service Excellence â Voice of Customer, Service Recovery, Attrition Calling, Process Simplification, Service Culture and Measures & Metrics. The Service Excellence team regularly conducts customer complaint meetings, review of progress on six pillars with key stakeholders, weekly calls with frontline staff to obtain feedback, make surprise visits to branches, conduct customer meetings, focus groups with branch staff and mystery shopping to understand frontline service culture and competence. The progress on Service Excellence is regularly monitored by the Customer Service Committee (CSC) of the Board. In FY 2017, 105 individuals and 2 teams were recognized through ESQuire (in-house newsletter to celebrate ESQ). A special edition of ESQuire was issued to recognize 21 branches, 20 individuals and 2 teams for the hard work done during demonetization period.
Non-Branch Channels
Your Bank provides customers the choice of accessing DCB 24 hour Customer Care Phone Banking, ATMs, Internet and Mobile Banking for completing their banking needs. The Bank strives to provide best-in-class technology and service platform and hence introduced the Missed Call Facility which enables customers to complete their basic banking by simply giving a missed call. The Bankâs mobile banking platform âDCB on the Goâ is periodically upgraded. The Bank provides instant fund transfer facility through Inter Bank Mobile Payment System (IMPS). In FY 2017, DCB Bank was amongst the first banks to offer Unified Payment Interface (UPI) a truly seamless and modern payment option on mobile phone. In FY 2017, the Bankâs Customer Care Associates attended to almost 10.87 lakh calls. At DCB Bankâs 24 Hour Toll Free Customer Care, customers directly get connected with the Bank officer (Customer Care Associate) without going through the pain of IVR. Thus, customers receive personal care. The Bank offers Phone Banking services in 9 languages of India (Hindi, English, Marathi, Gujarati, Tamil, Telugu, Odiya, Kannada and Punjabi) making it one of the best in the industry.
Marketing / Brand Awareness
Marketing unit works very closely with all the business units. The approach is on creating brand awareness in a cost effective manner across our footprint. Continuous micro marketing activities are conducted in almost every branch location throughout the year. This has helped achieve brand visibility, goodwill and new business. The Bank was the official partner - SunRisers Hyderabad (SRH) in IPL
2016. DCB Bank logo was prominent on the lead arm of the official jersey of all the players throughout the 2 month long tournament.
It was wonderful to witness SRH win the IPL 2016 tournament. On the eve of World Environment Day, the Bank was the title sponsor for âAhmadabad Go Green Marathon 2016â. The Bankâs signature customer event âEk Mulaquat Kuch Baateinâ was conducted in a few locations. Large number of customers attended and the Bank Chairman, Directors and Senior Management were able to freely exchange ideas in the meetings. As part of encouraging âstart-upsâ, the Bank once again tied up with BITS Pilani and presented âConquest 2016â, a prestigious competition where young new age entrepreneurs compete to show case their products / business. At Ajmer, the Bank sponsored the âBikersâ group of Royal Enfield (North) for propagating the message of safe driving and cleanliness. At Bengaluru, the Bank organised âCaptainâs Tankard Golf Tournamentâ at the prestigious Karnataka Golf Association. This event received overwhelming response from the club members. At Chennai, the Bank sponsored âTN Finance Conclaveâ. The theme was âGearing up for a changing environmentâ. This event was attended by leaders from the finance function from various industries. The Bank was proud to be associated for the second time with the Indian Navy PSO Cup Golf Tournament at Ambience Golf Greens, Gurgaon. This was a unique night golf event graced by the Chief of Naval Staff and senior Navy Officers. The golf event was followed by gala dinner with music and singing by enthusiastic Navy and the Bank staff. An international boxing event at New Delhi called âNight of the Championsâ was sponsored by the Bank. The match was live telecast in Star Sports and Hotstar. Your Bank was one of the sponsors for a wonderful event called âJubilee Gamesâ in Dubai. It was an extravagant show attended by the global community. More than 10,000 spectators and 2,500 athletes participated. Your Bank was also associated with musical events at Bengaluru, Surat, Vejalpur and Jaipur. A high profile seven day night cricket tournament in partnership with Jain Social Foundation was sponsored by the Bank at Jodhpur, Rajasthan.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY THE BANK.
Not applicable being a banking company.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All the transactions with related parties are in the ordinary course of business and on armâs length basis; and there are no âmaterialâ contracts or arrangement or transactions at armâs length basis and thus disclosure in from AOC-2 is not required.
POLICY ON RELATED PARTY TRANSACTIONS OF THE BANK
The Bank has a policy on Related Party Transaction and the same has been displayed on the Bankâs website:
http: / / www.dcbbank.com//pdfs/Policj_on_Related_Partj_ Transactions_2017-18.pdf
BUSINESS RESPONSIBILITY REPORT:
In terms of Regulation 34(2)(f) of the SEBI LODR Regulations, the Bankâs Business Responsibility Report describing the initiatives taken by the Bank from an environmental, social and governance perspective forms part of this Report and has been hosted on the website of the Bank, www.dcbbank.com.
CORPORATE SOCIAL RESPONSIBILITY (CSR):
A Board level committee for CSR has already been in place as stated in the section on Corporate Governance. The report on CSR is given below: Report on Corporate Social Responsibility (CSR) Activities during the FY 2016-17:
|
Sr. No. |
Description |
Particulars/Details |
|
1. |
A brief outline of the companyâs CSR policy, including overview of projects or programs proposed to be undertaken and a reference to the web-link to the CSR policy and projects or programs |
Outline: CSR Activities shall mean all the Corporate Social Responsibility activities / programs / initiatives of the company, either ongoing or new, dealing with the activities mentioned in thrust areas. The activities shall conform to those specified in Schedule VII to the Act (as amended from time to time) and as recommended by the CSR Committee and approved by the Board. The Bankâs thrust area is also in keeping with the Government of Indiaâs Swachh Bharat initiative. Thrust areas or activities ascribed to them are defined in the Policy, as amended by the Board, from time to time. Projects / Programmes to be undertaken: CSR Thrust Areas for DCB Bank Thrust areas shall mean and include any one or more of the following CSR activities: a) Conservation of water / water storage / water usage / protecting water bodies b) Waste Management c) Recycling Project/s supported: The availability of water and the stress on the water resources across cities and villages is acute as well as alarming. Sustainable methods for preservation of water bodies and resources is a dire need not only for the current generation but for all times to come. The Water situation is a grave one despite the availability of technical knowhow on rain water harvesting, water recharging structures which can give small and marginal farmers a better quality of life and livelihood. DCB Bankâs CSR Projects are at Kishangarh and Udaipur in Rajasthan; at Nuh in Haryana, in Amritsar district in Punjab, and Ratnagiri in Maharashtra. Additionally employee volunteer projects were completed in across locations such as Bhopal, Delhi, Chennai, Gurgaon/ Sohna, Hyderabad & Pune. Adherence to the Bankâs CSR main thrust area of Water, the FY 2016-17 projects are: a. Conservation of forests in the western ghats to enable rejuvenation of rivers, streams and natural water springs. Conservation of top soil through forestry. b. Ground water resources development in semi-arid villages. c. Rainwater harvesting structures in village schools as well as colleges. Creation of self sustaining water conservation structures for village schools in areas with prevalence of brackish water. Website link for DCB Bank CSR policy: http://www.dcbbank.com/pdfs/DCB-Bank-CSR-Policy.pdf |
|
2. |
The Composition of the CSR Committee. |
The members of the CSR Committee are Mr. Nasser Munjee (Chairman), Mr. Keki Elavia, Mr. S. Sridhar, Ms. Rupa Devi Singh and MD & CEO Mr. Murali M. Natrajan. Majority of the members are Independent Directors. |
|
3. |
Average net profit of the company for last three financial years (after adjusting for brought forward accumulated losses) |
Rs, 143.33 crore |
|
4. |
Prescribed CSR Expenditure (two per cent. of the amount as in item 3 above) |
Rs, 2.87 crore |
|
5. |
Details of CSR spent during the financial year: a) Total amount to be spent for the financial year; b) Amount unspent, if any; c) Manner in which the amount spent during the financial year is detailed on the following page |
Rs, 0.98 crore Rs, 1.89 crore -See the table on the following page- |
Manner in which the amount spent during the financial year 2016-17
|
(1) |
(2) |
(3) |
(4) |
(5) |
(6) |
(7) |
(8) |
|
S. No |
CSR project or activity identified. |
Sector in which the Project is covered |
Projects or programs (1) Local area or other (2) Specify the State and district where projects or programs were undertaken |
Amount outlay (budget) Project or programs wise |
Amount spent on the Projects or programs Sub-heads: (1)Direct expenditure on projects or programs. (2) Overheads: |
Cumulative expenditure up to the reporting period |
Amount spent Direct or through implementing agency * |
|
1 |
Provision of water storage facility for farming, community use and recharge ground water and underground reservoirs |
Water resource management & sustainable livelihood for tribal farmers |
(1) Project located in other area. (2) Project site is in the State of Rajasthan, Udaipur District. |
Rs, 50,16,311 |
(1) Direct expenditure Rs, 43,63,051 (2) Overheads Rs, 6,53,260 |
Complete amount disbursed to the project |
CSR project amount is spent through implementing agency Concern India Foundation |
|
2 |
Conservation of forests in the western ghats to enable rejuvenation of rivers, streams and natural water springs. Conservation of top soil through forestry. |
Prevention of degradation of pristine tropical forests. To arrest topsoil runoff and prevent loss of freshwater streams, springs and natural habitat |
(2) Project is in the State of Maharashtra, Ratnagiri District. |
Rs, 10,39,500 |
(1) Direct expenditure Rs, 8,14,100 (2) Overheads Rs, 2,25,400 |
Complete amount disbursed to the project |
CSR project amount is spent through implementing agency Applied Environmental Research Foundation (AERF) |
|
3 |
Rainwater harvesting structures in village schools. |
Creation of self sustaining water conservation structures for village schools in areas with prevalence of brackish water |
Project is in the State of Haryana, in Nuh District |
Rs, 33,05,620 |
(1) Direct expenditure Rs, 32,09,760 (2) Overheads Rs, 95,860 |
Complete amount disbursed to the project |
CSR project amount spent through implementation agency SM Sehgal Foundation |
|
4 |
Installation of waterless urinals in water stressed areas to reduce usage of a scarce resource |
Installed waterless urinals in areas having severely depleted underground water availability. Reducing sewerage discharge issues |
Project is in the State of Punjab, in Amritsar District |
Rs, 1,36,806 |
Direct expenditure Rs, 1,36,806 |
Complete amount disbursed to the project |
CSR project amount spent through implementation agency Ekam Ecosolutions |
|
5 |
CSR impact projects with DCB Bank CSR Employee volunteers |
Various activities in line with the Bank''s CSR thrust areas: Waste management, recycling, protection of water bodies & composting |
Projects in Mumbai, Navi Mumbai, Pune, Hyderabad, Delhi, Chennai, Bhopal, Bengaluru & Sohna |
'' 3,38,345 |
Expenditure '' 3,38,345 |
Complete amount disbursed to the projects |
Implemented directly as well as with agencies Concern India Foundation, United Way of Mumbai, Putenahalli Lake Trust, Gurgaon Mahila Sewa Samti. |
|
TOTAL |
- |
- |
'' 98,36,582 |
'' 98,36,582 |
- |
- |
* Details of implementing agency to be given
6. Reason for not spending the two per cent of the average net profit of the last three financial years or any part thereof:
The Bank''s approach has been measured and nuanced to build the CSR project pipeline. The resources deployed, the amount spent and locations coverd has shown a remarkable increase over the previous Financial Year. The Bank will continue to assess fresh projects and explore new geographies.
7. Responsibility Statement:
The CSR Committee of the Bank hereby states that the implementation and monitoring of CSR Policy, is in compliance with CSR objectives and policy of the Bank.
Sd/- (Chief Executive Officer or Managing Director or Director) Sd/- (Chairman- CSR Committee)
POLICY ON DIRECTORSâ APPOINTMENT AND REMUNERATION INCLUDING CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES, INDEPENDENCE OF A DIRECTOR, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES
The Board shall have minimum 3 and maximum 15 directors, unless otherwise approved. No person of age less than 21 years shall be appointed as a director on the Board. The Bank shall have such person on the Board who complies with the requirements of the Companies Act, 2013, the Banking Regulation Act, 1949, Provisions of the Listing Regulations, the âFit & Properâ criteria prescribed by the Reserve Bank of India (RBI), Memorandum of Association and Articles of Association of the Bank and all other statutory provisions and guidelines as may be applicable from time to time. Composition of the Board shall be in compliance with the requirements of Regulation 17 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations). Majority of the Directors as required under BR Act, shall have specialized knowledge/experience in the areas like Agriculture, Banking, SSI, Legal, Risk Management, Accountancy, Finance etc. Except for the Chairman and the MD & CEO, no other directors are paid remuneration, but are paid only sitting fees. The Chairman and the MD & CEO are paid remuneration as approved by RBI and other applicable authorities, but are not paid sitting fees. MD & CEO, Company Secretary and Chief Financial Officer shall be the Key Managerial Personnel (KMPs) of the Bank. All persons who are Directors / KMPs, members of Senior Management and all other employees shall abide by the Code of Conduct. Independent Directors are not entitled for ESOPs. Directors/KMPs shall not acquire any disqualification and shall be persons of sound integrity and honesty, apart from knowledge, experience etc. in their respective fields.
PARTICULARS OF EMPLOYEES
The Bank had 4979 employees as on March 31, 2017. 7 employees employed throughout the year were in receipt of remuneration of more than Rs, 1.02 Crore per annum. The details of such employees in terms of Section 197(12) of the Companies Act, 2013 read with Rule
5 (2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are appended separately (Annexure-I) and form part of this Report. The Report and Accounts are being sent to the shareholders excluding these particulars and any shareholder interested in obtaining the said details may write to the Company Secretary at the Registered Office of the Bank.
EMPLOYEE STOCK OPTIONS
The information pertaining to the Employee Stock Options is given in ANNEXURE-II to this Report.
PARTICULARS PURSUANT TO SECTION 197(12) AND THE RELEVANT RULES:
a) The ratio of the remuneration of each director to the median
employeeâs remuneration for the financial year ended March 31, 2017 and such other details as prescribed are as given below:
Name Ratio
Mr. Nasser Munjee (Chairman) 5 : 1
Mr. Murali M Natrajan (Managing Director & CEO) 148 : 1
b) The percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year:
Mr. Nasser Munjee â (Chairman): 0 %
c) The percentage increase in the median remuneration of employees in the financial year : 7 %
d) The number of permanent employees on the rolls of Bank: 4928
e) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year ended March 31, 2017 and its comparison with the percentile increase in the managerial remuneration and justification thereof and any exceptional circumstances for increase in the managerial remuneration: Average increase in remuneration is 11 % for Employees other than Managerial Personnel & 9 % for Managerial Personnel (KMP and Senior Management). There are no exceptional circumstances for increase in the managerial remuneration.
f) If remuneration is as per the remuneration policy of the Bank: Yes
PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The provisions of Section 134(3)(m) of the Companies Act, 2013 relating to conservation of energy and technology absorption do not apply to the Bank. However, as mentioned in earlier part of the Report, the Bank has been continuously and extensively using technology in its operations. Foreign Exchange earnings and outgo are part of the normal banking business of the Bank.
ESTABLISHMENT OF VIGIL MECHANISM
The Bank has in place a vigil mechanism pursuant to which a Whistle Blower Policy has been in vogue for the last several years. The policy was last reviewed in FY2015-16.This Policy inter alia provides a direct access to a Whistle Blower to the Chairman of ACB on his dedicated email-ID [email protected]. The Whistler Blower Policy covering all employees and directors is hosted on the Bankâs website at âhttp:// www.dcbbank.com/cms/showpage/page/whistle-blower-policyâ. None of the Bankâs personnel have been denied access to the Audit Committee
THE DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS
The Bank has designed and implemented a process driven framework for Internal Financial Controls (âIFCâ) within the meaning of the explanation to Section 134 (5) (e) IFC of the Companies Act, 2013. For the year ended March 31, 2017, the Board is of the opinion that the Bank has sound IFC commensurate with the nature and size of its business operations wherein controls are in place and operating effectively and no material weaknesses exist. The Bank has a process in place to continuously monitor the existing controls and identify gaps, if any, and implement new and /or improved controls wherever the effect of such gaps would have a material effect on the Bank''s operation.
DIRECTORSâ RESPONSIBILITY STATEMENT
Based on the framework of internal financial controls and compliance systems established and maintained by the Bank, the work performed by the internal, statutory and secretarial auditors and the reviews performed by the Management and the relevant Board Committees, including the Audit Committee of the Board, the Board is of the opinion that the Bank''s internal financial controls were adequate and effective during the year ended March 31, 2017. Accordingly, pursuant to Section 134 (5) of the Companies Act, 2013, based on the above and the representation received from the Operating Management, the Board of Directors, to the best of their knowledge and ability confirms that:
(i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there were no material departure there from;
(ii) they have , in the selection of the accounting policies, consulted the statutory auditors and have applied their recommendations consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as at March 31, 2017 and of the profit of the Bank for the year ended on that date;
(iii) they have 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 Bank and for preventing and detecting fraud and other irregularities;
(iv) they have prepared the annual accounts on a going concern basis;
(v) they have laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively during the year ended March 31, 2017; and
(vi) proper system has been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively during the year ended March 31, 2017.
EXTRACT OF THE ANNUAL RETURN
An extract of the Annual Return as of March 31, 2017 pursuant to the sub-section (3) of Section 92 of the Companies Act, 2013 and forming part of the report is attached separately as ANNEXURE-III to this report..
CORPORATE GOVERNANCE
The Bank has been continuously observing the best corporate governance practices and benchmarks itself against each such practice. A separate section on Corporate Governance and a Certificate from the Statutory Auditors M/s. Deloitte, Haskins & Sells, Chartered Accountants (Registration No. 117365W) regarding compliance of the conditions of Corporate Governance as stipulated in Schedule
V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Annual Report.
DIRECTORS
During FY 2017, Mr. Suhail Nathani, an Independent Director of the Bank, has ceased to be a Director of the Bank on January 28, 2017 after completing the term of eight consecutive years [the maximum permissible] as per the provisions of the Banking Regulation Act, 1949. The Board of Directors places on record its deep sense of appreciation of the valuable contributions made by Mr. Suhail Nathani during his association of 8 years as an Independent Director of the Bank.
A brief resume relating to Mr. Manekia who is to be re-appointed as Director is furnished in the notice of the 22nd AGM as well as in the report on Corporate Governance. Based on the Disclosures provided by him, Mr. Manekia is not disqualified from being appointed as a Director as specified in terms of Section 164 of the Companies Act, 2013.
None of the Directors of the Bank is related to each other per se.
A STATEMENT INDICATING THE MANNER IN WHICH FORMAL ANNUAL EVALUATION HAS BEEN MADE BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS;
1. The Chairman of the Nomination and Remuneration Committee of the Board sent draft parameterized feedback forms for evaluation of the Board, the Independent Directors and the Chairman.
2. Independent Directors at a meeting without anyone from the nonindependent directors and management, considered/evaluated the Board''s performance, performance of the Chairman and other non-independent Directors.
3. The Board subsequently evaluated performance of the Board, the Committees and Independent as well as Non-Independent Directors (without participation of the relevant director)
The members of the Board and committees evaluated the respective entity. Every individual Director evaluated every other Director. The results were collated and the Chairman informed that the performance of the Board as a whole and its Committees was satisfactory.
The Chairman also commented that individual performance of the Directors was also satisfactory.
THE DETAILS OF FAMILIARISATION PROGRAMME ARRANGED FOR INDEPENDENT DIRECTORS HAVE BEEN DISCLOSED ON WEBSITE OF THE BANK AND ARE AVAILABLE AT THE FOLLOWING LINK:
http://www.dcbbank.com/pdfs/Familarisation_Programme_for_
Independent_Directors.pdf
STATUTORY AUDITORS
M/s. Deloitte, Haskins & Sells, Chartered Accountants (Registration No. 117365W) were appointed as Statutory Auditors at the last Annual General Meeting. They are eligible for re-appointment for the FY 2017-18. Section 139 of the Companies Act, 2013 and the Rules made there under provide that a company can appoint a firm as auditor for maximum two terms of five consecutive years. In other words, company can make appointment of auditor for five years at a time. However the Bank is also governed by the provisions of Banking Regulation Act, 1949 and the circulars/notification/ guidelines issued by Reserve Bank of India (RBI) from time to time. As per the extant provisions, RBI gives permission for appointment of auditor on year to year basis. Further as per RBIâs directive, it is mandatory to rotate the Auditor after completion of four years. M/s. Deloitte, Haskins & Sells, Chartered Accountants (Registration No. 117365W) has already completed term of one year. Taking this into consideration, ratification of the appointment of the auditors has been recommended for financial year 2017-18.,which is also subject to prior approval of RBI. The Reserve Bank of India has been approached for their re-appointment. Your Board recommends ratification of their appointment as Statutory Auditors at the ensuing Annual General Meeting, subject to RBI approval.
SECRETARIAL AUDIT REPORT
Pursuant to the requirements of the Companies Act, 2013, the Bank has appointed M/s Ananthasubramanian & Co., Practicing Company Secretaries (COP 1774) as the Secretarial Auditor for FY 2017 and their report of April 7, 2017 is attached separately to this report.
ACKNOWLEDGEMENTS
Your Board wishes to thank the principal shareholder and promoters, the Aga Khan Fund for Economic Development S.A. (AKFED), and all the other shareholders for the confidence and trust they have reposed in the Bank. Your Board also acknowledges with appreciation the Reserve Bank of India (RBI) for its valuable guidance and support to the Bank. Your Board similarly expresses gratitude for the assistance and co-operation extended by SEBI, BSE, NSE, NSDL, CDSL,NPCIL, Central Government and the Governments of various States, Union Territories and the National Capital Region of Delhi where the Bank has its branches.
Your Board acknowledges with appreciation, the invaluable support provided by the Bankâs auditors, lawyers, business partners and investors. Your Board is also thankful for the continued co-operation of various financial institutions and correspondents in India and abroad.
Your Board wishes to sincerely thank all its customers for their patronage. Your Board records with sincere appreciation the valuable contribution made by employees at all levels and looks forward to their continued commitment to achieve further growth and take up more challenges that the Bank has set for the future.
On behalf of the Board of Directors
Place: New Delhi Nasser Munjee
April 14, 2017 Chairman
Mar 31, 2015
Dear Members,
The Directors are pleased to present the Twentieth Annual Report of
DCB Bank Ltd (hereinafter referred to as the Bank/Your Bank/DCB Bank)
together with the audited accounts for FY 2015.
In FY 2015, the Bank has posted an Operating Profit of Rs. 277.45 crore
(FY 2014Rs.187.96 crore) and a Net Profit of Rs. 191.18 crore (FY 2014 Rs.
151.36 crore).
Total Assets have increased by Rs. 3,209.17 crore and reached Rs.16,132.31
crore as on 31st March, 2015 (Rs.12,923.14 crore as on 31st March, 2014).
Customer Deposits have increased by Rs. 2,369.23 crore and Advances have
increased by Rs. 2,324.87 crore. The Bank has achieved the overall
Priority Sector Lending (PSL) target as required by the Reserve Bank of
India (RBI).
The Net Interest Margin (NIM) has improved to 3.72% in FY 2015 from
3.56% in FY 2014 and the Current and Savings Accounts (CASA) ratio
stood at 23.40% as on 31st March, 2015.
Cost to Income Ratio has decreased to 58.83% in FY 2015 from 62.93% in
FY 2014. The Bank''s total cost increased due to increase in number of
branches, higher business volumes and increase in number of staff.
Total Branch network stood at 154 as on 31st March, 2015 (130 as on
31st March, 2014) and ATM network increased to 328 as on 31st March,
2015 (238 as on 31st March, 2014).
Provisions Other Than Tax have increased to Rs. 69.42 crore in FY 2015
from Rs. 36.56 crore in FY 2014. The increase was due to provision for
existing and fresh NPA slippages, higher Floating provision and
Provision against Standard Assets.
Gross NPAs have increased to Rs. 186.07 crore as on 31st March, 2015 from
Rs. 138.45 crore as on 31st March 2014. The overall NPA Provision
Coverage Ratio as on 31st March, 2015 was 74.66%. Net NPAs have
increased to Rs. 105.70 crore as on 31st March, 2015 as against Rs. 74.02
crore as on 31st March, 2014.
Capital Adequacy Ratio (CAR) under Basel III as on 31st March, 2015
stood at 14.95%. (13.71% under Basel III as on 31st March, 2014).
In October 2014, the Bank issued 30,432,136 shares through Qualified
Institutional Placement (QIP) at Rs. 82.15 per share amounting to Rs. 250
crore.
Although the stock market sentiment has improved, the economic
conditions continued to be difficult. The banking industry continues to
be under pressure due to rising NPAs and restructured loans. In FY
2015, RBI maintained Cash Reserve Ratio (CRR) at 4% and reduced the
Statutory Liquidity Ratio (SLR) requirement from 23% to 21.5% and Repo
Rate from 8% to 7.5%. The Bank continued to embrace a cautious and
conservative stance in managing liquidity.
The Bank opened 24 new branches in FY 2015 taking the total tally of
branches to 154. Of these 24 new branches, 14 branches were established
in semi urban and rural areas. In line with the strategy, the Bank aims
to continue opening a number of branches mainly in Tier 2 to Tier 6
locations. This is likely to help the Bank grow its business, achieve
PSL and enhance CASA Deposits.
FINANCIAL SUMMARY
(Rs. in crore)
As at As at Increase /
March 31, March 31, (Decrease)
2015 2014
Balance Sheet
Customer Deposits 11,099.81 8,730.58 2,369.23
Inter Bank Deposits 1,509.32 1,594.58 (85.26)
Total Deposits 12,609.13 10,325.16 2,283.97
(Including Total CASA) (2,950.06) (2,581.27) 368.79
Advances 10,465.06 8,140.19 2,324.87
Non Performing Assets 186.07 138.45 47.62
(Gross)
Non Performing Assets 105.70 74.02 31.68
(Net)
Provision for Standard 51.04 34.22 16.82
Assets
Total Assets 16,132.31 12,923.14 3,209.17
Profit & Loss
Net Interest Income 508.22 368.39 139.83
Non Interest Income 165.72 138.66 27.06
Total Operating Income 673.94 507.05 166.89
Operating Cost 396.49 319.09 77.40
Operating Profit 277.45 187.96 89.49
Provisions 69.42 36.56 32.86
Profit Before Tax 208.03 151.40 56.63
Tax 16.85 0.04 16.81
Net Profit After Tax 191.18 151.36 39.82
DIVIDEND
In view of the provisions of Section 15 of the Banking Regulation Act,
1949, your Directors are not able to recommend payment of any dividend
for FY 2015 (Previous year NIL).
PARTICULARS OF EMPLOYEES
The information required under Section 197(12) of the Companies Act,
2013 and the rules made thereunder, as amended, has been given in the
annexure appended hereto and forms part of this report. The Bank had 14
employees who were employed throughout the year and were in receipt of
remuneration of more than Rs.60.00 lakh per annum and 2 employee (s)
were employed for part of the year and were in receipt of remuneration
of more than Rs. 5.00 lakh per month.
EMPLOYEE STOCK OPTIONS
The information pertaining to the Employee Stock Options is given in an
annexure to this Report.
g) Variations in the market capitalisation of the company, price
earnings ratio as at the closing date of the current financial year and
previous financial year and percentage increase or decrease in the
market quotations of the shares of the company in comparison to the
rate at which the company came out with the last public offer:
h) Average percentile increase already made in the salaries of
employees other than the managerial personnel in the last financial
year and its comparison with the percentile increase in the managerial
remuneration and justification thereof and any exceptional
circumstances for increase in the managerial remuneration : Average
increase in managerial remuneration is 10% for Employees other than
Managerial Personnel & 9% for Managerial Personnel (KMP and Senior
Management)
i) The key parameters for any variable component of remuneration
availed by the directors: Except for the Chairman Mr. Nasser Munjee and
the Managing Director & CEO (MD & CEO) Mr. Murali M Natrajan no
directors have been paid any remuneration as only Sitting Fees are paid
to them. Mr. Nasser Munjee is not paid any variable remuneration.
However, with respect to MD & CEO variable component is paid in the
form of Bonus, as per the Compensation Policy of the Bank which is
based on Reserve Bank of India guidelines on the Compnsation Policy.
Any payment of this nature is made only with the prior approval of the
Reserve Bank of India and Board of Directors.
j) The ratio of the remuneration of the highest paid director to that
of the employees who are not directors but receive remuneration in
excess of the highest paid director during the year: Not Applicable
k) If remuneration is as per the remuneration policy of the company:
Yes
PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
FOREIGN EXCHANGE EARNINGS AND OUTGO
The provisions of Section 134(3)(m) of the Companies Act, 2013 relating
to conservation of energy and technology absorption do not apply to the
Bank. However, as mentioned in the earlier part of the Report, the Bank
has been continuously and extensively using technology in its
operations. Foreign Exchange earnings and outgo are part of normal
banking business of the Bank.
ESTABLISHMENT OF VIGIL MECHANISM
The Bank has in place a vigil mechanism pursuant to which a Whistle
Blower Policy has been in vogue for the last several years. The policy
was last reviewed in FY2015.This Policy inter alia provides a direct
access to a Whistle Blower to the Chairman of ACB on his dedicated
email-ID [email protected]. The Whistler Blower Policy covering all
employees and directors is hosted on the Bank''s website at "http://
www.dcbbank.com/cms/showpage/page/whistle-blower-policy".
THE DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS
The Bank has designed and implemented a process driven framework for
Internal Financial Controls ("IFC") within the meaning of the
explanation to Section 134 (5) (e) IFC of the Companies Act, 2013. For
the year ended 31st March, 2015, the Board is of the opinion that the
Bank has sound IFC commensurate with the nature and size of its
business operations; wherein controls are in place and operating
effectively and no material weaknesses exist. The Bank has a process in
place to continuously monitor the existing controls and identify gaps,
if any, and implement new and /or improved controls wherever the effect
of such gaps would have a material effect on the Bank''s operation.
DIRECTORS'' RESPONSIBILITY STATEMENT
In accordance with Section 134(5) of the Companies Act, 2013, your
Board of Directors confirms that: a) in the preparation of the annual
accounts, the applicable Accounting Standards have been followed and
that there is no material departure; 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 or loss of the Bank for the year; c)
proper and sufficient care has been taken for maintenance of adequate
accounting records as provided in the Companies Act, 2013, for
safeguarding the assets of the Bank and for preventing and detecting
frauds and other irregularities; d) the annual accounts of the Bank
have been prepared on a "going concern" basis; e) the directors had
laid down internal financial controls to be followed by the Bank and
that such 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
EXTRACT OF THE ANNUAL RETURN
An extract of the Annual Return as of 31st March, 2015 pursuant to the
sub-section (3) of Section 92 of the Companies Act, 2013 and forming
part of the report is attached separately.
CORPORATE GOVERNANCE
The Bank has been observing the best corporate governance practices and
benchmarks itself against each such practice on an on-going basis. A
separate section on Corporate Governance and a Certificate from the
Statutory Auditors M/s. B S R & Co., LLP, Chartered Accountants
(Registration No.101248W/W-100022) regarding compliance of the
conditions of Corporate Governance as stipulated under Clause 49 of the
Listing Agreements with the Stock Exchanges form part of this Annual
Report.
DIRECTORS
During FY 2015, Mr. Sukh Dev Nayyar resigned from the Board of the Bank
w.e.f. 13 th January, 2015 due to his personal reasons. The Board of
Directors places on record its deep sense of appreciation of the
valuable contributions made by Mr. Sukh Dev Nayyar during his
association of more than 7 years as an Independent Director of the
Bank.
The Board of Directors at the meeting held on 1st November, 2014 had
approved appointment of Mr. Shaffiq Dharamshi (DIN- 06925633) as an
Additional Non-Executive Non-Independent Director on the Board w.e.f.
from the subsequent Board meeting. Accordingly, he joined the Board on
13th January, 2015. Notice as required under the Companies Act, 2013
has been received from a shareholder signifying his intention to
propose Mr. Shaffiq Dharamshi as a Director of the Bank. The Board of
Directors of the Bank recommend his appointment at the ensuing AGM.
In compliance with the provisions of the Companies Act, 2013 and Clause
49 of the Listing Agreement with regard to appointment of atleast one
woman director, the Board of Directors of your Bank at the meeting held
on 13th January, 2015 had approved the appointment of Ms. Rupa Devi
Singh (DIN-02191943) as an Additional
Non-Executive, Independent Director on the Board w.e.f. the subseqeunt
Board meeting. Accordingly, she joined the Board on 22nd January, 2015.
Notice as required under the Companies Act, 2013 has been received from
a shareholder signifying his intention to propose Ms. Rupa Devi Singh
as a Director of the Bank. The Board of Directors of the Bank recommend
her appointment to the shareholders at the ensuing AGM.
With approval of the Reserve Bank of India, the Board of Directors of
the Bank re-appointed Mr. Nasser Munjee as Part-time Chairman of the
Bank for a period of three years from 19th August, 2014 on an
honorarium of Rs. 18 lakh per annum and reimbursement of actual business
related expenses and Annual Club Membership fees. The Board of
Directors of the Bank recommend his re-appointment and payment of
honorarium in the ensuing AGM.
With approval of the Reserve Bank of India, the Board of Directors
re-appointed Mr. Murali M. Natrajan as MD & CEO of the Bank for a
period of three years i.e. from 29th April, 2015 to 28th April, 2018 on
his existing remuneration approved by RBI effective from 1st April,
2014. The Board of Directors of the Bank recommend his re-appointment
and payment of remuneration at the ensuing AGM.
A brief resume relating to the persons who are to be appointed as
Directors is furnished in the notice of the 20th AGM as well as in the
report on Corporate Governance. Based on the Disclosures provided by
them, none of the above mentioned persons are disqualified from being
appointed as a Director as specified in terms of Section 164 of the
Companies Act, 2013.
None of the Directors are related to each other per se.
During the year under review, in compliance with Section 203 of the
Companies Act, 2013, Mr. Bharat Sampat  Chief Financial Officer was
designated as a Key Managerial Personnel of the Bank in addition to the
existing KMPs viz. Mr. Murali M. Natrajan  MD & CEO and Mr. Hemant
V. Barve  Company Secretary.
A STATEMENT INDICATING THE MANNER IN WHICH FORMAL ANNUAL EVALUATION HAS
BEEN MADE BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS
COMMITTEES AND INDIVIDUAL DIRECTORS;
1. Nomination and Remuneration Committee of the Board had prepared and
sent through its Chairman draft parameterized feed back forms for
evaluation of the Board, Independent Directors and Chairman.
2. Independent Directors at a meeting without anyone from the non-
independent directors and management, considered/evaluated the
Board''s performance, performance of the Chairman and other
non-independent Directors.
3. The Board subsequently evaluated performance of the Board, the
Committees and Independent Directors (without participation of the
relevant director)
THE DETAILS OF FAMILIARISATION PROGRAMME ARRANGED FOR INDEPENDENT
DIRECTORS HAVE BEEN DISCLOSED ON WEBSITE OF THE BANK AND ARE AVILABLE
AT THE FOLLOWING LINK:
http:/ / www. dcbbank.
com/pdfs/Familarisation_Programme_for_lndependent_ Directors.pdf
STATUTORY AUDITORS
M/s. B S R & Co. LLP, Chartered Accountants (Registration
No.101248W/W-100022), were re-appointed as Statutory Auditors at the
last Annual General Meeting. They are eligible for re-appointment for
the FY 2016. Section 139 of the Companies Act, 2013 and the Rules made
there under provide that a company can appoint a firm as auditor for
maximum two terms of five consecutive years. In other words, a company
can make appointment of auditor for five years at a time. However, the
Bank is also governed by the provisions of the Banking Regulation Act,
1949 and the circulars/notification/ guidelines issued by the Reserve
Bank of India (RBI) from time to time. As per the extant provisions,
RBI gives permission for appointment of auditor on year to year basis.
Further, as per RBI''s directive, it is mandatory to rotate the
Auditor after completion of four years. M/s. B S R & Co. LLP have
already completed term of three years. Taking into consideration the
mandatory rotation after four years, last year, appointment of the
auditors was made for two years, subject to prior approval of the RBI
and ratification of shareholders in the ensuing Annual General Meeting.
The Reserve Bank of India has been approached for their re-appointment
for FY 2016. Your Board recommends ratification of their appointment as
the Statutory Auditors at the ensuing Annual General Meeting for a
period of up to two financial years ending with FY 2016.
SECRETARIAL AUDIT REPORT
Pursuant to the requirements of the Companies Act, 2013, the Bank has
appointed M/s Ananthasubramanian & Co., Practicing Company Secretaries
(CoP 1774) as the Secretarial Auditor for FY 2015 whose report of 10th
April, 2015 is attached separately to this report.
ACKNOWLEDGEMENTS
Your Board wishes to thank the principal shareholder and promoters, the
Aga Khan Fund for Economic Development S.A. (AKFED), and all the other
shareholders for the confidence and trust they have reposed in the
Bank. Your Board also acknowledges with appreciation the Reserve Bank
of India (RBI) for its valuable guidance and support to the Bank. Your
Board similarly expresses gratitude for the assistance and co-operation
extended by SEBI, BSE, NSE, NSDL, CDSL, Central Government and the
Governments of various States , Union Territories and the National
Capital Region of Delhi where the Bank has its branches.
Your Board acknowledges with appreciation, the invaluable support
provided by the Bank''s auditors, lawyers, business partners and
investors. Your Board is also thankful for the continued co-operation
of various financial institutions and correspondents in India and
abroad.
Your Board wishes to sincerely thank all its customers for their
patronage. Your Board records with sincere appreciation the valuable
contribution made by employees at all levels and looks forward to their
continued commitment to achieve further growth and take up more
challenges that the Bank has set for the future.
On behalf of the Board of Directors
Place: Chennai Nasser Munjee
14th April, 2015 Chairman
Mar 31, 2014
The Directors are pleased to present the eighteenth Annual Report of
your Bank together with the audited accounts for FY 2014.
In FY 2014, the Bank has posted an Operating Profit of Rs.187.96 crore
(previous year Rs.126.13 crore) and a Net Profit of Rs.151.36 crore
(previous year Rs.102.06 crore).
Total Assets have increased by Rs.1,644.32 crore and reached Rs.12,923.14
crore as on 31st March, 2014 (Rs.11,278.82 crore as on 31st March, 2013).
Customer Deposits have increased by Rs.1,178.23 crore and Advances have
increased by Rs.1,554.10 crore. The Bank has achieved the overall
Priority Sector Lending (PSL) target as required by Reserve Bank of
India (RBI).
The Net Interest Margin (NIM) has improved to 3.56% in FY 2014 from
3.34 % in FY 2013 and the Current and Savings Accounts (CASA) stood at
25.00%.
Cost to Income Ratio has decreased to 62.93% in FY 2014 from 68.58% in
FY 2013. This was, inter alia, on account of higher business volumes,
better performance of existing branches, lower lease rentals, closure
of low volume ATMs.
Provisions Other Than Tax have increased to Rs.36.56 crore in FY 2014
from Rs.24.04 crore in FY 2013. Part of the increase was due to increase
in Floating Provision and Provision against Standard Assets.
Capital Adequacy Ratio (CAR) under Basel III as on 31st March, 2014
stood at 13.71%. (13.61% under Basel II as on 31st March, 2013).
Gross NPAs have decreased to Rs.138.45 crore as on 31st March, 2014 from
Rs.214.98 crore as on 31st March 2013. The overall NPA Provision Coverage
Ratio as on 31st March, 2014 was 80.54%. Net NPAs have increased to
Rs.74.02 crore as on 31st March, 2014 as against Rs.49.13 crore as on 31st
March, 2013.
The market conditions continued to be challenging. Inflation remained
high for most of the year and liquidity remained tight. The banking
industry came under pressure due to rising NPAs and restructured
assets. The Reserve Bank of India (RBI) had maintained Cash Reserve
Ratio (CRR) at 4% and Statutory Liquidity Ratio (SLR) at 23% through FY
2014. The Bank''s cautious and conservative stance on liquidity and
investment portfolio enabled it to weather Q2 FY 2014 turbulence with
limited adverse impact.
The Bank opened 36 new branches in FY 2014 taking the total tally of
branches to 130. Of these 36 new branches, 34 branches are located at
semi urban and rural centres. Going forward, the Bank aims to continue
opening a number of branches mainly in Tier 2 to Tier 6. This is likely
to help the Bank achieve PSL and grow Current Account and Savings
Account (CASA) Deposits.
FINANCIAL SUMMARY
(Rs. in crore)
As at March As at March Increase /
31, 2014 31, 2013 (Decrease)
Balance Sheet
Deposits 10,325.16 8,363.84 1,961.32
Customer Deposits 8,776.05 7,597.82 1,178.23
(Including CASA) (2,581.27) (2,271.62) 309.65
Inter Bank Deposits 1,549.11 766.02 783.09
Advances 8,140.19 6,586.09 1,554.10
Non Performing 138.45 214.98 (76.53)
Assets (Gross)
Non Performing 74.02 49.13 24.89
Assets (Net)
Provision for
Standard 34.22 27.17 7.05
Assets
Total Assets 12,923.14 11,278.82 1,644.32
Profit & Loss
Net Interest Income 368.39 284.41 83.98
Non Interest Income 138.66 117.02 21.64
Total Operating 507.05 401.43 105.62
Income
Operating Cost 319.09 275.30 43.79
Operating Profit 187.96 126.13 61.83
Provisions 36.56 24.04 12.52
Net Profit Before Tax 151.40 102.09 49.31
Tax 0.04 0.03 0.01
Net Profit After Tax 151.36 102.06 49.30
DIVIDEND
In view of the provisions of Section 15 of the Banking Regulation Act,
1949, your Directors are not able to recommend payment of any dividend
for FY 2014 (Previous year NIL)
MANAGEMENT DISCUSSION AND ANALYSIS
Vision
The Bank''s vision is to be the most innovative and responsive
neighborhood community bank in India serving entrepreneurs,
individuals and businesses. In line with our vision, we began
implementing a new strategy in FY 2010. The Bank has now completed 4
years under the new strategy and has made substantial improvements.
Target Market
Keeping in view its inherent strengths, branch network and expertise,
the Bank''s target market is the self-employed segment (traders, shop
keepers, small businessmen, MSMEs and SMEs). The Bank has chosen to
have a limited presence in the salaried segment. The MSME / SME sector
plays a very important role in the growth of the Indian economy. It is
estimated that MSME / SME contribute 17% to GDP and employs over 70 mn
people in about 30 mn units. Further, MSME / SME is estimated to
contribute 45% of India''s industrial output and 40% of exports.
Business Strategy
The Bank has followed a consistent business strategy since FY 2010. The
same is re-iterated below:
- Rely on retail deposits (Term, CASA)
- Mainly expand branches in Tier 2 to Tier 6 locations
- Grow retail mortgages, MSME, SME, Commercial Vehicle, Tractors, Gold,
mid Corporate and Agri loans
- Avoid unsecured lending especially big tickets. Create a diversified
portfolio
- Increase fee income by cross selling insurance, wealth, trade and
cash management
- Continuously strengthen credit processes, recoveries and portfolio
management
- Relentlessly focus on Liquidity, Costs, Operational Risks, People and
Customer Service. Improve continuously
Credit Rating
During the year, CRISIL reaffirmed the Bank''s A-/Stable rating for
Long Term. CRISIL enhanced the rated amount from Rs.500 cr to Rs.1,000 cr
for the Certificate of Deposits program at rating of A1 . The Bank
also obtained a rating of A1 for Short Term Fixed Deposits program
from CRISIL. The continued improvement is likely to help the Bank in
increasing its funding resource pool for growth.
Research Coverage
The Bank''s management team continues to have meetings with the investor
community and participate in select seminars. The research coverage on
the Bank''s stock has now reached 36 in FY 2014.
Branch Expansion
During the year, the Bank increased its network by 36 branches. In the
last many years, this is the highest number of new branches installed
in one fi nancial year. The Bank now has 130 branches. New branches
were opened in many locations including the states of Andhra Pradesh,
Chattisgarh, Madhya Pradesh, Punjab, Odisha and Rajasthan. The branch
expansion was in line with the Bank''s strategy and we expect the
branches to break even over a period of 18 to 22 months. In order to
increase business volumes and provide comprehensive service to
customers, the Bank has embraced the concept of selling all products
(relevant to the catchment area) at all branches. Accordingly, the Bank
has enhanced the training of branch staff across all locations.
RETAIL BANKING
The Bank now operates a network of 130 branches across 80 locations
with a strong presence in Maharashtra, Gujarat and Andhra Pradesh. The
Bank has tie ups with Cash net and Infinet networks. This allows
customers to access more than 35,000 ATMs across the country. The Bank
has a comprehensive product range in both Deposits and Advances. There
is a huge emphasis on up skilling branch staff on all products so that
customers in the branch catchment area / neighborhood can be given
complete "one-stop" service. One of the key tasks of Retail Banking is
to generate CASA balances and Retail Term Deposits through its branches
and outbound sales teams. Performance of Retail Banking frontline staff
is managed using scorecards. The economy of India continues to be
sluggish. Therefore, the CA balances growth was muted in FY 2014.
However, the Bank was able to grow SA balances by 18.2% and overall
CASA balances growth was 13.6%.
Commercial Vehicle (CV)
In order to meet the RBI PSL guidelines and reduce dependence on
portfolio buyouts, the Bank re-started the CV business in FY 2013. In a
short time, the Bank has met with reasonable success in growing the CV
portfolio.
Loan Against Gold
DCB Loan Against Gold product offers a platform to broaden the Bank''s
retail asset customer base (many of them are first-time borrowers.
Gold Loans helps to deepen the existing branch deposit relationships.
This product is suitable for both salaried and self-employed. The
product team provided extensive training to all the branches. The
application form was simplified to help the loan turnaround time. A
sophisticated machine was employed to check the purity of gold on an
ongoing basis. This technology is likely to help in avoiding
fraudulent transactions.
Debit Cards
In FY 2014, the debit cards in force increased by 10.7% and the
e-commerce volume went up by 81%. During FY 2014, the Bank launched
domestic debit cards for NRE accounts.
DCB Payless Cards
In FY 2014, the Payless Cards in force increased by 32% and active
cards in force increased by 42%.
DCB ITZ Cash Freedom Card
DCB ITZ Cash Freedom Card is a strategic initiative that supports
financial inclusion for the urban under-banked population. The pilot
program of ITZ Cash Freedom Card was run in Mumbai and then scaled up
to select cities in India. This product now is offered at more than
1,500 outlets. In FY 2014, the cards in force went beyond the 84,000
mark.
DCB Janajeevan Prepaid Card
In FY 2014, the Bank launched India''s first co-branded prepaid card
for disbursal of small loans by Janalakshmi Microfinance. The product
is administered in association with Jana Urban Foundation. The initial
customer feedback is encouraging.
Aadhaar
Aadhaar enrolment camps were arranged in many branches. We have
established linkages with NPCI and the Bank is working with Visa,
Euronet and Alpha Finsoft to enable electronic Know Your Customer
(eKYC) on a pilot basis.
Mortgages
Mortgages are a lead product for the Bank and contribute 38.4% of the
Bank''s Net Advances. The Bank offers both Home Loans and Loan Against
Property. The target market is essentially self-employed segment. The
pace of new loans origination was further built up in FY 2014 by
increasing both Sales and Credit capacities. In the coming months, in a
systematic manner, the Bank aims to expand Mortgages operations across
its branch network.
Distribution of Mutual Funds and Banc assurance
The Bank distributes Mutual Funds, Life Insurance and General Insurance
products to new and existing customers. This helps deepen the
relationship with Deposit and Loan customers.
Traditional Community Banking
With a vision of strengthening neighborhood banking, the Bank set up a
separate vertical in FY 2010 with the aim of providing personalized
attention to the community customers and winning back lost
relationships.
Non Resident Indian (NRI) business
The Bank continued to make good progress in NRI business in FY 2014. We
leveraged on the relationship with Diamond Trust Bank Group (DTB) in
East Africa. During the year, over 1,400 new customers were
Trade Finance Business  East Africa
The Bank has identified opportunities of growth in its trade finance
business in association with DTB which has a strong presence in Kenya,
Tanzania and Uganda. The Bank is also expanding its reach with tie ups
with other regional banks in East Africa and intends to be a preferred
banker for India''s trade and remittance business with these fast
growing economies.
Cash Management Services (CMS)
The Bank provides Corporate, MSME / SMEs and Retail customers
sophisticated and cost effective CMS. This helps customer to manage
their payment logistics in a hassle free manner. In the last few years,
the Bank has steadily increased CMS customers and as on end of FY 2014
the number of customers reached 2,207 (Previous Year 1,589 customers)
MSME and SME
The importance of MSME and SME to India''s economy and the Bank''s
strategy of pursuing this segment have already been mentioned earlier
in this discussion. The Bank has created robust sales, underwriting and
portfolio monitoring capability for growing the MSME and SME business,
offering a wide range of products and personalized services including
Cash Management, Trade Finance and Internet Banking. The Bank has
established many new branches in Tier 2 to Tier 6 locations to
specially target MSMEs / SMEs. The Bank aims to become the business
partner of this vibrant entrepreneurial segment of the economy. Indian
economy is going through a tough period and MSMEs / SMEs are impacted.
In view of the current situation, the Bank adopted a very cautious
approach resulting in portfolio reduction in MSME / SME business in FY
2014.
CORPORATE BANKING
Corporate Banking is present across India with Regional offi ces at
Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata and Mumbai.
The main strategy is to provide complete range of commercial banking
solutions including structured Trade Finance and Cash Management. The
Bank has a strong underwriting and credit administration support to
achieve sustainable growth in Corporate Banking business. The emphasis
is on building a secured advances portfolio and building a long term
relationship with high quality large and mid-corporate houses. Indian
economy remained weak and growth opportunities were limited. The Bank
adopted a cautious approach and yet managed to grow the book strongly
in FY 2014.
AGRI AND INCLUSIVE BANKING (AIB)
India''s rural and semi urban areas have large untapped potential for
banking opportunities. The Bank''s AIB business meets the objectives of
business growth and financial inclusion. AIB is responsible for
coordinating efforts to complete the PSL targets set by the RBI. AIB
also is responsible for financial inclusion goals agreed with RBI and
the Board. AIB offers a wide range of products to cater to the various
needs of unbanked, under-banked, rural and semi urban population.
Basic Savings Bank Deposit Account (BSBDA)
BSBDA is the new name for "No frill account". This account majorly
helps in financial inclusion especially for those who do not have full
Identity, Signature and Address (ISA) proof. This account is basically
for the lower income group that has limited transaction needs.
Kisan Mitra
"Kisan Mitra" as the name suggests, is a liability product which fulfils
the requirement and enhances the saving habit in rural areas. It is
a product specially designed for members of co-operative institutions
(dairy co-operative, sugar co-operative, etc). It is a modified
Classic Savings account with Zero Account opening amount and nil
account balance non maintenance charges. The payments of the members
made by the co-operative institution are routed through these accounts.
Micro Housing
Under Micro Housing the Bank provides both home loans and business
loans to lower middle income group. The target segment can be both
organized and un-organized sectors. The Bank aims to provide finance
to people who find it otherwise difficult to obtain finance from the
organized sector. The loan purpose can be home construction, home
purchase, home repairs, business, marriage, education, consumption etc.
The Bank is making a lot of efforts to improve the process of assessing
the customers'' income and ability to repay.
Warehouse Construction Loan
There is a huge need in the country to provide farmers with scientific
storage so that wastage and deterioration of agricultural produce can
be reduced. Also, proper warehousing helps famers to retain their
produce and obtain fair pricing instead of selling in distress. Grameen
Bhandaran Yojana, a Capital Investment Subsidy Scheme for Construction
/ Renovation of Rural Godowns was introduced in FY 2002 under which the
borrower will be benefiting by a subsidy amount.
Retail Agriculture Loan Products
In order to fulfill the credit needs of the farmers, the Bank has
several retail agri products viz crop loan (for purchasing seeds,
fertilizers, pesticides, manures, irrigation etc), animal husbandry
loan, small business loan, artisan loan, self help group finance,
joint liability group finance and hi-tech agri financing (for
greenhouse projects).
Tractor Loans
In India, Tractors form an integral part of the total agricultural
equipment sector and is an indirect indicator of growth in the
agricultural sector. The Bank started tractor loans about a year ago
and has steadily built up volumes across Tier 2 to Tier 6 branches.
In order to strengthen relationship with tractor dealers and tractor
manufacturers, the Bank has introduced a new product viz trade advance
to tractor dealers. This will help drive more retail tractor finance
case leads from dealers to the Bank, over a period of time.
Microfinance
The Bank lends directly to SHGs and Micro Finance Institutions (MFIs)
who in turn lend to end borrowers/ customers. Over a period of time,
the Bank has created a strong network of MFI customers across India.
Commodity based Finance
The Bank is engaged in lending to farmers and agri processors against
their products stored in the designated warehouses. The Bank has a list
of approved commodities against which the funding is done.
Business Correspondent (BC)
The Bank has an approved product program for lending through the BC
model. The Bank is actively exploring BCs in a few states for strategic
tie up. This is expected to be completed in FY 2015.
TREASURY
Treasury actively manages liquidity, Fixed Income Securities Trading,
Equity Investment IPOs, FX Trading and Customer Sales. Treasury ensures
compliance with regulatory requirements such as CRR and SLR. In FY
2014, the Bank completed the implementation of an integrated new
treasury system.
Money Market and Foreign Exchange
For most part of FY 2014, the market was turbulent and volatile owing
to both domestic and international factors. In May 2013, RBI cut Repo
rate by 25 basis points in order to support growth. However, due to US
Fed''s planned tapering of its bond buying program, the market was
rattled and there was sharp correction in equity markets worldwide. The
US 10 year bond yields moved up to 3.00% and US dollar rose against
major currencies. In India, both equity and debt saw large scale
selling by FIIs. Owing to the Syrian crisis crude oil prices rose to
$119 per barrel. On top of this the Current Account Deficit (CAD)
remained high. Therefore the Indian Rupee depreciated sharply. On July
15, 2013, to arrest the fall in Indian Rupee and improve US dollar
inflow, RBI took series of tough measures namely raising the Marginal
Standing Facility (MSF) rates by 200 basis points to 10.25%,
restricting banks access to Repo at 0.5% of NDTL and requiring CRR to
be maintained at 99% on a daily basis. Overnight call rates jumped from
7.25% to 10.25%. The G-sec market saw unprecedented selling by FIIs
which made the 10 year G-sec yield rise above 9.00%. The RBI took
special measures to help the oil companies and mutual funds. The Bank
weathered this storm successfully due to its conservative approach in
Treasury operations. The Bank had ample liquidity and also avoided
major losses on account of drop in the G-sec portfolio value due to
sudden increase in the interest rates. To increase US dollar inflow,
RBI created a special swap window for FCNR (B) deposits. This resulted
in huge inflows of US dollar deposits from NRIs. Slowly, toward the
end of the year the markets became a bit stable. The Indian Rupee
appreciated somewhat against the US dollar. Given high inflation, RBI
was unable to reduce the interest rates. India''s economy slowed down
and industrial production contracted. Liquidity conditions remained
tight.
CREDIT & RISK
Risk Management
The Bank has an independent Risk Management function. The Credit
Committee of the Board (CCB) guides the direction for development of
policies and procedures in managing credit risk and implementing the
credit strategy. The objective of risk management is to have a dynamic
and an optimum balance between risk and return and ensure regulatory
compliance and conformity with the Board approved policies. It entails
the identification, measurement and management of risks across the
various businesses of the Bank. Risk is managed through defined
policies and procedures approved by the Board of Directors and
monitoring and corrective actions are taken on a continuous basis. The
Bank has invested in building a strong talent base with solid risk
expertise. The Risk Management function strives to anticipate
vulnerabilities through reviews of quantitative and qualitative data /
MIS analysis of both external and internal risks. The Bank''s risk
management processes are guided by policies appropriate for the various
risk categories namely Credit Risk, Market Risk (including asset
liability management and liquidity risks) and Operational Risk. The
Board sets the overall risk appetite and philosophy for the Bank. The
Risk Management Committee (RMC), which is a committee of the Board,
reviews various aspects of risk arising from the businesses undertaken
by the Bank. At the operating level, risk committees viz Asset
Liability Management Committee (ALCO), the Operational Risk Management
Committee (ORCO) and the Credit Risk Management Committee (CRMC)
oversee specific risk areas. These committees provide inputs for
review by the Risk Management Committee (RMC) of the Board.
Collections and Recoveries
For the past many years, the Bank has had a separate Collections and
Recoveries unit. In FY 2014, the Collections and Recoveries unit
performed well and helped in containing the risk although economic
conditions were weak throughout the year.
Credit Risk
The credit risk policy supports and is aligned with the Bank''s priority
of achieving growth and at the same time maintaining asset quality to
ensure long term sustainable profitability over business cycles. The
Bank strives to maintain a healthy balance between risk and reward. The
Bank also undertakes the exercise of measuring the credit risks
involved in the composition of its present portfolio and realigning
them to have a better risk-reward composition. The Bank endeavors to
continuously enhance its internal risk assessment capabilities.
The Risk Function over time has developed capabilities to assess the
risk associated with various products and business segments (MSME, SME,
Mortgages, Corporate, AIB etc). The effort is to standardize the credit
approval process so that the outcomes are predictable. The Bank has
implemented a rating model for obligors. This model takes into account
both quantitative and qualitative factors as inputs and produces a
rating that becomes one of the key inputs to credit decisions.
The Credit Administration Department (CAD) is responsible for
disbursement, documentation and security creation, database management
and generating various advances related reports and MIS.
The Credit Risk Analytics & Monitoring (CRAM) unit reviews key customer
exposures centrally to spot early warning signals based on the conduct
of account and other qualitative inputs.
In FY 2014, the Bank made improvements in the Credit function. The Bank
has sophisticated analytics that supports portfolio management and
credit policy improvements. The Bank strengthened its business
analytics function. The MSME / SME account renewal process was
streamlined. A new credit training module was created to train the
branch staff to help them identify potential business opportunities.
Concentration Risk
Concentration risk is monitored and managed both at the customer level
and at the aggregate level. The Bank continuously monitors portfolio
concentrations by segment, ratings, borrower, group, sensitive sectors,
unsecured exposures, industry, geography, etc. The Bank adopts a
conservative approach within the regulatory prudential exposure norms.
Market Risk
Besides the usual monitoring of Structural Liquidity, Interest Rate
Sensitive Gap limits and Absolute Holding limits, the Bank also
monitors interest rate risks using Value at Risk limits. Exposures to
Foreign Exchange and Capital Markets are monitored within pre-set
exposure limits, margin requirements and stop-loss limits.
Country Exposure Risk
The Bank has established specific country exposure limits which is
capped at 1.5% of Total Assets. The limit also depends upon rating of
individual countries. The Bank uses the litigant of insurance cover
available through the Export Credit and Guarantee Corporation (ECGC),
where appropriate.
Liquidity Risk
As part of the liquidity management and contingency planning, the Bank
assesses potential trends, demands, events and uncertainties that could
result in adverse liquidity conditions. The Bank''s Asset Liability
Management (ALM) policy defines the gap limits for the structural
liquidity and the liquidity profile is analyzed on both static and
dynamic basis by tracking cash inflow and outflow in the maturity
ladder based on the expected occurrence of cash flow. The Bank
undertakes behavioral analysis of the non-maturity products, namely
CASA, Cash Credit and Overdraft accounts on a periodic basis to
ascertain the volatility of balances in these accounts. The renewal
pattern and premature withdrawals of Term Deposits and drawdownÂs of
un-availed credit limits are also captured through behavioral studies.
The liquidity profile is estimated on an active basis by considering
the growth in Deposits, Advances and investment obligations. The
concentration of large deposits is monitored on a periodic basis.
Emphasis has been placed on growing Retail deposits and avoid as far as
possible bulk deposits. The Bank periodically conducts liquidity stress
testing.
Operational Risk
Operational risk is the risk of loss resulting from inadequate or
failed internal processes, people or systems, or external events. The
Bank''s operational risk management framework is defined in the
Operational Risk Management Policy approved by the Board of Directors.
While the policy provides a broad framework, ORCO oversees the
operational risk management in the Bank. The policy specifies the
composition, roles and responsibilities of the ORCO. The framework
comprises identification, assessment, management and mitigation of
risks through tools like incident reporting, loss reporting, Key
Operational Risk Indicators (KORI), Risk and Control Self-Assessment
(RCSA) and Periodic Risk Identification and Controls Evaluation
(PRICE).
Each new product or service introduced is subject to a risk review and
sign-off process so that relevant risks are identified and assessed
independently from the unit proposing the product. There is a separate
Process Management Team to document, maintain and conduct periodic
review of processes. Management Committee for Approval of Process
(MCAP) has been constituted to approve and review various processes in
the Bank. The said committee consists of highly experienced bankers and
subject matter experts. Internal Audit also reviews the processes that
are implemented as part of the audit function.
Reputational Risk
The Bank pays special attention to issues that may create a
Reputational risk. Events that can negatively impact the Bank''s
position are handled cautiously ensuring utmost compliance and in line
with the values of the Bank.
Implementation of Basel III Guidelines
The RBI has issued guidelines for implementation of Basel III capital
adequacy framework. In accordance with its requirements, the Bank has
migrated to Basel III capital adequacy disclosures with effect from Q1
FY 2014. The Bank continues to review and improve on its risk
management systems and practices to align them with best international
practices. The Bank has successfully implemented Standardized Approach
for Credit Risk, Standardized Duration Approach for Market Risk and
Basic Indicator Approach for Operational Risk. During FY 2014, the Bank
has migrated to a new treasury system which has helped enhance and
automate some of the Market Risk Management processes.
INFORMATION TECHNOLOGY (IT)
During the year, keeping in view the Bank''s strategy and growth, major
technology initiatives were focused towards optimization of the
infrastructure and applications. In FY 2014, the Bank implemented the
Information Security Management Systems (ISMS) and the Bank was awarded
ISO 27001:2005 certification for "Information Technology Department".
The Bank implemented several new applications in FY 2014 namely, the
new treasury system, NGRTGS module initiated by RBI, new middleware
solution for Payment System, Automated Data Flow to RBI for over 60
reports, CTS implementation in the Western grid, two factor
authentication for Personal and Business Internet Banking, Online
Internet password generation, ATM PIN on IVR and Online Account
Opening. Many of these new applications are designed to improve
controls and provide superior service to customers. In terms of IT
security, data center core firewall was upgraded. In order to provide
faster service to existing customers, a comprehensive amendment request
handling module was installed.
OPERATIONS
Operations unit is the backbone for processing of customer
transactions. In FY 2014, part of new CASA customers'' account opening
process has been relocated to Chennai. This move is expected to vastly
improve turnaround time, create scale and reduce overall costs.
Creation of Chennai operations unit also helps in providing a back-up
for Mumbai in case of any business continuity issues. Every year, in
order to improve customer experience and service, the Bank introduced a
number of process improvements on a continuous basis. Besides improving
service quality, these improvements help reduce operational errors as
well. In FY 2014, the Operations team ensured smooth implementation of
new branches and new business initiatives.
INTERNAL AUDIT (IA)
Internal Audit (IA) is an independent unit that performs regular audits
to evaluate the adequacy and effectiveness of internal controls and
overall risk management. IA is staffed by professionals with varied
skills and expertise. The Audit Committee of the Board (ACB) provides
direction and monitors the effectiveness of the IA function. IA uses a
comprehensive risk based approach taking into account the guidelines of
RBI and international best practices. In order to continuously innovate
and keep a high vigil and enhanced risk management, IA uses innovative
audits methodologies including optimum use of analytics and technology.
In FY 2014, IA revamped the branch audit approach and tools. The
continued use of specialized snap audits has provided management with
quick and deep insights into weak links and ability to address the gaps
promptly. As a result of its consistent inputs and value added
observations, IA has become a value partner in improving the overall
risk management and controls of various units of the Bank. Corrective
Action Trackers are part of regular management updates and forms a
basis of evaluating units'' performance. IA is playing an active role in
providing inputs for enhancing the existing policies and procedures. IA
also undertakes thematic reviews of key products and projects. It uses
experienced audit firms for concurrent audits in line with ACB
approved framework. IA continues to appraise the Board, the Audit
Committee of the Board (ACB) and the Management teams in terms of newer
emerging threats and recommend appropriate mitigating measures.
HUMAN RESOURCE (HR)
HR has been playing a key role in the journey of the Bank. This year, a
lot of progress was made in enhancing people skills, providing career
opportunities and caring of employees.
In a first of its kind, a promotion policy and process was introduced
whereby all employees could self-nominate for promotion if they are
eligible as per the published promotion policy. The whole idea was to
increase transparency in the promotion process. In order to improve the
quality of decisions and enhance skill levels, promotion tests and
interviews were introduced at various levels.
The Bank''s foundation of customer service rests on three pillars namely
Empathy, Speed and Quality (ESQ). The Bank continued to train employees
on ESQ and so far 2,174 employees have gone through the
ESQ program. This year HR launched an advanced program called "Living
out ESQ".
India has made a lot of progress in the last few years. Due to the
hustle and bustle of modern life, people have to deal with a lot of
challenges (work, commute, finance, family, etc.) and this creates a
lot of pressure and stress. The Bank has a caring attitude for its
employees and accordingly launched the initiative called Employee
Assistance Program (EAP). In EAP the employees and their dependants
can access professional counselors free of cost. They can obtain the
counselors assistance to deal with their personal problems in a
confidential manner. In addition to EAP, HR organized Annual Health
Check-ups for employees and their families at a discounted pricing.
Further, Health Week was celebrated to build awareness about various
aspects of health, for example, bone density test, cancer awareness,
stem cell awareness, nutrition workshop, health tips and stress
management.
The Bank''s "Coffee with MD & CEO" series was organized which gave an
opportunity to many frontline staff to directly interact with the MD &
CEO and share their views and concerns.
The Bank conducted a Career Fair for employees which gave an
opportunity to have one-on-one discussions with HR and senior team
members.
Employee Benefits were enhanced in many ways. Medical claim and
Personal Accident insurance limits were increased substantially.
Employee Personal Loan program was launched providing loans at rates
lower than market interest rates. Eligible employees were given leave
encashment option up to 7 days.
In the true spirit of ESQ, HR has created a dedicated help desk to
provide timely service to employee queries.
The Bank has created a Competency Model which is used in Hiring,
Training and Promotions. The Competency Model is extremely helpful in
standardizing competency alignment across all people related decisions.
In resourcing, the Bank has continued to develop innovative methods for
accessing and attracting talent. The Bank increased its headcount by
21.7% in FY 2014. The Top Recruit program was a unique initiative to
create an employer brand in business schools and to allow students to
apply for jobs in different functions of the Bank. Social media was
effectively used for this initiative and the response was overwhelming.
The Campus Connect was another initiative for a more interactive
dialogue with students. The Bank''s top team delivered lectures on
important topics as requested by various top business schools. The
above initiatives were instrumental in creating brand awareness among
prospective candidates from campuses. Further, to infuse young talent
in the Bank from business schools, the Bank recruited three batches of
"fresherÂs". In order to help them settle down properly in their
respective jobs a 15 day induction program called "Velocity" was
launched.
The Bank has created a learning culture and uses Individual Learning &
Development Scorecard approach. In FY 2014, huge efforts have been made
in providing training to employees. The new employee induction program
was revamped and made more fun and interactive targeting younger
employees. The basics of banking and AML/ KYC training was modified in
line with the changing needs. A branch based loans credit module was
created to improve branch staff understanding of credit.
A new sales coaching program called "Beat the Best" for enhancing the
performance of front line sales executives was successfully conducted.
In line with the new Risk Based Supervision Framework of RBI a risk
training module was used to cover more than 800 employees across
different units.
Apart from this, HR continued its well established and popular
leadership and development programs namely LEAP, RISE (for developing
leaders of tomorrow), ASPIRE (for providing skills to employees to deal
with additional responsibilities) and PACE (for improving frontline
sales capability).
The Bank adopted a unique approach to integrate different units across
all the locations. Similar to schools, the Bank created the concept of
Houses and all the employees were distributed across five houses which
were given attractive names. The concept of house is designed to break
the silos and create camaraderie across the Bank. In order to mix fun
and work several employee engagement programs were conducted during the
year for example cricket tournament, arm wrestling, etc. All the
festivals of India were celebrated with enthusiasm and zeal. CSR
activities such as Joy of Giving Week celebration, blood donation
drives, donation of old computers, clothes and books, charity auction,
etc. were conducted.
CUSTOMER SERVICE
Ensuring customer delight in every interaction remains the Bank''s core
desire for growth and success. Customer complaints and satisfaction are
closely monitored by the MD & CEO and senior management. An
independent Service Quality team analyses customer complaints, identifies
the root cause, makes suggestions for process improvements and
follows up with the respective units for completion. The Bank has a
"Centralised Complaint Management" system. Queries and complaints are
vigorously followed up to ensure timely resolution. Strict quality
standards are imposed on the Bank''s staff to ensure that customers are
provided proper service.
In FY 2013, the Bank launched a massive service improvement program
called the Power of Three  Empathy, Speed and Quality (ESQ). Over a
period of time the Bank intends to install a caring culture in the
Bank. The Bank''s ambition is to make ESQ the defining character of
the Bank. The ESQ quotient displayed by the prospective employee is a
key parameter for recruitment, just as demonstrated ESQ is a key
ingredient of the performance appraisal of every employee.
The MD & CEO along with the senior management team has done extensive
ESQ road shows and town halls in every DCB Bank location, addressing
employees, sharing experiences, receiving questions and defining the
way forward. So far, the Bank has conducted over 66 training programs
on ESQ covering 2,174 employees.
Customer queries / complaint management lays emphasis on identifying
trends, ensuring problem resolution and providing feedback for
improving the existing processes. The root cause analyses of queries /
complaints provide a broad framework for identifying key processes in
the Bank that needs to be improved or changed. The process change may
range from fine tuning to complete process revamping. The key process
improvements that the Bank has undertaken in FY 2014 include CASA
account opening, amendment requests from customers and gold loan
processing.
Adoption of technology has been the key to providing superior customer
convenience. The innovation of Debit Card PIN over the phone and the
Internet PIN over the net are two significant examples of technology
adoption breakthroughs achieved in FY 2014.
The Bank has a robust customer retention unit. This unit identifies
and engages with customers who are inactive or who reduce their
business with the Bank. This engagement has resulted in identification
of service gaps, fine tuning of product offering and win backs. The
Bank also conducted a series of customer meets labeled "Ek Mulaqat
Kuch Batein" where senior management including the Chairman attended
and obtained direct feedback from customers for improvement.
Additionally, the customer service and complaints are monitored by the
Customer Service Committee (CSC) of the Board.
Non-Branch Channels
Apart from branches, the Bank''s customers can access DCB 24 hour
Customer Care Phone Banking, ATMs, Internet and Mobile Banking. The
Bank strives to provide best-in-class technology and service platform.
Customers can easily use these non-branch channels from the comfort of
their home or office. DCB On The Go  Instant Mobile Banking provides
freedom to customers to conduct anywhere banking. The Bank provides
instant fund transfer facility through Inter Bank Mobile Payment System
(IMPS). Recently, the Bank has upgraded to intelligent Interactive
Voice Response (IVR) system enabling direct call routing through Caller
Line Identification. What is more, apart from getting their queries
resolved at phone banking, customers are also able to buy certain
banking products (subject to terms and conditions) over the phone. This
is seen as a big convenience by many customers. DCB Bank''s 24 Hour
Customer Care Agents now directly deal with customers who call the
Bank''s customer care telephone line, thus providing a personal touch.
The service change was made based on customer feedback and focus group
findings conducted by the Bank.
PARTICULARS OF EMPLOYEES
The information required under Section 217(2A) of the Companies Act,
1956 and the rules made there under, as amended, are given in the
annexure appended hereto and forms part of this report. In terms of
Section 219(1)(b)(iv) of the Act, the Report and Accounts are being
sent to the shareholders excluding the aforesaid annexure. Any
shareholder interested in obtaining a copy of the said annexure may
write to the Company Secretary at the Registered Office of the Bank.
The Bank had nine (9) employees who were employed throughout the year
and were in receipt of remuneration of more than Rs.60.00 lakh per
annum and no employee was employed for part of the year and was in
receipt of remuneration of more than Rs.5.00 lakh per month.
EMPLOYEE STOCK OPTIONS
The information pertaining to the Employee Stock Options is given in an
annexure to this Report.
PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
The provisions of Section 217(1)(e) of the Companies Act, 1956 relating
to conservation of energy and technology absorption do not apply to the
Bank. However, as mentioned in the earlier part of the Report, the Bank
has been continuously and extensively using technology in its
operations.
DIRECTORS'' RESPONSIBILITY STATEMENT
In accordance with Section 217(2AA) of the Companies Act, 1956, your
Board of Directors confirms that: a) in the preparation of the annual
accounts, the applicable accounting standards have been followed along
with proper explanation relating to material departures; b) the
directors had selected such accounting policies and applied them
consistently and made judgments 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 or loss
of the Bank for that period; c) proper and sufficient care has been
taken for maintenance of adequate accounting records as provided in the
Companies Act, 1956, for safeguarding the assets of the Bank and for
preventing and detecting frauds and other irregularities; and d) the
annual accounts of the Bank have been prepared on a "going concern"
basis.
CORPORATE GOVERNANCE
The Bank has been observing the best corporate governance practices and
benchmarking itself against each such practice on an ongoing basis. A
separate section on Corporate Governance and a Certificate from the
Statutory Auditors M/s. B S R & Co., LLP, Chartered Accountants
(Registration No.101248W) regarding compliance of the conditions of
Corporate Governance as stipulated under Clause 49 of the Listing
Agreements with the Stock Exchanges form part of this Annual Report.
DIRECTORS
During FY 2013-14, Mr. Darius Udwadia resigned from the Board of the
Bank w.e.f. January 14, 2014. The Board of Directors places on record
its deep sense of appreciation of the valuable contributions made by
Mr.Darius Udwadia as Director of the Bank.
The Companies Act, 2013 has been notified on September 12, 2013 (98
sections), February 27, 2014 (1 Section) and March 27, 2014 (183
sections effective from April 1, 2014) and the Rules made there under on
February 27, 2014, March 27, 2014, March 28, 2014, March 30, 2014 and
March 31, 2014. Pursuant to Section 149(6) of the Companies Act, 2013,
directors are required to inform their status as to ''Independent
Director'' (ID) in the first meeting of the Board of Directors held
from April 1, 2014. Accordingly 10 of the Directors of your Bank viz.
(i) Mr. Sukh Dev Nayyar, (ii) Mr. Suhail Nathani, (iii) Mr. Amin
Manekia, (iv) Mr. Altaf Jiwani, (v) Mr. Imran Contractor, (vi), Mr.
Keki Elavia, (vii) Mr. C. Narasimhan, (viii) Mr. Nalin Shah (ix) Mr. S.
Sridhar, and (x) Mr.Jamal Pradhan have declared their adherence to the
criteria fi xed u/s 149(6) for ''Independent Directors''. The Nomination
and Remuneration Committee of the Board (NRC) at its meeting perused
their declarations and other requirements under the Companies Act, 2013
and the Rules made there under, as applicable, and found all of them to
be meeting with the criteria for Independent Director. The Board of
Directors at the meeting held on April 15, 2014 has, as recommended by
NRC, taken the same on record. The relevant provisions of the Companies
Act, 2013 also provide that the IDs shall be appointed as such within a
period of 12 months from April 1, 2014. Your Board has deemed it
prudent and recommended to the Shareholders their appointment as ID for
a period up to 5 years at the ensuing Annual General Meeting (AGM). All
IDs shall not be liable to retire by rotation. However pursuant to the
provision of the Banking Regulation Act, 1949, no Director of a banking
company, other than its Chairman or whole-time Director, by whatever
name called, shall hold office continuously for a period exceeding
eight years. A brief resume relating to the Directors who are to be
appointed as Independent Directors is furnished in the report on
Corporate Governance. None of the above mentioned persons is disqualified
from being appointed as a Director as specified in terms of Section
164 of the Companies Act, 2013.
The Chairman Mr. Nasser Munjee and Managing Director and CEO Mr.Murali
M. Natrajan who have been appointed with the approval of RBI, are
''Non-Independent'' Directors and by virtue of Article 113 of the
Articles of Association of the Bank, are not liable to retire by
rotation. In view of the above, your Bank does not have any Director
who is liable to retire by rotation at the ensuing AGM of the Bank.
None of the Directors are related to each other per se.
STATUTORY AUDITORS
M/s. B S R & Co. LLP, Chartered Accountants (Registration No.101248W),
were appointed as Statutory Auditors at the last Annual General
Meeting. They are eligible for appointment for the FY 2014-15. Section
139 of the Companies Act, 2013 and the Rules made there under provide
that a company can appoint a firm as auditor for maximum two terms of
five consecutive years. In other words, company can make appointment
of auditor for five years at a time. However the Bank is also governed
by the provisions of Banking Regulation Act, 1949 and the
circulars/notification/guidelines issued by Reserve Bank of India
(RBI) from time to time. As per the extant provisions, RBI gives
permission for appointment of auditor on year to year basis. Further as
per RBI''s directive, it is mandatory to rotate the Auditor after
completion of four years. M/s. B S R & Co. LLP has already completed
term of two years. Taking into consideration the mandatory rotation
after four years, appointment of the auditors has been recommended for
up to two years which is also be subject to prior approval of RBI and
ratification of shareholders in subsequent Annual General Meeting. The
Reserve Bank of India has been approached for their re-appointment.
Your Board recommends their appointment as Statutory Auditors at the
ensuing Annual General Meeting for a period of up to two financial
years, subject to RBI approval.
ACKNOWLEDGEMENTS
Your Board wishes to thank the principal shareholder and promoters Aga
Khan Fund for Economic Development S.A. (AKFED), and all the other
shareholders for the confidence and trust they have reposed in the
Bank. Your Board also acknowledges with appreciation the Reserve Bank
of India (RBI) for its valuable guidance and support to the Bank. Your
Board similarly expresses gratitude for the assistance and co-operation
extended by SEBI, BSE, NSE, NSDL, CDSL, Central Government and the
Governments of various States where the Bank has its branches.
Your Board acknowledges with appreciation, the invaluable support
provided by the Bank''s auditors, lawyers, business partners and
investors. Your Board is also thankful for the continued co-operation
of various financial institutions and correspondents in India and
abroad.
Your Board wishes to sincerely thank all its customers for their
patronage. Your Board records with sincere appreciation the valuable
contribution made by employees at all levels and looks forward to their
continued commitment to achieve further growth and take up more
challenges that the Bank has set for the future.
On behalf of the Board of Directors
Place: Gurgaon Nasser Munjee
April 15, 2014 Chairman
Mar 31, 2013
The Directors are pleased to present the eighteenth Annual Report of
your Bank together with the audited accounts for FY 2013.
In FY 2013, the Bank has posted an Operating Profit of Rs. 126.13 crore
(previous year Rs. 83.82 crore) and a Net Profit of Rs. 102.06 crore
(previous year Rs. 55.08 crore).
Total Assets have increased by Rs. 2,601.97 crore and reached Rs.
11,278.82 crore as on 31st March, 2013 (Rs. 8,676.85 crore as on 31st
March, 2012).
Customer Deposits have increased by Rs. 1,483.03 crore and Advances
have increased by Rs. 1,301.67 crore. The Bank has achieved the
Priority Sector Lending (PSL) target as required by the Reserve Bank of
India (RBI).
The Net Interest Margin (NIM) has improved to 3.34% in FY 2013 from
3.25% in FY 2012 and the Current and Savings Accounts (CASA) ratio has
been maintained at 27.16%.
Cost to Income Ratio has decreased to 68.58% in FY 2013 from 74.45% in
FY 2012. This was mainly on account of higher business volumes, better
performance of existing branches, lower lease rentals and closure of
low volume ATMs.
Provisions Other Than Tax have reduced to Rs. 24.04 crore in FY 2013
from Rs. 28.71 crore in FY 2012.
Capital to Risk Assets Ratio (CRAR) under Basel II as on 31st March,
2013 stood at 13.61% (15.41% as on 31st March 2012).
Gross NPAs have decreased to Rs. 214.98 crore as on 31st March, 2013
from Rs. 241.98 crore as on 31st March, 2012. The overall NPA Provision
Coverage Ratio as on 31st March, 2013 was 85.71% (91.17% as on 31st
March 2012). Net NPAs have increased to Rs. 49.13 crore as on 31st
March, 2013 as against Rs. 30.24 crore as on 31st March, 2012.
The market conditions continued to be challenging. Inflation remained
high for most of the year and liquidity remained tight. The banking
industry came under pressure due to rising NPAs, especially from the
airlines, telecom and infrastructure sectors. The Reserve Bank of India
(RBI) reduced the Cash Reserve Ratio (CRR) by 75 bps in three tranches
to improve liquidity. However, deposit interest rates remained very
high and liquidity pressure continued unabated. Therefore, there was no
opportunity to reduce the Base Rate. The situation required the Bank to
remain cautious and be selective in pursuing Advances growth.
The Bank opened 10 new branches in FY 2013 taking the total tally of
branches to 94. Of these 10 new branches, 7 branches are located at
semi urban and rural centres. Going forward, the Bank plans to continue
opening a significant number of branches in Tier 2 to Tier 6 locations
covering semi urban and rural centres as part of the Bank''s thrust on
originating PSL and growing CASA deposits.
In the third quarter of FY 2013, the Bank has raised Tier I Capital to
the extent of Rs. 40.62 crore through Preferential Allotment.
FINANCIAL SUMMARY
(Rs. in crore)
As on 31st As on 31st Increase/
March, March, (Decrease)
2013 2012
Balance Sheet
Deposits 8,363.84 6,335.56 2,028.28
Customer Deposits 7,597.82 6,114.79 1,483.03
(Including CASA) (2,271.62) (2,034.67) 236.95
Inter Bank Deposits 766.02 220.77 545.25
Advances 6,586.09 5,284.42 1,301.67
Non Performing Assets (Gross) 214.98 241.80 (26.82)
Non Performing Assets (Net) 49.13 30.24 18.89
Provision for Standard Assets 27.17 25.25 1.92
Total Assets 11,278.82 8,676.85 2,601.97
Profit & Loss
Net Interest Income 284.41 227.70 56.71
Non Interest Income 117.02 100.37 16.65
Total Operating Income 401.43 328.07 73.36
Operating Cost 275.30 244.25 31.05
Operating Profit 126.13 83.82 42.31
Provisions 24.04 28.71 (4.67)
Net Profit Before Tax 102.09 55.11 46.98
Tax 0.03 0.03 -
Net Profit After Tax 102.06 55.08 46.98
DIVIDEND
In view of the provisions of Section 15 of the Banking Regulation Act,
1949, your Directors are not able to recommend payment of any dividend
for FY 2013 (Previous year NIL).
RETAIL BANKING
The Bank now operates a network of 94 branches across 43 locations with
a continued strong presence in Maharashtra, Gujarat and Andhra Pradesh.
The Bank has tie ups with the Cashnet and Infinet networks. This allows
customers to access more than 35,000 ATMs across the country. The Bank
is a pioneer in providing free ATM access (VISA ATMs) to its customers
with no limit on the number of transactions. The main task of Retail
Banking is to generate CASA balances and Retail Term Deposits through
its branches and outbound sales teams. Performance of Retail Banking
frontline staff is managed using scorecards. The economy of India
continues to be sluggish. Therefore, the Current Account (CA) balances
growth was muted in FY 2013. However, the Bank was able to grow Savings
Bank Accounts (SA) balances by 15% and overall CASA balances growth was
12%. In line with its philosophy of creating innovative products for
the self-employed segment, the Bank launched DCB Business Saver Account
in FY 2013. This is a unique Current Account proposition. It is
available only for individuals and sole proprietors. The account
holders can link their Savings Account to the Current Account and
automatically transfer surplus funds from their Current Accounts to the
linked Savings Accounts. This enables customers to earn interest on the
surplus balances.
Loan Against Gold
DCB Loan Against Gold product offers a platform to broaden the Bank''s
retail asset customer base (many of them are first-time borrowers)
through a secured lending product. It also deepens the existing branch
liability relationships. This product is suitable for both salaried and
self-employed individuals. In order to compete with NBFCs and gold loan
companies, the Bank is in the process of revamping the process to speed
up the sanction and disbursal of gold loans.
Card Products
DCB ITZ Cash Freedom Card is a strategic initiative that supports
financial inclusion for the urban under-banked population. The pilot
program of ITZ Cash Freedom Card was run in Mumbai and then scaled up
to select cities in India. This product now is offered at more than
1,000 outlets. The cards in force exceeded 10,000 nos. in FY 2013. The
Bank has also enabled remittances on DCB ITZ Cash Freedom Card and is
planning to offer the facility of opening Basic Savings Bank Deposit
Accounts (BSBDAs) to this customer base. The Bank has another unique
product called DCB Payless Card. This is a secured credit card issued
against a term deposit which provides a host of benefits with more
savings along with the convenience of a credit card like product. In
the later part of FY 2013, the Bank launched its Gift Cards product.
This will be ideal for existing customers for making gifts during all
the important festivals and occasions such as birthdays and
anniversaries.
Commercial Vehicles (CV)
In order to have less dependence on buyouts from NBFCs for meeting PSL,
the Bank re-launched the CV business in FY 2013. This portfolio is
expected to grow steadily over the next few years. The Bank is cautious
in its approach to grow its CV business as the slow economic conditions
are impacting sales which in turn is negatively impacting the portfolio
quality of the banking industry.
Mortgages
Mortgages contribute approx. 36% of the Bank''s Net Advances. The Bank
offers both Home Loans and Loan Against Property. These products are
primarily targeted at self-employed customers. The pace of new loans
origination was increased in FY 2013. Mortgages are offered in 12
locations including four new locations namely Ahmedabad, Coimbatore,
Ludhiana and Surat which were opened during FY 2013.
Distribution of Mutual Funds and Bancassurance
The Bank distributes Mutual Funds, Life Insurance and General Insurance
products to new and existing customers. The customers are offered
mutual fund products based on their risk profile which inter alia
depends on investment objectives and time horizon. The Bank has
developed a financial planner with the help of ICRA online. The Bank
has partnered with Birla Sunlife Insurance Company for distributing
Life Insurance products, which include life covers, unit linked
insurance plans, pensions and traditional plans. One of the innovations
based on customer feedback has been the introduction of Group Life
Insurance and Group Personal Accident Insurance which are available
exclusively to the Bank''s customers. The Group Life Insurance
program provides over-the-counter insurance cover upto Rs. 75 lakh with
limited paper work and without any medical tests. Similarly, on the
Group Personal Accident platform, the Bank''s customers can get an
accident insurance cover ranging from Rs. 5 lakh to Rs. 30 lakh over-
the-counter at an affordable price.
Non-Branch Channels
The Bank strives to provide best-in-class technology and service
platform. It offers a number of innovative convenient facilities such
as Phone Banking, Mobile Banking and Internet Banking free of charges.
Customers can easily use these non-branch channels from the comfort of
their home or office. DCB On The Go  Instant Mobile Banking provides
freedom to customers to conduct anywhere banking including the instant
fund transfer facility through Inter Bank Mobile Payment System (IMPS).
DCB Bank''s 24 Hour Customer Care Agents now directly deal with
customers who call the Bank''s customer care telephone line, thus
providing a personal touch. This change has been made based on customer
feedback and focus group findings conducted by the Bank. The Bank is
equipped to provide services such as ATM PIN generation and
authentication, telephone PIN generation and authentication, account
enquiries like balance enquiry, last five transactions, cheque status,
stop payment request, and card hot listing amongst other services.
Traditional Community Banking
With a vision of strengthening neighbourhood banking, the Bank set up a
separate vertical in FY 2010 with the aim of providing personalized
attention to the community customers and winning back lost
relationships. In FY 2013, Traditional Community Banking deposits grew
by 12% and Advances increased by 24%. The Bank plans to further
strengthen this business in FY 2014.
Non Resident Indian (NRI) business
The Bank has made rapid progress in NRI business in FY 2013. The
business continued to leverage on the relationship with Diamond Trust
Bank Group (DTB) in East Africa to increase its presence in East
Africa. During FY 2013, over 300 new customers were acquired and the
remittance value increased by over 100%. The business is now exploring
tie-ups with other banks in East Africa and the Middle East to offer
correspondent banking facility to further increase remittances and
trade finance business.
Trade Finance Business - East Africa
The Bank has identified opportunities of growth in its trade finance
business in association with DTB which has a strong presence in Kenya,
Tanzania, Uganda and Burundi. The Bank is also expanding its reach with
tie-ups with other regional banks in East Africa and intends to be a
preferred banker for India''s trade and remittance business with these
fast growing economies.
MSME and SME
The importance of MSME and SME to India''s economy and the Bank''s
strategy of pursuing this segment have already been emphasised earlier
in this discussion. The Bank has created robust sales, underwriting and
portfolio monitoring capability for growing the MSME and SME business,
offering a wide range of products and personalized services including
Cash Management, Trade Finance, Internet Banking and Bancassurance. The
Bank has also started business in Tier II cities and opened SME-centric
branches to cater to the growing business demands in this segment. The
MSME and SME Unit is effectively supported by regional credit teams to
understand and sanction business proposals seamlessly. The Bank aims to
become the business partner of this vibrant entrepreneurial segment of
the economy. In view of the weak economic conditions, the Bank decided
to re-shape its approach in FY 2013. In terms of new loan originations,
the Bank focussed more on small ticket MSME / SME instead of larger
MSME / SME.
CORPORATE BANKING
Corporate Banking is present across India with Regional offices in
Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata and Mumbai.
The main strategy is to provide complete range of commercial banking
solutions including structured Trade Finance and Cash Management
Services. The Bank has a strong underwriting and credit administration
support to achieve sustainable growth in Corporate Banking business.
The emphasis is on building a secured advances portfolio and building a
long-term relationship with high quality large and mid-corporate
houses. The economic scenario in FY 2013 was weak with major
industrial sectors being affected due to weak investment and reduced
consumer demand. The Bank adopted a very cautious approach and despite
limited opportunity for growth, Corporate Banking has shown good
progress in FY 2013.
AGRI AND INCLUSIVE BANKING (AIB)
India''s rural and semi urban areas have large untapped potential for
banking opportunities. The Bank has set up the AIB Business Unit with
the objective of meeting PSL targets and financial inclusion. AIB is
responsible for coordinating the efforts to complete the PSL targets
set by the Reserve Bank of India (RBI). AIB is also responsible for
financial inclusion goals agreed with RBI and the Board. Even under
difficult market conditions, the Bank has been able to meet the PSL
targets in FY 2013. AIB offers a wide range of products to cater to
the various needs of rural and semi urban India for example, funding
against pledge of stocks stored in warehouses, term loans and
securitization transaction from Microfinance Institutions (MFIs) and
NBFCs, working capital for agriculture product processors, term loans
for warehouse construction and securitization of MFI portfolio. In FY
2013, retail agriculture and allied loans like crop loans, animal
husbandry loans, land improvement loans and small business loans have
grown through the existing branch network. Tractor loans were extended
in Madhya Pradesh and Maharashtra in addition to Gujarat and Odisha .
The Bank was able to avail NABARD refinance for the MFI, farm and
non-farm sectors. In FY 2013, AIB opened 7 new branches, namely
Kadodara, Songadh and Vasad (Gujarat), Pipariya & Gadarwara (Madhya
Pradesh) and Hinjilicut & Dunguripali (Odisha).
TREASURY
Treasury actively manages liquidity, Fixed Income Securities Trading,
Equity Investment IPOs, FX Trading and Customer Sales. Treasury ensures
compliance with regulatory requirements such as CRR and SLR.
Foreign Exchange Treasury
Due to market conditions, the Bank adopted a cautious approach in FX
business in FY 2013. A turbulent global financial market, interspersed
with the domestic trinity of high inflation, high current account
deficit and slow growth prevailed over the foreign exchange markets in
FY 2013. The US Fiscal Cliff and the Eurozone risks dominated the
global scenario with Quantitative Easing (QE) and insufficient
investment opportunities propelling capital inflow into equity markets
of emerging economies including India. The Japanese Yen also witnessed
lot of volatility in pursuit for expansionary monetary policy by the
Japanese government. The Indian Rupee has shown high volatility during
FY 2013, moving to Rs. 57.30 in June 2012 from Rs. 50.50 in the
beginning of April 2012. This was a result of high domestic inflation
compounded with major risks emanating from the global economy and the
rising oil prices. The third quarter of FY 2013 began with various
reform measures including liberalized FDI limits for certain sectors
and announcement of fiscal consolidation path, enhancing global
investor confidence in the Indian economy. This, along with
announcements of quantitative easing by the US Fed and the Bank of
Japan, boosted capital inflows into India and aided some recovery of
the rupee.
Money Market
The liquidity in the banking system remained in deficit mode throughout
FY 2013. RBI cut Repo rate to 7.50% from 8.50% to induce growth and the
overnight call rates remained around Repo rate and moved down to 7.50%
from 8.50%. RBI also infused liquidity by way of OMOs and further
reduced CRR by 75 basis points releasing large amount of liquidity in
the system. The 10 year G-sec yields moved down to 7.80% from 8.50%,
during FY 2013 with various measures taken by RBI to support growth.
The Bank adopted a cautious approach and made regular gains in G-Sec
trading.
CREDIT & RISK
Risk Management
The Bank has an independent Risk Management function. The objective of
risk management is to have a dynamic and an optimum balance between
risk and return and ensure regulatory compliance and conformity with
the Board approved policies. It entails the identification, measurement
and management of risks across the various businesses of the Bank. Risk
is managed through defined policies and procedures approved by the
Board of Directors and monitoring and corrective actions are taken on a
continuous basis. The Bank has invested in building a strong talent
base with deep risk expertise while also successfully recruiting and
retaining that expertise. The Risk Management function strives to
anticipate vulnerabilities through reviews of quantitative and
qualitative data / MIS of both external and internal risks. The
Bank''s risk management processes are guided by policies appropriate
for the various risk categories, namely Credit Risk, Market Risk
(including asset liability management and liquidity risks) and
Operational Risk. The Board sets the overall risk appetite and
philosophy for the Bank. The Credit Committee of the Board (CCB) guides
the direction for development of policies and procedures in managing
credit risk and implementing the credit strategy. The Risk Management
Committee (RMC), which is a committee of the Board, reviews various
aspects of risk arising from the businesses undertaken by the Bank. At
the operating level, risk committees namely Asset Liability Management
Committee (ALCO), the Operational Risk Management Committee (ORCO) and
the Credit Risk Management Committee (CRMC) oversee specific risk
areas. These committees provide inputs for review by the Risk
Management Committee (RMC) of the Board.
In FY 2013, the Bank made many improvements in the Credit function. A
simple scoring methodology was introduced for existing mortgages
portfolio. All retail loans are now scored based on various parameters
and the Bank has the capability to conduct migration analysis as well.
The credit parameters of Tractor loans, Mortgages and CV were suitably
amended based on business needs and portfolio performance. The Bank has
sophisticated analytics that supports portfolio management and credit
policy improvements. In line with the new guidelines, a securitization
policy was introduced that helped to effect buyouts for meeting PSL
target. The Bank further enhanced analytics by introducing "Through
the Door" loans review. The portfolio stress testing was also
strengthened by addition of new parameters. A risk based model for
pricing was introduced for mortgage portfolio buyout. In order to avoid
frauds and errors in title document checks by an in-house legal counsel
was implemented. This is in addition to the checks done by empanelled
lawyers. Credit appraisal, financial analysis and sanction letter
formats were improved through standardization. This is likely to help
enhance customer service. The Bank is ahead in terms of adhering to the
time lines set by CERSAI for updation of mortgages data in the central
system. Collections and Recoveries continue to deliver good performance
in FY 2013.
Credit Risk
The credit risk policy supports and is aligned with the Bank''s
priority of achieving growth and at the same time maintaining asset
quality to ensure long-term sustainable profitability over business
cycles. The Bank strives to maintain a healthy balance between risk and
reward. The Bank also undertakes the exercise of measuring the credit
risks involved in the composition of its present portfolio and
realigning them to have a better risk-reward composition. The Bank
endeavours to continuously enhance its internal risk assessment
capabilities.
Over time, the Risk Function has developed capabilities to assess the
risks associated with various products and business segments (MSME,
SME, Mortgages, Corporate, etc.). The effort is to standardize the
credit approval process so that the outcomes are predictable. The Bank
has implemented a rating model for obligors. This model takes into
account both quantitative and qualitative factors as inputs and
produces a rating that becomes one of the key inputs to credit
decisions.
The Credit Administration Department (CAD) is responsible for
disbursement, documentation and security creation, database management
and generating various advances related reports and MIS.
The Credit Risk Analytics & Monitoring (CRAM) Unit monitors key
customer exposures centrally to spot early warning signals based on the
conduct of account and other qualitative inputs which may affect credit
quality of customer. The Bank has developed strong credit monitoring
mechanisms by building a comprehensive Early Warning Process for
account level monitoring.
Concentration Risk
Concentration risk is monitored and managed both at the customer level
and at the aggregate level. The Bank continuously monitors portfolio
concentrations by segment, ratings, borrower, group, sensitive sectors,
unsecured exposures, industry, geography, etc. The Bank adopts a
conservative approach within the regulatory prudential exposure norms.
Market Risk
Besides the usual monitoring of Structural Liquidity, Interest Rate
Sensitive Gap limits and Absolute Holding limits, the Bank also
monitors interest rate risks using Value at Risk limits. Exposures to
Foreign Exchange and Capital Markets are monitored within pre-set
exposure limits, margin requirements and stop-loss limits.
Country Exposure Risk
The Bank has established specific country exposure limits (capped at
1.5% of the Bank''s Total Assets), which are based on rating of
individual countries. The Bank uses the mitigant of insurance cover
available through the Export Credit and Guarantee Corporation (ECGC),
where appropriate.
Liquidity Risk
As part of the liquidity management and contingency planning, the Bank
assesses potential trends, demands, events and uncertainties that could
result in adverse liquidity conditions. The Bank''s Asset Liability
Management (ALM) policy defines the gap limits for the structural
liquidity and the liquidity profile is analyzed on both static and
dynamic basis by tracking cash inflow and outflow in the maturity
ladder based on the expected occurrence of cash flow. The Bank
undertakes behavioural analysis of the non-maturity products, namely
CASA, Cash Credit and Overdraft accounts on a periodic basis to
ascertain the volatility of balances in these accounts. The renewal
pattern and premature withdrawals of term deposits and drawdowns of
un-availed credit limits are also captured using behavioural studies.
The liquidity profile is estimated on an active basis by considering
the growth in Deposits, Advances and investment obligations for a
short-term period of three months. The concentration of large deposits
is monitored on a periodic basis. Emphasis has been placed on growing
Retail deposits and to avoid as far as possible bulk deposits. The Bank
periodically conducts liquidity stress testing.
Operational Risk
Operational risk is the risk of loss resulting from inadequate or
failed internal processes, people or systems, or external events. The
Bank''s operational risk management framework is defined in the
Operational Risk Management Policy approved by the Board of Directors.
While the policy provides a broad framework, Operational Risk
Management Committee (ORCO) of Management oversees the operational risk
management in the Bank. The policy specifies the composition, roles and
responsibilities of the ORCO. The framework comprises identification,
assessment, management and mitigation of risks through tools like
incident reporting, loss reporting, Key Operational Risk Indicators
(KORI), Risk and Control Self-Assessment (RCSA) and Periodic Risk
Identification and Controls Evaluation (PRICE).
Each new product or service introduced is subject to a risk review and
sign- off process so that relevant risks are identified and assessed
independently from the unit proposing the product. There is a separate
Process Management Team to document, maintain and conduct periodic
review of all the processes for the Bank. Management Committee for
Approval of Process (MCAP) has been constituted to approve and develop
various processes in the Bank. The said committee consists of highly
experienced bankers and subject matter experts. Internal Audit inspects
the processes that are implemented.
Reputational Risk
The Bank pays special attention to issues that may create a
Reputational risk. Events that can negatively impact the Bank''s
position are handled cautiously ensuring utmost compliance and in line
with the values of the Bank.
Implementation of Basel II guidelines
The Bank has taken the opportunity of implementation of the Basel II
framework to systematically review and align its risk management
systems and practices with best international practices. In accordance
with the guidelines issued by RBI on Basel II, the Bank has
successfully migrated to Standardized Approach for Credit Risk,
Standardized Duration Approach for Market Risk and Basic Indicator
Approach for Operational Risk from 31st March , 2009. The Bank adheres
to the extant New Capital Adequacy Framework (NCAF) for computation of
eligible capital, Risk Weighted Assets and Capital Adequacy Ratio
(CRAR).
INFORMATION TECHNOLOGY (IT)
Keeping in view the Bank''s strategy and growth, during FY 2013, major
technology initiatives were focused towards optimization of
infrastructure and applications. The Bank implemented server
virtualization for Windows based applications in production and test
environments. This initiative, inter alia, helped to reduce physical
servers which in turn reduced rack space and power requirements. Thus,
the Bank took a few steps towards becoming a "green data centre".
An enterprise storage solution has been implemented providing
scalability and "storage to storage" data replication capabilities
between Data Centre and Disaster Recovery databases. On the
applications front, the Bank implemented a few key modules of a
contemporary integrated Treasury Management system replacing a legacy
system. The Bank also strengthened the mobile banking solution that has
capabilities to handle the financial inclusion initiatives in addition
to providing an efficient and convenient banking channel to the
customers. With a view to improving customer service, a new Call
Centre-IVR solution was implemented which provides customer convenience
features such as change of ATM PIN through IVR using IPIN. The Bank has
also provided a facility for "Online Savings Account Opening"
convenience for existing and new customers. This feature is available
to NRIs and will be extended to the domestic market in FY 2014. In
order to strengthen the IT security to reduce the risk to customers
particularly for "online" transactions, the network security
architecture was revamped to enhance security of servers from internal
as well as external unauthorized access. An automated Patch Management
Solution was implemented to update patches in desktop environment. In-
house developed Security Incident and Event Management solutions were
implemented for constant monitoring of logs from security devices. The
Bank also took steps towards ISO 27001 standards for strengthening its
IT governance model.
OPERATIONS
The Operations Unit is the backbone for processing of customer
transactions. The Operations Unit has been co-located in the same
building as the Corporate Office. This is expected to vastly improve
the coordination between business units and Operations. In FY 2013, the
Bank has launched Cheque Truncation System (CTS) in Bangaluru,
Hyderabad and Kochi and is in the process of launching the same for the
Western region. In order to improve customer experience, the Bank
introduced a number of process improvements on a continuous basis. This
not only helped to improve customer satisfaction but also reduced
Operations Risks. The Operations team ensured smooth implementation of
new branches and new business initiatives.
INTERNAL AUDIT (IA)
Internal Audit (IA) is an independent unit that performs regular audits
to evaluate the adequacy and effectiveness of internal controls and
overall risk management. The Audit Committee of the Board (ACB)
provides direction and monitors the effectiveness of the IA function.
IA uses a comprehensive risk based approach taking into account the
guidelines of RBI and international best practices. In order to
continuously innovate and keep high vigil and enhanced risk management,
IA introduced innovative audits during the year with significant
leverage and use of technology. This approach in specialized snap
audits has provided the Management with quick and deep insights into
weak links and ability to address the gaps promptly. As a result of
its consistent inputs and value added observations, IA has become a
value partner in improving the overall risk management and controls of
various units of the Bank. Corrective Action Trackers are part of
regular management updates and form a basis of evaluating the units''
performance. IA is playing an active role in providing inputs for
enhancing the existing policies and procedures. IA also undertakes
thematic reviews of key products and projects. It uses experienced
audit firms for concurrent audits in line with ACB approved framework.
IA continues to appraise the Board, ACB and the Management teams in
terms of newer emerging threats and recommends appropriate mitigating
measures.
HUMAN RESOURCE (HR)
In FY 2013, HR once again played a key role in the transformation
journey of the Bank. The main focus was on upgrading of skills,
providing career progression, employee engagement to improve pride and
belonging, talent hiring and nurturing.
The Bank was awarded as "Great Place to Work" in the study
conducted by Great Place to Work Institute.
The Bank launched several unique developmental programs for employees
which range from Leadership Development (LEAP), developing employees
into complete bankers (RISE, Aspire), "Beat the Best" for frontline
executives and career progression initiatives such as "Budding Branch
Managers, "Budding ROMs", "Budding ACMs" and "Budding SME
RMs". The Bank''s employees also took part in professional
certification programs. In order to equip the employees in process
improvement, Re-engineering, Six Sigma and Project Management
certifications were also conducted.
In FY 2013, the Bank hired 18 freshers under the Budding Banker Program
for Retail Banking. In a major move, the Bank invested in a competency
framework creation which will ensure consistency in hiring parameters
for various levels in the organization.
With a view to providing direct access to frontline employees and give
them an opportunity to give feedback to the top team, "Coffee with MD
& CEO" sessions were organized. In this forum, frontline employees
could freely exchange ideas with the MD & CEO.
The Bank is committed to Corporate Social Responsibility. It is one of
the best ways to increase employee engagement. In FY 2013, blood
donation, clothes and books donation, visit to orphanage and charity
auctions were conducted.
In terms of employee activities, throughout the year, several programs
were undertaken. Employees participated enthusiastically in carrom,
chess and cricket tournaments. Wellness, Breast Cancer Awareness
Session, Healthy Heart Talk, Positive Thinking Workshop and Hair
Treatment Camp were conducted to improve awareness amongst employees.
Like in the previous year''s all important occasions and festivals
were celebrated by the Bank. The Bank has an in-house employee
magazine "High Decibel" which is published monthly. As per
tradition, every year, the Bank conducted the "Movers & Shakers",
its annual staff recognition and cultural event program.
CUSTOMER SERVICE
The Bank believes that customer satisfaction is at the core of its
existence and customers must be served proactively beyond their
expectations. The Bank has a dedicated Service Quality (SQ) team that
is supervised by the MD & CEO along with Senior Management. The SQ team
inter alia is responsible for identifying problems faced by customers,
co-ordinating speedy rectification of issues, actively looking for
process improvement opportunities, scientifically tracking customer
satisfaction and facilitating implementation of customer friendly
automation.
The Bank has installed "Centralized Complaint Management System" so
that customer queries and complaints are not inadvertently missed out
and also to provide uniform quality service. All complaints are tracked
rigorously for timely closure and delays if any are escalated to the
Senior Management.
The Bank offers personal and corporate Internet Banking services which
are at par with the best in the industry. DCB Bank mobile alerts are
considered to be one of the best in the industry. On an ongoing basis,
more alerts are added to provide convenience that reduces the need for
customers to visit a branch.
In FY 2013, the Bank launched a massive service improvement program
called Power of Three  Empathy, Speed and Quality (ESQ). ESQ
represents the three solid pillars of service philosophy of the Bank.
The MD & CEO and the Management Team visited key locations in India and
addressed the staff to emphasize the need for improving the service
levels and the service culture. Over a period of time, the Bank aims to
vastly improve the level of service provided to customers and set new
industry benchmarks. The ESQ initiative is almost one year old and the
Bank is seeing the values of ESQ slowly taking root in the entire
organization. It is a long journey undertaken by the Bank to
differentiate it from the competition.
A special training program was created called "ESQ Explored" and in
FY 2013, more than 800 employees were covered by ESQ training.
As part of ESQ, on a regular basis, the MD & CEO and the Management
Team go through a sample of customer complaints which is recorded in
the Bank''s dedicated customer complaint system called Optilive. A
detail root cause analysis is conducted for the complaints reviewed by
the MD & CEO. This helps in identifying improvements that need to be
implemented in Operations, Technology, Credit, Process, etc. so that
similar complaints do not recur. Corrective actions are tracked
rigorously by the Management Team for timely completion. In addition to
sample customer complaints review, the Bank also conducted an
independent internal customer satisfaction survey by sending a
structured questionnaire to several customers. The feedback so received
was shared with the Management Team. The Chairman of the Bank met with
groups of customers along with the Senior Management team to solicit
direct feedback on areas for improvement.
DCB 24 Hour Customer Care phone banking unit has been serving customers
for a long time. The idea is to eliminate the need for customers to
visit the branches for their banking needs. This unit handles
approximately 55,000 calls per month. Incoming calls are monitored to
provide regular feedback and training to the phone banking executives
so that they can improve the quality of interaction with the customers.
The Customer Care Unit runs programs such as ''Voice of the
Customer'' for effective complaint resolution and process improvement.
In FY 2013, some key measures taken up by the Bank include a formation
of customer first team which is designed to ensure end-to-end customer
complaint resolution. A separate retention calling team has been
created to call customers who have stopped banking with the Bank. The
idea is to understand the issues and win back these customers. The
retention calling team gives valuable feedback to various functions and
the product team. The customer satisfaction and complaint levels are
regularly reviewed by the Customer Service Committee (CSC) of the
Board. The Bank has also set up a robust training mechanism; both on
the online platform as well as using conventional class room sessions,
to enable its employees to improve the quality of customer service.
PARTICULARS OF EMPLOYEES
The information required under Section 217(2A) of the Companies Act,
1956 and the rules made there under, as amended, are given in the
annexure appended hereto and forms part of this report. In terms of
Section 219(1)(b) (iv) of the Act, the Report and Accounts are being
sent to the shareholders excluding the aforesaid annexure. Any
shareholder interested in obtaining a copy of the said annexure may
write to the Company Secretary at the Registered Office of the Bank.
The Bank had 8 employees who were employed throughout the year and were
in receipt of remuneration of more than Rs. 60 lakh per annum and no
employee was employed for part of the year and was in receipt of
remuneration of more than Rs. 5 lakh per month.
EMPLOYEE STOCK OPTIONS
The information pertaining to the Employee Stock Options is given in an
annexure to this Report.
PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
The provisions of Section 217(1)(e) of the Companies Act, 1956 relating
to conservation of energy and technology absorption do not apply to the
Bank. However, as mentioned in the earlier part of the Report, the Bank
has been extensively using technology in its operations.
DIRECTORS'' RESPONSIBILITY STATEMENT
In accordance with Section 217(2AA) of the Companies Act, 1956, your
Board of Directors confirms that: a) in the preparation of the annual
accounts, the applicable accounting standards have been followed along
with no material departures; b) the directors had selected such
accounting policies and applied them consistently and made judgments
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 or loss of the Bank for the year; c)
proper and sufficient care has been taken for maintenance of adequate
accounting records as provided in the Companies Act, 1956, for
safeguarding the assets of the Bank and for preventing and detecting
frauds and other irregularities; and d) the annual accounts of the Bank
have been prepared on a "going concern" basis.
CORPORATE GOVERNANCE
The Bank has been observing the best corporate governance practices and
benchmarking itself against each such practice on an ongoing basis. A
separate section on Corporate Governance and a Certificate from the
Statutory Auditors, M/s. B S R & Co., Chartered Accountants, regarding
compliance of the conditions of Corporate Governance as stipulated
under Clause 49 of the Listing Agreements with the Stock Exchanges form
part of this Annual Report.
DIRECTORS
In accordance with the Companies Act, 1956 and the Articles of
Association of the Bank, Directors Mr. Suhail Nathani and Mr. Amin
Manekia are retiring by rotation and, being eligible, offer themselves
for reappointment. The Board recommends the re-appointments of Mr.
Suhail Nathani and Mr. Amin Manekia as Directors at the ensuing Annual
General Meeting. A brief resume relating to the Directors who are to be
re-appointed is furnished in the report on Corporate Governance. None
of the above mentioned persons is disqualified from being appointed as
a Director as specified in terms of Section 274(1)(g) of the Companies
Act, 1956.
Mr. Imran Contractor, Mr. Keki Elavia, Mr. C. Narasimhan, Mr. Nalin
Shah and Mr. S. Sridhar were appointed by the Board as Additional
Directors of the Bank on 12th October, 2012 and Mr. Jamal Pradhan was
appointed as an Additional Director of the Bank on 15th January, 2013.
Separate notices along with deposits of Rs. 500/- each have been
received from six shareholders signifying their intention to propose
Mr. Imran Contractor, Mr. Keki Elavia, Mr. C. Narasimhan, Mr. Nalin
Shah, Mr. S. Sridhar and Mr. Jamal Pradhan as Directors of the Bank at
the ensuing AGM. The Board of Directors of the Bank also has
recommended their appointments.
During FY 2013, Mr. Narayan K. Seshadri and Mrs. Nasim Devji ceased to
be Directors of the Bank, on their successful completion of 8
continuous years on the Board of the Bank, on 29th September, 2012 and
12th January, 2013 respectively. Mr. Amir Sabuwala and Mr. Rajabbhai
Momin also resigned from the Board of the Bank on 12th October, 2012.
The Board of Directors had placed on record its sincere appreciation of
the valuable contributions made by Mr. Narayan K. Seshadri, Mrs. Nasim
Devji, Mr. Amir Sabuwala and Mr. Rajabbhai Momin as Directors of the
Bank.
STATUTORY AUDITORS
M/s. B S R & Co., Chartered Accountants, were appointed as the
Statutory Auditors at the last Annual General Meeting. They are
eligible for reappointment for the FY 2013-14 and the Reserve Bank of
India has been approached for their reappointment. Your Board
recommends their appointment as the Statutory Auditors at the ensuing
Annual General Meeting.
ACKNOWLEDGEMENTS
Your Board wishes to thank the principal shareholder, the promoters Aga
Khan Fund for Economic Development (AKFED), and all the other
shareholders for the confidence and trust they have reposed in the
Bank. Your Board also acknowledges with appreciation the Reserve Bank
of India (RBI) for its valuable guidance and support to the Bank. Your
Board similarly expresses gratitude for the assistance and co-operation
extended by SEBI, BSE, NSE, NSDL, CDSL, Central Government and the
Governments of various States where the Bank has its branches.
Your Board acknowledges with appreciation, the invaluable support
provided by the Bank''s auditors, lawyers, business partners and
investors. Your Board is also thankful for the continued co-operation
of various financial institutions and correspondents in India and
abroad.
Your Board wishes to sincerely thank all its customers for their
patronage. Your Board records with sincere appreciation the valuable
contribution made by employees at all levels and looks forward to their
continued commitment to achieve further growth and take up more
challenges that the Bank has set for the future.
For and on behalf of the Board of Directors
Hyderabad Nasser Munjee
12th April, 2013 Chairman
Mar 31, 2012
The Directors are pleased to present the seventeenth Annual Report of
your Bank together with the audited accounts for FY 2012.
In FY 2012, the Bank has posted an Operating Profit of Rs 83.82 crore
(Previous year: Rs 86.06 crore) and a Net Profit of Rs 55.08 crore
(Previous year: Rs 21.43 crore).
Total Assets have increased by Rs 1,263.98 crore and reached Rs 8,676.85
crore as on 31st March 2012. (Rs 7,412.87 crore as on 31st March 2011).
Customer Deposits have increased by Rs 764.77 crore and Advances have
increased by Rs 1,002.73 crore. The Bank has achieved the Priority
Sector Lending (PSL) target as required by Reserve Bank of India (RBI).
The Net Interest Margin (NIM) has improved to 3.25% in FY 2012 from
3.13% in FY 2011 and the CASA ratio remains high at 32.12%.
Cost to Income Ratio has increased to 74.63% in FY 2012 from 71.43% in
FY 2011. This was on account of Staff Costs, ATM expansion, Service Tax
and general inflation in cost of services.
Provisions Other Than Tax have reduced to Rs 28.71 crore in FY 2012 from
Rs 56.81 crore in FY 2011.
Capital Adequacy Ratio (CAR) under Basel II as on 31st March 2012 stood
at 15.41%.
Gross and Net NPAs have decreased to Rs 241.80 crore and Rs 30.24 crore
respectively as on 31st March 2012 from Rs 263.57 crore and Rs 41.23
crore respectively as on 31st March 2011. The overall NPA Provision
Coverage Ratio as on 31st March 2012 was 91.17%.
The market conditions continued to be challenging. Inflation remained
high for most of the year and liquidity remained tight. Cost of Funds
went up substantially and the Bank had to revise the Base Rate to
partly offset the margin pressure. The banking industry came under
pressure due to rising NPAs especially from airlines, telecom and
infrastructure. Towards the end of third quarter of the year some
relief was seen in inflation data. The Reserve Bank of India (RBI)
reduced Cash Reserve Ratio (CRR) by 125 bps in two tranches to improve
liquidity. However, deposit interest rates remained very high and
liquidity pressure continued unabated. Therefore, there was no
opportunity to reduce the Base Rate. The situation required the Bank to
remain cautious and be selective in pursuing Advances growth.
The Bank opened 4 new branches in FY 2012 (Netrang, Mandvi, Bargarh and
Itarsi) taking the total tally of branches to 84. The Bank received 2
branch licenses in FY 2011 and 10 in FY 2012. Out of these, 4 branches
have been installed and the balance 8 will be completed in FY 2013. The
Bank received a communication from RBI permitting the Bank to open
branches in Tier 2 to Tier 6 locations without prior approval from RBI.
This permission was not previously available to the Bank. Going
forward, the Bank plans to periodically open branches especially in
Tier 2 to Tier 6 locations. This will help in growing CASA deposits,
retail loans and Priority Sector Lending (PSL).
The Bank embarked on ATM expansion plan in order to improve fee income,
obtain more visibility for the Bank and support CASA growth. In FY
2012, the Bank installed 182 new ATMs taking the total tally to 320 by
end of March 31, 2012.
The Management Team had been working for the past few months to raise
Tier I capital to continue its growth journey as per new strategy.
However, since September 2010, the market was not conducive and
investors were generally risk averse. In the early part of the fourth
quarter of FY 2012, there was a window of opportunity and the Bank has
raised Tier I capital to the extent of Rs 94.01 crore through QIP and Rs
98.75 crore through Preferred Allotment. This capital raising has
vastly improved the Capital Adequacy Ratio of the Bank.
FINANCIAL SUMMARY
(Rs in crore)
For the year For the year Increase/
ending 31 ending 31 (Decrease)
March 2012 March, 2011
Balance Sheet
Deposits 6,335.56 5,610.17 725.39
Customer Deposits 6,114.79 5,350.02 764.77
(including CASA) (2,034.67) (1,975.46) 59.21
Inter Bank Deposits 220.77 260.15 (39.38)
Advances 5,284.42 4,281.69 1,002.73
Non Performing Assets (Gross) 241.80 263.57 (21.77)
Non Performing Assets (Net) 30.24 41.23 (10.99)
Provision for Standard Assets 25.25 25.31 (0.06)
Total Assets 8,676.85 7,412.87 1,263.98
Profit & Loss
Net Interest Income 227.70 189.14 38.56
Non-Interest Income 102.73 112.10 (9.37)
Total Operating Income 330.43 301.24 29.19
Operating Cost 246.61 215.18 31.43
Operating Profit 83.82 86.06 (2.24)
Provisions 28.71 56.81 (28.10)
Net Profit / (Loss) Before Tax 55.11 29.25 25.86
Tax 0.03 7.82 (7.79)
Net Profit / (Loss) After Tax 55.08 21.43 33.65
DIVIDEND
In view of the provisions of Section 15 of the Banking Regulation Act,
1949, your Directors are not able to recommend payment of any dividend
for FY 2012 (Previous year NIL).
MSME and SME
The importance of MSME and SME to India's economy and the Bank's
strategy of pursuing this segment have already been mentioned earlier
in this discussion. The Bank has created robust sales, underwriting and
portfolio monitoring capability for growing the MSME and SME business.
It offers a wide range of products and personalized services including
Cash Management, Trade Finance, Internet Banking and Bancassurance. The
Bank aims to become the business partner of this vibrant
entrepreneurial segment of the economy. Your Bank has again this year
achieved strong growth in MSME and SME Advances. The MSME and SME sales
teams have been continuously acquiring new relationships while the
dedicated portfolio team has been deepening existing relationships.
Over time with the opening of new branches, the Bank aims to be one of
the best MSME and SME bank in India.
CORPORATE BANKING
Corporate Banking is present across India with Regional offices in
Mumbai, Ahmedabad, Bengaluru, Chennai, Hyderabad, Delhi and Kolkata.
The main strategy is to provide complete range of commercial banking
solutions including structured Trade Finance and Cash Management
Services. The Bank has a strong underwriting and credit administration
support to achieve sustainable growth in Corporate Banking business.
The emphasis is on building a secured advances portfolio and building a
long term relationship with high quality large and mid-corporate
houses. The business is being managed by a team of experienced
Relationship Managers, Credit Analysts and Product Specialists in Trade
Finance and Cash Management Services. The Bank targets emerging
Corporates and in FY 2012 the unit added 32 new customers.
AGRI AND INCLUSIVE BANKING (AIB)
India's rural and semi urban areas have large untapped potential for
banking opportunities. In order to meet the objectives of business
growth and financial inclusion, the Bank has set up a separate unit
named as Agri and Inclusive Banking (AIB). This unit is also
responsible for coordinating the efforts to meet the Priority Sector
Lending (PSL) targets set by RBI. As stated earlier in this report, the
Bank met its PSL target prescribed by RBI in FY 2012.
AIB offers a wide range of products to cater to the various needs of
rural and semi urban India for example funding against pledge of stocks
mentioned in warehouses, term loans and portfolio buyout from Micro
Finance Institutions (MFIs) and NBFCs, working capital for agri
processors and term loans for warehouse construction.
In FY 2012, AIB launched Crop Loan, Animal Husbandry Loan, Land
Improvement Loans, JLG Loans and Small Business Loans. AIB also
launched Tractor Financing in a few locations. Your Bank was amongst
the first banks to re-start lending to MFIs.
In FY 2012, AIB opened 4 new branches namely Netrang and Mandvi
(Gujarat), Bargarh (Odisha) and Itarsi (Madhya Pradesh). These branches
focus on products like Value Savings Account and Kisaan Mitra Account
(mini recurring deposit scheme) besides providing Gold Loans and other
Retail Agri loans.
TREASURY
Treasury actively manages liquidity, Fixed Income Securities Trading,
Equity Investment IPOs, FX Trading and Customer Sales. Treasury ensures
compliance with regulatory requirements such as CRR and SLR.
In FY 2012, the main focus of the Government and RBI was to ensure
growth and simultaneously tame inflation. This was indeed a difficult
task. While India has a strong vibrant domestic economy, still the
country is strongly impacted by the situation prevailing in the West.
Interest rates remained high and liquidity was tight. RBI increased the
Repo rate from 6.75% to 8.50%. The high interest rate environment had
an impact on economic growth.
The liquidity in the banking system remained in deficit mode throughout
the year going up from Rs 50,000 crore to Rs 190,000 crore on account of
Government borrowing and RBI intervention in the FX market. RBI hiked
Repo rate from 6.75% to 8.50% to contain inflationary pressure and the
overnight call rates remained above Repo rate and moved up from 7.00%
to 9.50%. RBI infused liquidity by way of Open Market Operations (OMOs)
and reduced the Cash Reserve Ratio (CRR) by 125 bps. The 10 year G-sec
yields moved up from 8.00% to 9.00% in the first half FY 2012 but fell
towards the end of the year on account of regular OMOs. The GDP and IIP
figures did not infuse much confidence and the markets remained
volatile. The Sensex came down sharply until December 2012 and
recovered somewhat from January 2012.
The Foreign Exchange (FX) market was extremely volatile. The INR
weakened sharply against the US Dollar from around Rs 43.85 to Rs 54.30
requiring RBI intervention in the FX market. FIIs were also net sellers
in the equity market till December 2011 before turning net buyers in
January 2012. This has led to an inflow of US Dollars and slight
strengthening of INR. However, given the fiscal deficit, high oil
prices, inflation and global uncertainties, the situation looks weak.
The Bank remained cautious in trading both in FX and Money markets.
Despite adverse liquidity situation in the system, the Bank's liquidity
was managed well throughout the year. Taking advantage of rising
yields, Treasury regularly invested in high yielding Government bonds
and improved the yield from the previous year. In order to reduce the
cost of funds on available excess liquidity created by funds flow
mismatch, the Bank deployed the surplus funds in various money market
instruments.
CREDIT & RISK
Risk Management
Your Bank has an independent Risk Management function. The Credit
Committee of the Board (CCB) guides the direction for development of
policies and procedures in managing credit risk and implementing the
credit strategy. The objective of risk management is to have a dynamic
and an optimum balance between risk and return and ensuring regulatory
compliance and conformity with the Board approved policies. It entails
the identification, measurement and management of risks across the
various businesses of the Bank. Risk is managed through defined
policies and procedures approved by the Board of Directors and
monitoring and corrective actions are taken on a continuous basis. The
Bank has invested in building a strong talent base with deep risk
expertise while also successfully recruiting and retaining that
expertise. The Risk Management function strives to anticipate
vulnerabilities through reviews of quantitative and qualitative data /
MIS of both external and internal risks.
The Bank's risk management processes are guided by policies appropriate
for the various risk categories namely Credit Risk, Market Risk
(including asset liability management and liquidity risks) and
Operational Risk. The Board sets the overall risk appetite and
philosophy for the Bank. The Risk Management Committee (RMC), which is
a committee of the Board, reviews various aspects of risk arising from
the businesses undertaken by the Bank. At the operating level, risk
committees namely Asset Liability Management Committee (ALCO), the
Operational Risk Management Committee (ORCO) and the Credit Risk
Management Committee (CRMC) oversee specific risk areas. These
committees provide inputs for review by the Risk Management Committee
(RMC) of the Board.
Credit Risk
The credit risk policy supports and is aligned with the Bank's
corporate priority of achieving growth and at the same time maintaining
asset quality to ensure long term sustainable profitability over
business cycles. The Bank strives to maintain a healthy balance between
risk and reward. The Bank also undertakes the exercise of measuring the
credit risks involved in the composition of its present portfolio and
realigning them to have a better risk-reward composition. The Bank
endeavors to continuously enhance its internal risk assessment
capabilities.
The Risk Function over time has developed capabilities to assess the
risk associated with various products and business segments (MSME, SME,
Mortgages, Corporate etc). The effort is to standardize the credit
approval process so that the outcomes are predictable. The Bank has
implemented a rating model for obligors. This model takes into account
both quantitative and qualitative factors as inputs and produces a
rating that becomes one of the key inputs to credit decisions.
The Credit Administration Department (CAD) is responsible for
disbursement, documentation and security creation, database management
and generating various advances related reports and MIS.
The Credit Risk Analytics & Monitoring (CRAM) unit monitors key
customer exposures centrally to spot early warning signals based on the
conduct of account and other qualitative inputs which may affect credit
quality of customer. The Bank has developed strong credit monitoring
mechanisms by building a comprehensive Early Warning Process for
account level monitoring.
Concentration Risk
Concentration risk is monitored and managed both at a customer level
and at the aggregate level. The Bank continuously monitors portfolio
concentrations by segment, ratings, borrower, group, sensitive sectors,
unsecured exposures, industry, geography etc. Your Bank adopts a
conservative approach within the regulatory prudential exposure norms.
Market Risk
Besides the usual monitoring of Structural Liquidity, Interest Rate
Sensitive Gap limits and Absolute Holding limits, the Bank also
monitors interest rate risks using Value at Risk limits. Exposures to
Foreign Exchange and Capital Markets are monitored within pre-set
exposure limits, margin requirements and stop-loss limits.
Country Exposure Risk
The Bank has established specific country exposure limits capped at
1.5% of Total Assets are based on rating of individual countries. The
Bank uses the mitigant of insurance cover available through the Export
Credit and Guarantee Corporation (ECGC), where appropriate.
Liquidity Risk
As part of the liquidity management and contingency planning, the Bank
assesses potential trends, demands, events and uncertainties that could
result in adverse liquidity conditions. The Bank's Asset Liability
Management (ALM) policy defines the gap limits for the structural
liquidity and the liquidity prof le is analyzed on both static and
dynamic basis by tracking cash inflow and outflow in the maturity
ladder based on the expected occurrence of cash flow. The Bank
undertakes behavioral analysis of the non-maturity products, namely
CASA, Cash Credit and Overdraft accounts on a periodic basis to
ascertain the volatility of balances in these accounts. The renewal
pattern and premature withdrawals of Term Deposits and drawdowns of
un-availed credit limits are also captured through behavioral studies.
The liquidity profile is estimated on an active basis by considering
the growth in Deposits, Advances and investment obligations for a
short-term period of three months. The concentration of large deposits
is monitored on a periodic basis. Emphasis has been placed on growing
Retail deposits and avoid as far as possible bulk deposits. The Bank
periodically conducts liquidity stress testing.
Operational Risk
Operational risk is the risk of loss resulting from inadequate or
failed internal processes, people or systems, or external events. The
Bank's operational risk management framework is defined in the
Operational Risk Management Policy approved by the Board of Directors.
While the policy provides a broad framework, Operational Risk
Management Committee (ORCO) of Management oversees the operational risk
management in the Bank. The policy specifies the composition, roles and
responsibilities of the ORCO. The framework comprises identification,
assessment, management and mitigation of risks through tools like
incident reporting, loss reporting, Key Operational Risk Indicators
(KORI), Risk and Control Self-Assessment (RCSA) and Periodic Risk
Identification and Controls Evaluation (PRICE). Each new product or
service introduced is subject to a risk review and sign- off process so
that relevant risks are identified and assessed independently from the
unit proposing the product. There is a separate Process Management Team
to document, maintain and conduct periodic review of all the processes
for the Bank. Management Committee for Approval of Process (MCAP) has
been constituted to approve and develop various processes in the Bank.
The said committee consists of highly experienced bankers and subject
matter experts. Internal Audit inspects the processes that are
implemented.
Reputational Risk
The Bank pays special attention to issues that may create a
Reputational risk. Events that can negatively impact the Bank's
position are handled cautiously ensuring utmost compliance and in line
with the values of your Bank.
Implementation of Basel II guidelines
The Bank has taken the opportunity of implementation of the Basel II
framework to systematically review and align its risk management
systems and practices with best international practices.
In accordance with the guidelines issued by the Reserve Bank of India
on Basel II, the Bank has successfully migrated to Standardized
Approach for Credit Risk, Standardized Duration Approach for Market
Risk and Basic Indicator Approach for Operational Risk from March 31,
2009. The Bank adheres to the extant New Capital Adequacy Framework
(NCAF) for computation of eligible capital, Risk Weighted Assets and
CRAR.
INFORMATION TECHNOLOGY (IT)
The Bank continues to leverage technology for supporting its business
strategy and to improve the level of customer service. The application
landscape consists of a blend of packaged products as well as some home
grown applications.
The Bank has created a robust infrastructure architecture with all the
offices connected using Multi Protocol Label Switching (MPLS)
technology backbone to provide a better, reliable and efficient network
in line with business priorities.
With a view to strengthen information security, the Bank has
implemented appropriate solutions, which are continually upgraded based
on the periodic reviews, vulnerability analysis and penetration
testing.
In order to reduce the number of ATM complaints and improve customer
satisfaction, in FY 2012, IT completed the migration of card management
and switch to Euronet from the existing vendor. It was a complex
project which was smoothly completed with minimum errors. During FY
2012, the Bank's Disaster Recovery (DR) was relocated to Bengaluru in a
much better facility.
As a part of the on-going upgrade of IT infrastructure, the Bank
implemented an enterprise storage platform that is expected to provide
efficient processing capabilities.
The IT operations are managed with a judicious mix of 'in-house' and
'outsourced' manpower, comprising a strong in-house team combined
with outsourced resources.
The Bank will continue to implement appropriate, cost-efficient
technologies to support the business plan in the coming financial year.
OPERATIONS
Operations is the backbone of the Bank's internal and external service
delivery which is centralized at Vikhroli in Mumbai. Operations
endeavors to adopt an empathetic approach to drive efficiencies and
best-in-class customer service. Internal controls are constantly
reviewed to ensure that risks are well managed. End to end process
reviews are conducted periodically and automation is introduced
wherever possible to reduce errors and cycle time.
INTERNAL AUDIT (IA)
Internal Audit is an independent unit that performs regular audits to
evaluate the adequacy and effectiveness of internal controls and
overall risk management. The Audit Committee of the Board (ACB)
provides direction and monitors the effectiveness of the audit
function. IA uses a comprehensive risk based approach taking into
account the guidelines of RBI and international best practices. IA
reviews include snap audits and thematic reviews of key functions and
projects. IA also uses experienced audit firms for concurrent audits.
As a result of the improvements initiated last year, IA is continuously
emerging as a unit providing valuable inputs for improving the overall
risk management and controls. Corrective Action Trackers (CATs) have
started showing results as they are now part of regular management
updates and form a basis of tracking improvements. IA has initiated a
few new improvements in FY 2012 that are expected to further assist in
proactively identifying risks in changing business dynamics and assist
in improving overall control environment. IA continues to appraise the
Board, the Audit
Committee of the Board (ACB) and the Management teams in terms of newer
emerging threats and recommend appropriate mitigating measures.
HUMAN RESOURCE (HR)
In FY 2012, once again HR played a key role in transformation journey
of Your Bank. The main focus was on upgrading of skills, providing
career progression, employee engagement to improve pride, belonging,
talent hiring and nurturing. A lot of hard work went into developing
and delivering functional training. The Bank continued to pay special
attention to employee communication through High Decibel (in-house
staff magazine), DCB facebook page for employees, 'Being DCBian'
workshops, open forums, MD & CEO audio calls and skip level meetings.
HR launched "Career First", a career planning and development
program for employees that provide them the opportunity to have a
one-on-one discussion with the HR team who provide them with counseling
and career planning. Psychometric tool was used to help the employee
improve self- awareness. A unique panel discussion with the Management
Committee was organized where a set of employees could directly get
inputs from the management committee on how to build one's career and
skill set. The Bank also initiated "Grow with us" program to
prepare aspiring employees to fill up critical roles as and when the
need arises.
In FY 2012, numerous employee activities and social events were
conducted. This greatly helped improve team building and bonding. The
Bank participated in the Mumbai marathon, celebrated the global 'Joy of
Giving Week' through blood donation drives, visits to old age homes,
donation of books, clothes and toys to the needy as well as auction of
senior management memorabilia for charity. The annual 'Movers &
Shakers' event to celebrate success, recognize the achievers and also
give an opportunity to the Bank's talent was once again a remarkable
success. Besides the annual event, HR conducted inter corporate
photography competition, 'Biggest Loser' an in-house challenge for
weight loss and getting fit and healthy, 'Rangoli' competition during
Diwali, 'Carol singing' during Christmas and 'Antakshari' contests. DCB
Bank Premier League - an annual cricket tournament was held across
regions and the tournament was keenly contested amongst the various
teams. HR organized 'bone density camp' for employees to help them
understand early signs of osteoporosis, 'Nutrition Talk' and Yoga for
employees to make them more ft in today's stressful life.
The Bank has a culture of learning through the Individual Learning &
Development Scorecard (ILDS) and over 80% of the Bank's employees have
undergone various training programs.
Our key area of concentration this year was to create cross functional
synergies by sharing information on the functioning of select business
units. A first of its kind cross functional learning program was
"RISE" completed over a period of six months for 23 employees. This
program would clearly help job mobility in the Bank for talent as it
equips them with working knowledge of various functions. HR completed
"LEAP - Season II" (Leadership Excellence and Acceleration Program)
which was launched in FY 2010. In this program 20 employees go through
training, project work and presentation.
In terms of resourcing, the Bank launched the "Budding Bankers"
program by hiring fresh graduate trainees. These freshers will be
provided on the job intensive training across various units for 6
months and will be deployed in suitable openings at the end of the
training. The Bank expects to build a strong talent pool using this
program.
CUSTOMER SERVICE
The Bank believes that customer satisfaction is at the core of its
existence and customers must be served proactively beyond their
expectations. The Bank has a dedicated Service Quality (SQ) team that
is supervised by the MD & CEO along with Senior Management. The SQ team
inter alia is responsible for - identifying problems faced by
customers, coordinating speedy rectification of issues, actively
looking for process improvement opportunities, scientifically tracking
customer satisfaction and facilitating implementation of customer
friendly automation.
The Bank has installed "Centralised Complaint Management" so that
customer queries and complaints are not inadvertently missed out and
also to provide uniform quality service. All complaints are tracked
rigorously for timely closure and delays if any are escalated to the
senior management.
The Bank offers personal and corporate Internet Banking services which
are at par with the best in the industry. DCB Bank mobile alerts are
considered to be one of the best in the industry. On an ongoing basis,
more alerts are added to provide convenience that reduces the need for
customers to visit a branch.
In FY 2012, a major revamp of the Account Opening process for Current
and Savings Accounts was completed. The new process helped to improve
frontline and customer satisfaction. The second process that is under
improvement is the loan sanctioning and disbursal process for MSME and
SMEs. Several areas for improvement across Credit, Operations and Sales
have been identified and implementation of recommendations by the
process improvement team has already begun.
DCB 24 Hour Customer Care phone banking unit has been serving customers
for a long time. The idea is to eliminate the need for customers to
visit the branches for their banking needs. This unit handles
approximately 71,000 calls per month. Incoming calls are monitored to
provide regular feedback and training to the phone banking executives
so that they can improve the quality of interaction with the customers.
The Customer Care unit runs programs such as 'Voice of the Customer'
for effective complaint resolution and process improvement. In FY 2012,
some key measures taken up by the Bank include a formation of customer
first team which is designed to ensure end-to-end customer complaint
resolution. A separate retention calling team has been created to call
customers who have stopped banking with the Bank. The idea is to
understand the issues and win back these customers. The retention
calling team gives valuable feedback to various functions and the
product team. The customer satisfaction and complaint levels are
regularly reviewed by the Customer Service Committee (CSC) of the
Board. Your Bank has also set up a robust training mechanism; both on
the online platform as well as using conventional class room sessions,
to enable its employees improve the quality of customer service.
STATUTORY DISCLOSURES IN ANNUAL REPORT 2011-12 PARTICULARS OF EMPLOYEES
The particulars required under Section 217(2A) of the Companies Act,
1956 and the rules made there under, as amended, are given in the
annexure appended hereto and forms part of this report. In terms of
Section 219(1)(b) (iv) of the Act, the Report and Accounts are being
sent to the shareholders excluding the aforesaid annexure. Any
shareholder interested in obtaining a copy of the said annexure may
write to the Company Secretary at the Registered Office of the Bank.
The Bank had 7 (seven) employees who were employed throughout the year
and were in receipt of remuneration of more than Rs 60.00 lakh per annum
and 1 (one) employee who was employed for part of the year and was in
receipt of remuneration of more than Rs 5.00 lakh per month.
EMPLOYEE STOCK OPTIONS
The information pertaining to the Employee Stock Options is given in an
annexure to this Report.
PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
The provisions of Section 217(1)(e) of the Companies Act, 1956 relating
to conservation of energy and technology absorption do not apply to the
Bank. However, as mentioned in the earlier part of the Report, the Bank
has been extensively using technology in its operations.
DIRECTORS' RESPONSIBILITY STATEMENT
In accordance with Section 217(2AA) of the Companies Act, 1956, your
Board of Directors confirms that: a) in the preparation of the annual
accounts, the applicable accounting standards have been followed along
with proper explanation relating to material departures; b) the
directors had selected such accounting policies and applied them
consistently and made judgments 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 or loss of
the Bank for that period; c) proper and sufficient care has been taken
for maintenance of adequate accounting records as provided in the
Companies Act, 1956, for safeguarding the assets of the Bank and for
preventing and detecting frauds and other irregularities; and d) the
annual accounts of the Bank have been prepared on a "going concern"
basis.
CORPORATE GOVERNANCE
The Bank continues to believe in observing the best corporate
governance practices and benchmarking itself against each such practice
on an ongoing basis. A separate section on Corporate Governance and a
Certificate from the Statutory Auditors M/s. S. R. Batliboi & Co.,
Chartered Accountants regarding compliance of the conditions of
Corporate Governance as stipulated under Clause 49 of the Listing
Agreements with the Stock Exchanges form part of this Annual Report.
DIRECTORS
In accordance with the Companies Act, 1956 and the Articles of
Association of the Bank, Directors Mr. D.E. Udwadia and Mr. Sukh Dev
Nayyar are retiring by rotation and, being eligible, offer themselves
for reappointment. The Board recommends the re-appointments of Mr.
D.E. Udwadia and
Mr. Sukh Dev Nayyar as Directors at this Annual General Meeting. A
brief resume relating to the Directors who are to be re- appointed is
furnished in the report on Corporate Governance. None of the above
mentioned persons is disqualified from being appointed as a Director as
specified in terms of Section 274(1)(g) of the Companies Act, 1956.
Mr. Amin Manekia and Mr. Altaf Jiwani were appointed by the Board as
Additional Directors of the Bank on January 12, 2012. Separate notices
alongwith deposits of Rs 500/- each have been received from two
shareholders signifying their intention to propose Mr. Amin Manekia and
Mr. Altaf Jiwani as Directors of the Bank at the ensuing AGM. The Board
of Directors of the Bank also has recommended their appointments.
During FY 2011-12, Mr. Shabir Kassam has resigned from the Board of the
Bank. The Board of Directors has placed on record its sincere
appreciation of the valuable services rendered by Mr. Kassam as a
Director of the Bank since January 2006.
STATUTORY AUDITORS
Messrs M/s. S.R. Batliboi & Co., Chartered Accountants, were appointed
as Statutory Auditors at the last Annual General Meeting. They have
completed a continuous term of four years as the Bank's Statutory
Auditors and as required under the Banking Regulation Act, 1949 they
cannot be reappointed at the ensuing Annual General Meeting.
The appointment of the Bank's Statutory Auditors requires prior
approval of RBI. Accordingly, the approval of RBI for appointing M/s.
BSR & Co., Chartered Accountants, as Statutory Auditors of the Bank has
been received. Appointment of M/s. BSR & Co., Chartered Accountants, as
Statutory Auditors of the Bank for FY 2012-13 has been included in the
Agenda for the ensuing AGM.
ACKNOWLEDGEMENTS
Your Board wishes to thank the principal shareholder, the promoters Aga
Khan Fund for Economic Development (AKFED), and all the other
shareholders for the confidence and trust they have reposed in the
Bank. Your Board also acknowledges with appreciation the RBI for its
valuable guidance and support to the Bank. Your Board similarly
expresses gratitude for the assistance and co-operation extended by
SEBI, BSE, NSE, NSDL, CDSL, Central Government and the Governments of
various States where the Bank has its branches.
Your Board acknowledges with appreciation, the invaluable support
provided by the Bank's auditors, lawyers, business partners and
investors. Your Board is also thankful for the continued co-operation
of various financial institutions and correspondents in India and
abroad.
Your Board wishes to sincerely thank all its customers for their
patronage. Your Board records with sincere appreciation the valuable
contribution made by employees at all levels and looks forward to their
continued commitment to achieve ambitious organizational goals that the
Bank has set for the future.
On behalf of the Board of Directors
Bengaluru Nasser Munjee
April 13, 2012 Chairman
Mar 31, 2011
The directors are pleased to present the sixteenth Annual Report of
your Bank together with the audited accounts for FY 2011.
India faced many challenges during FY 2011. Tackling the problem of
high infation has been a agenda for the Government and the Reserve Bank
of India (RBI). The global economy is recovering but still weak and a
few countries in Europe continue to be in a precarious financial
condition. In India, the year started well with adequate liquidity and
low interest rates, however, by the second half the situation was very
different. The IIP data was not encouraging and liquidity became tight
pushing up interest rates. RBI took special steps to improve the
liquidity in the system and banks started offering customers high term
deposit interest rates. As cost of funds increased, banks increased the
Base Rate for lending. Due to uncertain conditions, the stock markets
remained volatile.
Globally, towards the end of the year, there has been massive uprising
of people in many of the Middle East countries demanding change. This
has already pushed up the oil price to a great extent. The situation
got worse in March 2011 when Japan was hit by a massive earthquake
followed by a devastating tsunami. Japan and the world is still
dealing with the fall out of the unprecedented natural disaster. While
the Indian economy continues to be resilient and buoyant and is
expected to grow at 8.0 to 8.5% per annum, oil price increase and
infation are likely to take some shine off the growth story.
Against the above background, the shareholders will be pleased to know
that in FY 2011, DCB has progressed further towards improving its
business and financial performance. DCB returned to profits in the 2nd
quarter of FY 2011 and thereafiter continued to improve step by step
every quarter.
In FY 2011, DCB has posted an Operating Profit of Rs. 86.06 Crore
(Previous year: Rs. 48.27 Crore) and a Net Profit of Rs. 21.43 Crore
(Previous year: Net Loss of Rs. 78.45 Crore).
The Net Interest Margin (NIM) has improved from 2.79% in FY 2010 to
3.13% in FY 2011 and the CASA ratio remains high at 35.2%.
Cost to Income Ratio has decreased to 71.4% in FY 2011 from 80.6% in FY
2010.
Provisions other than tax has reduced to Rs. 56.81 Crore in FY 2011 from
Rs. 121.01 Crore in FY 2010.
Capital Adequacy Ratio (CAR) under Basel II as on 31st March 2011 stood
at 13.25%.
Total Assets have increased by Rs. 1,235.67 Crore and reached Rs. 7,372.34
Crore as on 31st March 2011. (Rs. 6,136.67 Crore as on 31st March 2010).
Customer Deposits have increased by Rs. 721.69 Crore and Advances have
increased by Rs. 811.74 Crore.
Gross and Net NPAs have decreased to Rs. 263.57 Crore and Rs. 41.23 Crore
respectively as on 31st March 2011 from Rs. 319.18 Crore and Rs. 107.62
Crore as on 31st March 2010. The overall NPA Provision Coverage Ratio
was 87.64% and 100% for unsecured personal loans NPAs.
FINANCIAL SUMMARY
(Rs. in Crore)
For the year For the year Increase/
ending ending (Decrease)
31 March, 2011 31 March, 2010
Balance Sheet
Deposits 5,610.17 4,787.33 822.84
Customer Deposits 5,350.02 4,628.33 721.69
(including CASA) (1,975.46) (1,692.76) 282.70
Inter Bank Deposits 260.15 159.00 101.15
Advances 4,271.45 3,459.71 811.74
Non Performing
Assets (Gross) 263.57 319.18 (55.61)
Non Performing
Assets (Net) 41.23 107.62 (66.39)
Provision for Standard
Assets 25.31 25.25 0.06
Total Assets 7,372.34 6,136.67 1,235.67
Profit & Loss
Net Interest Income 189.14 141.55 47.59
Non-Interest Income 112.10 107.52 4.58
Total Operating Income 301.24 249.07 52.17
Operating Cost 215.18 200.80 14.38
Operating Profit 86.06 48.27 37.79
Provisions 56.81 121.01 (64.20)
Net Profit/(Loss) Before Tax 29.25 (72.74) 101.99
Tax 7.82 5.71 2.11
Net Profit/(Loss) 21.43 (78.45) 99.88
Afiter Tax
DIVIDEND
In view of the provisions of Section 15 of the Banking Regulation Act,
1949, your Directors are not able to recommend payment of any dividend
for FY 2011 (Previous year NIL)
VISION
Our vision is to be the most innovative and responsive neighborhood
community bank in India serving entrepreneurs, individuals and
businesses. In line with our vision, we began implementing a new
strategy, outlined below, in FY 2010. We have been operating under the
new strategy for almost two years and we are clearly seeing an
improvement in the business and financial performance of DCB.
Business Strategy
- Grow Retail Mortgages, MSME, SME and mid Corporate advances. The
emphasis will be on creating a diversifed and secured portfolio.
- Focus on CASA and Retail Term Deposits to manage/improve the cost of
funds. Retail Banking using branch banking and outbound sales team will
be the key channels for CASA and Retail Term Deposits. Bancassurance
and Trade Finance products will be actively cross sold to improve Fee
income and customer loyalty.
- Treasury will be mainly responsible for liquidity and Balance Sheet
management and will look for opportunities in fix and SLR trading gains
within acceptable risk levels.
- Productivity across all units to be actively managed with a strong
Cost discipline.
- Continue to strengthen Credit and Operational risks to support
Balance Sheet growth.
- Using sophisticated process improvement techniques, at least 3 key
processes to be improved every year which in turn will improve Service
Quality.
- Focus on Training especially in Sales and Service to enhance
frontline quality and effectiveness.
- Improve Human Resource processes to attract and retain talent.
Target Market
DCBs core target market will be MSME and SME sector. The Bank has
chosen this strategy in line with its capital position, infrastructure,
branch distribution, people capabilities and product strength. This
sector plays an important role in the economy of any country. They are
small and usually labor intensive. They cater to the needs of the
market with limited and indigenous capital outlay. MSME and SME play a
vital role in the growth of the Indian economy. It is estimated that
MSME and SME segment contributes around 45% of the industrial output
and 40% of exports. In India, at the end of year 2009, it was estimated
that MSME and SME make up for around 28.5 million business units
employing over 66 million people.
In FY 2011, DCB has grown Retail Mortgages, MSME and SME loans. A
steady portfolio was maintained in Corporate Banking. DCB made special
efforts to once again meet the Priority Sector Lending obligation.
DCB received 2 branch licenses from RBI. These branches are likely to
be operational by June 2011. In Branch Banking, focus of attention on
CASA and Retail Term Deposits yielded good results. Throughout the
year, the Bank managed its liquidity position very well and did not
have to over rely on bulk deposits and borrowings.
Costs increase was much slower than Income growth and were largely
limited to salary increases for the existing workforce and hiring
frontline sales staff for growing deposits and advances.
Provisions in FY 2011 were substantially lower than the previous year
and the Provision Coverage Ratio was well above the guidelines set by
RBI.
DCB has been able to return to profits in FY 2011. This has been
possible due to systematic and disciplined execution of the new
strategy while improving NPAs by concentrating on collections and
recovery efforts.
PARTICULARS OF EMPLOYEES
The information required under Section 217(2A) of the Companies Act,
1956 and the rules made there under, as amended, are given in the
annexure appended hereto and forms part of this report. In terms of
Section 219(1)(b)(iv) of the Act, the Report and Accounts are being
sent to the shareholders excluding the aforesaid annexure. Any
shareholder interested in obtaining a copy of the said annexure may
write to the Company Secretary at the Registered Offce of the Bank. The
Bank had 7 employees who were employed throughout the year and were in
receipt of remuneration of more than Rs. 60.00 lacs per annum and 1
employee who was employed for part of the year and was in receipt of
remuneration of more than Rs. 5.00 lacs per month.
EMPLOYEE STOCK OPTIONS
The information pertaining to the Employee Stock Options is given in an
annexure to this Report.
PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
The provisions of Section 217(1)(e) of the Companies Act, 1956 relating
to conservation of energy and technology absorption do not apply to
DCB. However, as mentioned in the earlier part of the Report, DCB has
been extensively using technology in its operations.
DIRECTORS RESPONSIBILITY STATEMENT
In accordance with Section 217(2AA) of the Companies Act, 1956, your
Board of Directors confrms that: a) in the preparation of the annual
accounts, the applicable accounting standards have been followed along
with proper explanation relating to material departures; b) the
directors had selected such accounting policies and applied them
consistently and made judgments 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 or loss of
the Bank for that period; c) proper and suffcient care has been taken
for maintenance of adequate accounting records as provided in the
Companies Act, 1956, for safeguarding the assets of the Bank and for
preventing and detecting frauds and other irregularities; and d) the
annual accounts of the Bank have been prepared on a "going concern"
basis.
CORPORATE GOVERNANCE
The Bank continues to believe in observing the best corporate
governance practices and benchmarking itself against each such practice
on an ongoing basis. A separate section on Corporate Governance and a
Certifcate from M/s S. R. Batliboi & Co., Chartered Accountants
regarding compliance of the conditions of Corporate Governance as
stipulated under Clause 49 of the Listing Agreements with the Stock
Exchanges form part of this Annual Report.
DIRECTORS
In accordance with the Companies Act, 1956 and the Articles of
Association of DCB, Directors Mr. R. A. Momin, Mr. Narayan K. Seshadri
and Mr. Suhail Nathani are retiring by rotation and, being eligible,
offer themselves for reappointment.
The Board recommends the re-appointments of Mr. R. A. Momin, Mr.
Narayan K. Seshadri and Mr. Suhail Nathani as Directors at this Annual
General Meeting. A brief resume relating to the Directors who are to
be re- appointed is furnished in the report on Corporate Governance.
None of the above mentioned persons is disqualifed from being appointed
as a Director as specified in terms of Section 274(1)(g) of the
Companies Act, 1956.
STATUTORY AUDITORS
Messers S. R. Batliboi & Co., Chartered Accountants were appointed as
Statutory Auditors at the last Annual General Meeting as per Banking
Regulation Act, 1949. They are eligible for re-appointment for FY
2011-12 and their appointment is subject to RBI approval. Your Board
recommends their appointment as Statutory Auditors at the ensuing
Annual General Meeting, subject to approval of RBI.
ACKNOWLEDGEMENTS
Your Board wishes to thank the principal shareholder, the promoters Aga
Khan Fund for Economic Development (AKFED), and all the other
shareholders for the confdence and trust they have reposed in DCB. Your
Board also acknowledges with appreciation the RBI for its valuable
guidance and support to DCB. Your Board similarly expresses gratitude
for the assistance and co-operation extended by SEBI, BSE, NSE, NSDL,
CDSL, Central Government and the Governments of various States where
DCB has its branches.
Your Board acknowledges with appreciation, the invaluable support
provided by DCBs auditors, lawyers, business partners and investors.
Your Board is also thankful for the continued co-operation of various
financial institutions and correspondents in India and abroad.
Your Board wishes to sincerely thank all its customers for their
patronage. Your Board records with sincere appreciation the valuable
contribution made by employees at all levels and looks forward to their
continued commitment to achieve ambitious organizational goals that the
Bank has set for the future.
On behalf of the Board of Directors
Mumbai Nasser Munjee
April 13, 2011 Chairman
Mar 31, 2010
The year 2009 was one of the most difficult years in living memory for
most economies of the world. India, however, continued to remain robust
recording the second highest rate of growth after China. Cautious
monetary management in India helped steer the banking system away from
the excesses witnessed elsewhere and though credit off-take weakened,
the system remained in good shape.
DCB, for the first few months of FY 2010, continued to suffer from the
impact of increase in Non Performing Advances (NPAs) in Unsecured
Personal Loans. The Unsecured Personal Loans portfolio was impacted for
the whote industry due to the severe economic slowdown. Commercial
Vehicle and Construction Equipment also got impacted to some extent.
DCB ceased advancing Unsecured Personal Loans, Commercial Vehicle and
Construction Equipment in mid 2008 and since then these portfolios have
steadily been run off. Vigorous efforts on timely collection and
recoveries have been successful and this has helped to reduce the
provisions and mitigate the losses. Provisions are lower in the
financial year 2009-10 (FY 2010) than the previous financial year (FY
2009).
In FY 2010, DCB successfully dealt with many of the challenges faced by
it. DCBs Balance Sheet was restructured substantially towards reducing
dependence on unpredictable wholesale deposits in favour of more stable
retail or customer deposits.
Having dealt with the rising NPA issue, the Bank has implemented a new
strategy in FY 2010 for growth. Unlike the past years where DCB
depended to a large extent on Unsecured Personal Loans, in the new
strategy, the Bank is focusing on (a) Retail Mortgages (b) Micro Small
& Medium Enterprise (MSME) (c) Small & Medium Enterprise (SME) (d)
mid-Corporate (e) Agri, Microfinance and Rural Banking (AMRB) (to meet
Priority Sector Lending (PSL) targets). The Bank is adopting a more
customer centric approach to achieve business growth and create a
diversified and secured portfolio. DCBs branch network will play a
key role both for deposits and advances. Instead of funding the
advances with bulk deposits, the Bank has changed its approach and has
put a lot more effort in generating low cost deposits such as Current
and Savings Accounts (CASA) and Retail Term Deposits. The focus of
attention on retail CASA and Retail Term Deposits not only helped
improve the cost of funds but also enabled DCB to strengthen the
Balance Sheet by replacing volatile bulk deposits with more stable
retail deposits.
DCB aims also to boost other sources of income by cross selling life
insurance and general insurance, wealth advisory, cash management and
trade products in order to improve customer loyalty as well increase
non fund based income.
In the last few months, DCB has been successful in growing MSME, SME
and Mortgage Advances. Corporate Banking delivered steady performance
while Agri, Microfinance and Rural Banking witnessed substantial growth
in FY 2010. DCB made special efforts to ensure that PSL regulatory
obligations are fulfilled by it.
Continuously enhancing customer loyalty is critical for the Bank.
Therefore, a lot of attention has been given to improving service at
the branches and streamlining back office operations. Cross selling of
life insurance, general insurance and trade business has helped to
improve deepening relationships with our customers. New products such
as wealth advisory (offered at no cost to our customers) have met with
a strong positive response.
All this has been achieved with dramatic and universal cost cutting and
enhancing the efficiency of operations. The twin result of the growth
of business as well as dramatic cuts in costs has had the effect of
lowering Net Loss for FY 2010 from the previous year. This has also
been a year where it has been difficult to grow business as credit
off-take in the banking industry as a whole has been weak owing to a
slowing economy but your Directors expect this to change dramatically
in FY 2011.
As the Bank continues to execute its strategy and business plans your
Directors expect the Balance Sheet growth to continue which, in turn,
should help achieve sustainable income growth. The fourth quarter Net
Loss has improved in comparison to the previous three quarters and your
Directors are confident of returning to profitability within a few
months.
FINANCIAL SUMMARY
(Rs.in Cr.)
For the year For the year Increase/
ending ending (Decrease)
31 March 2010 31 March 2009 (%)
Balance Sheet
Parameters
Deposits 4,787.33 4,646.89 3.0%
Customer Deposits 4,626.61 4,248.23 7.0%
(including CASA) (1,691.04) (1,438.04) 17.6%
Inter Bank Deposits 160.72 398.66 (59.7%)
Advances 3,459.71 3.274.02 5.7%
Non Performing Assets 319.18 290.00 10.1%
(Gross)
Non Performing Assets 107.61 126.99 15.3%
(Net)
Provision for Standard 25.25 25.37 0.4%
Assets
Total Assets 6,136.67 5,943.04 3.3%
Profit & Loss
Parameters
Net Interest Income 141.99 197.26 (28.0%)
Non-Interest Income 107.09 120.06 (10.8%)
Total Operating 249.08 317.32 (21.5%)
Income
Operating Cost 200.82 241.98 17.0%
Operating Profit 48.26 75.34 (35.9%)
Provisions 121.00 161.94 25.3%
Net Profit Before Tax (72.74) (86.60) (16.0%)
Tax 5.71 1.50 280.7%
Net Profit After Tax (78.45) (88.10) 11.0%
DCB strategy was to exit from Unsecured Personal Loans, Commercial
Vehicle and Construction Equipmentand replace the portfolio by secured
Advances in MSME, SME, Retail Mortgages, mid Corporate and Agri,
Microfinance and Rural Banking.
Balance Sheet has begun to grow in the last few months. Balance Sheet
as on March 31, 2010 was Rs. 6,137 Cr. as against Rs. 5,943 Cr. as on
March 31, 2009.
Net Advances grew to Rs. 3,460 Cr. as on March 31, 2010 from Rs. 3,274
Cr, as on March 31. 2009.
CASA book grew by 18% year on year. CASA ratio as on March 31, 2010
stands at 35.3% as against 30.9% as on March 31, 2009.
Retail Deposits (Retail CASA and Retail Term Deposits) continued to
show good results. Retail Deposits were at 81.5% of Total Deposits as
on March 31, 2010 as against 67.9% as on March 31, 2009. Net Interest
Margin was at 2.79% for FY 2010 as against 2.86% for FY 2009.
Unsecured Personal Loans portfolio reduced substantially and stood at
Rs. 95 Cr. as on March 31, 2010 as against Rs. 330 Cr. as on March 31,
2009.
Gross and Net Non-Performing Advances as on March 31, 2010 was Rs. 319
Cr. and Rs, 108 Cr. respectively and have declined steadily in the
last few months of FY 2010. DCBs overall NPA Coverage Ratio has
improved to 70.0% as on March 31. 2010 from 56.2% as on March 31, 2009.
During FY 2010, DCB raised Capital in August 2009 by issuance of lower
Tier II Subordinated Debt (Series IV) in the nature of promissory notes
aggregating Rs. 65 Cr. and also in November 2009 issued 23,725,835
equity shares at the rate of Rs. 34,14 per share to Qualified
Institutional Buyers (QIBs) and raised Rs. 81 Cr. of Tier I Capital.
DIVIDEND
In view of the performance for the Financial Year ended 31 March 2010,
your Directors do not recommend payment of any dividend for FY
2009-2010. (Previous year: Nil)
DIRECTORS RESPONSIBILITY STATEMENT
In accordance with Section 217(2AA) of the Companies Act, 1956, your
Board of Directors confirms that: a) in the preparation of the annual
accounts, the applicable accounting standards have been followed along
with proper explanation relating to material departures; b) the
directors had selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the company at the end of the financial year and of the profit or loss
of the company for that period; c) proper and sufficient care has been
taken for maintenance of adequate accounting records as provided in the
Companies Act, 1956, for safeguarding the assets of DCB and for
preventing and detecting frauds and other irregularities; and d) the
annual accounts of DCB have been prepared on a "going concern" basis.
CORPORATE GOVERNANCE
The Bank continues to believe in observing the best corporate
governance practices and benchmarking itself against each such practice
on an ongoing basis. A separate section on Corporate Governance and a
Certificate from M/s S.R. Batliboi & Co,, Chartered Accountants
regarding compliance of conditions of Corporate Governance as
stipulated under Clause 49 of the Listing Agreements with the Stock
Exchanges form part of this Annual Report.
DIRECTORS
In accordance with the Companies Act, 1956 and the Articles of
Association of DCB, Directors Mr. Amir A. Sabuwala, Ms. Nasim Devji and
Mr. Shabir Kassam are retiring by rotation and, being eligible, offer
themselves for re- appointment.
The Board recommends the re-appointments of Mr. Amir A. Sabuwala, Ms.
Nasim Devji and Mr. Shabir Kassam as Directors at this Annua) Genera)
Meeting. A brief resume relating to the Directors who are to be re-
appointed is furnished in the report on Corporate Governance.
None of the above mentioned persons is disqualified from being
appointed as a Director as specified in terms of Section 274(1 )(g) of
the Companies Act, 1956.
Mr. Anuroop Singh ceased to be a Director w.e.f. August 31, 2009. Your
Directors place on record their sincere appreciation of the services
rendered by Mr, Anuroop Singh.
STATUTORY AUDITORS
Messers S. R. Batliboi & Co., Chartered Accountants were appointed as
Statutory Auditors at the last Annual General Meeting as per Banking
Regulation Act, 1949. They are eligible for re-appointment for FY
2010-2011 and their appointment is subject to RBI approval. Your Board
recommends their appointment as Statutory Auditors at the ensuing
Annual General Meeting, subject to approval of RBI.
ACKNOWLEDGEMENTS
Your Board wishes to thank the principal shareholder, the promoters Aga
Khan Fund for Economic Development (AKFED), and all the other
shareholders for the confidence and trust they have reposed in DCB.
Your Board also thanks the RBI for its valuable guidance and support to
DCB. Your Board acknowledges with gratitude, the assistance and
co-operation extended bySEBI, BSE, NSE, NSDL, CDSL, Central Government
and the Governments of various States where DCB has its branches.
Your Board acknowledges withappreciation, the invaluable
supportprovided by DCBs auditors, lawyers, business partners and
investors. Your Board is also thankful for the continued co-operation
of various financial institutions and correspondents in India and
abroad.
Your Board wishes to sincerely thank all its customers for their
patronage. Your Board records with sincere appreciation the valuable
contribution made by employees at all levels and looks forward to their
continued commitment to achieve ambitious organisational goals that the
Bank has set for the future.
On behalf of the Board of Directors
Mumbai Nasser Munjoe
April 16, 2010 Chairman
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DCB Bank Ltd. ಹೆಚ್ಚಿನ ಮಾಹಿತಿ
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DCB Bank Ltd. ಟೂಲ್ಸ್
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DCB Bank Ltd. ಕಂಪನಿಯ ವಿವರಗಳು
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ಕಂಪನಿ ಇತಿಹಾಸ
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DCB Bank Ltd. ಹಣಕಾಸು ಅನುಪಾತದ ಲೆಕ್ಕ
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DCB Bank Ltd. ಫಲಿತಾಂಶ
- ತ್ರೈಮಾಸಿಕ ಫಲಿತಾಂಶ
- ಅರ್ಧವಾರ್ಷಿಕ ಫಲಿತಾಂಶ
- ಒಂಭತ್ತು ತಿಂಗಳ ಫಲಿತಾಂಶ
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DCB Bank Ltd. ಹಣಕಾಸು ಡಾಟಾ
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DCB Bank Ltd. ವರದಿಗಳು
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