Financial Report 2013-14

Director's Report

" Your Directors have pleasure in presenting the One Hundred and Sixth Annual Report of your Bank with the audited Balance Sheet, Profit & Loss Account and the Report on Business and operations for the year ended March 31, 2014 (FY14)."

Performance Highlights

• Total Business (Deposit+Advances) increased to Rs 9,65,900 crore reflecting a growth of 20.43% (y-o-y).
• Gross Profit and Net Profit were Rs 9,291 crore and Rs 4,541 crore respectively. Net Profit registered a growth of 1.35% over the previous year.
• Credit-Deposit Ratio stood at 86.15% as against 82.03% last year.
• Retail Credit posted a growth of 20.96% constituting 16.6% of your Bank’s Gross Domestic Credit in FY14.
• MSME Credit posted a growth of 21.21% constituting 20.3% of your Bank’s Gross Domestic Credit in FY14.
• Net Interest Margin (NIM) as per cent of interest earning assets in global operations was at the level of 2.36% and in domestic operations at 2.87% during FY14.
• Net NPAs to Net Advances stood at 1.52% this year against 1.28% last year.
• Capital Adequacy Ratio (CAR) as per Basel II stood at 12.87%.
• Capital Adequacy Ratio (CAR) as per Basel III stood at 12.28%
• Net Worth improved to Rs 34,933 crore registering a rise of 13.7%.
• Book Value improved from Rs 729.11 to Rs 813.50 on year.
• Business per Employee moved up from Rs 1,689 lakh to Rs1,865 lakh on year.

Segment-Wise Performance

The Segment Results for the year FY14 reveal that the contribution of Treasury Operations was Rs 1,527.24 crore, that of Corporate/Wholesale Banking was minus Rs 461.11 crore, that of Retail Banking was Rs 3,359.84 crore, and of Other Banking Operations was Rs 2,458.02 crore. Your Bank earned a Profit after Tax (PAT) of Rs 4,541.08 crore after deducting Rs 1,386.68 crore of unallocated expenditure and Rs 956.23 crore towards provision for tax.

Key Financial Ratios

Dividend

Your Bank’s Directors have proposed a final dividend of Rs 10.50 per share. The final dividend together with interim dividend of Rs 11 per share paid in January 2014 results in total dividend of Rs 21.5 per share (on the face value of Rs 10/-per share) for the year ended March 31st, 2014. The total outgo in the form of dividend, including taxes, will be Rs 1,083.68 crore.

Capital Adequacy Ratio (CAR)

Your Bank’s Capital Adequacy Ratio (CAR) was comfortable at 12.87% under Basel II and at 12.28% under Basel III as on 31st March 2014. Moreover, your Bank’s Tier 1 ratio was at 9.28% and common equity Tier 1 was at 8.95% under Basel III framework.

Your Bank’s Net Worth as at 31st March 2014 was Rs 34,933.06 crore comprising paid-up equity capital of Rs 430.68 crore and reserves (excluding revaluation reserves) of Rs 34,502.38 crore. An amount of Rs 3,457.40 crore was transferred to reserves from the profits earned.

Provisions towards Retirement and Other Benefits

During the year FY14, your Bank made provision towards contribution to gratuity (Rs 100.72 crore), pension funds (Rs 1,014.76 crore), leave encashment (Rs 106.18 crore) and additional retirement benefits (Rs 54.71 crore) on actuarial basis. Total provisions under these four categories amounted to Rs 1,276.37 crore during the year FY14, against Rs 1,205.63 crore during FY13. Total corpus available with your Bank at the end of March 2014 under these heads was: Rs 1,532.62 crore (gratuity), Rs 7,893.50 crore (pension funds), Rs 735.69 crore (leave encashment) and Rs 647.17 crore (additional retirement benefit).

Management Discussion and Analysis

Economic Scene in FY14 and Outlook for FY15

The financial year 2013-14 (FY14) began with multifarious developments including elevation of inflation, heightened rupee volatility and worsening current account deficit apart from growth slowdown and sharp industrial contraction. However, as the year progressed, especially from the third quarter onwards, there were firm signs of stability on the external front, partial easing of inflationary pressures and positive outlook towards growth.

During the third week of May 2013, the US suggested the possibility of “scaling back of its monetary stimulus or tapering” and there were wide spread repercussions on the emerging markets in general and on India, in particular, wherein not only the financial markets and asset prices saw a sharp decline but even the growth-inflation dynamics worsened further. The rupee-dollar exchange rates slumped to a record low of Rs 68.8 in late August 2013. The money markets were also under pressure with call money rates spiking to 9.5% and hardening of government bond yields. In response, the Reserve Bank of India (RBI) took a series of policy initiatives in mid-July to address exchange rate volatility so that it does not risk macroeconomic stability and growth sustainability. The measures undertaken included initiatives to contain domestic liquidity by sharply increasing Marginal Standing Facility (MSF) rate, moderating outflows and encouraging FX inflows through liberalized External Commercial Borrowings (ECBs) and Foreign Currency Non Resident (Bank) or FCNR (B) deposits. Apart from these, the government increased customs duty on gold and compressed demand for oil as well as curbed nonessential imports. External inflows were also encouraged. Consequently, the rupee recovered rather sharply to over Rs 60.0 per US dollar and touched a high of Rs 59.9 per dollar on March 28, 2014.

As the uncertainties surrounding “taper” decimated and domestic policy initiatives had positive impact, there was significant reduction in rupee volatility. The Current Account Deficit (CAD) which had peaked due to heightened outflows also contracted to 0.9% of GDP in Q3, FY14 from 6.7% of GDP in Q3, FY13. As India’s currency stabilised, the RBI began unwinding the unconventional monetary measures from September, 2013 in an orderly fashion. Among them, the marginal standing facility (MSF) which was increased by 200 bps to 10.3% on July 15, 2013 was gradually reduced in stages to 9.0% on December 18, 2013 and maintained at that level till the end of the financial year.

In the real sector, the ongoing contraction of mining and manufacturing sectors pulled down the real GDP growth to 4.8% in Q3, FY14. While the growth concerns remained significant for industrial and services sectors, the favourable monsoon rainfall improved the agricultural performance during FY14. Yet, majority of private forecasting agencies estimate the full year’s growth for FY14 in the band of 4.6% to 4.8%.

As in the past few years, the inflationary situation remained a dominant macro risk for India throughout the year FY14. The CPI inflation averaged around 9.5% throughout the year FY14 on the back of elevated food and fuel inflation. Despite the correction in vegetable prices during Dec-Jan, FY14 as well as the favourable monsoon and agricultural production scenario in FY14, food inflation at the retail level remained elevated highlighting the innate supply chain inefficiencies. Additionally, the upward adjustment in diesel prices and electricity tariffs too impacted the CPI trajectory during FY14.

The Interim Budget for FY15 presented by Government of India showed continued fiscal consolidation, with a fall in the fiscal deficit from 4.9% of GDP in FY13 to 4.6% of GDP in FY14 and further to 4.1% of GDP in FY15. While the revised estimates of both the revenue and fiscal deficits for FY14 are lower than the budgeted estimates, the expenses on subsidies, interest payments and pensions overshot the budgeted target and their impact was absorbed by lower plan expenditure.

Most of the private and public think-tanks from across the globe including International Monetary Fund (IMF) believe that Indian economy will recover in FY15 and the recovery will be enabled by a relatively stronger world economy, improving export competitiveness and policies encouraging investment. While the CPI inflation is expected to remain an important challenge for India, it should continue to move onto a downward trajectory during the major part of FY15.

Performance of Indian Banking Sector in FY14 and Outlook for FY15

Against the backdrop of a slowdown in the domestic economy and tepid global recovery, the growth of the Indian banking sector remained under pressure even in FY14. The deposit and credit growth was marginally better than that in FY13. The growth in deposits of scheduled commercial banks (SCBs) at 14.6% in FY14 was marginally better than the growth at 14.2% in the previous financial year. However, this growth was primarily driven by the liberal policy adopted by the RBI towards non-resident Indian deposits. The credit growth at 14.3% in FY14 too was marginally better than that at 14.1% in FY13.

Due to exchange market pressures during Q2, FY14 the RBI had to take exceptional measures that resulted in firming up of both deposit and lending rates in September, 2013. With the ebbing of pressures on exchange rate, the RBI rolled back these exceptional measures in a calibrated manner and, in response to that the lending rates softened a bit in H2 of FY14. On balance, however, the lending rates were by and large sticky during the year. As inflation remained at elevated levels, the banks were compelled to offer attractive interest rates on their term deposits so as to protect their liability franchise. The sticky and elevated cost of deposits combined with subdued credit demand suppressed the banks’ earnings profile. Given the bleak macroeconomic environment and worsening repayment capacity of borrowers, the asset quality deteriorated and pipeline of restructured assets remained large during the financial year FY14.

However, most of the financial experts and analysts feel that the worst is over for the Indian banking industry, as there will be increased clarity on macroeconomic and political fronts during FY15. On the positive side, liquidity remains steady, inflation is expected to move downwards for the major part of FY15 and the RBI is in full control to manage any volatility. Macro recovery and potential for post-election reforms should see a gradual reduction in stressed loans on lower slippages and higher recoveries.

Risk Management

To ensure sustainable and consistent growth, your Bank has developed a sound risk management framework so that the risks assumed by the Bank are properly assessed and monitored continuously. It may be noted that the ultimate responsibility for setting up the risk management framework lies with the Board of the Bank. It includes setting up risk appetite, framing policies and effective monitoring. Your Bank’s Board has put in place a robust Enterprise-wide Risk Management architecture so that the risks remain within the risk appetite defined by the Board.

The Board of Directors has oversight on all the risks assumed by the Bank. Specific committees of the Board have been constituted to facilitate focused oversight on various risks. Policies approved from time to time by the Board of Directors or committees of the Board form the governing framework for each type of risk. The business activities are undertaken within these policy frameworks.

A brief outline of the mechanism for identifying, evaluating and managing various risks within your Bank is as follows.

Asset Liability Management (ALM)

Your Bank’s Asset Liability Management (ALM) is aimed at strategic planning, implementation, and control processes that affect the volume, mix, maturity, rate sensitivity, quality, and liquidity of the Bank’s assets and liabilities, thereby ensuring that the returns are commensurate with the level of risk taken.

The ALM is the function of Asset Liability Management Committee (ALCO), which comprises of General Managers and Executive Directors and is headed by the Chairman and Managing Director. It operates under the guidance and supervision of the Board and/or Sub-Committee of Board on ALM and Risk Management. It meets at regular intervals to review the interest rate scenario, product pricing for both deposits and advances, maturity profile of the incremental assets and liabilities, demand for Bank funds, cash flows of the Bank, profit planning and overall Balance Sheet Management. The ALCO is also entrusted with the job of fixing Base rate and pricing of advances & deposit products and suggesting revisions of Base Rate to the Board.

In your Bank, the liquidity risk is measured and monitored through two approaches-Flow approach and Stock approach. Flow approach is done through preparation of Structural liquidity statement on a daily basis against prudential caps fixed for liquidity gap positions. The quality of liquidity is further tested by working out various ratios under Stock Approach, wherein a series of prudential caps are tested on a daily basis. The compliance to Stock Approach caps ensures that the Bank has managed its liquidity through appropriate diversification and kept it within the sustainable limit. Moreover, liquidity position is projected every fortnight, for the subsequent three months on a dynamic basis through Dynamic Gap Reports.

For measurement and monitoring of Interest rate risk, currency wise, both Traditional gap approach and Duration gap approaches are followed. The short-term impact of interest rate movements on NIM is worked out through “Earnings at Risk” approach taking into consideration Yield curve risk, Basis risk and Embedded Options Risk. The long-term impact of interest rate movements on Market Value of Equity is also worked out through Duration Gap approach.

Advanced techniques such as stress testing of liquidity risk and interest rate risk, simulation, sensitivity analysis etc., are used on regular intervals to draw the contingency funding plan under different liquidity and interest rate scenarios. Your Bank has also put in place contingency plans to meet its liquidity obligations under various stressed scenarios.

Your Bank is in the process of implementing Oracle Financial Services Analytics and Applications (OFSAA) platform, which is a multi-currency ALM, Fund Transfer Pricing (FTP) and profitability solution, offering extensive data management capabilities for accurate information gathering and analysis. With a powerful suite of analytical and reporting tools, the efficient liquidity and interest rate risk management has been facilitated, enabling strategic decision-making and generating alerts against potential deviations.

Credit Risk

Your Bank’s Credit Risk management is governed by a comprehensive and well-defined Credit Policy which is approved by the Board. It encompasses credit approval processes for all business segments along with the guidelines for monitoring and mitigating the risks associated with them. The Board of Directors of your Bank endorses the credit risk strategy and approves the credit risk policies. In line with international best practices, there is a clear segregation between risk takers and policy framers.

Your Bank has put in place a structured and standardised credit approval process which includes a well established procedure of comprehensive credit appraisal and credit rating. Furthermore, your Bank has adopted risk-based delegated lending power, where higher discretionary lending powers have been delegated for low credit risk proposals. The rating serves as a key input in the approval as well as post-approval credit processes.

Your Bank has in place a robust two dimensional credit rating system which reflects both client rating and facility rating. The two dimensional approach is more precise and consistent as it records Probability of Default (PD) and Loss Given Default (LGD). Over the years, your Bank has gained rich experience in internal rating and has built up data on credit rating migration. This robust platform has enabled your Bank to make an application to the RBI to migrate to Foundation Internal Ratings’ Based (FIRB) approach of Credit Risk under Basel II rules. The FIRB implementation will also prepare your Bank to drive its business in more systematic and sophisticated manner in terms of risk-based pricing, optimum portfolio construction and fixation of risk appetite.

Also, your Bank conducts industry studies to track emerging risk factor across industries and to identify sunrise sectors. This industry knowledge is supplemented through field visits, interacting with clients, sector regulators and industry experts. To manage the undue concentration risk in the portfolios, the Bank has put in place prudential caps across industries, sectors and borrowers. The corporate research cell also carries out detailed sectoral studies, identifies portfolio trends, and generates portfolio level MIS covering various credit quality indicators like sectoral exposure, credit concentration, ratings distribution and migration.

Market Risk

Market Risk is the “risk” of loss of earnings or economic value due to adverse changes in market rates or prices. The sources of market risk may be enumerated as under.

• Interest rate risk: The exposure that is affected by adverse movement and volatility in various yield curves and credit spreads.
• Currency exchange rate risk: The risk that arises from changes in exchange rates and their volatility.
• Equity price risk: The risk that arises from changes in the prices of equities, equity indices, equity baskets and volatility in stock market.

The market risk may also arise from changes in commodity prices and volatility. However, your Bank does not have any exposure to commodity related markets.

Your Bank has clearly articulated policies to control and monitor its treasury functions. These policies comprise management practices, procedures, prudential risk limits, review mechanisms and reporting systems. These policies are reviewed regularly in line with changes in financial and market conditions.

The Interest rate risk in your Bank is measured through Interest Rate Sensitivity Gap Reports and Earning at Risk. Furthermore, your Bank calculates duration, modified duration, Value at Risk for its investment portfolio consisting of fixed income securities, equities and forex positions on daily basis. It monitors the short-term Interest rate risk from the Net Interest Income (NII) perspective and longterm interest rate risk from the Economic Value of Equity (EVE) perspective. The Value at Risk for the treasury position is calculated for ten days holding period, at 99.0% confidence level. Moreover, the stress testing of fixed interest investment portfolio through sensitivity analysis and equities through scenario analysis is regularly conducted in your Bank.

Based on the RBI directions, your Bank has also been estimating the “Economic Value of Equity Impact” on a quarterly basis.

Operational Risk

Operational Risk implies the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This includes legal risk, but excludes strategic and reputational risks. Your Bank has a robust and comprehensive Operational Risk Management Framework (ORMF) to meet the qualitative and quantitative requirements of the Standardized Approach (TSA) and Advanced Measurement Approach (AMA) of Basel II requirements. Operational Risk Management Committee (ORMC) of your Bank shoulders the responsibility of monitoring and controlling the operational risk by way of prescribing/ amending processes, imposing controls and defining roles and responsibilities. Your Bank has sound operational risk governance practice with three lines of defence mechanism such as Business line management, independent corporate operational risk management function and an independent inspection and audit function to ensure that its internal guidelines, policies and procedures are complied with.

Your Bank is in the process of implementing a globally accredited sophisticated system (SAS EGRC 5.1) to capture, measure, monitor and manage its operational risk exposure by installing an enterprise-level automated web-based solution. The solution is expected to be fully operational before the end of the half-year of FY15. Moreover, your bank is one of the promoters and initial equity capital subscribers to a company which will be a consortium of Operational Risk loss data in India for the banking industry.

Basel III Implementation

The Basel III capital regulations were implemented in India with effect from April 1, 2013. To ensure smooth transition to full Basel III, appropriate transitional arrangements have been provided with full implementation as on March 31, 2019. The Basel III capital rules also require an enhanced set of disclosures on the components of Capital Adequacy Ratio (CAR) which are published separately.

Risk-Based Supervision by RBI–A Change from the CAMELS System

The growing complexities in the banking business and lessons from the recent financial crisis have resulted in a thorough overhaul of the global regulatory and supervisory benchmarks. There were revised prescriptions for more resilient banks and banking systems (Basel III), revised core principles for effective bank supervision, new principles for supervision of financial conglomerates and planning for recovery and resolution of global systemically important banks, etc. This needed a relook at the RBI’s extant supervisory processes and mechanism in order to make it more robust and capable of addressing emerging challenges.

With this view, the RBI has introduced a concept of Risk- Based Supervision (RBS) that will focus on evaluating both present and future risks - as against the present compliance based and transaction testing approach (CAMELS). The “Risk Based Supervision” Framework introduced by RBI for Indian banks is named as “Supervisory Program for Assessment of Risk and Capital (SPARC)” and “Integrated Risk and Impact Scoring (IRISc)” Model is one of its most important components.

Under the RBS, the probability of failure of a bank and the likely impact of this failure is calculated. Also, the banks assessed as having a low risk/impact profile would be inspected only once in a two to three year cycle.

The RBI proposes to use thematic reviews increasingly as a tool of supervision whereby it will carry out review of a particular product, market or practice to assess risks brewing within the sector or at systemic level for enabling prompt actions/measures.

A single point contact in the form of an exclusive ‘Senior Supervisory Manager’ (SSM) is created within the Department of Banking Supervision of RBI (DBS) to ensure efficient and effective communication between the RBI and the banks.

While the CAMELS carried out “performance evaluation” of banks, the RBS will determine the “probability of failure of a bank and its impact in the light of- (1) risks to which a bank is exposed, (2) the strength of control and governance, (3) oversight framework in place and (4) available capital. Based on the rating, a particular bank would be apprised of the direction/ trend of key risks along with overall risk faced by it and a risk-mitigation plan, comprising of a need for improving controls, augmenting capital and/ or restructuring the existing business.

Under RBS, the focus will also be on the potential risks arising from the material group entities to the parent bank.

It may be noted that your Bank was one of the few banks selected for the first cycle of supervisory review under the RBS–2013, given its systemic importance. Both the off-site and on-site supervision were successfully completed within the given timeframe for your Bank.

Credit Monitoring Function

Credit monitoring is one of the most important tools for ensuring quality of advance assets. Your Bank has the system of monitoring of the advance accounts at various levels (Branch/Region/Zone and Corporate) to prevent asset quality slippages and to take timely corrective actions to improve the quality of its credit portfolio.

A separate department for Credit Monitoring functions at the Corporate level, headed by a General Manager, and one at the Regional and Zonal level, started functioning since September 2008. The Slippage Prevention Task Force (SPTF) formed at all Zonal, Regional offices in terms of the Bank’s Domestic Loan Policy was activated for the purpose of arresting slippages and also for initiating necessary restructuring in potential and viable sick accounts at an early stage in a time bound manner.

The primary objectives of the Credit Monitoring Department at the Corporate level are enumerated as under:

• Identification of weakness/Potential default/incipient sickness in the advance account at an early stage;
• Initiation of suitable and timely corrective actions for preventing further impairment in advance accounts/ deterioration in credit quality of the borrowal accounts;
• Prevention of slippage in the Asset Classification and relegation in Credit Ratings through vigorous follow up;
• Identification of suitable cases for restructuring/ rescheduling/ rephasement as well as further financing in deserving and genuine cases with matching contribution from the borrower; Liaisoning with CDR Cell, ZO & ROs;
• Taking necessary steps / regular follow up, for review of accounts and compliance of terms and conditions, thereby improving the quality of Bank’s credit portfolio;
• Monitoring progress of accounts under Board for Industrial and Financial Reconstruction (BIFR).

Monthly Monitoring of Advances accounts

On-line web-based software developed by the IT Department for Monthly Monitoring Reports (MMR) in respect of advance accounts with FB+NFB exposure of Rs 10 crore and above was launched in January 2013 and is being upgraded time to time.

Based on the MMRs, the follow up actions are taken for ensuring expeditious review of accounts, rectification of irregularities, compliance of terms and conditions in high value advance accounts for improving the asset quality of your Bank’s credit portfolio.

Restructuring of Advances Accounts

As a part of an on-going business strategy to improve upon the quality of advance assets, the Bank reaffirmed the need to look into the stressed advance portfolio on a continuous basis, industry-wise as well as borrower-wise, and to initiate suitable action by way of restructuring as may deem fit.

During the financial year 2013-14, the Bank undertook restructuring of various advances accounts as per the table given below.

Restructuring of Advance Accounts (Global) – 2013-14

(Rs crore)

Economic Intelligence Unit

A specialised Economic Intelligence Unit (EIU) headed by the Chief Economist and located at the Corporate Office of your Bank supports your Bank’s Top Management in several critical areas like Macroeconomic Forecasting, Investor Relations, Business Strategy Formulation, Asset- Liability Management, and in discussions/deliberations with Regulators – domestic and international and Rating Agencies. The EIU regularly provides the Top Management of your Bank as well as its operational units a periodic outlook on key macroeconomic and financial variables like industrial and infrastructure growth, inflation, interest rates, stock and debt market movement, sectoral credit deployment and resource mobilisation of the banking industry, liquidity conditions, exchange rates, etc.

By providing deep understanding of macroeconomic aspects, corporate sector health and banking sector policies, the EIU of your Bank supports the Bank’s efforts in tapping right kind of business opportunities and swiftly responding to market dynamics.

The EIU publishes a weekly newsletter (e-publication) covering weekly macroeconomic developments and policy highlights to share its perspectives on global and domestic economic and policy scenarios with investors, bankers, regulators, rating agencies and other market participants.

This division works as an intellectual arm of your Bank in comprehending developments that eventually aid the formulation of rightly aligned strategies.

Internal Control Systems

Your Bank has a well established Central Internal Audit Division (CIAD) that examines and ensures the adherence to systems and procedures, policies, directives and guidelines of the Bank. The directions / instructions and guidelines received on various issues of internal control from RBI, Government of India, Bank’s Board, the Audit Committee of the Board (ACB) and Audit Committee of Executives (ACE) have become part of the Internal Control System for better risk management.

With the size of business increasing year after year, the CIAD is continuously and consistently aiming for curbing the inherent risks through effective control mechanism so as to safeguard the Bank’s interest.

The CIAD operates through thirteen Zonal Internal Audit Divisions to carry out the audit of Branches / Offices as per the periodicity decided by the Audit Committee of the Board and examines and ensures adherence to such systems of internal control and risk management.

The Audit Committee of the Board oversees the Internal Audit function of your Bank. The Committee guides in developing effective Risk Based Internal Audit, Concurrent Audit, IS Audit and all other audit functions for improving the efficiency of systemic controls. The Committee monitors the functioning of the Audit Committee of Executives and Audit Division in the Bank.

All the branches of your Bank are covered under the Risk Based Internal Audit (RBIA). A total of 3,831 branches were inspected during FY14. Out of these, 2,917 branches (76.14%) were in Low Risk, 818 branches (21.35%) were in Medium Risk and 96 branches (2.51%) were in High Risk categories.

The I.S. Audit Cell working under Central Internal Audit Division, based in Mumbai, conducts the review of IT operations, applications, infrastructure, I.S. Audit of branches, etc., and performs the function of Offsite Surveillance.

In line with the guidelines issued by the Department of Financial Services, Ministry of Finance, your Bank has implemented the following:

• Audit Committee of Executives has been established to oversee the work of Central Internal Audit Division and Zonal Audit Committees with effect from March 2013. This is expected to strengthen further the level of compliance of systems, procedures and internal guidelines.
• The Concurrent Audit Policy, Manual and Scoring Sheets duly approved by Audit Committee of the Board and Risk Based Concurrent Audit have been successfully implemented from FY14.

The coverage of Concurrent Audit has been increased to 1,002 branches in 2014-15 from 834 branches in FY14. In per cent, these 1,002 branches had 70.25% of the Bank’s total deposits, 82.02% of its total advances and 75.21% of its total business as on 27.12.2013.

Credit Audit is now being nurtured as a specialized function within CIAD and the new structure is made operational from July 2013. During FY14, Credit Audits were conducted in respect of 4,335 accounts covering the total fund-based and non fund-based business of Rs 2,62,435 crore, thereby ensuring increased level of compliance for large-sized loans.

To summarise, your Bank’s Central Internal Audit Division has been effectively monitoring (on continuous basis) the compliance of systems and procedures, policies, directives and guidelines laid down by its own Board, the Regulator and the Government of India.

Operations and Services

Customer-Centric initiatives

As always, efficient customer service and customer satisfaction are the primary objectives of your Bank in its day to day operations. Your Bank is highly responsive to the needs and satisfaction of its customers, and is committed to the belief that all technology, processes, products and skills of its people must be leveraged for delivering superior banking experience to its customers.

Recently, your Bank has taken several measures to improve customer service at its branches and at the same time, strengthen the customer complaint redressal machinery for fast disposal of customer complaints.

Some of the other major initiatives in improving the customer service during FY14 are as under.

• SMS alerts in respect of:

  Financial Transactions viz

  • All cheque return transactions irrespective of amount.
  • For transactions of Rs 1.00 lakh and above in Cash Credit Acccount.
  • At entry level of transactions for cheque of Rs 1,00,000/- and above presented in inward clearing.

  Non financial transactions viz

  • Change in interest rate in loan accounts due to change in base rate.
• Issuance of “Multicity/Payable at par at all branches in India” cheques to all eligible customers of your Bank.
• Acknowledgement of Form 15G/15H: Branches have been advised to acknowledge receipt of Form 15G /15H to the depositors to ensure non deduction of TDS and to eliminate complaints in this respect.
• To render better customer service, Offline cash withdrawals up to Rs 15,000/- to Savings Bank Customers and up to Rs 25,000/- to Current Account Customers are allowed at your Bank branches where network connectivity to Data Centre is not available.
• Revision of cash handling charges: To increase CASA deposits and to attract high net worth business clients to your Bank, cash handling charges have been revised downwards from amount-based charges to packet-based charges.
• “Welcome Kit” comprising of a welcome letter, non personalized Debit Card and a non personalized cheque book are being provided to new SB account customers of your Bank.
• Customer Meet: Under the direction of Chairman & Managing Director, customer meets at all your Bank branches were convened throughout the country on the same day and at the same time i.e. on 15.07.2013.
• Banking Codes and Standards Board of India (BCSBI) Code Awareness Customer Meet: In order to spread awareness of the Codes of BCSBI among customers of your Bank, a Customer Meet was convened by Head Office, Baroda on 6th August 2013. The meeting was chaired by Chairman of BCSBI and about 150 customers from various cross sections of Banking attended the meeting.
• Printing of nominee’s name in Pass Book/Statement of Account and FDR, if requested by customer, has been enabled in the system of your Bank.

Efforts to improve Customer Service at Branches

In your Bank, the feedback on quality of customer service at branches is obtained through the Branch Level Customer Service Committee meetings that are held every month in which customers from various cross sections of the society are invited including senior citizens and pensioners. The suggestions/views generated during such meetings are collated and an appropriate follow-up action is taken to examine the feasibility to implement the suggestions for improving the service quality.

Your Bank is focused towards providing excellent customer service through all delivery channels and has been making continuous efforts for enhancing the level of customer satisfaction by leveraging technology to provide e-products and alternative delivery channels e.g. ATM/Debit cards, POS (Point of Sale machines), Internet Banking, Mobile Banking, etc., best suited to the diverse needs of different customers. The varied interests and expectations of customers are taken care of by improving upon various processes and procedures.

Compliance

Your Bank is a member of the Banking Codes and Standards Board of India (BCSBI) and has adopted the “Code of Commitment to the Customers” prescribed by the BCSBI. It has also adopted the “Code of Bank’s Commitment to MICRO and Small Enterprises”. These have been placed on your Bank’s website and also made available to its customers at the branches. To create and enhance awareness of the Code among the customers, the message to visit your Banks’ website www.bankofbaroda.com / www.bcsbi.org.in for more details has been incorporated inside the cover of Saving Bank passbook; as a footnote in Statement of Accounts and also displayed on the screens of ATM machines.

Customer Service Committee of the Board

Your Bank has a Sub-Committee of Board for Customer Service which is headed by your Banks’ Chairman and Managing Director with the following members as on 31st March 2014:

This Sub-Committee addresses the issues relating to the formulation of policies and assessment of their compliance which brings about consistent improvement in the quality of customer service. It also monitors the status of the number of deceased claims pending for settlement beyond 15 days pertaining to depositors/locker hirers/depositors of safe custody articles, and reviews the status of implementation of awards passed by the Banking Ombudsman.

Standing Committee on Customer Service

Your Bank has also set up a Standing Committee on Procedures and Performance Audit on Customer Services, comprising of three eminent public personalities as members along with all the three Executive Directors and four General Managers of the Bank. This Committee oversees timely and effective compliance of the RBI instructions on Customer Service and also reviews the practices and procedures prevalent in your Bank and takes necessary corrective steps on an ongoing basis.

The suggestions emanating in the Branch Level Customer Service Committee meetings are obtained by your Bank’s Head Office on quarterly basis from Regional Offices and placed before the Standing Committee on Procedure and Performance Audit on Customer Services. The feedback of the committee meetings is then put up to the Customer Service Committee of the Board of Directors.

Customer-Centric initiatives and Redressal of Complaints

• Your Bank has a Board approved policy on Customer Grievance Redress and the same is placed on the Bank’s website. Your Bank is also having a well structured Customer Grievance Redressal Mechanism. The General Manager in charge of “Operations & Services, is designated as Nodal Officer for customer complaints regarding your Bank. Moreover, all zonal and regional heads of your Bank are designated as nodal officers for their respective zones and regions. Furthermore, the names of all nodal officers along with their contact numbers are displayed in all the branches of your Bank.
• A quarterly review note on customer grievances is placed before the Board of Directors giving position of customers’ complaints received by your Bank.
• To minimize customer complaints and to ensure hassle free customer service, a regular analysis of complaints is done on monthly basis and action points / findings sent to all zonal/regional heads for taking remedial measures to minimize recurrence of such complaints in future.
• Your Bank is having a web-based online complaint registration and redressal system in the name of Standardized Public Grievance Redress System (SPGRS). An icon has been provided on home page of your Bank’s website, through which your Bank’s customer can lodge their complaint online. The system not only facilitates a speedy redressal of the complaints, but also enables your Bank to maintain centralized data base of all complaints.

Recently by making a modification in the SPGRS, your Bank has provided a facility to lodge complaint/ suggestion to non-customers. Moreover, your Bank’s customers can re-open their complaints within 15 days, if they are not satisfied with the redressal.

Systems for KYC-AML-CFT

Know Your Customer (KYC) norms/Anti-Money Laundering (AML) Standards / Combating of Financing of Terrorism (CFT) measures and Obligation of Bank under PMLA, 2002

Your Bank has a Board approved KYC-AML-CFT Policy. The said Policy is the foundation on which the Bank’s “implementation of KYC norms, AML standards, CFT measures and obligation of the Bank under Prevention of Money Laundering Act (PMLA) 2002” is based. The Bank issues guidelines to operational units on issues relating to KYC-AML-CFT issues based on the directives of the regulators.

The major highlights of KYC-AML-CFT implementation across your Bank are as under:

• The Bank generates Cash Transaction Reports (CTRs) electronically for submission to Financial Intelligence Unit-India (FIU-IND), through the electronic medium.
• The “AML Solution” for generating system-based alerts has been installed and implemented. The scope has been further widened with addition of more alert definitions as per recommendations of IBA working group.
• There is a system-based detection and submission of Suspicious Transaction Reports (STRs) to the Financial Intelligence Unit-India (FIU-IND).
• System-based Risk Categorization (from AML angle) of Bank’s customers’ accounts has been done every half year.
• The Bank files Counterfeit Currency Reports (CCRs) to FIU-IND, New Delhi.
• The Bank files Non Profit Organizations Transaction Reports (NTRs) to FIU-IND.
• The Bank is in the process of allotting Unique Customer Identification Code (UCIC) to all its existing customers as per RBI guidelines.
• Bank has eliminated 1.32 crore idle customer IDs from the system.
• Online verification of PAN from NSDL has been operationalised as a major step to tackle money laundering.
• CBS system has been modified suitably not to accept cash deposits of Rs.50,000/- and above in absence of PAN / Form No. 60/61.
• Bank is in the final stage of implementation of e-KYC in collaboration with UIDAI.
• Real-time checking of names from UNSCR list is available in more than 1800 branches as a step towards CFT.

The full KYC compliance entails Staff Education as well as Customer Education for which the following measures are taken by the Bank:

• A comprehensive list of KYC documents is uploaded on the Bank’s website (www.bankofbaroda.com) for the benefit of customers.
• Mobile based SMS are being sent and notices have been published in local and national dailies for updation of KYC data in accounts of the customers.
• A KYC-AML page is created at the Bank’s INTRANET for posting reference material on KYC-AML- CFT education for staff.
• Regular training sessions are conducted on the KYC-AML-CFT guidelines at the Bank’s training establishments.
• Training is being arranged for the Bank’s senior officials/ executives at RBI, IBA (Indian Banks’ Association) and National Institute of Bank Management (NIBM).
• Sustained efforts are being made to create expertise at the Banks’ Head Office for the Corporate Oversight and also for the KYC Audit of branches.
• Regular On-site and Off-site test checking is being carried out to find out deficiencies and prompt rectification.

Compliance Policy

Your Bank has put in place a Board approved well documented Compliance Policy outlining the compliance philosophy of the Bank based upon the directions of RBI on compliance function in banks. The said Policy is the foundation on which all compliance function of your Bank is based. Compliance function in your Bank is an integral part of governance along with internal control and compliance risk management process supported by a healthy compliance culture.

Major Initiatives & Highlights of Compliance Function

Compliance Department is set up at Bank’s Corporate Office headed by Chief General Manager reporting to Senior Management of the Bank.

Apart from qualified staff in the Compliance Department at corporate centre, each department at the corporate office and controlling offices as well as branches are having compliance officers to look after compliance function.

Compliance function ensures observance of statutory provisions contained in various legislations viz. Banking Regulation Act, Reserve Bank of India Act, Foreign Exchange Management Act and Prevention of Money Laundering Act. It also ensures Standards and Codes prescribed by BCSBI (the Banking Codes and Standards Board of India), IBA (Indian Banks Association), FEDAI (Foreign Exchange Dealers’ Association of India) and FIMMDA (the Fixed Income Money Market and Derivatives Association of India).

In order to keep the compliance staff up-to-date with developments in the areas of banking laws, rules and standards, regular and systematic education, knowledge management tools have been uploaded on the Bank’s site (http://intranet.bankof baroda.co.in).

Back Office Operations

Regional Back Offices and City Back Offices

Your Bank is having 12 Regional Back Offices (RBOs) at present with two RBOs opened during the year at Bareilly and Ahmedabad. One more RBO at Hyderabad is in advanced stages for a roll out, in order to have one RBO per zone for processing of CASA account opening forms and issue of Personalised cheque books. More than 4,200 branches of your Bank are linked for centralised account opening process through RBOs and more than 4,350 branches are linked for issuance of Personalised cheque books.

Your Bank is having 85 centralised city back offices for processing of inward and outward cheques through clearing. During the year under review, 100.0% migration to CTS (Cheque Truncation System) clearing has taken place in Southern Grid and also at all the 20 MICR (Magnetic Ink Character Recognition) locations of the Western Grid.

Government Business & Currency Chest

Your Bank focused on Government Business in a dedicated fashion during FY14 to augment its fee-based income. Some of the major initiatives taken during the year under review are listed below.

• Your Bank obtained permission for “State Tax Collection” in the states of Dadra & Nagar Haveli, Delhi (offline), Mizoram, Nagaland, Andhra Pradesh & Meghalaya. With this, your Bank is authorized to accept State Tax Collection in 19 States.
• Your Bank obtained permission from Ministry of Railways for disbursement of Railway Pension in 11 States i.e. Maharashtra, West Bengal, Assam, Bihar, Nagaland, Tamil Nadu, Manipur, Tripura, Sikkim, Mizoram and Arunachal Pradesh.
• Your Bank obtained authority for additional 166 branches for undertaking Public Provident Funds / Senior Citizens Savings Scheme (PPF/SCSS) Business. With this, around 1,079 branches of your Bank are authorized to undertake PPF/SCSS business.
• Your Bank undertook special campaign for the mobilization of PPF with effect from 1st January, 2014 to 31st March, 2014. A total of 44,740 accounts were mobilized during the campaign period and 64,072 accounts during FY14 as a whole.
• Your Bank also undertook special campaign for the mobilization of NPS Lite under New Pension Scheme during the period from 2nd December, 2013 to 31st March, 2014 and more than 23,800 Accounts were mobilized during the campaign period and more than 25,000 Accounts during FY14 as a whole.
• Your Bank received permission for e-stamping facility in the states of UP & Uttarakhand and activated 48 branches in UP & 17 branches in Uttarakhand. With this, your Bank’s 113 branches in six states are authorized to conduct e-stamp business.
• Your Bank obtained authorisation from Ministry of Commerce & Industries for participation in their e-Biz portal to provide online collection of license fees and charges collected for issuance of various types of licenses.
• Your Bank implemented physical collection of Customs Duty at Inland Container Depot (ICD) Kribhco & Hazira and started collection of Customs Duty at both the locations.
• In Andhra Pradesh, your Bank obtained approval from Geological & Mining Department for Royalty collection through Cyber Treasury.
• In the State of Gujarat, your Bank got authorization to collect MST & Entry Tax and also to handle six additional Sub Treasuries business.

New Pension Scheme (NPS)

After launching of NPS-Lite Scheme on 14.09.2012, your Bank canvassed 20,872 applications up to 31.03.2013 and 23,646 applications during the financial year ended 31.03.2014 under the NPS-Lite Swavalamban scheme. Your Bank has set a target for canvassing 1,00,000 applications under the NPS-Lite Swavalamban scheme during the financial year 2014-15.

Cash Management & Currency Chest

• Your Bank managed to maintain average Cash Deposits Ratio (without ATM Cash) at 0.30 or below by constant monitoring and follow up with the zones and regions.
• Clean Note Policy: To comply with Clean Note Policy of RBI, your Bank procured 1,354 NSMs in the 1st phase for its branches and currency chests in FY14 and procurement of 3,682 NSMs for rest of the branches is under way.
• Proposed New Currency Chests: As a customercentric initiative to improve the payment system, your Bank identified 32 currency chests to be opened during the period, thereby increasing total number of currency chests from 84 to 116, out of which three currency chests, notably at Dhamnod, I.E. Varanasi, Rahangi, were opened during the year 2013-14.
• Coin Vending Machine: As per the “Strategic Plan on Currency Management 2011-14”, 30 Coin Vending Machines have been installed at different places during FY14.

Vigilance

Vigilance in your Bank aims at identifying leakages within the organization that lead to financial loss and, taking corrective and preventive actions to plug these leakages and simultaneously ensuring proper justice and fair play in the organization. Thus, this helps in protecting the innocent employees by supporting quality decisions, while striving to bring the real offenders to book thereby eliminating forces that thwart integrity and preventing loss for your Bank.

With the objective of bringing awareness among the staff members about preventive vigilance and also to put forth consequences of flouting the rules and regulations, which may lead to perpetration of frauds by unscrupulous elements, sensitive branches of the Bank are identified on the basis of risk perception and Preventive Vigilance Audits are conducted. The staff members are sensitized about preventive vigilance through vigilance newsletter, circulars, meetings etc. Other initiatives are also being taken such as implementation of Bio-metric authentication in CBS, online submission of Property Returns by officers and putting Immoveable Property Returns of Executives on your Bank’s website.

Your Bank has also created a pool of trained officers for skilled investigation and expeditious conduct of enquiry proceedings. It may be noted that there was significant improvement in disposal of disciplinary action during the year FY14.

As a part of increasing transparency in the processes and systems, stress is being put on leveraging technology in the customer service areas as well as the internal monitoring systems viz. online applications, submissions, services etc., wherein minimum manual intervention is required.

The Vigilance machinery is effectively performing its role as decision facilitators rather than decision deterrent by strengthening the systems and procedures, plugging the loopholes, wherever found and erasing grey areas. It is imparting participative, proactive and preventive mechanisms to meet the desired impact.

Business Performance

Given below are the details of your Bank’s major achievements on the business front during FY14.

Resource Mobilisation and Asset Expansion

The share of Bank’s Deposits in total resources stood at 86.26% as of 31st March 2014. Total Deposits of your Bank grew from Rs 4,73,883.34 crore to Rs 5,68,894.39 crore, posting a healthy growth of 20.05% over the previous year. Of this, Savings Bank Deposits – a critical component of Low-Cost Deposits grew by 14.39% from Rs 84,302.61 crore to Rs 96,437.44 crore.

The share of low cost deposits (Current + Savings) or CASA deposits in Total (Domestic + Overseas) Deposits was at 25.75% and in Domestic Deposits at 31.76%.

Your Bank’s Total Advances expanded by 20.97% during FY14 led by 21.34% expansion in Domestic Advances and 20.16% expansion in Overseas Advances.

Composition of Funds – Global

Global Advances (Net)

Deposit Resources

To bring more synergy between business models persuaded by your Bank and its organizational structure promoting the corporate goals, a new business vertical “Deposit Resources” was created during the year. The aim of this newly created vertical has been to ensure a consistent and broad based growth in CASA and Retail Term Deposits.

We are happy to share that your Bank canvassed 79,87,709 new Savings Bank accounts and 1,20,082 new Current accounts during the year under review.

Sale of Gold Coins

Around 40,145 Gold coins of different denominations aggregating 362.333 Kgs were sold during the year FY14.

Initiatives undertaken by “Deposit Resources” Department

Product Modification

Product modification in Baroda Premium Current Account (BPCAP): Your Bank effected a flexibility in sweep period ranging from 15 days to maximum 91 days during the year. The customer would now enjoy an option to decide sweep period within the specified range depending upon his/her requirement of funds. The rate of interest on short deposits is to be for the period as per the option given by customer as per the Bank’s ROI prevalent from time to time.

Other Business initiatives

Drive for activation of dormant accounts: To revive & strengthen the relationship with existing customers, a drive was launched by your Bank for activation of dormant accounts.

Drive for Issuance of Debit Cards: As a part of your Bank’s CASA campaign and to promote the use of debit card, a drive was launched to cover maximum customers during the campaign period.

CASA Campaign: To accelerate growth in low cost deposits, notably, the Current and Savings Bank Deposits, a CASA campaign was launched from 2nd September 2013 to 25th September 2013. An amount of Rs 696 crore (retained amount) as fresh Savings Bank Deposit was mobilized in 15,01,679 new Savings Bank accounts and total savings deposit of Rs 1,402 crore was mobilized during the campaign period. An amount of Rs 230 crore was mobilized in 25,426 new Current accounts and a total Current Deposit of Rs 777 crore was mobilized. Total CASA deposit of Rs 926 crore in new accounts and in overall, an amount of Rs 2,179 crore in both Savings and Current Account was mobilized during the campaign period.

Savings Bank Deposit Campaign: To accelerate the pace of mobilization of Savings Bank deposit, a campaign for Savings Bank deposit was launched from 17.02.2014 to 22.03.2014. An amount of Rs 1,093.66 crore in 8,69,945 new savings bank accounts was mobilized with overall increase of Rs 1,765.31 crore in savings bank deposits. The average balance in newly opened SB accounts amounted to Rs 12,571/-.

NRI Services

The NRI (Non-Resident Indian) deposits are important resources, which your Bank has been successfully tapping over the years.

New Products Launched

In pursuance to the important measures announced by the RBI during August-September 2013 to augment inflow of NRI remittances from abroad, two special Retail Liability products styled as “Baroda Premium FCNR (B) deposit” and “Baroda Ultra Premium FCNR (B) deposit” were introduced on 23rd September, 2013 and 10th October, 2013, respectively. The funds mobilized under these products facilitated your Bank to participate in concessional Dollar SWAP window of the RBI. Keeping in line with the closure of SWAP window of RBI on 30th November, 2013, the special deposit products were closed on 27th November, 2013. Your Bank mobilized deposit of USD 42 million and USD 1,694 million, respectively and swapped with the RBI for an amount of USD 1.7 billion.

New Inward Remittance Processed

The Process has been initiated for launch of new inward remittance product Flash Remit under tie up arrangement with UAE Exchange Centre LLC (UAEECL) under rupee drawing Arrangement of RBI. As of now, Supplemental Agreement document is ready to be signed with UAE Exchange LLC, Abu Dhabi, UAE for the new online remittance product.

Special NRI Deposit Campaign

Coinciding with the launch of two new FCNR (B) products, special campaign for NRI deposit was launched between 14th Oct, 2013 and 30th Nov, 2013 across all branches with a special focus on top 500 NRI centric branches. Against a target of Rs 1,508 crore, your Bank could register a net increase of Rs 1,600 crore in this period. During the special drive, about 12,967 new accounts with an inflow of Rs 10,512 crore were opened.

Centralized NRE/NRO SB a/c extended to all territories

Centralized opening of NRE/NRO SB accounts in NRI Back Office (NROBO), Mumbai, was extended to all overseas territories for sponsoring the accounts opening applications from July 4, 2013. Total number of 5,538 NRE/NRO SB accounts was opened during the year with sponsored application received from your overseas branches, subsidiaries and joint ventures on behalf of the domestic branches.

Other Initiatives

• Your Bank vigorously followed up with NRIs and assisted branches in cleansing database for KYC compliance under the RBI observation.
• Your Bank initiated efforts for rejuvenation of Dormant accounts.

Wholesale & Mid Corporate Banking

Your Bank’s Large and Mid Corporate segment collectively contributes more than 50% of its domestic credit portfolio.

The FY14 was a challenging year for the Indian banking sector as elucidated in the earlier section on Economic Scene in FY14. Given below are some of the specific challenges faced by the Bank’s Corporate Lending division during FY14.

Credit demand from corporates remained subdued for a number of reasons such as

• Lowest GDP growth rate in a decade.
• Delayed Policy/administrative decisions on various projects.
• Specific delays in clearance of infrastructure projects for different reasons.
• Uncertain policy environment
• High input price inflation & interest rates
• Volatile exchange rate movement in H1, FY14

Balancing between lending appetite and worsened asset quality

Against this backdrop, your Bank has been cautious and careful in garnering new business/ sectors for augmenting credit growth. Yet, the fast track desk of your Bank established 146 new relations during FY14. Its Large and Mid Corporate segments accorded fresh sanction/ increased credit facilities to the tune of over Rs 96,000 crore during FY14.

The objective of “harnessing growth in corporate credit” through creation of Corporate Financial Services branches and Mid Corporate branch model, has been successful. Together, these branches have contributed nearly Rs 1,00,000 crore of assets representing 36% of your Bank’s outstanding domestic credit.

While according credit sanctions, your Bank continued to ensure the benchmark of due diligence, appraisal standard, compliance and governance to maintain the asset quality. Total non food gross advances of your bank registered a growth of 21.88% from Rs 2,24,035.82 crore (as on 31.03.2013) to Rs 2,73,060.13 crore (as on 31.03.2014). The growth in credit of your Bank was higher than the industry average.

Innovation & new initiatives are the hallmarks of progress in any industry. Your Bank’s Large Corporate and Mid Corporate departments also undertook the following novel initiatives during FY14.

• A new product christened as “Top Up Facility” was introduced looking to the requirement of timely sanction of working capital requirements for the corporates.
• Features of existing products were reviewed and revisited to make more competitive. The products included Corporate Loan, Bid Bond Guarantee, Loan Against Future Rent Receivables etc.
• Interest rate structure was rationalized to make it one of the best in the industry.
• As a strategic business decision, your Bank’s Project Finance Department was hived off and merged with Baroda Capital Markets Ltd. Baroda Capital Markets Limited will now carry out Techno Economic Viability Studies of the projects, arrange funds for Corporates by way of Syndication of Bank Loans etc. Baroda Capital Markets Ltd has a dedicated team of professionals comprising Engineers, Finance Professionals, and experienced groomed credit officers. Another objective was also to augment their fee income through extending project appraisal services in the market to undertake TEV study of projects.
• Turnaround time of credit delivery was significantly reduced.

Your Bank’s “human capital” has been playing a crucial role in accomplishing the aforesaid objectives. Recruitment of professionals viz. CA/ ICWA/ MBA was made during the year FY14 to replenish & reinforce the stock of human capital. It may be noted that your Bank focused on grooming of its credit & FX officers by according it the topmost priority.

Retail Credit

Retail banking services continued to remain an important business division of your Bank in FY14 as well. This division focuses on meeting the financial needs of personal and small business customers (traders) who are looking for accessible and affordable banking services.

The performance of your Bank’s Retail banking division during the year under review is as under.

Growth under Retail Lending

Your Bank’s Retail Loan Book consists of five key products viz. Home Loan, Auto Loan, Education Loan, Traders Loan and Mortgage Loan, which constituted 79.31% of total Retail Loans as at end-Mar, 2014. The other products namely LABOD/ODBOD constituted 17.91% of the Bank’s total retail loan.

The other retail loan products like Baroda Personal Loan and other miscellaneous products viz. Doctors Loan, Loan against Government securities etc., constituted 2.8% of Retail Loans.

Total Retail Loans stood at Rs 46,019 crore as on 31st March, 2014 as against the level of Rs 38,046 crore as on 31st March, 2013. Absolute growth of Rs 7,973 crore (21.0%) was registered during FY14 as against a growth of Rs 2,379 crore (6.7%) during the previous financial year.

Growth under Five Key Retail Products

Under five key products which constituted 79.3% of total Retail Loans, an absolute growth of Rs 5,899 crore (19.3%) was posted during FY14 as against Rs 4,412 crore (16.9%) during FY13.

Home Loans: Absolute growth of Rs 3,513 crore (21.9%) was registered during FY14 as against a growth of Rs 1,911 crore (13.5%) during FY13.

Auto Loans: Absolute growth of Rs 698 crore (23.7%) was registered during FY14 as against a growth of Rs 512 crore (21.1%) during FY13.

Baroda Traders Loans: Absolute growth of Rs 1,215 crore (16.9%) was registered during FY14 as against a growth of Rs 1,620 crore (29.1%) during FY13.

Baroda Mortgage Loans: Absolute growth of Rs 367 crore (14.9%) was registered during FY14 as against a growth of Rs 284 crore (13.0%) during FY13.

Education Loans: Absolute growth of Rs 106 crore (5.4%) was registered during FY14 as against a growth of Rs 86 crore (4.6%) during FY13.

NPAs under Retail Loans

The amount of Non Performing Assets (NPA) as on 31st March, 2014 against your Bank’s Retail loans stood at Rs 901 crore (1.96%) as against the same level but a higher per cent of 2.11% as on 31st December, 2013. The amount of NPA as on 31st March, 2013 under Retail Loans was Rs 669.08 crore or 1.76% of gross retail loans.

Initiatives in Retail Banking During FY14

New Products Launched

A new Retail Asset product named as Vehicle Loan Scheme for your Young Officers & Clerical Staff was launched on 10th April, 2013 for purchase of four and two wheelers, with maximum limit of Rs 3.50 lakh and Rs 0.75/0.60 lakh, respectively. Another new asset product styled as Baroda Traders Gold Card scheme was also launched on 30th April, 2013 for the existing Baroda Traders Loan borrowers. New Retail Loan product “Baroda Premium Personal Loan” to Salaried Employees with a maximum limit of Rs 10 lakh was launched on 1st November, 2013. New Car Loan scheme ‘Baroda Car Loan to NRI/PIO’ was launched on 4th December, 2013. Special Education Loan for students of Asia Pacific Flight Training Academy was launched on 9th October, 2013. Special Traders Loan Scheme for Iron and Steel Traders in NCR was another new product to the kitty of new products launched during the year.

Product Modification

During the year, your Bank modified Baroda Additional Assured Advance (AAA), a Top-up Home Loan Product, by increasing the maximum limit from Rs 0.25 crore to Rs 2.00 crore in addition to adding new features in the scheme to facilitate more home loan borrowers to avail the scheme. Maximum limit was also increased in the existing product for traders ‘Baroda Traders Loan’ from Rs 2 crore to Rs 3 crore for Semi-urban and Rural Branches and to Rs 4 crore for Metro/Urban branches and under Baroda Mortgage loan from Rs 1 crore to Rs 3 crore. The rates of interest were rationalized and made attractive for various products like Baroda Housing Loan, Loan against Future Rent Receivables, Baroda Mortgage Loan, Baroda Education Loan and Loan/Overdraft against Bank’s own Fixed Deposit Receipts, during the course of the year FY14.

Other Business Initiatives

• Your Bank regularly disseminated information amongst its employees on various retail product features, which included products like Home Loan, Traders Loan, Auto Loan, Education Loan and Mortgage Loan, etc. Your Bank published a booklet (in both Hindi and English) entitled as ‘Retail Loan Guide Ready Reckoner’ for its staff members.
• Loan Campaigns were undertaken at different points of time to boost the retail business. The products for which such campaigns were undertaken were - Additional Assured Advance (AAA), Future Rent Receivables and Baroda Traders Loans, Education Loans, Mortgage Loans, Auto Loans, Baroda Home Loans, Baroda Traders Loans, etc., which helped in increasing the Bank’s overall retail disbursements.
• Your Bank strengthened the Tie-up arrangements with Maruti Suzuki Ltd & others like Mahindra & Mahindra, Tata Motors, Force Motors and Honda Cars India Ltd.
• Your Bank opened five New Retail Loan factories (RLFs) at Bharuch, Junagarh, Visakhapatnam, Meerut & Moradabad taking the total strength of RLFs to 45.
• Your Bank’s Regions were actively involved in Organization of Property and Car Expositions as well as participation in local trade fairs as a business supportive measure.
• The initiative to send SMS messages/reminders to retail Loan borrowers led to significant improvements in recovery in these accounts.

Wealth Management Services

In order to cater to the various investment needs of its customers, apart from seamless banking, your Bank is offering Wealth Management Services since the past ten years. For this, your Bank has entered into tie-up arrangements with various companies for offering products like Life Insurance, Non-Life Insurance, Mediclaim, Mutual Fund, Online trading etc. The two JV (Joint Venture) companies of the Bank, one in Life Insurance and the other in Mutual Fund business, is showing steady growth over the years. Apart from distributing the products of these companies, the products of tiup partners are also being distributed through the Bank’s pan Indian branches.

In order to offer more qualitative Wealth Management Services to the customers, your Bank has enabled India First Life Insurance’s (IFLI) renewal Insurance premium collection through ATMs and fund collection module for Baroda Pioneer Mutual Fund. On the occasion of your Bank’s 106th foundation day, the Bank’s Chairman and Managing Director unveiled IndiaFirst Health Card. This card is introduced with a view to provide cash less benefits, to the card holder, at empanelled hospitals through Point of Sale (POS) Machines.

During the year FY14, your Bank gave added focus to the installations of POS machines at Merchant establishments with a view to improve its Current Account portfolio. This indeed generated good results and your Bank doubled its POS numbers in a year’s time across the Merchant locations.

Apart from the E-Trading tie up with India Infoline Ltd., your Bank, through its wholly owned subsidiary BOB Capital Market Ltd., is offering Online Trading Facility (OLT) – Bobetrade- to its customers. A modified trading platform with added features is going to be launched soon which will help your Bank in attracting and retaining its retail customers.

As a “Self Certified Syndicate Bank” (SCSB) by SEBI, an additional mode for applying in IPO/FPO/Right Issues and NFO of Mutual Funds is made available by your Bank in the form of Application Supported by Blocked Amount (ASBA) to all category of investors who are customers of your Bank. Your Bank has enabled 655 centres for accepting Syndicate ASBA applications.

Your Bank is always committed to provide more personalised services to ensure customer delight and will move forward in the same direction in the years to come.

MSME Business

The micro, small and medium enterprise (MSME) sector is crucial to India’s economy. A recent IFC study on MSME finance in India indicates there are 29.8 million enterprises in various industries, employing 69 million people. This sector accounts for 45% of Indian industrial output and 40% of exports. Although 94% of micro, small and medium firms are unregistered, the contribution of the sector to India’s GDP has been growing consistently at 11.5% annually, which is much higher than the average GDP growth of the nation.

Considering the importance of the MSME sector to Indian economy and to facilitate this business, your Bank rationalized interest rate structure for MSME borrowers in June 2013. Your Bank comfortably achieved all the regulatory targets pertaining to this segment during FY14. Moreover, your Bank has a rich set up of 52 SME Loan Factories (SMELFs), which sanctioned loans to the tune of Rs 19,999 crore during the financial year under review.

In addition to the MSME units under the regulatory category, your Bank also considers financing the units in manufacturing and services activity which have investments in plant & machinery and equipments, respectively, in excess of regulatory guidelines and have turnover up to Rs 150 crore on the same footing as MSME units. This is done internally to give preferred attention to this “expanded” sector along the lines of regulatory MSME enterprises.

However, for reporting to regulators, the performance of your Bank is reckoned on regulatory lending i.e. to units/ borrowers who comply strictly with definition of Micro, Small and Medium Enterprises.

It may be noted that during the year FY14, the performance of your Bank under the regulatory category of MSME business has been very encouraging despite the overall slow-down in the economy.

Growth of MSME Business

The total outstanding in MSME Sector works out to Rs 57,426 crore as on 31st March 2014. The growth in lending to MSME Sector during the last three years is given in the table below.

Major Achievements in FY14

• The MSME advances of Rs 56,634 crore as of end-Mar 2014 reflected a growth of Rs 9,912 crore (21.21%) over the MSME advances in the previous year.
• The advances of Rs 27,756 crore to Micro Enterprises in the total credit of Rs 40,873 crore to MSE sector (as of the previous year) stood at 67.90% in FY14, comfortably reaching the mandatory target of 60.0% fixed by the RBI.
• The MSME advances as on 31st Mar, 2014 contributed 20.16% to the gross domestic advances of your Bank.
• The advances to Micro & Small enterprises reached the level of Rs 50,300 crore as against the Government set mandatory target of Rs 45,900 crore by end-Mar, 2014.
• Your Bank introduced a New Product named as “MSME Capex Loan and Capex Card” during FY14 to further promote its MSME business.

Initiatives in MSME Financing during FY14

• Your Bank reduced the spread in the rate of interest charged to the MSME borrowers to encourage investment spending.
• Your Bank approved scoring type credit rating model for small value loans worth Rs 2 lakhs up to Rs 2 crore.
• Your Bank held the SME conclave with Heads of SME Loan Factories in the months of June and October 2013 to deliberate on the issues pertaining to MSME businesses.
• Your Bank celebrated MSME Festival from 1st November 2013 to 28th February 2014.
• Your Bank arranged MSME Round Table conference at Nasik, Indore, Rajkot and Coimbatore.
• Your Bank aggressively focused on collateral free lending under the CGTMSE scheme.
• Your Bank participated in several exhibitions, seminars, etc., to build its Brand image.

Besides this, your Bank introduced MSME CAPEX LOAN and CAPEX CARD for MSME borrowers. It financed units in Hosiery industry in Kanpur Region and leather & leather products in Kanpur and Agra regions. It financed Tea Processing units in West Bengal and Sikkim regions. It extended financial support to units engaged in Rerolling mills, Machine Tools and Textile printing activity across the country. It financed units engaged in manufacturing of Hand Tools & Sports goods in Punjab-Jamu-Kashmir Region. It financed Hotel/Motel/Resorts in Haldwani and Deharadun regions. It financed agro-based units across the nation. It entered into MOU with Mahindra Trucks & Buses P. Ltd. under its scheme for financing Road Transport Operators for purchase of commercial vehicles manufactured by various commercial vehicle manufacturers. It also entered into MOU with Development Commissioner, MSME for Technology up-gradation and for providing quality support to MSMEs with respect to energy efficient projects.

Under its MSME segment, your Bank has various Area Specific Schemes for certain pockets, where there is a concentration of units with same or similar activity and with good business potential. These schemes have yielded satisfactory results for your Bank. The cluster development is also being undertaken with lead district branches having a larger role to play in the ensuing year. Furthermore, directed programmes of the Government of India, particularly the Weavers Credit Card (WCC) and lending under Prime Minister’s Employment Generation Programme (PMEGP) received focused attention during the year FY14.

In particular, your Bank renewed the following area-specific schemes during the year FY14.

• Financing of Marble units in Rajasthan.
• Financing of Textiles units on pan India basis.
• Financing of Brass Manufacturing Units in Jamnagar, Junagadh & Kutch Region.
• Financing of collateral free loans/educational loans to persons with disabilities promoted by National Handicapped Finance and Development Corporation.
• Financing of three-wheelers manufactured by Piaggio Vehicles Pvt. Ltd.

Rural and Agricultural Lending

Your Bank has always been a frontrunner in the area of Priority Sector and Agriculture lending. It has been harnessing the vast potential of the rural market through its wide network of 1,781 rural branches and 1,267 semi-urban branches. Even during FY14, your Bank opened 453 new branches in rural and semi-urban areas.

Your Bank is the proud Convener of State Level Banker’s Committee (SLBC) in the states of Uttar Pradesh and Rajasthan. Your Bank shoulders the Lead Bank Responsibility in 48 districts in the states of Gujarat (14), Rajasthan (12), Uttar Pradesh (15), Uttaranchal (2), Madhya Pradesh (2), Bihar (2) and Delhi (1).

Your Bank has sponsored three Regional Rural Banks (RRBs) in three states with a network of 1,659 branches and total business of Rs 33,169.55 crore as of March, 2014.

Performance of Priority Sector Lending in FY14

Priority Sector Advances of your Bank surged from Rs 80,003 crore as on March 2013 to Rs 90,488 crore as on March 2014 and formed 40.02% of the Adjusted Net Bank Credit (ANBC) against the mandated target of 40.00%. The Direct Agriculture advances of your Bank increased to Rs 22,117.51 crore over the previous year with an absolute growth of Rs.1,609.39 crore (7.85%) during the year. The total agriculture advances of your Bank has grown by Rs 768.76 crore and reached Rs 28,431.92 crore as at end-March 2014. The growth remained marginal due to the impact of revised guidelines of Priority Sector Lending issued by Reserve Bank of India made applicable from July 20, 2012 which led to reclassification of a large number of accounts out of Agriculture. Your Bank’s Direct Agricultural advances formed 9.78% of ANBC as of March 2014 against the mandated target of 13.50%. The Total Agricultural Advances were at 12.57% of ANBC against the mandated target of 18.00% (Recent guidelines of RBI dated 15.05.2014 would increase the Total Priority Sector and Total Agriculture Advances to 41.22% and 13.93% respectively).

Under its flagship agriculture loan product “Baroda Kisan Credit Card (BKCC)”, your Bank issued as many as 2,47,796 Credit Cards during FY14 to provide credit to farmers across India. Baroda Kisan RuPay Card, an ATM enabled smart Card, has been issued to 3,30,257 BKCC holders for their convenience. Your Bank financed as many as 2,95,743 new farmers during FY14 granting them loans worth Rs 4,505.55 crore.

As a part of its microfinance initiatives, your Bank credit linked 11,908 Self Help Groups by granting loans amounting to Rs 198.03 crore during FY14 thereby taking the total number of SHGs credit linked to 1,83,566 with an outstanding loan amount of Rs 1,670.57 crore.

Business and Social Initiatives

Your Bank undertook various initiatives during FY14 to harness the emerging opportunities in rural and agriculture lending. Some of them are mentioned below.

• To augment the Agriculture advances, your Bank conducted special campaigns viz. Kharif and Rabi campaign for crop loans under which the disbursements of Rs 5,585.67 crore and Rs 2,850.40 crore, respectively, were made. Another Campaign for Investment Credit was also undertaken, in which disbursements of Rs 897.84 crore were made.
• Your Bank has identified 466 Thrust Branches across India to boost Agriculture lending. These branches contributed 35.95% of the total Agriculture outstanding of the Bank as at 31st March 2014.
• Your Bank formulated various Area-specific Schemes which are tailor-made to cater to the needs of the local farming community, with various freebies like concessions in rate of interest & charges etc. Twelve such schemes to accommodate the varied needs of farmers were approved and implemented during the year under review.
• Your Bank launched Agriculture Loan Factories for bettering customer service and improving the volume and quality of the Bank’s agriculture advances. Three such pilot factories have started functioning in Mehsana in Gujarat, Bareilly in U.P and Muzaffarpur in Bihar.
• At present, your Bank has 47 Baroda Swarojgar Vikas Sansthan (BSVS), Baroda R-SETI Centers across India training the youth and imparting them knowledge and skills required for taking up self-employment ventures. During FY14, around 33,974 youth beneficiaries were trained at these centres, out of which 22,297 have established self-employment ventures. Out of the total 1,92,247 beneficiaries trained by these centers so far, 1,20,979 have successfully taken up their own self employment ventures.
• Your Bank has established 46 Financial Literacy Centres (FLC) across India, christened as “SARATHEE” to impart financial literacy and credit counseling services to the needy to help them avail financial services from the banking system and also to provide counseling services to those under financial distress. Your Bank has opened these centers under the patronage of its BSVS Trust and free services are provided to all by these centers.
• Your Bank has also opened a Micro Loan Factory at Raebareli and Sultanpur in U.P. The Micro Finance Loan Factory has a mobile van with facilities and all related documents on SHG financing. It is manned by officers who are duly authorised to sanction and disburse loans up to Rs 25,000 to SHGs on the spot and at their door steps.

Performance of RRBs Sponsored by your Bank

At present, there are three RRBs sponsored by your Bank:

• Baroda Uttar Pradesh Gramin Bank, Head Office: Raebareli.
• Baroda Rajasthan Khetriya Gramin Bank, Head Office: Ajmer.
• Baroda Gujarat Gramin Bank, Head Office: Bharuch.

The aggregate business of these three RRBs rose to Rs 33,169.55 crore as of March, 2014 from Rs 29,284.23 crore as at end-March, 2013, registering a growth of 13.27%.

These three RRBs together posted a Net Profit of Rs 289.40 crore during FY14 as against Rs 97.06 crore earned during FY13.

The “Net Worth” of all these RRBs put together improved from Rs 1,234.42 crore at end-March, 2013 to Rs 1,523.82 crore at end-March, 2014 and their “Reserves and Surplus” improved from Rs 777.52 crore at end-March, 2013 to Rs 1,066.92 crore at end-March, 2014, respectively.

Advances to SC/ST Communities during FY14

The outstanding advances granted by your Bank to SC/ST communities have been growing healthily year after year. This is evident from the fact that the outstanding advances granted to these beneficiaries went up from Rs 4,712.66 crore as at end-March, 2013 to Rs 6,160.30 crore as at end-March, 2014. In fact, the SC/ST communities accounted for a share of 29.90% in the total advances granted to weaker sections by your Bank during the year under review. Furthermore, a special thrust is laid by your Bank in financing SC/ST under various government sponsored schemes namely National Rural Livelihood Mission (NRLM), Swarna Jayanti Shahari Rojgar Yojana (SJSRY), Prime Minister Employment Generation Programme (PMEGP), etc.

Baroda Swarojgar Vikas Sansthans (BSVS) have also been giving due preference to SC/ST communities while selecting the trainees. It is heartening to indicate that so far, these centres have trained 72,365 youths under the SC/ST category.

Bank’s Committed Efforts at Financial Inclusion (FI)

Financial Inclusion is delivery of banking services at an affordable cost to the vast sections of disadvantaged and low income groups. The Financial Inclusion Plan aims at providing easy access to financial services to those sections of the society who are deprived of it so far at affordable cost thereby bringing them into the mainstream financial sector. Implementation of Financial Inclusion is not a new concept for your Bank. Financial Inclusion activities are being implemented by your Bank since inception through various government-sponsored programmes, lending to the poorest of the poor, lending to the minority communities, lending to SC/ST, lending to priority sectors, etc. However, the RBI formalized the concept of Financial Inclusion in 2005, when it permitted rendering of banking services through Business Correspondent (BC) channel. It then advised all commercial banks in the year 2010 to submit Board-approved Plan for providing banking services in rural unbanked areas under Financial Inclusion.

As desired by Government of India and directed by the RBI, your Bank’s Board had approved a Financial Inclusion Plan (FIP) for implementation by your Bank within a period of three years commencing from 2010- 11. The plan had envisaged covering 20,000 villages in a span of three years under Financial Inclusion utilizing various technology based initiatives. Thereafter, Ministry of Finance and RBI advised your Bank to cover the villages having population above 2,000 by March 2012. Accordingly, your Bank was allotted 2,855 villages which are covered well within the timelines.

Thereafter, the RBI advised all banks to provide banking services to all villages within the service area of the specific bank in three years i.e. 2013-14 to 2015-16. Accordingly, your Bank’s Board approved disaggregated FIP for all 21,526 service area villages of the Bank to be covered in three years, i.e., up to March 2016. As per the Board approved FIP, the year-wise target for coverage of service area villages is 11,124, 16,324 & 21,526 during 2013-14, 2014-15 & 2015-16, respectively. Your Bank has already surpassed the annual target of village coverage well ahead of its timeline. Almost all other parameters of Annual Targets set in disaggregated FIP for March 2014 have also been achieved.

Models used by your Bank for FI

Your Bank has adopted various models for providing banking services under financial inclusion such as:

• ICT (Information & Communication Technology) based
• BC model
• POS (Point of Sale/Service)
• Kiosk
• Mobile Van
• Brick & Mortar Branches

Information and Communication Technology (ICT) based Business Correspondent (BC) model: POS based BC Model

This solution is based on Application Service Provider (ASP) model with smart cards based technology for financial inclusion. Under this model, Business Correspondents are appointed by banks through service providers who are provided with point-of-service (POS) devices, using which, they carry out transactions for the smart card holders at their doorsteps. The customers can operate their accounts using their smart cards through biometric authentication. In this system, all transactions processed by the BC are online real time basis in CBS of the bank. The POS devices deployed in the field are capable to process the transactions on the basis of a Smart Card, Account number (card less) and Aadhaar number (AEPS transactions). The BC is moving into the cluster of villages allocated to him/her on a predetermined day and time for providing banking services at the doorsteps of the habitants.

KIOSK BC Model

It is a web-based application that can be accessed through internet connectivity on laptop or desktop by authorized individuals. The CSC e-governance Service India Ltd, FIA Technology Services Pvt Ltd and Geosansar are appointed as BCs for providing banking services in the villages allocated to the Bank as well as for implementation of Urban Financial Inclusion. This is a card less solution; account holder can operate the account on the basis of account number as well as Aadhaar number. The Kiosks are connected with your Bank’s CBS through web-based connectivity from the computer system/laptop of the kiosk operator. The transactions are processed through biometric authentication on online real time basis. As on 31st March, 2014, your Bank covered 7,525 villages through 2,780 Kiosk centers and also established 1034 urban kiosk centers across the country.

Mobile Van

The customized vehicle (van) is specifically designed for the purpose of banking activity. The exterior of the van is covered with the Bank advertisements and information about products offered by the Bank in rural areas. Thereby, it is also an advertising media for your Bank in rural segment. The van is equipped with computer hardware and connectivity to access the CBS. The Bank staff is deployed on the van to provide banking services in the villages. The van is moving into the cluster of villages on predetermined days and time which are in proximity to the existing branches, for providing online banking services. The banking services are being provided during fixed days in a week. At present, 15 mobile vans have been deployed for catering financial services to 211 villages in the states of Uttar Pradesh, Rajasthan, Gujarat, Uttarakhand, Bihar and Goa.

Brick and Mortar Branch

The brick and mortar branches are opened in a comparatively bigger village having the potential and viability. Such centers are identified during the course of finalization of the Bank’s branch expansion plan. As per the Bank’s FIP, 1,772 rural branches have been opened as against a target of 1,554 for the current financial year. Your Bank had annual target for opening 334 branches in un-banked rural area as per the disintegrated FIP submitted to the RBI, which is comfortably achieved by opening of 430 branches in FY14.

New Initiatives of bank under Financial Inclusion

Kiosk banking Model

The Kiosk banking model was launched by Shri S.S. Mundra, Chairman & Managing Director, by virtually inaugurating 1,000 Kiosks on the 106th foundation day of your Bank i.e. 20th July 2013. Your Bank has arrangements with Common Service Centers (CSCs) to avail their services as Business Correspondent of your Bank for running the Kiosk centers. The common service centers are ICT enabled front end service delivery points at the village level and urban centers for delivery of government, financial, social & private sector services in the areas of agriculture, health, education, entertainment, banking, insurance, pension, utility payments, etc. Your Bank has also engaged other service providers for similar banking Kiosks in urban/rural centers. These Kiosks would be connected with the CBS of your Bank through web-based connectivity from the computer system/laptop of the kiosk operator.

Urban Financial Inclusion

The rural inhabitants have largely remained the focus of the financial inclusion efforts since, a large proportion of the villages are still unbanked. Besides people living in rural and far flung areas, urban poor still have no access to formal financial products and services like savings, credit, remittance and insurance, forcing them to depend on usurious informal sources to meet their personal, health, and livelihood-related needs. Many of those are normally migrant labors, hawkers, slum dwellers from rural areas that generally leave their villages for livelihood. In order to cover them under financial inclusion, the Government of India has started campaign in all states through SLBC fora to bring these vulnerable groups under mainstream financial system. Your Bank has introduced urban kiosks at various locations across the country. Shri S.S. Mundra, Chairman & Managing Director launched urban kiosk at Abgaonkala in Harda district of Madhya Pradesh on 19th January 2014. As on 31st March 2014, your Bank set up more than 1,000 urban kiosk at various locations across the country.

Products Offered under Financial Inclusion

Basic Savings Bank Deposit Account with in-built OD Facility

This product is specially devised for individuals from Financial Inclusion villages as per the RBI guidelines. The account can be opened without depositing any amount which doesn’t attract any penalty and will be opened through BC. These accounts can be operated through business correspondents as well as at the branches. In–built overdraft facility up to Rs 10,000 is available under the scheme. Overdraft of Rs 250 can be availed immediately on opening of the account by the customer and availability of higher amount of overdraft up to Rs 10,000 is performance linked.

Recurring Deposit (RD) Account

This is money back RD facility duly designed for financial inclusion account holders to provide liquidity. The product offers money back facility, at the end of six months, an amount equivalent to 50.0% of the outstanding credit balance in the account can be paid back as per the requirement of depositor.

Baroda Kisan Credit Card (BKCC)

This product is for farmers which covers their needs like production credit, investment credit, personal loan needs as well as consumption needs. It is flexible in utilization of the limit as he can utilize the limits as per his requirements during the year.

Baroda General Credit Card (BGCC)

The BGCC is implemented through all the branches of your Bank. The credit facility offered under the scheme would include working capital and term loan requirements of the entrepreneurs.

Baroda Swabhimaan Suraksha (Low Premium Insurance)

Your Bank has introduced life insurance product with low premium for financial inclusion customers in coordination with India-first Life Insurance Company. An insurance cover of Rs 5,000 to Rs 50,000 is available at premium of Rs 20.88 per thousand for five years.

Financial Literacy Key to Successful Inclusion

The desired objective of Financial Inclusion can be achieved only when we are able to generate equal responses from the villages. In order to invoke responses amongst villagers, there is a need to educate them on various banking facilities and its benefits to them. In other words, financial literacy would be the key for success of financial inclusion initiatives of the bank. Therefore, all constituents of FI need to develop a bond with each other for not only to provide banking facilities, but also to create a massive awareness of banking and banking products amongst the population through Financial Literacy, wherever implementing Financial Inclusion programme. Your Bank’s link branches are arranging Financial Literacy campaign by conducting meetings and addressing the habitants in different forums.

Your Bank has taken the following major initiatives towards financial literacy in rural parts of the country.

Baroda Swarojgar Vikas Sansthan (Baroda RSETI) is a trust formed by the Bank way back in 2003 for undertaking skill building activities for unemployed rural youth and providing hand holding support to them till their settlement in their venture. Your Bank has established 47 such centers all over the country. During FY14, around 33,974 youth beneficiaries were trained at these centres, out of which 22,297 have established self employment ventures. The settlement ratio of candidates trained to candidates settled in business works out to 65.63%.

Around Forty six Financial Literacy & Credit Counseling Centres (FLCCs) “SAARTHEE” are operational across the country. Since inception, around 19,731 individuals visited FLCCs of which in 10,460 cases, the issues were resolved.

Around Fifty two Baroda Grameen Paramarsh Kendras facilitate financial education, credit counseling, information sharing and problem solving on technical issues, synergy & liaison with other organizations for value added services and development activities in rural areas.

Mobile Micro Finance Loan Factory has been established with a vision to provide credit and banking facilities to SHGs at their doorstep under the SHG–Bank linkage program, ensuring hassle free and prompt credit delivery within maximum of four days & hassle free credit to the SHGs.

“BYST-BoB Entrepreneurship Development Programme” (BYST) provides end-to-end support to disadvantaged young dynamic micro-entrepreneurs in the form of Loans, Business Mentors, Training, Networking and Marketing.

Direct Benefit Transfers (DBT)/Direct Benefit Transfer for LPG Subsidy (DBTL)

The Government of India as well as State Governments give various subsidies, Pensions, scholarships, MNREGA Payments etc to the beneficiaries under various government programs. Many of these were given through cash distribution systems. Considering the present inefficiencies in the system, the respective government departments have planned to deliver these kinds of payments through electronic mode by way of direct credit in the accounts of the beneficiaries. There are 34 government schemes identified as of now for DBT payments. At present, the government has rolled out DBT in 121 districts. Besides this, the Government of India also has decided to give subsidy on LPG gas cylinders to domestic users directly through DBTL scheme as against indirectly to producers. The DBTL scheme was rolled out in 291 districts in phased manner since July 2013. It is expected that DBT/DBTL system would be able to reduce the pilferages and inefficiencies in distribution systems, thereby benefiting the government as well as the beneficiaries. Your Bank has developed Aadhaar linking facility with the account of the customers for roll out of DBT/DBTL. Your Bank had organized camps for seeding of Aadhaar and opening accounts of the beneficiaries in the districts identified for DBT/DBTL. Your Bank’s branches are approaching DBTL beneficiaries residing within their vicinity for seeding of Aadhaar and opening of accounts of beneficiaries who do not have bank account in all the districts identified for roll out of DBTL.

Highlights of the Bank’s Performance under Financial Inclusion in FY14

• Your Bank covered 14,161 villages against a target of 11,124.
• Your Bank opened 74.66 lakh “Basic Savings Bank Deposit Account” against target of 63.74 lakh, out of which 18.71 lakhs accounts were opened through the Business Correspondents.
• The balance outstanding in the “Basic Savings Bank Deposit Account” of your Bank is around Rs 1,918 crore.
• Your Bank sanctioned overdraft of Rs 11.31 crore as against a target of Rs. 6.22 crore in Basic Saving Bank Deposit Account.
• Your Bank opened 2,584 Ultra Small Branches (in villages with population above 2,000) to strengthen functioning of BC model.
• Your Bank approved a disaggregation plan up to the branch level to implement its FIP for 21,526 villages by March 2016.
• Your Bank launched its Urban Financial Inclusion drive by opening more than 1,000 Kiosk at various locations in metro and urban centers across the country.
• Also, your Bank surpassed all targets set under disaggregated FIP for FY14.

International Operations

In the year 2013-14, the world economy continued to experience subdued growth. While the protracted recession in the euro area has finally ended, the growth in the United States strengthened to some extent. A few large emerging economies, like India, managed to backstop the deceleration they experienced in the past two years and moved upwards moderately. Your Bank continued to make a mark in the international arena by staying strong and resilient to the global environment. The International Operations of your Bank maintained a healthy growth in business as well as profitability.

Your Bank retained its market position as one of the leading Indian banks in providing services to the customers across the globe. The overseas centers continued to synergize and work as a team for making most of the opportunities in the international market. New initiatives were taken in IT infrastructure for enhancing customer satisfaction. Your Bank further spread its presence in UAE, Tanzania and Uganda by opening an additional branch in each of these three countries.

Business & Profit Performance

During FY14, the Total Business of your Bank’s overseas branches registered a growth of 33.3%. While Customer Deposits increased by 33.2%, Total Deposits by 43.6% and Advances by 20.2%.

During FY14, International Operations of your Bank contributed a sizeable 32.6% to your Bank’s global business.

Total Assets

Total Assets of your Bank’s International Operations showed a healthy growth of 39.1% having increased from Rs 1,66,460 crore as of Mar, 2013 to Rs 2,31,552 crore as on Mar, 2014.

Profit

In the period of subdued growth and pressure to maintain the margins, your Bank was successful in maintaining its gross profit for the year FY14 in line with the previous year. This is due to the proactive measures taken by the overseas territories and adaptability to changing scenarios. The Net Profit had a growth of 22.2% during the year.

Contribution of international operations to the Bank’s global Net Profit was at 25.4%.

Asset Quality in Overseas Operations

Asset quality is one of the most critical areas in determining the overall health of a bank. Your Bank has an efficient credit monitoring mechanism at the overseas centers to ensure the quality of the loan portfolio and the credit administration programme.

Due to the global slowdown in the recent years, all sectors of the economies across the globe have been impacted thereby increasing the importance of maintaining strong asset quality. The stressed and restructured accounts are being monitored in your Bank’s overseas territories on a continuous basis.

Net Advances during FY14 increased by 20.2% over the level of previous year. Your Bank has put in best efforts to maintain the quality of assets, as the Gross NPAs of International operations as per cent to Total Advances of International Operations was 1.57% as on Mar, 2014 versus 1.37% as of Mar, 2013.

Your Bank’s International Presence

Your Bank’s international presence covers 24 countries through its 102 branches/offices as under:

The Bank also has following Joint Ventures/ Associates:

• Indo Zambia Bank Ltd., Zambia having 25 branches.
• India International Bank (Malaysia) Bhd., Malaysia having one branch.

Overseas Expansion in FY14

During FY14, your Bank opened three new overseas branches/offices. An Electronic Banking Service Unit at Shabiya, UAE was also made operational during the year.

Moreover, two branches of the subsidiaries were opened at Kariakoo in Tanzania and Kololo in Uganda.

Future Plans for Overseas Business

With a view to consolidate operations and improve/protect the market share, your Bank has further plans for expansion in upcoming centers in the countries where your Bank is already present. Your Bank also has plans to enter new countries offering opportunities for profitable growth of business.

Necessary infrastructure is being created for further expanding the network in UAE, UK, Kenya, Tanzania and Ghana.

The overseas expansion is considered in line with the various directives issued from Ministry of Finance, Government of India regarding overseas expansion of Public Sector Banks of India.

Syndication Centres in Overseas Operations

Your Bank’s Global Syndication Centre at London and Regional Syndication Centres at Dubai and Singapore specially focus on the business of Syndication Loans in International Market. Your Bank has also set up an International Merchant Banking Cell (IMBC) at Corporate Office, Mumbai, which mainly caters to the requirements of Indian corporates and also supports the regional syndication centres to canvass business from Indian corporates who are in need of foreign currency resources. Your Bank is an active player in the Syndication Loan Market and also participates in loan origination.

Products and Services in Overseas Business

Your Bank has customized products and services according to the local needs for each country of operation. Your Bank provides state of the art products and services in the international market to suit the business needs of the international market.

The single Core Banking Solution at all the overseas branches and subsidiaries of your Bank facilitates introduction of new products and services and helps in carrying out modification/improvement in line with the requirements of customers in the country of operation.

Technology in Overseas Territories

• The number of ATMs at overseas Territories and subsidiaries increased to 91 (55 on-site and 36 off-site) as on 31st March, 2014 from 89 (54 onsite and 35 offsite) as on 31st March, 2013.
• Debit Card/ATM card issuance is implemented in ten overseas territories/subsidiaries out of which four territories/subsidiaries are having tie-ups with Global Payment Technology Company M/s VISA. Furthermore, VISA accreditation is in progress for Oman territories and Guyana, Uganda, Kenya subsidiaries.
• Many of the territories/subsidiaries are moving to chip-based debit cards. The EMV (chip cards) implementation in UAE territory has been completed and implementation in Oman and Mauritius territories is in progress.
• Internet banking (Baroda Connect) is implemented in 14 overseas territories/ subsidiaries. viz 1.UAE, 2. United Kingdom 3. Oman, 4. Mauritius, 5. Fiji 6.Seychelles, 7. Australia (View) 8.Kenya, 9.Uganda, 10.Botswana, 11.New Zealand, 12. Ghana. 13. Tanzania (View Based) 14. USA (View Based). The USA territory has been added in this financial year and internet banking implementation is in progress for Trinidad & Tobago and Guyana Subsidiaries and will be made live in the next financial year.
• Fraud Management Solution (2FA) has been implemented in internet banking of New Zealand, UAE, UK, Uganda, and Kenya and compatibility of e-banking in Smart Phones has also been enabled for these territories/subsidiaries. The FMS implementation in progress for Botswana, Fiji, Oman, Mauritius, Seychelles and Ghana territories/ subsidiaries.
• Implementation of Centralized SWIFT activity for all territories/subsidiaries (except USA) has been completed and operating from Data Centre. The US territory has outsourcing agreement with M/s Fundtech for processing of SWIFT activities.
• The AML Erase (Batch mode) solution has been implemented in Australia during the year FY14. The AML Erase Solution is now available in all overseas territories/subsidiaries except the US. The US territory has outsourcing agreement with M/s Fundtech for online AML and OFAC scanning. The offline transactions checking are done through Prime Compliance suite.
• The Global Treasury Solution is implemented in DIFC Dubai in this financial year. Now GTP solution is available at US, UK, UAE, Bahamas, Bahrain, Hongkong, Singapore, Belgium and DIFC Dubai.
• The Cheque Truncation & Automated Clearing House implementation in Trinidad & Tobago, Seychelles and Botswana is in progress.
• Approach finalized for sending SMS alerts for all transactions in international territories/subsidiaries. Implementation is in progress for six territories/ subsidiaries. (Fiji, Guyana, Uganda, Botswana, China, and Kenya).
• In view of the end of technical support for Windows XP, your Bank has initiated the process for Migration from Microsoft Windows XP to Windows 7 for all PCs and ATMs in its international territories/ subsidiaries.

Risk Management in Overseas Operations

Your Bank has strong Risk Management Systems in place at the overseas centers to deal with the additional risks in the international banking scenario. Separate Risk Management Department has been set up at overseas centres to deal with Credit, Market & Operational Risks. Specialized Risk Managers have been posted at the overseas centres.

The Basel II guidelines were implemented at all the overseas territories with effect from 31st March, 2008 and your Bank has adopted Standardised Approach for Credit Risk, Standardised Duration Method for Market Risk and Basic Indicator Approach for Operational Risk.

The BOB RAM Model for internal Credit Rating has been implemented at overseas centres. It has further strengthened the credit monitoring by capturing vital information related to advances accounts.

The Special Model for Asset Classification and Credit Monitoring has been implemented at all the overseas territories of your Bank.

Regulatory Compliance in Overseas Operations

Your Bank has a reputation of being a Regulatory Compliant Bank. Dedicated compliance teams are present at overseas centers to ensure that stringent of the home/host country regulatory norms are followed.

Well-integrated compliance setup ensures that compliance issues of the Bank are handled in a timely manner. Your Bank has posted officers at overseas centres whose skills are continuously enhanced through trainings and other avenues. Your Bank does not see compliance as merely a regulatory requirement but a duty to protect the interest and reputation of the Bank and its stakeholders.

The overseas territories/subsidiaries have the prudential policies/manuals in varied areas of banking as per their respective regulatory requirements, which are periodically reviewed to ensure that they are in conformity with the regulatory guidelines and requirements.

Treasury Operations

Your Bank operates its Treasury from a State of the Art Dealing Room at Baroda Sun Tower at its Corporate Office in Mumbai. This dealing room is well positioned to scale up your Bank’s Treasury Operations and keep pace with the latest developments in the market. Your Bank’s Treasury handles domestic treasury operations and covers activities in various markets i.e. Foreign Exchange, Interest Rates, Fixed Income, Derivatives, Equity and other alternative asset classes. A basket of financial products are offered to Bank’s clients like interest rate swaps, currency swaps, forwards and options facilitated by the advanced technology platforms used by your Bank.

A sophisticated Automated Dealing System caters to the needs of clients of Authorized Branches dealing in foreign exchange transactions across the country. During the financial year under review, your Bank successfully implemented Global Treasury Solution, as part of Business Process Re-engineering, at DIFC, Dubai.

During the summer of 2013, the market perception of potential tapering of US Quantitative Easing triggered outflows from Emerging markets across the Globe. Indian markets saw major outflow of portfolio investments, particularly from the debt segment causing yields to fluctuate sharply in the first half of the last year. As a result of portfolio outflows from Debt and Equity markets along with concerns over adverse current account deficit, the Rupee depreciated to Rs 68.84 in August 2013. To attract inflows into debt segment, the RBI hiked Repo and the Marginal Standing Facility (MSF) rate by 200 basis and made MSF rate at 10.25%, the operating money market rate. The overall allocation of funds under LAF Repo against surplus SLR Securities was limited to 0.50% of the Net Demand and Time Liabilities (NDTL) of the banking system. Furthermore, banks were required to maintain a minimum daily CRR balance of 99.0% of the total requirement (from earlier 70.0%).

While rolling back the above temporary measures after the stabilisation of external situation, the RBI addressed the continuing pressure on CPI and hiked the Repo rate by a cumulative 75 bps to 8.00%.

Your Bank was able to capitalize on the opportunity offered by the sharp fall in yields in the first two months and the sharp yield movement upward later in the year was adroitly handled in terms of its impact on the Bank’s fixed income investments. Your Bank utilized the opportunity presented by higher bond yields to add bonds to the portfolio and increase the average yield on Investments. The average yield on Domestic SLR investments was 7.85%. During FY14, your Bank’s Treasury earned Rs 9,793 crore as Interest/Discount earnings, while Profit on Sale of Investment and Exchange Earnings were Rs 732 crore and Rs 575 crore, respectively.

Your Bank’s Treasury offers customized solutions using available products viz Interest Rate Swaps (IRS), Currency Swaps (CIRS), Forwards and Options to meet the Interest rate and Foreign Exchange risk mitigation requirements of the corporate clients. During the year, your Bank’s Treasury actively raised funds by undertaking USD swap with RBI against the FCNR deposits and Tier I capital, under the special RBI swap window provided to the banks. The Interest Rate Swaps and Currency options were widely used for hedging the interest rate and currency for the corporates. Your Bank’s Treasury started dealing in Exchange traded Cash settled Interest Rate Futures based on 10Y benchmark Government Security and emerged as one of the major player in the market. Arbitrage opportunities available between asset classes including Money Market CBLO, Call, Market Repo, Government Securities and Forex markets were effectively utilised.

The sentiment in equity markets improved during second half of FY14 due to FII inflows fuelled by the expectations of an investor friendly and stable government after the general elections in May 2014. The Equity desk of the treasury actively churned its portfolio and booked profits at regular intervals whenever an opportunity emerged in the markets.

The Foreign exchange desk of the Treasury retained its position as one of the premier market players in the Forex desks of the Public Sector Banks. The Proprietary trading desk was active in encashing the available arbitrages and mobilised resources in tight situations of liquidity impacting the Indian markets.

Your Bank’s Treasury Mid-Office monitors market exposures and limits fixed by the Board of Directors, on a real time basis. The Risk Management parameters, including Value-at-risk (VaR) are used to measure Market Risk on all portfolios. These measures are backed up by the Back Testing on risk numbers and Stress Testing of various investment and currency portfolios.

Corporate Social Responsibility (CSR)

As a responsible corporate citizen, it has been the endeavour of your Bank to empower the community through socio-economic development of the underprivileged and weaker sections.

In its continued efforts to make a difference to the society at large, your Bank intensified its efforts further in this direction in FY14.

Some of the initiatives in the domain of CSR undertaken by your Bank are as follows.

• Your Bank has established Baroda Swarozgar Vikas Sansthan (Baroda R-SETI) for imparting free training to unemployed youth to develop their entrepreneurial skills to become self employed. This is expected to improve the economic status of their families and also give a boost to various regional economies within these locations. All the Lead Districts of your Bank have an R-SETI each. About 47 such Sansthans have been established by your Bank in which more than 1,92,247 youth have been trained and around 1,20,979 have been gainfully self employed.
• In order to spread awareness among the rural masses on various financial and banking services and to speed up the process of financial inclusion, your Bank has also established 46 Financial Literacy Centres (FLC) across India. These centres will impart financial literacy in the form of simple messages like Why Save, Why borrow from banks, Why borrow as far as possible for income generating activities, Why repay in time, Why insure yourself, Why Save for your retirement, etc.

Asset Quality Management

The year FY14 was a challenging year for the banking industry to maintain the Asset Quality due to a fragile economic environment. But your Bank continued its practice of rigorous monitoring and recovery of the NPA portfolio. However, due to downward pressure on various economic indicators impinging the banking industry, your Bank continued to witness pressure on its NPA position during FY14.

Indian banks, in general, witnessed heavy incidence of slippages in FY14 due to volatile financial markets both within and outside India, higher inflation and higher interest rate regime throughout the FY14. In spite of various depressed economic parameters impacting the Bank, fresh slippages, during the year, were at 1.99% of the opening Standard Advances of your Bank. Against the backdrop of high slippages, the ratio of Gross NPA to Gross Advances was at 2.94% as on 31st Mar, 2014. Consequently, the ratio of Net NPA to Net Advances stood at 1.52% by end-Mar, 2014. Yet, these were one of the lowest in the large-sized public sector banking space.

In the past several years, your Bank made all out efforts to maintain the Loan Loss Provisioning ratio at or above the mandated norm of 70% set by the RBI. However, due to a steep rise in NPAs and higher provisioning, the loan loss coverage ratio was at 65.45% during FY14, after factoring in the Prudential/ Technically Written-off advances. It may be noted that during the year FY14, this ratio continuously improved on sequential basis from the second quarter to the fourth quarter of the year (from 61.68% in Q2, FY14 to 65.45% in Q4, FY14).

Your Bank has developed a comprehensive structure of recovery and credit monitoring function at the branch, region, zone and corporate levels. Besides this, the nodal officers at each Debt Recovery Tribunal (DRT) centre are assigned the role of a follow-up of legal cases on day-to-day basis so as to minimize the delay in obtaining decrees and execution thereof, in order to expedite and maximize recoveries. For recoveries of all DRT suit filed NPA accounts, the assets charged to the banks are now being sold through E-auction to get a fair market value of assets charged to us. Additionally, to speed up the recovery Asset Reconstruction Companies (ARCs) have been appointed as recovery agents and consultants have been appointed to liaison with official liquidator (OL) to get the recoveries realised by OLs. Lok Adalats, Recovery Camps and Village Chaupal Meets were regularly conducted by your Bank’s branches to reduce long pending cases and expedite recoveries in small accounts.

Your Bank continued its emphasis on follow-up mechanism to explore recovery prospects of NPA accounts. The system of monitoring of large value NPA accounts of say Rs 1 crore and above directly from the corporate office by way of fortnightly video conferencing with the regions and zones have ensured proactive action by branches, advocates, recovery agents, etc. The actions under SARFAESI Act at various levels were also monitored by the Bank’s Corporate Office. Therefore, the cash recovery in NPA accounts during FY14 was Rs 1,261.81 crore, higher than the cash recovery of Rs 625.57 crore during FY13. The upgradation was higher at Rs 684.72 crore during FY14 compared to Rs 340.93 crore during FY13.

During FY14, your Bank laid specific focus on recovery of small accounts by organizing Lok Adalats and Recovery Camps at village/town level. Moreover special Schemes called Vishesh Vasooli Yojana and Bhagirath Prayas were also launched during the first half of FY14. Your Bank also launched an incentive linked recovery scheme called “Sankalp – VI”, to enlist personalized attention of each and every staff member in pursuing recovery efforts of small value accounts with an outstanding up to Rs 25 lakh. The cash recovery made during FY14 under this scheme was very impressive at Rs 155.19 crore.

As a part of strategy suggested by the RBI for NPA management, your Bank put for sale of NPL accounts under individual as well as portfolio sale during FY14 and as a result of good response from the market, could sell 23 NPL (NPA & Write Off accounts) accounts with aggregate outstanding balance of Rs 671.27 crore to four ARCs (with Net Book Value of Rs 253.65 crore).

The “asset classification-wise” breakup of advances portfolio of your Bank is as under.

(Rs crore)

Information Technology (IT)

Your Bank has undertaken a total end-to-end business and IT strategy project covering your Bank’s domestic, overseas and subsidiary operations.

• Your Bank has built the best of technology infrastructure by implementing a state-of-the-art Data Centre conforming to Uptime Institute Tier-3 standard and also a Disaster Recovery Site in different seismic zone with redundancy built in every single point of failure to ensure uninterrupted banking service delivery to customers.
• In addition to the Disaster Recovery Centre, your Bank has also implemented the Near Disaster Recovery Centre during the year to ensure Near Zero Data Loss as part of its Business Continuity Planning and Disaster Recovery strategy.
• Your Bank continued to optimise its technology initiatives like windows server virtualization, desktop virtualization and backup consolidation as green initiatives and also to improve Data Centre operational efficiency. Application virtualization, Automatic Storage Management (ASM) & Real Application Clusters (RAC) Implementation, Bandwidth up-gradation, provision of backup link, use of new technology based on MPLS (Multi Protocol Label Switching) for improving uptime and on demand upgrade are some of the major initiatives.
• Your Bank has been undertaking regular capacity planning, upgrade and refresh to support growing demand of business at various service delivery channels.
• Your Bank has an upgraded Enterprise Management System and modules have been deployed to effectively manage and monitor Bank’s growing IT infrastructure.
• Your Bank has deployed centralised IT architecture to provide the Core Banking Solution (CBS) and other application platform to all its domestic branches and 23 overseas territories, providing ease of management & monitoring and optimisation of resources. Your Bank’s regional rural banks (RRBs) are also on the CBS Platform and as notified by the Government of India (GOI), your Bank has successfully amalgamated RRBs of Central Bank of India and Punjab National Bank with 350 branches into one of the RRBs of your Bank.

Alternate Delivery Channels

Internet Banking - BARODA CONNECT

Internet Banking, viz., Baroda Connect has been completely revamped in your Bank to enhance its look and feel, user-friendliness and user experience based on heuristic evaluation and usability audit. Your Bank continued to add more facilities under its Internet Banking channels. Other enhanced features such as Online FDR Double Dhamaka, online recurring deposit opening, online gift card, Tax payments of various States, multiple challans for excise duty, Credit to Loan accounts, Bill payments, Online donations to Prime Minister Relief Fund, India Life Insurance premium payment, aadhaar seeding through internet banking, IMPS (Immediate Payment services). Internet Banking facility is made available on all Smart-phones/tablets offering comfort of anywhere banking to its customers. Internet Banking has also been implemented in total 14 overseas territories viz. Tanzania, Uganda, Kenya, Mauritius, Seychelles, Botswana, New Zealand, UAE, Fiji, UK, Oman, Ghana, Australia and USA. Internet banking is also provided in all Bank- sponsored RRBs.

In order to enhance security and confidence in Internet Banking, your Bank introduced enhanced security features by deploying Fraud Management Solution, including step-up authentication based on risk analysis, two factor authentications by enabling OTP, PULL OTP, SMS OTP, QnA. Your Bank has also introduced use of digital certificates for corporate customers for authentication and non repudiation in high value interbank transactions through internet banking. Your Bank has initiated the process of implementing Fraud Management Solution for remaining five overseas territories where transaction-based e-Banking is implemented.

Mobile Banking – BARODA M-CONNECT & IMPS

As one more alternate delivery channel, many features are available on the Mobile Banking platform of your Bank to provide various facilities to customers, viz., balance enquiry, mini statement, fund transfer, stop payment, cheque status, debit card blocking, other services. Mobile banking application is made available in all i-Phones and i-Pads in addition to Blackberry, Android, Windows devices. Immediate Payment Services (IMPS) are implemented covering Person to Account (P2A), Merchant Payments (P2M), Aadhaar based remittance (P2U). IMPS merchant payments (P2M) enabled for Mobile top-up / DTH top-up, Insurance premium payment, Online shopping, Over-thecounter payments, fees payments to schools/colleges/ universities, Utility Bill payments, Travel & Ticketing, Temple Donations, Non internet based railway ticket booking through mobile phones using IMPS – IRCTC. Under Mobile Banking, your Bank is now enabled NUUP (National Unified USSD Platform), providing ease of use and convenience to customers.

eLobby

Your Bank embarked on the next level of customer engagement by enabling 24 X 7 services for customers through eLobbies. Devices like Bunch Note Acceptors, Self- Service Pass Book Printers, Cheque Deposit Kiosk, Internet Banking Kiosks, were installed in more than 30 eLobbies attached to branches. Cash deposit in Bunch Note Acceptors was enabled through card as well as account number to provide convenience to customers. In the coming years, large scale expansion of this network is targeted. Your Bank is also proposing to introduce Cash Recyclers which accept cash, sort it and make payments from the deposited cash.

ATM

The ATM Switch is upgraded in your Bank to a higher version along with Hardware up-gradation with enhanced features for better performance, speedy ATM transactions and ease of ATM expansion. The ATM switch is deployed for India, UAE, Oman, Mauritius, Fiji, Tanzania, Botswana, Trinidad & Tobago (T&T) and New Zealand. Your Bank introduced Non Personalised Debit Cards during the year to enable faster and hassle free delivery of cards to the customer over the counter at the time of account opening itself. Your Bank enabled NEFT remittances from ATMs during the year. Many customer centric initiatives such as RuPay Debit Cards, RuPay POS and RuPay KCC Cards, RuPay e-commerce, Brown label ATMs, Collection of Insurance premium for India First Life Insurance Policy holders, Cheque book request, Immediate Payment Services (IMPS) through ATMs are undertaken. Talking ATMs deployed for visually impaired persons. Your Bank has also completed certification of RuPay Chip card for international usage, enabling cash withdrawal & balance enquiry for prepaid cards, gift cards & General Purpose Reloadable cards on ATMs, Aadhaar seeding through ATM. For enhanced security as well as implementation of RBI mandates, chip based cards were introduced. multi-factor authentication for card not present transactions implementation of Fraud management Solution in ATMs/ POS in India ATM Transaction receipt printing in Hindi, Regional Language Screen selection for Gujarati, Marathi, Tamil, Malyalam, Telugu, Kannada and Bengali are enabled on ATM. Visa Debit card for UAE, BSP (Bank South Pacific) Interchange Implementation for Fiji, Chip Based Card Implementation in India, Oman and Mauritius,. Your Bank has successfully launched RuPay ATM and RuPay KCC cards for its RRBs also.

SMS Banking

For customers who desire to avail only information based banking services, your Bank has introduced SMS banking for balance enquiry, mini statement, Cheque status from the registered mobile number. This is a very simple and easy to use product that a customer can start using without any registration process.

Contact Centre

Your Bank has implemented Customer Relationship Management as a new initiative to get 3600 view of the customer for providing better services through a contact centre over phone in order to improve their satisfaction and loyalty. Existing customers/Prospective customers may call on Toll Free no. (1800223344 & 1800 5700) wherein following services can be availed of.

• Issuance of a cheque book
• Enquiry about products and services
• Account Enquiry – Balance, Transaction, Amount in Clearing etc.
• Hot-listing of ATM cards
• Stop payment marking / un-marking
• Request for issuance of debit card
• Request for re-generation of debit card PIN
• Support for e-banking users
• Re-generation of mobile banking password
• On-line (paperless) TPIN generation facility
• Other information regarding products and services of your Bank is also provided to prospective customers/ account holders.
• The CRM applications is linked to sales offices like Retail Loan Factories (RLFs), City Sales Offices (CSOs) wherein the leads generated at contact centre on the basis of enquiry about the products by customers are transferred to these offices for further processing.
• Your Bank has also completed a launch of recovery processes through contact centre wherein customers are informed about the EMI and due amounts. This shall facilitate customers to deposit EMI/due amount on demand dates.

Payment Systems

• All branches of your Bank are enabled for interbank remittances through RTGS and NEFT. The RTGS and NEFT have also been interfaced with your Bank’s internet banking portal. The Straight through Processing (STP) of NEFT & RTGS have been implemented for the Bank as well as RRBs. Your Bank has upgraded IT infrastructure and architecture change to support large volume and ISO20022 message format used for NGRTGS. RTGS & NEFT have also been implemented in Uganda.
• Internet Payment Gateway services for debit cards/ credit cards are increasingly offered to merchants and internet shopper as a safe and secure channel for online purchases.
• The SWIFT facility for worldwide inter-bank financial communication is provided at Foreign Exchange Authorized Branches in India as also in 22 overseas territories.
• The Payment Messaging Solution (PMS) is implemented in 22 overseas territories & all authorized branches in India. PMS facilitates validation and formatting of SWIFT messages generated from CBS as per SWIFT standards, and also goes through AML check.
• During the year under review, a grid based Cheque Truncation System (CTS) was implemented in MICR Centres Mumbai and Western Grid of Maharashtra, Gujarat and Madhya Pradesh.
• National Automated Clearing House (NACH) is implemented for both debit and credit transactions.

Other Customer Centric initiatives

• Your Bank has been offering highly customised IT enabled products and services tailored to the specific requirements of valuable clients. Other products and services like RBI Inflation Indexed Bonds, bulk issuance of gift cards, direct dispatch of debit card & PIN mailers to customers, remittances under Money Transfer Service Scheme for exchange house, etc., have been implemented as well.
• Cash Management System is a full-function web enabled cash management solution offered to your Bank’s customers, covering services like Receipt Management (Collections), Payment Management and Invoice Management (Receivable and Payable Management). During the year, your Bank implemented Two Factor Authentication (2FA) for Cash Management System, opening a new channel for customers to manage their funds position quickly with Straight Through Processing (STP).
• The Retail Depository Services are made available to your Bank’s Retail as well as Corporate customers. With a centralized depository application, branches are equipped to provide depository services for both NSDL as well as CDSL. With Online Trading System, your Bank will be able to provide complete suite of online services to the customers for trading in instruments like equities, mutual funds, bonds and initial public offering (IPOs).
• New PA-DSS complaint Debit Card Management System has been implemented to provide comprehensive management and support for your Bank’s Debit Card operations.
• Your Bank has initiated Aadhaar based payment like Direct Benefit Transfer (DBT), Electronic Benefit Transfer (EBT). Direct Beneficiary Transfer under Aadhaar Payment Bridge System (APBS) and wages payment for Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
• Aadhaar Enabled Payment System (AEPS) for transactions initiated from POS terminals based on Aadhaar number in case of account opened under Financial Inclusion
• Your Bank has extended Central Project Scheme Monitoring System (CPSMS) to State Governments for effecting payments of plan funds received directly at the State Treasuries. Printed Payment Advice (PPA) based payments as well as Digital Signature Certificate based payments too have been implemented under CPSMS.
• NPS, NPSLite (a scheme to provide financial security for economically disadvantaged people for protecting their future during old age), MGPSY for NRI have been deployed.
• The IT setup has been developed for account opening process and transactions, both online and offline, to be carried out through Business Correspondent thus enabling Financial Inclusion.
• The Mobile Van Banking is launched in Gujarat, UP & Bihar on a pilot basis as the Bank’s Financial Inclusion initiative.
• To enable your Bank to have its pulse on the market, an online customer survey portal has been developed for getting ongoing feedback from customers. Online portal is made available on Bank’s web site to customers/visitors to log and track the status of their Feedback/ suggestions/complaints.
• Various initiatives like Linking of UID numbers, Account number portability, Capturing KYC related information, Simplified account opening procedures, addition of village codes in core banking system are undertaken during the year.
• Your Bank has also enabled SMS Alerts delivery facility to its customers for all transactions made through alternate delivery channels and for all CBS transactions above threshold limits. SMS alerts to customers are also sent for non-financial events like Account opening, Account Activation, Change in interest rate on loan accounts, Installment due/overdue notice for loan accounts, Cheque Book Dispatch (containing delivery details), Cheque getting rejected, FD Maturity notice, Notice to customers for KYC Compliance, Notice at the time of Aadhaar Linking/de-linking, Notice to Potentially dormant account, Notice at the time of account becoming dormant.

Support Services

• The Integrated Global Treasury Solution has been implemented in UK, UAE, Bahamas, Bahrain, Hongkong, Singapore, Belgium and in India, reducing the cost of operations and better fund management.
• For improving your Bank’s service delivery, the Back Office functions have been centralized at City Back Offices and Regional Back Offices. Your Bank now has 70 City Back Offices and 12 Regional Back Offices. The personalized cheque book issuance has been centralized. Your Bank has also started centralized FCNR operations.
• Your Bank has fully automated its Loan Processing (Retail, Agri and SME) modules for better and quick customer service. Your Bank also provides a single click Online Loan Application feature for Home Loan, Auto Loan and Education Loan.
• Enterprise wide GL Solution has been implemented. This provides variety of inputs to your Bank for strategic decision making in business development and also generates enterprise wide consolidated reports.
• The Centralized Payroll, Salary module, e-TDS module and Leave Module have been implemented for all your Bank’s offices in India.
• The Human Resource Networking for Employees Service has been implemented with the objective of creating a central database of the Bank employees for facilitating decision-making, promotion and selection exercise as also for automating other HR processes.
• Your Bank has also undertaken, as a part of its business strategy, Data Warehouse for providing flexible and interactive source of strategic information, Customer Relationship Management for better customer insight and uniform customer view across channels. It has also facilitated Automated Data Flow to regulator.
• Your Bank has upgraded existing applications like Exchange, e-Business suite with enhanced features, encompassing Customer Relationship Management, HRNes and Enterprise wide GL modules.
• For regulatory compliance, the Anti Money Laundering (AML) has been implemented in India and 22 overseas territories. Your Bank has implemented Risk Management solution. Your Bank has also implemented AML solution in all its sponsored RRBs.
• Various new Regulatory requirements like Aadhaar seeding through different channels like ATM, net banking, SMS, online verification and validation of PAN numbers, de-duplication of customer ids, etc., were undertaken during the year.

Information Security

A robust Information Security Management System was put in place during the year under review to protect the technology against security threat. A Comprehensive Audit by External Agencies is being successfully carried out by your Bank for its Core Banking Solution and all other applications as well as for Data Centre/Disaster Recovery centre Infrastructure. Biometric Authentication is introduced for CBS Login at Branches.

Your Bank has set up a Security Operation Centre (SOC) for enhanced IT security. Your Bank’s Data Centre as well as Disaster Recovery Centre are ISO 27001 certified.

Your Banks has Implemented Fraud Management Solution for Internet Banking, ATM & POS. In order to enhance security and confidence in Internet Banking, your Bank introduced Fraud Management Solution, including two factor authentications in India and seven Overseas territories by enabling ARCOT OTP, PULL OTP and SMS OTP..

Your Bank is regularly conducting VAPT (Vulnerability assessment & Penetration Testing) of external facing applications, e-Banking log monitoring etc.

Your Bank has enabled a Fraud Risk Management system for day-to-day monitoring of suspicious transactions at branches for protecting the interests of customers.

While cyber-attacks have become more unpredictable and electronic payment systems vulnerable to new types of misuse, it is imperative that banks introduce certain minimum checks and balances to minimise the impact of such attacks and to arrest/minimise the damage.

To minimise the damage, your Bank has initiated following additional security measures which will be enabled shortly.

• Your Bank has implemented the RBI mandates as part of Risk and Mitigation measures for card present transactions
• All new debit and credit cards will be issued for domestic usage unless international usage is specifically sought by the customer.
• Your Bank will convert existing MagStrip Cards to EMV Chip card.
• Your Bank will set up PIN enabled POS
• Your Bank will enable additional security as addition of Digital signatures for Corporate Internet Banking.

E-business

Transaction Banking Department has enabled a host of alternate banking channels for improved customer interaction, reduce operational cost and develop new business opportunities. The ATMs, Internet banking, Mobile banking, Debit cards, Prepaid cards, RTGS/NEFT are a few of them. The year has seen significant progress in self service units viz. Bulk/Cash acceptors, Passbook printers, Internet banking kiosks and opening of 45 Baroda Non-Stop 24X7 lobbies.

Given below are the highlights of performance of the various units during the FY14.

ATM deployment & Debit card issuance

New Initiatives/achievement during FY14

• Enriched ATM experience with multilingual screen and 1,200 talking ATMs for visually challenged persons.
• Your Bank provided 85 Bunch Note/Cash Acceptors at high cash accepting centres.
• Your Bank launched Non Personalized Cards for instant issuance to customers.

Baroda Connect (Internet Banking)

New Initiatives during FY14

Your Bank enabled fund transfer facility and purchase of Baroda Gift Card through Net Banking portal.

Baroda M-connect (Mobile Banking)

BARODA RTGS/NEFT

Baroda e-Gateway (Internet Payment Gateway)

Baroda Cash Management

Other initiatives in E-business during FY14

• Installation of 1,200 Self Service Passbook Printers for easy updation of statement of account.
• Installation of 85 Bunch Note Acceptor (BNA) at high cash accepting centres.
• Started issuing KCC Card and Debit Card for RRBs.
• Introduction of EMV Chip Debit Card.
• Implementation of web module for Baroda Cash Management Service to meet Corporate requirement.
• Initiated Mobile Banking Rewards Campaign to increase activation and usage
• Enhanced IVR facility at Contact Centres.
• Implementation of Baroda SMS Banking facility.
• Set up NACH facility for automated clearing.

Initiatives in E-business Planned for FY15

• To increase number of ATMs/Cash Dispensers to 8,000.
• To introduce EMV debit cards of Visa, Master & Rupay for various customer segments.
• To install 1,000 additional Bulk Note Acceptor/Cash Recyclers.
• To start value added services on ATMs like bill payments, card to card fund transfer etc.
• To enable debit card blocking through SMS.
• To enhance features of Internet Banking to enable online account opening and better security.
• To introduce the facility of digital signature in Baroda Connect for large value payment transactions as additional security measure.
• In mobile banking, Aadhar Based Payment System(ABPS) to be introduced in coordination with NPCI.
• To enable Regional Back Offices (RBOs) to register all eligible accounts opened at their end for Mobile Banking.
• To enable additional 100 Self Service Baroda NonStop lobbies to enhance self service foot print and brand visibility.
• To install additional 400 Multi Function Kiosks
• To launch e-Passbook service to customers through Mobile Application.

Human resources - “Creating Competence and Passion for Business Excellence”

The triumph and all round growth of your Bank is an outcome of the synergy of various assets that the Bank possesses. One of the most vital of them being its Human asset – its people, which has enabled the Bank to traverse through an all-encompassing growth trajectory.

Your Bank has a rich reservoir of Human capital comprising of the skill sets and competencies of 46,001 employees who are at all times committed towards augmenting "Stakeholders’ Value through Concern, Care and Competence."

In this journey of excellence undertaken to fulfill greater aspirations and bigger dreams to touch the lives of all the stakeholders, it is actually the people power of your Bank which makes the difference.

Realizing the criticality of this asset for the sustained growth of your Bank on the one hand, and the multiple challenges like the large number of retirements, massive intake of talent, huge training requirements, succession planning and engagement for higher productivity on the other hand, a lot has been done by your Bank in the area of Human Resources in the recent past and more so in the financial year FY14.

Besides excelling in the routine HR activities like recruitments, promotions, deployments, etc, a host of new HR interventions/ reforms have been introduced in your Bank under the gamut of a well-structured and a comprehensive HR transformation project aptly christened as project Sparsh – “human touch for business excellence”.

This is an unparallel HR transformation project in the banking industry sought to construct an integrated framework of the various elements of the Human Resource function in your Bank. In over a span of two and a half years, since the commencement of Project Sparsh in August 2011, several new and path breaking HR initiatives have been launched and a host of other existing policies, schemes, processes have been revamped to make them more broad–based, futuristic, employee friendly and have greater alignment with the Bank’s business.

Some of the key accomplishments worth mentioning in the HR sphere particularly in FY14 are as under:

Strategic Workforce Planning and Recruitment Drive

An optimal manpower mix is a prerequisite for the sustenance and growth of the business. Hence a scientific manpower planning model has been put in place for estimating manpower needs by level, skills and by branch and also for strategic workforce planning for the next few years to feed into various other HR interventions of recruitment planning, career progression, vacancies and postings/deployment.

Your Bank has put in place a clearly defined recruitment policy, which steers the recruitment from different channels, hiring of larger numbers in view of the emerging requirements as projected by the strategic workforce planning and also articulating a clearly-defined employer value proposition with the acronym “F I R S T” as shown below:

An especially designed ‘Career Portal’ has been launched on the Bank’s website which defines this value proposition further with clearly laid out sections related to why your Bank should be the preferred choice for any prospective applicant by projecting the different facets of working at Bank of Baroda. These strategies provide a huge impetus to the “Employer Branding” of your Bank significantly.

For a Smooth and effective integration of the new hires into the Baroda Family, your Bank has also put in place a very well structured and a focused “On-boarding Programme” which not only aims at functional integration of the new recruits in the Bank but also their cultural assimilation into this institution. Going further, your Bank has also launched a focused Mentoring programme “Baroda Sarthy” for the new hires wherein the senior employee - a mentor handholds the new entrant to enable his smooth transition into the corporate world and help him/her adapt to the value system and working of your Bank.

“Baroda Manipal School of Banking”

The Baroda Manipal School of Banking (BMSB) is a unique association of Bank of Baroda and Manipal Global Education to train students for a banking career in Bank of Baroda on a “first-day, first-hour” productive model, and thereby have a ready pool of trained officers. The students undergo a focused one-year programme customized to the Bank’s requirements and this leads to the award of a post-graduate diploma in banking and finance, before they are absorbed in the Bank as probationary officers. The programme works on an inverted model of “Train, Hire and Deploy”

This innovative resourcing channel was initiated during the year FY12 and so far, since its inception, 1,379 students from seven batches have joined the Bank as officers and at present, around 1,068 students are undergoing their training at the BMSB campus at Bangaluru.

Recruitment drive during FY14

Your Bank has been undertaking focused hiring efforts on a sustained basis year on year, to cater to retirements, resignations, sustained business growth and rapid branch expansion etc. Various recruitment exercises were undertaken during the year to address the emerging manpower requirements in your Bank. Recruitment of Specialist officers, Probationary officers and clerical personnel were initiated to meet the needs of your Bank, both in terms of replacements for normal attrition and factoring in the business growth needs. Your Bank recruited 2,685 officers in various Grades / Scales (both Generalists & Specialists), 3,125 Clerks and 439 Subordinate staff, thereby inducting a total of 6,249 new employees in the Bank during the period 2013-2014 The recruitment process is continued in the year 2014-15 also with various recruitment projects undertaken for filling up almost 3,800 posts of officers and 3,800 posts of clerks.

Formulation of Talent Management System

With a view to identify and groom young potential leaders in the Bank so that they can go on to man the critical leadership positions and thereby fill up the foreseen leadership gaps in future, your Bank has taken a big stride of designing and implementing a well orchestrated Talent Management System. This system proactively identifies future potential leaders based on various criteria and also grooms them through a systematic developmental plan for each of the identified future leader.

This is an annual exercise and in FY14, your Bank was able to clearly identify around 20% people in specific scales of Officers viz. in Scales II, III, IV, V and VI as the future leaders.

Framework for Career Progression

Concerted efforts have been taken by your Bank for fostering the career progression of employees primarily to reward them for their efforts and performance and also to motivate them further to climb up the corporate ladder and thereby fulfill both organizational as well as personal aspirations.

Your Bank not only provides opportunities for upward movement in the hierarchy but also ensures horizontal movement of officers across different functions to provide them wider exposure and carve out a definite career path for them.

Akin to recent years, in FY14 also, promotion exercise in all the cadres was conducted and a total of 3,525 employees as shown in the table below were promoted to higher grade/ scale.

Employee engagement and Rewards

To augment the engagement levels in the employees for the higher motivation and productivity, your Bank has recently formulated a policy on “employee engagement”. As part of this policy various initiatives like conduct of satisfaction surveys, workshops for interaction of juniors and seniors etc., are undertaken to improve the employee connect with HR and top management.

To promote a culture of performance and to reward the top performers, your Bank has very recently launched a revised performance linked incentive scheme for its employees.

Implementation of HR Technology

Your Bank has put in place a very comprehensive HR technology platform covering HRM, Training, Payroll & Leave modules christened as the “Human Resources Network for Employee Services (HRNes)”. This technology platform has enabled automation of various HR functionalities and processes. The HR Automation is a key enabler in the implementation and sustenance of various HR initiatives and certain processes have completely been automated thus enhancing the efficiency of the HR operations thereby reducing the turnaround time.

In addition to the above HR interventions, the setup of the HR function in your Bank has also been strengthened further during FY14 and made more efficient by centralization of the routine administrative activities into a HR Back-office.

Special Thrust on Development of SC/ST/Other Backward Communities

Your Bank is committed to the constitutional safeguards and social objectives for development and welfare of persons belonging to SCs, STs and Other Backward Classes in the Indian society. Your Bank is one of those banks in the entire banking industry that has the highest number of employees belonging to SCs and STs, which itself shows the commitment of the Bank towards their development and upliftment. Some of the highlights of your Bank’s efforts for development and welfare of people belonging to SCs and STs are enumerated as under.

Reservation in Employment

Your Bank observes all guidelines stipulated by the Government of India for reservation of posts in employment in All India recruitment and local recruitment. Around 15% of total posts are reserved for SCs and 7.5% posts are reserved for STs in all India recruitments as also for selection to Baroda Manipal School of Banking, it being another channel of resourcing started by the Bank. For other recruitments made on regional basis, appropriate percentages prescribed for various States are being observed. Special efforts are made like offering pre-recruitment orientation training to SC/ ST applicants for recruitment in your Bank. Relaxation in age limit and qualifications are given and interviews of SC/ST candidates are taken on relaxed standards in order to ensure that appointment of candidates to the reserved posts happens. In the interview panel for recruitment, a member belonging to SC/ST is invariably associated. Candidates belonging to SC/ST, who are called for interview, are reimbursed traveling expenses. In addition to providing reservation in employment, your Bank is also providing reservation and other enabling mechanisms in career growth and promotions for SC and ST employees as per the guidelines in vogue. Pre-promotion training is also being given before such candidates’ participation in promotion exercises. Moreover, around 10.0% of the available residential accommodation of your Bank is reserved for SC/ST candidates. The staff strength and representation of SCs and STs as of 31st March 2014 is as under

Reservation Cell

An exclusive Reservation Cell in your Bank has been set up to monitor the reservation and other enabling provisions for SC/ST employees. An executive in the rank of General Manager is appointed as Chief Liaison Officer for SC/ST/PWD & EX-Serviceman employees who ensure compliance of various guidelines pertaining to the SC/ST/PWD & EX-Serviceman employees. A Liaison Officer for SC/ST has been appointed in each Zone of your Bank who takes care of all matters and grievance redressal of SC/ST employees of that Zone.

Meeting with SC/ST Welfare Association

With a view to have direct dialogue and review of reservation and other special provisions for SC and ST, your Bank holds quarterly meetings with the representatives of SC/ST Welfare Association of the Bank at Corporate level. Your Bank’s Chairman and Managing Director and Senior Executives including the Chief Liaison Officer for SC/ST/PWD & Ex-Serviceman participate in the meeting.

Bharat Ratna Dr. Babasaheb Ambedkar Memorial Trust

Your Bank has established the “Bharat Ratna Dr. Babasaheb Ambedkar Memorial Trust” in 1991 for promoting welfare activities for the benefit of SC/ ST employees and their family members. Apart from scholarships to children of employees belonging to SC/ST, this Trust also provides scholarship to needy students belonging to SC/ST community, in general, in major centres of the country.

Visit of National Commission for Scheduled Castes

During the year FY14, the National Commission for Scheduled Castes visited your Bank at Bhubaneshwar on 22nd October, 2013 and at Guwahati on 26th October, 2013. The suggestions and guidance of the Commission are being scrupulously observed by your Bank.

Due to the Bank’s all out efforts in the HR sphere, your Bank is yielding positive recognition in the employers market which can be testified by the fact that Bank of Baroda has become the most preferred PSU Bank for new recruits as per the IBPS Rankings in 2013. We are confident that the HR initiatives will definitely lead to enhanced employee productivity and enable building of a long term and sustainable HR platform by upgrading HR skills, leveraging the full potential of the Bank’s human capital and implementing cutting edge HR policies and processes through use of technology.

A Dedicated Cell for Training & Development

Looking to the importance of Training and Development in the context of large scale recruitment in the Bank combined with the need for grooming of the existing work force in the context of the growing competition, your Bank created a new cell for “Learning” and a new functional position as Chief Learning Officer (CLO) in the Bank during FY14. The CLO is of the level of a General Manager and supports the organization through learning interventions.

The broad mandate of this new vertical is as follows.

• Institutionalizing and enhancing E-learning for effective knowledge management.
• Fostering a learning environment across the organization through innovative interventions.
• Helping customers to understand and use your Bank’s products and services through customer education.
• Aligning training with operational priorities by designing suitable courses through collaboration with other functional heads.
• Steering the Baroda Academy towards the objectives for which it was set up.

Your Bank has 15 training establishments spread all over the country including its apex Staff College at Ahmedabad. The Staff College has successfully completed its glorious journey of 49 years and stepped into the Golden Jubilee year on 21st November, 2013. Golden Jubilee year was launched by your Bank’s Chairman & Managing Director on the same day. A series of learning events took place throughout the year to commemorate the Golden Jubilee year. During the year, a new Training Centre was commissioned at Bangalore.

Faculty members of the Bank have authored good number of research papers that were presented in national and international conferences and subsequently published as well.

The training system in your Bank extensively uses case study methodology and has built up a pool of case studies developed by faculty members to make training highly experiential and simulation-based.

A good number of innovative steps have been taken by the Bank in the domain of training over the years. The training system of your Bank bagged a National Award for Innovative Training Practices in various industries by securing third position, awarded by the Indian Society for Training & Development (ISTD) during the year FY14.

Large Scale Training on Products

Your Bank carried out a campaign called “ASCEND” for large scale product training to impart product knowledge to the front line officers on Retail Liability, Retail Asset and e-Business products. The campaign was run entirely by the trainers and operational bankers, and it covered 5,987 employees amounting to about 95% of the target group.

Similarly two rounds of All India quiz christened “Baroda Gyani” were organized to bring more awareness on product knowledge. More than 4,000 employees from sub-staff to officers participated in this competition upgrading their product knowledge. E-learning modules on retail products were also launched for this purpose.

Adoption of new Training Policy

Your Bank has a Board approved comprehensive training policy. It covers entire spectrum of training activities that include a) laying down streamlined processes, b) a full-fledged training structure, c) capacity building, d) measurement of training efficacy and, e) intervention methodology.

Special Thrust on Development of SC/ST/Other Backward Communities

Your Bank is committed to the constitutional safeguards and social objectives for development and welfare of persons belonging to SCs, STs and other backward classes in the Society. Around 49 programmes covering 1,221 SC and 573 ST employees were conducted during FY14 to prepare them for promotion exercise. Similarly, 9,602 SC employees, 3,795 ST employees and 10,292 OBC employees were imparted training during FY14 in various key banking areas.

Training to Customers: “Customer Connect” Campaign

As part of customer education, the training system ran a campaign during Feb-Mar 2014 to impart training to customers for using net banking and mobile banking services. More than 15,342 customers were trained at various centres and the initiative will continue throughout the calendar year.

Capability Building Initiatives

To build knowledge power of its employees, your Bank has been focusing on comprehensive grooming of the staff in key banking areas like credit, forex, Priority Sector, Retail Banking, CBS, Financial Inclusion, Risk Management etc. Besides, your Bank conducts comprehensive training programme called “On-Boarding Programme” for newly recruited officers and clerks using in-house resources and through a tie-up with reputed external agencies. The Bank conducted more than 2,337 in-house training programs during the year FY14 covering 49,044 participants in addition to the external training of officers and executives at various business schools in India and abroad. Your Bank is at an advanced stage to take the next big step in the area of e-learning to augment its capabilities to reach out to every single employee.

External Training

During FY14, around 988 staff members were nominated to various external training programmes. Your Bank considers External Training an integral part of capacity building, wherein employees at all levels are exposed to such programmes to learn and adopt the best practices existing in the industry.

Some of the noteworthy and dedicated programmes organised during the year FY14 were:

• Top Management Programme for General Managers and Deputy General Managers of your Bank at ISB, Hyderabad from 13th to 18th May 2013.
• Top Management Programme for two batches of newly promoted Assistant General Managers and Chief Managers at International Management Institute (IMI), New Delhi from 13th to 17th May 2013 and from 20th to 24th May 2013.
• A Leadership Development Programme for newly promoted Assistant General Managers of the Bank from 7th to 12th October 2013 at Centre for Organization Development, Hyderabad.
• Integrated Treasury Bourse Programme in association with Trinity Academy, Mumbai from 26th August to 5th September 2013 for treasury officers.
• Talent management training on ‘Communication and Influence’ and ‘People Development and Team Focus’ for the identified officers during Oct-Dec 2013.

• Executive Development Programme on Rational Emotive Behaviour Therapy (REBT) from 5th to 7th December 2013 at University of Mumbai.

• A dedicated Programme for Agriculture Officers of your Bank from 2nd to 7th December 2013 at Manipal Academy of Banking, Bangalore.
• Nearly 3,000 new clerks were on-boarded in tie-up with NIIT-IFBI thus covering all the new clerks who joined the Bank post June, 2013. More than 800 existing clerks were trained under a refreshers’ course “UTKARSH” by IFBI.
• A programme on “Positive Approach to Vigilance Administration for Disciplinary Authorities” on 18th & 19th October 2013 at New Delhi.
• A Faculty Development Programme was conducted from 16th to 21st December 2013 by M/s Fourth Quadrant Training Pvt. Ltd.

Business Process Re-engineering (Project Navnirmaan)

Ever since your Bank changed its brand identity, there has been a tremendous growth in its brand recall value, which in turn gave rise to enhanced expectations from all stakeholders. The expectations were further strengthened by your Bank’s tag line as India’s International Bank and its mission to be a ‘National Bank of International Standards’. However, your Bank has responded well to these expectations by restructuring its products and processes in an optimum fashion.

Actually, the process of change began with the setting up of Retail Loan Factories in 2007. Subsequently, your Bank commissioned a comprehensive change programme in June 2009 that sought to rebuild the Bank for the future under the name Project Navnirmaan.

This project touched all aspects of your Bank‘s processes, structures and systems with an objective to simplify processes, improve branch productivity and provide bestin- class service to its customers.

The change programme has been successful and this initiative has been one of the major factors to help your Bank bag a number of awards and accolades establishing itself truly as India’s International Bank.

The major achievements under the project Navnirmaan during FY14 are enumerated as under.

• Baroda-Next Branch : Around 1,433 metro and urban branches have been rolled out as Baroda Next branches in your Bank until end of FY14.
• Branch Front-end Automation: The Queue Management System (QMS), Cheque Deposit Machines and Personalized Pass Book Printers were installed in 9,840 and 1,200 branches, respectively.
• City Back Office (CBO) : Clearing operations were centralized for all branches (linked to CBO). At present, there are 85 CBOs operational throughout the country.
• Regional Back Office (RBO) : Two RBOs at Bareilly and Ahmedabad were added during the year taking the total strength to 12. Altogether 3,653 branches are linked for CASA opening and 4,263 branches linked for PCB (Personalized Cheque Book) issuance.
• Credit centralization Pilot (RLF/ SMELF) : The Retail and SME credit centralization pilot of your Bank initiated in FY14 is under progress at the Loan Factories in Baroda.
• Sustainability of NAVNIRMAAN initiatives/impact: Process Compliance Audit (PCA) - A certification procedure for Baroda Next branches was introduced through which process compliance/adherence by branches are being evaluated by your Bank’s inspecting officers. Till date, 907 branches have been covered under the PCA.
• Train the Trainers Programme: A two days’ programme was held at Staff College Ahmadabad from 29th to 30th June, 2013– in connection with holding workshops at all zones for branch heads, sales heads, relationship managers, customers service and branch hosts of Baroda Next branches.
• Change Leader–cum-RBDM Conclave: A two days’ conclave was held at Staff College, Ahmadabad during 12-13 August, 2013.
• Contact Centre:: Your bank has two Contact Centres at Lucknow and Vadodara. In addition to the existing basket of service, Mobile Banking assistance service has been added during the year. The service timing has been increased to 6am to 10pm (from earlier 8am to 8pm) for better customer convenience.
• E- Lobby: Your Bank has started 45 independent E-Lobbies in different zones. It offers the following six services- Cash Dispenser (ATM), Bunch Note Acceptor (BNA), Self Service Automatic Passbook Printing Kiosk, Cheque Deposit Machine (CDM), Internet Banking Kiosk and Phone Banking facility.
• Innovation Committee: With a view to encourage a culture of innovation across the organization, your Bank set up an Innovation Committee in March 2014 with the following objectives - developing new products and services, innovation in internal processes that add value to customers and the Bank, innovation in service delivery that delights the customers.

Marketing

During FY14, your Bank continued to promote its brand and various products and services through various marketing initiatives. This involved effective utilization of different media vehicles such as Print, Electronic (TV, Radio, Online etc.) and OOH, apart from supporting the “Below-the-Line” (BTL) activities undertaken by the Zones and Regions.

The highlights of various marketing / communication activities undertaken during FY14 are given below:

Your Bank, encouraged from the success of its initiative of FY13 i.e. BRAND Engagement Program, launched the next edition of ‘Bank of Baroda Canvas Competition’ during January 2014 to continue and harness the potential of longterm relationship formed with the younger audience as well as their influencers i.e. parents and teachers. This year again the momentum was to build long-term relationship with both existing and new educational institutions and as such, students across the country were invited to submit their entries through their respective schools on a predetermined topic and winning entries were selected on National/Regional levels by a select panel of judges. The brand-association formed with the target audience through involvement of the Bank’s mascot i.e. ‘Stickman” increased significantly this year and participants were invited to name the stickman. A judicious mix of on-ground activities at the Zonal and Regional levels were used in the campaign to maximize the number of entries in the said competition.

In addition to the above initiative, your Bank undertook various Product Promotion Campaigns to promote its products and services amongst target audience through advertising across different geographies. Besides focusing on providing information on various products and services, particularly Saving Deposits, Current Deposits, Home Loans, Car Loans and SME Loans, new product-lines like Consumer Durable loans and Alternate Delivery Channels (ADCs) were aggressively promoted. Furthermore, special customer segments were also targeted viz; Special Campaigns for Doctors and NRIs etc. through judicious use of various media vehicles on Pan India basis. Information relating to expansion of branch network, both domestic and overseas, was also given due publicity largely through print medium which helped enhancing your Bank’s brand image and visibility.

Your Bank also participated in various events such as Pravasi Bhartiya Diwas 2014, FICCI-IBA Banking Conference 2013, World Ranking Snooker Tournament–Indian Leg, India– Australia Cricket Series 2013, MINT Annual Banking Conclave, BKC Financial Institutions Employees Marathon and Standard Chartered Mumbai Marathon 2014, among many other events to continue the brand association with the customers and stakeholders thereby increasing the recall value.

During FY14, as part of its public relations task, your Bank had wide media coverage of its activities across the country, which helped in enhancing your Bank’s brand image.

Awards and Industry Recognition for Bank of Baroda

Your Bank won several awards and recognitions during FY14 from the reputed media houses and other prestigious organizations on various business and financial parameters for its steady and all round performance, superior management thereby contributing to the growth of the economy.

Given below are some select awards won by your Bank during the year FY14:

• Your Bank’s Chairman & Managing Director Shri S S Mundra, ranked 41st in the list of Top 100 India Inc’s Most Powerful CEOs as per CD-ET (Corporate Dossier- Economic Times) Inc’s Survey 2013, published in Economic Times issue dated 12.07.2013. He was also ranked 3rd amongst CEOs of Public Sector Banks as per the survey.
• Your Bank ranked 20th amongst ‘Best Indian Brands’ – Brand Equity Economic Times Survey. This was published in Economic Times issue dated 31st July 2013.
• Your Bank won a Special Award for Best IT Team among Public Sector Banks at IDRBT Banking Technology Excellence Awards 2012-13.
• Your Bank was recognized as the Best Public Sector Bank under the category ‘Global Business Development’ by Dun & Bradstreet – Polaris Financial Technology Banking Awards 2013.

• The Reserve Bank Rajbhasha Competition, 28.08.2013, Mumbai gave your Bank the following prizes.

  • First Prize in Region ‘C’
  • Second Prize in Region ‘A’ & ‘B’
  • Third Prize for ‘AKSHAYYAM’ in Hindi House – Bilingual House Journal Competition
  • Third Prize for ‘BOBMAITRI’ in – Bilingual House Journal Competition
• The Sunday Standard Best Bankers’ Awards – Best Banker – HR constituted by The New Indian Express Group, was conferred on Shri S S Mundra, Chairman & Managing Director of your Bank during FY14.
• Your Bank received an award in Indira Gandhi Rajbhasha Shield Competition, 14.09.2013, New Delhi.
• First Prize for the Year 2011-12 was given for your Bank’s exemplary performance in Official Language Implementation.
• In the ASSOCHAM 9th Annual Banking Summit–cum- Social Banking Excellence Awards 2013, 16.09.2013, New Delhi, your Bank was the Winner in Public Sector Banks Category in recognition of its distinguished and commendable work done in the field of ‘Social Banking’.
• Your Bank improved its ranking from 66th to 52nd in The Asian Banker - Region’s Largest Bank category, in September 2013 special issue 122 of The Asian Banker.

• Your Bank won the following awards during the 53rd Annual Awards Nite of the Association of Business Communications of India (ABCI), 18.10.2013, Hotel Taj, Colaba, Mumbai.

  • Special Column (English) – BronzeTrophy for BOBMAITRI
  • Special Column (Language) – Silver Trophy for Apni Baat – Akshayyam
  • Headlines – Bronze Trophy for Corporate Ad (Stamp Creative)
• Your Bank was ranked No.3 in THEBWReal500 – India’s 50 Biggest Financial Companies published in Business World Issue dated 04.11.2013.
• Your Bank was ranked No.50 in BT500 India’s Most Valuable Companies published in Business Today November 10 2013 issue.
• Your Bank was rated as the 3rd Fastest Growing Large Bank and 4th ‘Best Bank – in Large Bank Category’ in a Survey of India’s Best Banks by - BW-PwC Survey. This Survey was published in Business World issue dated 30th December 2013.
• Your Bank was ranked 22nd in Brand Equity Top Service Brands published in Brand Equity Issue dated 18.12.2013, retaining its brand ranking position as that of last year.
• Your Bank was ranked 28th in Fortune India 500 lists published in Fortune India Magazine Special issue December 2013.
• Your Bank received the MSME Banking Excellence Award – 2013 as the Best Bank in MSME by Chamber of Indian Micro Small and Medium Enterprises on 09.01.2014 at New Delhi.
• Your Bank was ranked 27th in India’s Biggest 500 Companies – Top 500 company listing 2013 published in ET 500 Magazine issue January 2014.
• Your Bank was awarded “Best Bank - Public Sector” by ABP News in Banking, Financial Services & Insurance Awards on 14.02.2014 in Mumbai.
• Your Bank was awarded for “Excellence in Banking (PSU)” by My FM Stars of the Industry award on 14.02.2014 in Mumbai.
• Your Bank was awarded for “Excellence in Home Loan Banking” by My FM Stars of the Industry award on 14.02.2014 in Mumbai.
• Your Bank received the ‘Global Excellence & Leadership Award’ in the category of ’50 most talented CSR Professionals of India’ by World CSR Congress in Mumbai on 18/02/2014.
• Your Bank was ranked 53rd on Net Revenue and 45th on Market Capitalization in FE 500 list published in Financial Express Magazine February 2014 issue.
• Your Bank was ranked No.1 in the Public Sector Bank Category in FE-EY Best Banks Survey 2012-13 published in The Financial Express Magazine March 2014 issue.
• Your Bank’s Eastern UP Zone, Lucknow was awarded the 1st Prize by Government Of India for Implementation of Official Language (Hindi) in Banks for the year 2012- 13 by Official Language Dept, Ministry of Home Affairs, Government of India at a function held in Chandigarh.

Premises Re-Engineering and Ambience Enhancement

The major achievements of your Bank in the area of “Premises re-engineering and ambience enhancement” during the year FY14 are as given below.

• Construction of office building cum currency chest at Varanasi was completed. This building is equipped with ultra modern gadgets and systems with energy efficient equipments and rain water harvesting system. The eco-friendly materials were used in its construction. Your Bank’s presence by this building in Varanasi is admired by one and all. Now, it has become one of the landmark buildings of the city.
• As per the directives from Ministry of Finance, your Bank linked its corporate office with all zonal and regional offices through State-of-the Art Video Conferencing (VC) systems based on MPLS Connectivity. Interaction of functional heads through VC has made the decision making process more efficient, quick and cost effective.
• During FY14, your Bank adopted all technology centric initiatives in the form of e-tendering, e-procurement etc. and this was implemented in a phased manner.
• You Bank ensured that all payments to vendors are made through RTGS/NEFT.
• In tune with your Bank’s policy to have its administrative offices in owned premises, your Bank purchased land at Bangalore (Karnataka), Hyderabad (AP), Faizabad (UP) Indore (MP), Udaipur (Rajasthan), Dehradun (Uttrakhand), Jaipur (Rajasthan) and New Raipur (Chhatisgarh), Bareilly (UP) and Ernakulam (Kerala) for construction of commercial /residential buildings.
• Looking to the ever increasing rentals, area optimisation of every corner of the available premises is being ensured by your Bank. Layouts are being revisited while renovation and furnishing of branches and offices is being done by introducing eco-friendly and ergonomically designed sleek furniture items. The area norms for acquisition of the premises have also been reviewed and implemented.
• To have uniformity in systems and procedures pan- India, Premises Policy Guidelines, Constructions Manual, Refurbishment Manual were designed and formulated. Agencies have been identified for quick procurement of the furniture items and to have similar and identical design to get aesthetically pleasant look and vibrant indoor environment.

Projects implemented during FY14

• The construction of office building cum currency chest at Varanasi.
• Construction of residential complex at Janakpuri, New Delhi.
• The construction of multi-storey integrated office building at Jaipur.
• Construction of BSVS at Ajmer, Dunga rpur, Banswada and Pratapgarh.
• The setting-up of e-lobbies at 45 various locations in the country.
• Your Bank purchased residential flats at various places for newly transfered officers.

Projects under implementation

• Construction of BSVS at Alirajpur, Jaipur, Surat, Bharuch and Jhabua.
• Construction of administrative and residential buildings at New Raipur.
• Construction of residential cum commercial complex at Indore (MP).
• Construction of own building for Disaster Recovery Site at Hyderabad.
• Renovation of Bank of Baroda Institute of Information Technology at Gandhinagar (Gujarat).
• Construction of Regional Office Building at Faizabad.

• Renovation of residential building and flats at Nehru Enclave, Lucknow.

Future Plans for Estate Management

• To facelift the Bank’s Building at Parliament Street, New Delhi.
• To redevelop the Bhandup Staff Quarters building, Mumbai, thereby to construct about 138 residential flats for transfered officers/executives.
• The redevelopment of Jogeshwari Staff Quarters, Mumbai, to construct a building for residential and commercial use.
• To construct the training centre at Bangalore.
• Construction of BSVS at various centres across India as per the directives from the Government of India.
• To set up the Baroda Academy (i.e., training Centre) at Gandhinagar (Ahmedabad), Bangalore, Greater Noida and Bhubhneshwar.

Brick & Mortar Branch Expansion

Given below is the information on your Bank’s brick and mortar distribution channels as on 31st March, 2014, which is observed to be closer to common customers as compared to the E-Banking channels that are generally preferred by the tech savvy urban masses.

Domestic Subsidiaries and Associates

The performance of your Bank’s Subsidiaries, Joint Ventures and Associates was quite satisfactory during FY14.

BOBCARDS Ltd. turned around during FY11 due to the recovery in NPA accounts. Subsequently, it posted profits during FY12 and FY13. During FY14, the company focused on all qualitative aspects of business development, which resulted in better profitability, quality card base and ME base. The Company introduced a range of Titanium Cards, Signature Cards, Assure Cards, Corporate Platinum Cards and Bobcards Elite with premium features like added privileges and offers. Special schemes for corporate and HNI customers were also launched during the year. The Company has drawn up aggressive plans for the enlargement of Card and Merchant Base for the coming year.

BOB Capital Markets Ltd. was professionally strengthened during the year by deputing a team of Project Finance Department and embarked upon undertaking technoeconomic viability (TEV) studies, debt restructuring and corporate finance services on a large scale for various customers. Throughout the year, the focus remained on investment advisory services, debt and equity syndication and capital market activities. The Company commenced institutional broking business and also launched an Online Institutional Trading platform from October 2009. The On-Line Retail Trading platform, which was commercially launched on July 20, 2012 was extensively modified to make it much simpler and easier to use by customers to have the benefit of user-friendly retail trading platform. The company, functioning in a very competitive market, is ever alert to opportunities in the market and is poised to grow bigger in the coming years.

The Nainital Bank Ltd. was promoted by Late Bharat Ratna Pandit Govind Vallabh Pant and others and became Associate Bank of Bank of Baroda in the year 1973. Today, the shareholding of Bank of Baroda in Nainital Bank Ltd. is 98.57% and is a subsidiary of the Bank. The State of Uttarakhand, vide its communiqué dated August 3, 2012, has notified that The Nainital Bank Limited be treated at par with other PSU Banks. The Bank has initiated branch expansion initiatives and has already established a Regional Office at Dehradun and has aggressive plans to ramp up its scale of operations. The Bank has launched e-stamping facility in 15 branches and has initiated several new IT initiatives e.g Mobile banking & e-banking etc. The Bank also took various initiatives to increase its retail segment particularly in housing loan & consumer loan to high income salaried employees of Government Departments & PSU as well as professionals.

Baroda Pioneer Asset Management Company Ltd. a joint venture with Pioneer Global Asset Management SpA, is in its sixth year of operation. During the year under review, the Company was able to strengthen its AUM (Asset under Management) significantly which rose by 75.0% on year on year basis as of March’14 and was able to add one lakh folios despite weak sentiments prevailing in both debt and equity markets. The key to this growth was strong focus on the institutional segment which helped the Company to grow its debts and money market products coupled with focus on Systematic Investment Plans (SIPs) for retail investors. The Company has increased the number of investor servicing points from 77 to 203 during the year. There was a substantial growth in Company’s average assets under management (AAUM) during the year which has placed it among the top 20 mutual funds in India and is ranked 19th for the month of March, 2014. The Company’s (AAUM) growth was robust on year on year basis and was at 11% whereas industry growth was at 10.0%, as per the AMFI (Association of Mutual Funds of India) website. With equity markets remaining volatile, SIPs continue to be one of the best ways for the Company to channelize customers’ savings into the equity market.

IndiaFirst Life Insurance Company Ltd., a joint venture company with Legal & General group, commenced its business operations on 16th November 2009 and has received an overwhelming response for its products across the country. The Company has won Model Insurer Award (Asia) for the three successive years. IndiaFirst garnered new business registering a year on year growth of 67.0%. Its industry-wide new business ranking improved from 9th position last year to 7th position in the current year (Feb ’14). Increase in the new business (NB) premium has improved the market share from 3.0% last year to 5.0% current year (Feb ’14). Number of customers grew by 46.0% year on year on account of new distribution tie-ups which include RRBs/ NBFCs/Brokers through Alternate Channel Distribution. Renewal collection grew by 23.0% year on year leading to increase in premium income for the Company and subsequent increase in the policy and premium persistence. The Company’s total revenue increased by 46.0% (y-o-y). Company’s major initiative with the Bank includes launch of premium option through mobile banking for Bank of Baroda customers and financial inclusion branch module.

India Infradebt Limited is a joint venture company with ICICI Bank Limited, ICICI Home Finance Company Limited, Citicorp Finance (India) Limited and Life Insurance Corporation of India. The Company was incorporated on October 31, 2012 in Mumbai and has been issued registration certificate No.N-13.02039 dated 08.02.2013 by the Reserve Bank of India to operate as an Infrastructure Debt Fund – Non Banking Financial Company (IDF-NBFC). The Company’s principal activity is to re-finance part of the debt liabilities of the Project Companies.

India Infradebt Limited (Infradebt) is India’s first Infrastructure Debt Fund structured as Non Banking Financial Company (IDF-NBFC). Infradebt closely worked with National Highways Authority of India, Ministry of Finance (MoF) and Ministry of Road Transport & Highways towards the successful implementation of IDF framework.

During the year, it became the first IDF-NBFC to be rated “AAA” by CRISIL in July 2013 for its proposed debenture issue. Subsequently, in December 2013, ICRA also assigned a rating of AAA to the debenture issue programme of Infradebt consequent to the efforts of Infradebt in convincing various authorities.

Infradebt is primarily focusing on sectors like roads and ports. During the year, the Board Credit & Risk Committee has approved provision of financial assistance to a few proposals in the roads sector, in addition to the sanction provided to HEL (Himalayan Expressway Ltd.). Furthermore, Infradebt would constantly keep identifying additional projects for takeout financing and envisages closing additional transactions over the next few months.

Baroda Pioneer Trustee Company Pvt. Ltd. Baroda Pioneer Trustee Company Pvt. Ltd. is the trustee to Baroda Pioneer Mutual Fund. As a trustee, the Company ensures that the transactions entered into by Baroda Pioneer Asset Management Company Limited are in accordance with the SEBI (Mutual Funds) Regulations, 1996 and also reviews the activities carried on by the AMC.

(Rs lakh)

Implementation of Official Language (OL) Policy

During the period under review, your Bank made noteworthy progress regarding implementation of Official Language Policy of Government of India. Besides compliance of various statutory requirements of Official Language Act and Rules, your Bank took the initiative of promoting and utilizing Hindi as a tool for establishing better connect with customers and ensuring them the best possible service.

Your Bank prepared a well-structured annual action plan for the achievement of various targets set by the Government of India under its Annual Implementation Programme 2013-14 and the assurances given to the Committee of Parliament on Official Language during its visits to various offices/ branches of the Bank. Through continuous monitoring and regular efforts at various levels, your Bank could achieve all the major targets of the Programme and fulfilled all the assurances given to the Committee of Parliament on Official Language.

The Meetings of Central Official Language Implementation Committee, presided over by Chairman and Managing Director of the Bank, were organized regularly on quarterly basis. Under the guidance received from the Committee, several new initiatives were taken during the year FY14. Your Bank took a major initiative of automating the Quarterly Hindi Progress report submission system in the Bank. The Bank implemented ‘Pragati online package’ across the Bank. The package was made available on the Bank’s wide area network. All the operating units, administrative offices were provided user ID and passwords for submitting Rajbhasha Reports. Your Bank started sending systemsgenerated letters pertaining to opening of accounts in bilingual (Hindi-English) format through its Regional Back Offices. Through this package, every month lakhs of letters were generated in bi-lingual form which helped the Bank in meeting to a great extent its targets set under the Official Language programme. Your Bank brought more branches under the coverage of an IT programme used to generate and print pass-books and account statements in Hindi at the branches situated in linguistic regions A and B. For the convenience of customers, the facility of getting transaction slips in Hindi from ATMs was expanded further and now majority of your Bank’s ATMs are covered under it. Your Bank introduced display of screen in additional four Indian Languages i.e Telugu, Tamil, Malyalam and Kannada during the year. Your Bank also prepared an Inward- Outward package viz. Document Management System for maintaining records of inward/outward letters as per the linguistic region-wise reporting requirements of its OL policy.

To increase financial literacy amongst masses, your Bank prepared cartoon booklets, animation films in Hindi and also in some regional languages on developing the habit of saving, features of Kisan Credit Card and on the need of timely repayment of loans. These cartoon booklets and animation films were christened as “Chhoti Bachat badi Khushhali”, “ Aam ke aam guthliyon ke daam” and “ Samay Par Karj Ka Bhugtan, Jindagi Bane Aasaan” in their Hindi edition. Marathi, Gujarati, Bangla, Punjabi editions of these booklets/films were also released. These Booklets/animation films were sent to Regional Offices/ Zonal Offices of the Bank for their effective utililization.

Your Bank has been pioneer in spreading and promoting the use of Hindi through the forum of Nagar Rajbhasha Samitis. During the year under review, your Bank, with the approval of Home Ministry, Government of India constituted four new Nagar Rajbhasha Samitis. These committees are functioning at Jodhpur, Rajkot, Surat and Bareilly under the convenorship of your Bank. Nagar Rajbhasha Samiti, Baroda and Jaipur are the oldest TOLICs (i.e., Town Official Language Implementation Committees) working under your Bank’s convenorship.

The Third Sub-Committee of parliament on official language visited your Bank’s branches/offices at Chitrakoot and Anand. The Committee also reviewed efforts of your Bank’s Corporate Office in its visit to Mumbai. The Committee was full of praise of the efforts put in by your Bank for promotion of the use of Hindi language.

Your Bank’s efforts were well recognised by Government of India and Reserve Bank of India also. Government of India awarded your Bank with the 1st Prize in the Indira Gandhi Rajbhasha Shield Competition consecutively for the second year. Your Bank’s Chairman and Managing Director (CMD) received this award from Honorable President of India at a function held at Vigyan Bhawan, New Delhi on Hindi Diwas 2013. Further, your Bank was awarded first prize for ‘ C’ Region and second prizes for Region ‘A’ and ‘B’ by Reserve Bank of India (RBI) under the RBI Rajbhasha Shield Competition. The Bank’s In-House Magazine ‘BOBMAITRI’ and Hindi Magazine ‘Akshayyam’ were also awarded with the third prize by the RBI. Your Bank’s CMD received these awards from the Governor of RBI. These magazines also won two awards from Association of Business Communicators of India.

Your Bank continued with its flagship scheme “Medhavi Vidyarthi Samman Yojana” for popularising Hindi amongst the students’ community. Under this scheme, cash prizes and commendation certificates signed by your Bank’s CMD are given to those students who have scored highest marks in M.A.(Hindi). This scheme, at present, is applicable in 64 universities of the country.

Your Bank has published three books in Hindi during the year viz.”Proudyogiki aur Grahak Seva”, “Thodi Si Dhoop” and “Maharaja Sayaji Rao Gaekwad III”, for providing qualitative reading material in the Hindi language.

Board of Directors

Shri Bhuwanchandra B. Joshi appointed as a Whole Time Director (designated as Executive Director) w.e.f. 05.08.2013 by the Central Government u/s 9 (3) (a) of The Banking Companies (Acquisition and Transfer of Undertakings) Act,1970, to hold office up to 31.12.2016 i.e. the date of his superannuation or until further orders, whichever is earlier.

Dr. K. P. Krishnan, IAS, nominated as a non executive Director, representing Government of India, w.e.f. 19-02- 2014, vice Shri Alok Nigam, IAS.

Shri Sudhir Kumar Jain appointed as a Whole Time Director (designated as Executive Director) ceased to be a Director with effect from 08.07.2013 on his elevation as Chairman and Managing Director of Syndicate Bank.

Shri Ajay Mathur, a part time non- official Director/Non executive director, ceased to be a Director with effect from 04.05.2013 on completion of his term.

Shri Satya Dev Tripathi, a part time non- official Director/ non executive director ceased to be a Director with effect from 30.08.2013 on completion of his term.

Shri V.B. Chavan, a part time non- official Director / Non executive director ceased to be a Director with effect from 31.01.2014 on attaining the age of superannuation.

Shri Alok Nigam, IAS, a part time non- official Director/ Non executive director ceased to be a Director with effect from 18.02.2014 on the nomination of Dr. K.P. Krishnan, IAS, in his place.

Directors’ Responsibility Statement

The Directors confirm that in the preparation of the annual accounts for the year ended March 31, 2014:

• The applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
• The accounting policies framed in accordance with the guidelines of the Reserve Bank of India, were consistently applied.
• Reasonable and prudent judgment and estimates were made so as to give true and fair view of the state of affairs of your Bank at the end of financial year and of the profit of your Bank for the year ended on March 31, 2014;
• Proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of the applicable laws governing banks in India; and
• The accounts have been prepared on a going concern basis.

Acknowledgement

The Directors express their sincere thanks to the Government of India, Reserve Bank of India, Securities and Exchange Board of India, other regulatory authorities, various financial institutions, banks and correspondents in India and abroad for their valuable guidance and support.

The Directors acknowledge with appreciation the assistance and cooperation extended by all stakeholders of your Bank like customers, shareholders and well wishers in India and abroad.

The Directors place on record deep appreciation for the hard work and dedication of the members of your Bank’s staff at different levels, which enabled your Bank to record high quality, consistent growth year after year despite economic challenges and consolidate its position as one of the premier banks in the country.

For and on behalf of the Board of Directors,

S. S. Mundra Chairman & Managing Director