DIRECTORS' REPORT To the Members Your Directors are immensely pleased to present the 97th Annual Report together with the Audited Statement of Accounts for the year ended 31st March 2016 and the Auditors' Report in the Bank's Centenary Year. Performance Highlights During the year under report your Bank has been able to achieve significant growth in all areas of operation. Performance highlights for FY 16 in the key areas of its operation are as under: The total business of the Bank crossed Rs. 89555 cr as on 31st March 2016, registering an absolute growth of Rs. 8174 cr at a growth rate of 10.04%, over March 2015 level of Rs. 81381 cr. Aggregate business was driven by 12.06% growth in gross deposits and 7.59% growth in gross advances. Deposits Total deposits increased by 12.06% from Rs. 44690.27 cr in FY15 to Rs. 50078.90 cr in FY 16. Savings bank deposits registered a good growth of 21.12%, an increase from Rs. 6314 cr to Rs. 7648 cr and demand deposits grew 14.14% from Rs. 3528 cr to Rs. 4027 cr. CASA deposits recorded a growth rate of 18.62% to reach Rs.11675 cr from Rs. 9842 cr. Term deposits grew by 10.20% from Rs. 34848 cr to Rs. 38404 cr. Advances Aggregate advances grew from Rs. 36690.77 cr as on 31st March 2015 to Rs. 39475.70 cr as on 31st March, 2016, an increase of 7.59%. Priority sector advances of the Bank were at Rs. 17082 cr as at the end of the fiscal under report. Priority sector lending constituted 46.06% of the Adjusted Net Bank Credit (ANBC) as against the RBI stipulation of 40%. As against the requirement of 18%, lending to agriculture were at Rs. 7867 cr constituting 21.21% of the ANBC. Bank's advances to micro enterprises and weaker sections were at 7.01% and 11% respectively. The Bank continues to comply with the regulatory guidelines under priority sector, agricultural lending, micro enterprises and weaker section advances. Investments The investment portfolio of the Bank registered a growth of 6.81% to reach Rs.13281.40 cr from Rs.12435.18 cr in the previous fiscal. The investment portfolio composition is consistent with the corporate requirement, risk perception and investment policy of the Bank. Income earned on investments during FY 16 was at Rs. 1095.78 cr, a dip of 5.39% from the previous fiscal FY15 earnings of Rs.1158.17 cr. Profit on sale of investments was Rs. 94.41 cr at the end of fiscal 2015-16 as against Rs. 71.03 cr registered during the previous fiscal 2014-15, showing a quantum growth of 32.92%. Liquidity position was comfortable throughout the fiscal 2015-16. Income The gross interest income component grew by 0.88% y-o-y from Rs. 5395.88 cr in FY 15 to Rs. 5443.40 cr in FY16. However, the Net Interest Income grew by 21.52%, y-o-y from Rs.1465.91 cr to Rs.1781.37 cr. Non-interest income increased to Rs. 706.81 cr from Rs.580.84 cr, a growth of 21.69%. The yield on advances decreased from 12.14% to 11.67% and yield on investments decreased marginally from 7.50% to 7.49%. Expenditure The interest expenditure fell from Rs. 3929.97 cr to Rs. 3662.03 cr showing a decline of 6.82% (Rs. 267.94 cr). Operating expenses increased from Rs.1103.46 cr to Rs.1252.76 cr, an increase of 13.53% (Rs.149.30 cr). Cost of deposits decreased from 7.96% to 7.40%. The reduction in interest expenditure helped Net Interest Margin increase from 2.91% in FY 15 to 3.43% in FY 16. During the fiscal year the spread on funds increased from 2.27% to 2.71%. Profit Your Bank earned an operating profit of Rs. 1235.42 cr for the year 2015-16 as against Rs. 943.29 cr registered in the previous fiscal 2014-15. The operating profit posted a high growth of 30.97% on y-o-y basis. During the year ended March 31, 2016, the net profit of the Bank increased by 22.26% to Rs. 567.63 cr as against Rs. 464.28 cr posted in the previous fiscal 2014-15. The net profit was up by Rs.103.35 cr during FY 16. Appropriations The net profit of Rs. 567.63 cr which along with a sum of Rs.1.49 cr brought forward from the previous year aggregating Rs. 569.12 cr is appropriated as under: There are no material changes affecting the financial position of the Bank which have occurred between the end of the financial year of the Bank to which the financial statements relate to and the date of the report. There are no material orders passed by the regulators or courts or tribunals impacting the going concern status and the Bank's operations in future. Asset Quality During the fiscal 2015-16, your Bank consolidated its credit processing through hub system viz; Central Loan Processing Cells which was implemented a few years back. The co-ordinated efforts of Credit Monitoring Group and the Stressed Assets Management Department at the Central Office and the recovery teams at Divisional Offices ensure that fresh slippages were reduced to a large extent. Recovery was given major thrust. The strategy consists of (a) preventive actions (b) Recovery & Upgradation (c) Resolution & settlement and (d) Sale to Asset Reconstruction Companies (ARCs). The provisions under SARFAESI Act, 2002 have been effectively leveraged to ensure further improvements in recovery performance. The bank has vigorously pursued special one time settlement for small accounts which has also helped in recovering NPAs. Lok Adalats conducted in various Divisions were also utilised to reduce NPAs considerably. Mega auction conducted during the last fiscal resulted in big success. The Bank also sold many large, consortium based borrowal accounts to ARCs which would involve complex processes and would have taken long time for meaningful recoveries. The Gross NPA of the Bank declined to Rs. 511.18 cr as on 31.03.2016 from Rs. 677.78 cr as at the end of the previous financial year 31.03.2015. In terms of percentage, Gross NPAs came down to 1.30% as on March 2016 from 1.85% in the previous fiscal. The Net NPA of the Bank declined from Rs. 280.97 cr as at the end of FY 15 to Rs. 216.17 cr as at the end of the FY 16. The Net NPA ratio of the Bank against the Net Advances decreased from 0.78% as at the end of the previous fiscal 31.03.2015 to 0.55% as at the end of the fiscal under report. The Provision Coverage Ratio (PCR) stood at 82.46% as at the end of the fiscal 31.03.2016 as against 75.20% maintained at the end of the previous fiscal ended on 31.03.2015. The Bank has been maintaining significantly higher PCR over many years now. Capital Funds and Capital Adequacy Ratio The paid up share capital of the Bank as on 31.03.2016 was at Rs.121.86 cr comprising of 12,18,64,454 Equity shares of Rs.10/- each fully paid up. During the year under report 2,34,845 equity shares were allotted on 29.04.2015 consequent to the exercise of ESOS by the employees granted options. The Net owned funds of the Bank increased from Rs.4246.03 cr to Rs. 4572.95 cr, a rise of Rs. 326.92 cr registering a growth rate of 7.70%. Capital adequacy ratio stood at 12.17% as per BASEL III norms (12.26% under BASEL II). The bank's capital adequacy ratio is well above the statutory limit of 9.625% prescribed by the Reserve Bank of India. The market capitalisation of the Bank's shares as on 31.03.2016 was Rs. 5323 Cr. Dividend The bank has an uninterrupted track record of profit and dividend payment since its inception, a century ago. Your Bank is pleased to inform that for the first time the Board of Directors has declared an interim dividend of Rs.10/- per share (100%) for this fiscal 2015-16. The interim dividend was declared on 14.03.2016 and already paid during March 2016. The Board of Directors have pleasure in recommending a final dividend of Rs. 4/- per share for the fiscal under report. The final dividend, on approval by the shareholders in the 97th AGM will take the total dividend for the year 2015-16 to Rs.14/-per share (previous year Rs.13/-per share). The total dividend payment works out to Rs.170.61 cr excluding tax. The dividend pay out ratio works out to 30.06% excluding dividend tax. Earnings per share/Book Value The earnings per share (Basic) and the book value per share as on 31.03.2016 were at Rs. 46.59 and Rs. 375.25 respectively. Foreign Exchange Transactions The merchant turnover of the Bank grew by 12% to reach Rs.20642 cr in FY16 as against Rs.18493 cr in FY 15. Export credit stood at Rs.1286 cr as at 31.03.2016 as against Rs.1221 cr as at 31.03.2015, a growth of 5.32% over the previous fiscal. Your Bank earned a total income of Rs. 111.17 cr as on March 31, 2016 on forex transactions against Rs. 89.13 cr as at March 31, 2015, a growth of 24.73%. Of the total income earned to the tune of Rs. 111.17 cr, exchange profit accounted for Rs. 54.34 cr and Commission and others accounted for Rs. 56.83 cr. Employees Stock Option Scheme The Bank has not granted any stock options during the year under report. Credit Rating ICRA Limited who had rated the Unsecured Redeemable Nonconvertible Subordinated Lower Tier II Bonds issued in the year 2009, have reaffirmed the rating at A+ (pronounced as ICRA A plus) with stable outlook. Investments with such rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. ICRA Limited has reaffirmed A1+ rating (pronounced ICRA A one plus) for the Rs.30 bn Certificate of Deposits programme of your Bank. CRISIL has reaffirmed its rating for your bank's Rs.30 bn Certificate of Deposits Programme at A1+. Both the ratings given by ICRA and CRISIL for the Certificate of Deposits Programme of the Bank indicate very strong degree of safety regarding timely payment of financial obligations. Such instruments carry lowest credit risk. Expansion of Network Your Bank has 667 branches and 1655 ATMs as on 31.03.2016. The bank had added 38 branches and 10 ATMs during the year to improve its footprint throughout the country including un-banked centres in tune with RBI guidelines. Technology initiatives Your bank continued to actively leverage its proven IT initiatives to offer a wide array of advanced financial services and products, embedded with the latest technology and security features, to cater to the needs of its customers and target group and further their banking convenience. Your Bank introduced a number of significant IT driven initiatives during 2015-16 covering various facets of banking system. They are: Introduction of General Purpose Re-loadable cards A product that suits the Corporate community. Loading & Reloading is being done based on the Corporate instructions to the Bank. The General Purpose Re-loadable card is equipped with Reloading and ATM Withdrawal facility which is very much useful for the end-user. The card, issued under "RuPay" Brand, can be reloaded any number of times subject to the ceiling amount. Kisan Credit Card The Kisan Credit Card has emerged as an innovative credit delivery mechanism, to meet the production and credit requirements of the farmers, in a timely and hassle-free manner. The ATM Card made the quick delivery or disbursement of credit possible. NPCI has launched an Indian Domestic Card in INR branded as RuPay. The scheme aims at providing adequate and timely disbursal under credit support from the banking system, under a single window to the farmers, for their cultivation & other needs like meeting short term credit requirements for cultivation of crops, Post harvest expenses, Produce Marketing loan, household consumption requirements, working capital for maintenance of farm assets and activities allied to agriculture like Dairy animals, inland fishery etc. BNA Recyclers Cash Deposit Machines are migrated as Re-cyclers with Cash Withdrawal facility for customers. In re-cyclers, both cash deposit and withdrawal can be made in the same machine and the cash deposited by the customers can be re-cycled for withdrawals. Your Bank migrated 202 out of 353 cash deposit machines as re-cyclers. Automatic Pass Book KIOSK Customers can use this Automatic Pass book kiosk for getting their passbooks printed automatically and immediately. The customer on inserting their passbook into the printer, the printer will automatically print the passbook by turning pages without any hassles to the customers. The pass book kiosks are deployed in 56 branches of your Bank and the Bank proposes to roll out the same in more branches in FY 17. Launch of e-Book with additional features for customers - enhancements version by version E-Book, launched during December 2014, has been upgraded with multiple features, is being enhanced during every version. The bank is constantly re-visiting the application and providing improved options with innovative features to keep the customers delighted. Issuance of Chip based Multi-Currency Travel Cards and Addition of 5 more currencies in Travel Card Your Bank issues Chip based Travel cards for Security purpose with three currencies viz: USD, EURO and SGD. This card carries the feature of having multiple wallets in a single card. We have introduced five additional currencies in the existing multi currency travel cards namely, Canadian Dollar CAD, British Pounds GBP, Japanese Yen JPY, Swiss Francs CHF, Swedish Kroner SEK. Customers can load the respective currencies and make use of them to avoid the cross-currency conversion charges. Implementation of NACH (National Automated Clearing House) Electronic Clearing Service (ECS) has been replaced with NACH by NPCI and the bank has enabled the services to the customers. Foreign Inward Remittance through IMPS NRIs can transfer funds to person in India through the Correspondent bank on IMPS. The customer's account will be credited instantaneously, once sent by the correspondent bank. Introduction of IMPS facility for Corporate Customers in Internet Banking Your Bank has implemented IMPS in the Internet Banking for the Retail and Corporate Customers to transfer funds instantaneously to their clients/ staff etc. The facility has been provided with an enhanced limit to cater the needs of the customer. Access to Income Tax e-Filing portal through Internet Banking The Net Banking user will be mandated to select one of the account numbers and proceed by clicking the "Initiate" button onthe screen, which will redirect the user to his respective 'user access area' in the Income Tax e-filing portal. Release of EMV Chip Debit cards The Bank issues EMV chip enabled debit cards, issued under VISA, MASTER & RuPay brands to the customers. Introduced since 01.02.2016, the card complies with the RBI Guidelines on Security and Risk Mitigation measures for Electronic Payment Transactions. Rollout of KVB mPay Application - new version Your bank has rolled out new version of mPay application, with new look & feel and additional features. The customer can do instant user registration in the application. Introduction to Direct Menu short codes in NUUP (National Unified Unstructured Supplementary Service Data Platform) Your Bank Customers can do transactions through NUUP services offered by NPCI. The customer can dial *99*75# to get the NUUP Menu. The per day limit is Rs. 5,000/-. The NUUP can be used for Balance Enquiry, Mini Statement, Funds Transfer with MMID, Funds Transfer with Account Number, know your MMID, Change MPIN and Generate OTP. NPCI has introduced the menu options in many of the regional languages wherein the customer can select the respective language and make use of the same. Financial Inclusion - Rollout of Aadhaar Enabled Payment System (AEPS) and Pin Based Authentication in Micro ATMs AEPS KVB has implemented AEPS (Aadhaar Enabled Payment System) transaction using Aadhaar Based authentication in all its Micro ATMs. In an AEPS transaction, an account holder can authenticate himself using his Aadhaar number and biometric fingerprints to prove his identity. Aadhaar enabled RuPay card This card is used in the Micro ATMs. The Aadhaar number is available in the magnetic stripe of RuPay card. The Aadhaar number will be fetched/used and the customer's bio-metric will be captured to authenticate the transaction. Pin Based Authentication in Micro ATMs All ATM cards (Visa, Maestro and RuPay brands) can be used on a Micro ATM as if it is used in a ATM by using the PIN authentication. PIN based authentication at present can be used for 'Cash Withdrawal' and 'Balance Inquiry' in Micro ATMs. Golden Vision Initiatives You are aware that the Bank, in the year 2009 recognised the need to embrace emerging best practices in banking, identify new avenues for growth, re-engineer its processes to improve business effectiveness and to build new capabilities that will develop growth platform for the future. Your bank decided to embark upon a structured long-term transformation program captioned as "Golden Vision". Your Bank appointed The Boston Consulting Group (BCG), as Consultants for the Golden Vision Program. BCG's overall engagement spanned across three phases viz: Phase 1: November 2009 to November 2011, Phase 2: December 2011 to May 2013 and Phase 3: May 2013 till May 2016. The engagement of BCG came to a close on 14.05.2016 and they have played a key role in the Bank realising its objectives through various initiatives implemented during the period. Your Bank needs to sustain the implementation and scale up the initiatives with a lot of focus. The Bank has put in place a structure to govern the sustained implementation of the program. Your Bank places on record its sincere appreciation to BCG for being a strategic partner throughout the period of the transformation journey. Financial Inclusion As per RBI Financial Inclusion Plan, the Bank was required to cover 117 villages and two urban locations through Business Correspondents upto March 2016 spread over Tamil Nadu, Andhra Pradesh, Telengana and Karnataka States. Your Bank has covered all the 117 villages & two urban locations allocated to it. The Bank has 42 Ultra Small Branches as at 31.03.2016. Financial literacy has been identified as a pre-requisite for effective financial inclusion and an integral part of Pradhan Mantri Jan-Dhan Yojana in order to let the beneficiaries make best use of the financial services being made available to them. Your Bank has conducted 109 financial literacy camps in rural/unbanked rural branches. Your bank has also conducted 50 Financial Literacy Credit Camps through urban, metro/semi-urban branches. Pradhan Mantri Jan-Dhan Yojana (PMJDY) Your Bank offers Pradhan Mantri Jan-Dhan Yojana accounts to the general public, a National Mission on Financial inclusion encompassing an integrated approach to bring about comprehensive financial inclusion of all the households (specifically weaker sections and low income household groups) in the country. KVB introduced a separate Savings Bank Product for PMJDY, through which the bank opened 144038 accounts with an outstanding balance of Rs.12.32 cr as at 31.03.2016. In addition the beneficiaries under the Scheme were issued RuPay debit cards with inbuilt accident insurance cover of Rs. 1 lakh and life insurance cover of Rs. 30,000/-. Pradhan Mantri Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Atal Pension Yojana (APY) The Bank successfully reached to unbanked and economically weaker population through PMSBY, PMJJBY and APY programs that are designated to bring social security. In FY 16, your Bank enrolled 141155 customers under PMSBY, 96897 customers under PMJJBY and 2743 customers in APY. Performance under Sovereign Gold Bond Scheme, 2015 With a view to reduce country's demand for physical gold, Government of India started the Sovereign Gold Bond Scheme, 2015. Your Bank operationalized the Sovereign Gold Bond Scheme in all the branches to canvass maximum applications. Your Bank could mobilise total subscription denominated in units of gold was 49709 grams amounting to Rs.13.31 cr in three tranches. It is pertinent to note that your Bank is one of the top ten banks in terms of subscription amount. Management Discussion and Analysis The Management Discussion and Analysis Report for the year under review as stipulated in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is presented in a separate section forming part of this Annual Report. Auditors Statutory Auditors M/s Abarna & Ananthan, Chartered Accountants, Bangalore will retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment. They have completed two years as Statutory Auditors of the Bank. In terms of the extant guidelines of RBI they have remaining two year term. In terms of Sec 139 of the Companies Act, 2013 read with Companies (Audit & Auditors) Rules, 2014, the Board of Directors has recommended the re-appointment of M/s Abarna & Ananthan, Chartered Accountants, Bangalore as Statutory Auditors for a period of two years subject to the approval of the Reserve Bank of India to hold office from the conclusion of the 97th AGM till the conclusion of the 99th AGM on remuneration to be decided by the Board based on the recommendation of Audit Committee of the Board. The Bank has received consent from the Auditors and confirmation to the effect that they are not disqualified to be appointed as the Auditors of the Bank in terms of the provisions of the Companies Act, 2013 and the rules made there under. The shareholders are requested to consider and approve the appointment of the Statutory Auditors of the Bank. Secretarial Auditor and Secretarial Audit Report Pursuant to Sec 204 of the Companies Act, 2013, your Bank had appointed Shri CS S. Solaiyappan, Practicing Company Secretary, Salem to conduct the Secretarial Audit of the Bank for the financial year 2015-16. The Report of Secretarial Auditor for the year 2015-16 is annexed to this report as Annexure 1 There is no Audit Qualifications in the Statutory Auditors' Report and in the Secretarial Audit Report as annexed elsewhere in this Annual Report. Statutory Disclosures The Disclosures to be made under sub-section (3) (m) of Sec 134 of the Companies Act, 2013 read with Rule (8) (3) of the Companies (Accounts) Rules, 2014 by your Bank are explained as under: Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo Conservation of Energy The Bank has undertaken various initiatives for energy conservation at its premises. Your Bank owns 850 KW Wind Turbine Generator at Govindapuram village, Theni District in Tamil Nadu. Installed in the year 2011, the Bank is utilising the wind power generated for its Registered & Central Office at Karur and also at its Divisional Office, Chennai premises. 10,32,050 units were generated during the fiscal under reports by the wind mill. One floor at the Central Office complex and some critical centres /offices were equipped with energy efficient LED lights, motion detector sensors. Technology Absorption The Bank has been making extensive use of information technology in all the operations. Bank is also constantly pursuing its goal of technological upgradation in a cost-effective manner for delivering quality customer service. Technology is a key enabler and core facilitator to the goals of your Bank and is identified as one of the strategic pillars of the Bank. Your Bank has been at the forefront of leveraging technology to provide better products and services to its customers. Ever since the banking industry in the country entered into technology, your Bank has a state-of-the-art technology. All departments within the Bank use IT to deliver superior products and services to the customers. Your Bank has adopted modern technology and applies best banking practices in the field of governance frameworks - to ensure that it renders the high standards of service quality and operational excellence and convenience to the customers. Your Bank has deployed 'Technology' as a Strategic Business enabler - to build a distinct competitive advantage and to achieve superior standards of Customer Service. The technology architecture and the IT Outsourcing structure has enabled your Bank to achieve best standards of Customer Service at comparatively lower cost structures. KVB is moving towards service oriented architecture by implementing Enterprise Service Bus (ESB), which is a Webservices capable infrastructure that supports intelligently directed communication and mediated relationships among loosely coupled and decoupled business components. The service oriented architecture will help your Bank's large and e-commerce firms who are technology-driven or require time sensitive processing to consume your Bank's ESB Services for their payment and receivables. With a view to support new and innovative methods for ensuring customer delight, your Bank has been upgrading various systems which are already in place as also implemented new systems and platforms. Your Bank has augmented direct channels infrastructure and further embarked on upgrading its core banking systems. To ensure highly resilient IT infrastructure and its optimum utilization, the Bank has implemented virtualization in its data centres which has reduced its carbon footprint. Foreign Exchange earnings and outgo Foreign exchange earnings and outgo are part of the normal banking operations. Through its export financing operations, the Bank supports and encourages the country's export efforts. Corporate Social Responsibility (CSR) Your Bank always desired to play a proactive role in societal development with an intention to bring positive change in the lives of many. As a responsible Corporate Citizen, your Bank has been supporting various philanthropic activities by making donations to such initiatives. Your Bank made contribution in areas of education, sports, healthcare and community welfare etc. Statutory disclosures with respect to the CSR Committee and an Annual Report on CSR Activities forms part of this report as Annexure 2. Your Bank donated a sum of Rs. 2 cr to the Tamil Nadu Chief Minister's Relief Fund when Chennai, Kancheepuram and Cuddalore districts of Tamil Nadu were flooded during the heavy rains in November - December 2015. The donation was handed over in person to the Hon'ble Chief Minister of Tamil Nadu by MD & CEO on behalf of the Bank. Extract of Annual Return Extract of Annual Return as at March 31, 2016 in Form MGT 9 pursuant to sub-section 3 (a) of Sec 134 and sub-section (3) of Section 92 of the Companies Act, 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is annexed as Annexure 3 to this report. Board of Directors In terms of Sec 152 of the Companies Act, 2013, Non-Executive Non-Independent Directors Shri A J Suriyanarayana and Shri M K Venkatesan, retire by rotation and being eligible offer themselves for re-election at the ensuing Annual General Meeting (AGM). Shri B Swaminathan, Director of the Bank was appointed as the Part-time Chairman of the Bank in the Board meeting held on 23.11.2015. RBI has accorded approval for the appointment for a period three years effective from the date of his taking charge as the Part-time Chairman. Shri B Swaminathan took charge as the Chairman of the Bank on 20.01.2016. The appointment of the Chairman is placed as an agenda item in the notice of the ensuing AGM. During the year under report Shri M V Srinivasamoorthi was appointed as an Additional Director of the Bank with effect from 27.08.2015 to hold office as Non-Executive Non-Independent Director. Shri M V Srinivasamoorthi, will hold office as Additional Director upto the date of ensuing AGM. He has expressed his willingness to seek election as Non-Executive Non-Independent Director at the ensuing AGM. Smt CA K L Vijayalakshmi, Director was appointed as a Non- Executive Non-Independent Director at the 96th AGM held on 22.07.2015. Board in the meeting held on 26th May, 2016, reclassified her as a Non-Executive Independent Director after obtaining confirmation from her under Sec 149 (6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, confirming that she meets the criteria of independence. It is proposed to appoint Smt CA K L Vijyalakshmi as an Independent Director for a period of three years. Your Bank has received a letter from her indicating her willingness to seek election as Non-Executive Independent Director at the ensuing AGM. Dr. K S Ravichandran, was co-opted as an Additional Director in the Board Meeting held on 26th May 2016. He will hold office as Additional Director upto the date of the ensuing AGM. In terms of Section 149 of the Companies Act, 2013 and the Listing Regulations, a Declaration has been obtained from him stating that he meets the criteria of independence. He has signified his willingness to seek election as Non-Executive Independent Director at the ensuing AGM. It is proposed to appoint Dr. K S Ravichandran as an Independent Director for a period of three years. The relevant details including profile of the Directors and Additional Directors who are seeking election / re-election at this Annual General Meeting are furnished separately in the Notice of the AGM. Shri K P Kumar, Part - time Chairman of the Bank demitted office consequent to the completion of his two year tenure ended on 23.09.2015. Board places on record its appreciation for the valuable services rendered by Shri K P Kumar during his tenure. Declaration by Independent Directors The Bank has received necessary declaration from each Independent Director under Sec 149 (7) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) that they meet the criteria of independence laid down in the Companies Act, 2013 and Listing Regulations. Remuneration As required by the provisions of Sec 197 (12) of the Companies Act, 2013, read with Rule 5 (2) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of the employees who were in receipt of remuneration not less than sixty lakhs rupees for FY16 are set out in this report. The ratio of remuneration of each director to the median employees remuneration and other details in terms of sub-section 12 of Sec 197 of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 are forming part of this report as Annexure 4. Confirmation as to Compliance of applicable laws It is hereby confirmed that the Bank has proper systems in place to ensure compliance of all laws applicable to the Bank. Corporate Governance A separate section on Corporate Governance standards followed by your Bank and the relevant disclosures as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Companies Act, 2013 and the rules made thereunder is enclosed as an annexure to this report. A certificate from Shri CS S. Solaiyappan, Practicing Company Secretary, confirming compliance to the conditions of Corporate Governance as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is annexed to this report. Directors' Responsibility Statement Pursuant to Sec 134(5) of the Companies Act, 2013 with respect to the Directors' Responsibility Statement, it is hereby confirmed that (a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) The directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the bank at the end of the financial year and of the profit and loss of the bank for that period; (c) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the bank and for preventing and detecting fraud and other irregularities; (d) The directors had prepared the annual accounts on a going concern basis; (e) The directors had laid down internal financial controls to be followed by the bank and that such internal financial controls are adequate and were operating effectively. (f) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Awards received by the Bank in 2015-16 1. KVB received "Best Bank Award for Electronic Payment Systems among Small Bank for the year 2014-15" by The Institute for Development and Research in Banking Technology, Hyderabad (IDRBT). The award was received from the hands of Hon'ble RBI Governor Shri. Raghuram Rajan, on 23rd October 2015 in the IDRBT- Banking Technology Excellence Awards function held at Hyderabad. Your Bank is receiving the IDRBT award for the seventh consecutive year. 2. Your Bank received the ABP News BFSI Best Bank (Private Sector) award 3. KVB was awarded "Best Contactless Payments" award by Elets Technomedia Pvt Ltd. in the Financial Inclusion & Payments Systems Award. 4. KVB received Best MSME Bank award under "Emerging Banks" category in the MSME Banking Excellence Awards 2015 by the CIMSME (Chamber of Indian Micro Small and Medium Enterprise). 5. KVB was awarded " ATM Net work- Runner up under Small Banks" award by National Payment Corporation of India. 6. KVB bagged twin awards - the Best Contactless Innovation of the Year 2016 for Smart City Cards and also Best Innovative End-to-End POS Technology Solution for the "KVB Green POS" in the End-to-End POS Technology Solution category at the Kamikaze B2B Awards and Customer Fest 2016. 7. KVB received "Best Contactless Payments" award in the Finoviti 2016 Conference and Awards conducted by Banking Frontiers. Acknowledgements The Board of Directors places on record its sincere thanks to the Government of India, Reserve Bank of India, various State Governments and regulatory authorities in India for their valuable guidance, support and co-operation. The Board also acknowledges with gratitude the co-operation and support received from various State Governments, Stock Exchanges, rating agencies and other banking/financial institutions. The Board takes this opportunity to place on record its deep sense of gratitude to its loyal shareholders for extending their support during the year and looks forward to their continued association in the years ahead. The Board thanks the valued customers for their goodwill, patronage and continued support and looks forward to their continued patronage in scaling greater heights. During the fiscal the Bank has received various recognitions and accolades for its excellence in the Banking domain. The Board is thankful to all such organisations and agencies for formally recognising the Bank's efforts. The Board appreciates the sincere and dedicated services displayed by its entire staff and highly values their commitment in improving the Bank's performance. For and on behalf of the Board of Directors, B. Swaminathan Chairman Place: Karur Date : 09.06.2016 |