Management Discussion and Analysis

Indian Economic Overview and Outlook for FY17

 India’s macroeconomic stability has improved substantially due to fiscal prudence, lower inflation, lower current account deficit, and robust foreign exchange reserves. As per the advanced estimates of CSO, the real GDP (2011-12 prices) for 2015-16 stood at 7.6% and the Gross Value Added (GVA) at basic constant prices (2011-12) stood at 7.3% in 2015-16.

This growth was achieved despite subdued global demand and two consecutive below-normal monsoons that impacted farm output.

While the agriculture sector is expected to grow at 1.1% in 2015-16, the growth in services sector has moderated slightly to 9.2%. The industrial sector is estimated to grow by 7.3% in 2015-16. The index of industrial production (IIP) for April- March 2015-16 was at 2.4%.

The major achievement in 2015-16 has been sharp decline in inflation driven by a number of factors such as sharp decline in crude oil prices, RBI formally targeting inflation, astute food supply management and minimal increase in minimum support prices and slowdown in China. The CPI has ranged between 5-6% during the year and WPI stood at (-) 0.91%. The overall inflation remained within the targets set by the RBI.

The exports continued to contract for 15 consecutive months and imports also remained subdued due to slow economic recovery in the domestic economy and decline in oil prices. The current account deficit remained at 1.3% in Q3, FY16 as against 1.5% in Q 3, FY15. The buoyant inward remittances, lower oil prices and significant FDIs which jumped around 40% resulted in higher foreign exchange reserves above US $ 350 billion. Fiscal deficit retained at 3.9% (Revised Estimates) for 2015-16 and 3.5% (Budget Estimates) for 2016-17.

The year witnessed the continuation of the reform measures.

The reforms aimed at debottlenecking the economy, removing structural constraints, promoting industry and enterprise via Make-in-India initiative and the attendant measures to improve the ease of doing business, improving delivery through direct benefit transfer and deepening of banking services and liberalizing foreign direct investment policy in various sectors were taken forward this year. The new initiatives like Public Sector Banks’ Revamp Plan (Indradhanush), UDAY (Ujwal DISCOM Assurance Yojana) for ensuring financial turnaround of the ailing power distribution companies, Start-up India for tapping budding entrebrneurial potential, the Pradhan Mantri Fasal Bima Yojana for crop insurance, add to the ongoing reform measures. The PAHAL scheme of transferring LPG subsidies via DBT reduced leakages by 24 per cent. As announced in the Union Budget, the bankruptcy law was passed in the Parliament. Also, the announcement of Smart Cities, Housing for all by 2022, Make in India and stand up/start-up initiatives are positive developments from banking perspective. The efforts of the government to improve the ease of doing business would facilitate the growth imperatives. Though Indian economy has emerged as one of the fastest growing large economies in the world, the external risks to growth such as subdued global growth; slowdown and rebalancing in China’s economy; increased volatility in financial markets; and, gradual tightening in the monetary policy in the United States remain.

Recent Developments in Indian Banking and Outlook for FY17 The RBI effected a shift in its monetary policy stance on January 15, 2015 with a reduction in repo rate by 25 basis points (bps) to 7.75 per cent and followed it up with a cumulative reduction of 125 bps to 6.50 per cent till recently. Correspondingly, the banks effected a cut in their Base rates, though, the pace of decline in Base Rate was lower than that of the policy benchmark rate. The limited transmission of monetary policy became a cause of concern for the RBI. Given the limited transmission of policy rates, the RBI introduced Marginal Cost of Funds based Lending Rate. With this change, the transmission of policy rates into the lending rates of banks would improve.

The performance of the scheduled commercial banks (SCBs) during 2015-16 remained subdued due to sluggish deposit & credit growth and asset quality concerns. The deposit growth was 9.7% and the credit growth remained at 10.7%.

Gyan Sangam 2.0 was held at Gurgaon in the first week of March 2016 to review the progress made on the recommendations of Gyan Sangam-I. Deliberations were held with top management of Public Sector Banks on Restructuring/ Mergers and acquisitions, NPA management and recovery, technology, digital and financial inclusion, credit growth and risk management. Under Project Indradhanush, a range of measures were announced for improving the performance of PSBs including the capitalization of PSBs to the extent of Rs. 70, 000 crore till 2019. The Bank Board Bureau has started functioning wef 1st April, 2016, which aims at improving the governance of Public Sector Banks (PSBs) and formulate appropriate strategies for their growth. The Bureau will also recommend for selection of heads of Public Sector Banks and Financial Institutions and help Banks in capital raising plans.

Business Performance

Resource Mobilization and Credit Expansion

During the year, your Bank made strategic shift in its approach towards business by moving to average business concept. The allocation of business targets as well as review of performance of all operating units is done on the basis of average business figures (based on daily average). Given below are the details of your Bank’s major achievements on business front during FY16.

Total Average Deposits of your Bank rose from Rs. 5,34,470 crore to Rs. 5,78,317 crore, posting a growth of 8.20% over the brvious year. Of this, Average Savings Bank Deposits grew by 12.71 % from Rs. 94,705 crore to Rs. 1,06,739 crore. The share of low cost deposits (Current + Savings) or CASA deposits in Total (Domestic + Overseas) Deposits as on Mar’16 was at 26.36 % and in Domestic Deposits at 33.57% as against 26.39% and 33.01% respectively last year. Share of average CASA (domestic) to total average deposits of your Bank, increased from 29.31% as on March 2015 to 29.43% as on March 2016. Your Bank continues to shed bulk brferential rate term deposits in favour of retail term deposits. Domestic retail term deposits ratio improved to 73.96% as on 31.03.2016 from 62.79% last year.

Your Bank’s Total Average Advances expanded by 5.69% during FY16 led by 6.43% expansion in Domestic Advances and 4.24% expansion in Overseas Advances. Bank has focused on re-balancing of its loan book after thorough review of the portfolio with a calibrated shift to assets growth where it can improve its earnings and share of overall business with customers.

Operating Performance

Net Interest Income of your Bank decreased by 3.39% on account of significant increase in non-performing assets which led to interest reversals and cessation of interest income of such assets. However Total Revenue increased by 0.85% led by 13.56% increase in other income. Operating expenses, including employee cost increased by 16.28%. Operating Profit of the Bank at Rs. 8,816 crore was lower by 11.08%.

During the year, the Bank made Provisions of Rs. 14,211 crore against Rs. 6,517 crore in FY 15. These provisions included Rs. 13,766 crore towards NPAs and other provisions of Rs. 1748 crore. Provisions on NPAs were higher than the regulatory requirements by Rs. 2,954 crore to improve the provision coverage ratio to 60.09% against stressed assets and to strengthen the balance sheet. Other provisions included Rs. 1,564 crore provided on account of pension liability arising on account of moving to mortality table from LICI 1994-96 to IALM of 2006-08. Your Bank has provided for all known liabilities to ensure that all focus would be to improve earnings going forward. On account of all these factors, Bank posted net loss of Rs. 5,396 crore against net profit of Rs. 3,398 crore last year.

Large & Mid Corporate Credit

Bank caters to the needs of corporate credit mainly through 10 Corporate Financial Service branches and 17 Mid Corporate branches. -82- new corporate relationships were established during the year. In view of challenging market conditions brvailing, your Bank adopted cautious approach coupled with proper due diligence towards taking fresh exposures. Bank initiated following measures to ensure consistent growth of large and mid-corporate credit with quality:

• Monitoring of undrawn exposure to achieve optimum level of capital conservation;

• Introduction of RAROC approach to examine the risk adjusted return of an asset;

• Initiated process of building a team of sectoral expertise;

• Established “Real Estate Desk” to exclusively deal with CRE proposals;

• Setting up market intelligence cell in view of increasing number of Red Flagged Accounts;

Domestic Foreign Business (DFB) division under Corporate Banking Business vertical supports Authorised Dealer (AD) branches to deal with Forex Business.

MSME Credit

MSME is a vital sector to the nation’s economy and Bank supports credit to this sector through 54 SME Loan factories and wide network of branches. MSME advances of of your Bank were Rs. 54,990 crore as on March 2016. The advances of Rs. 29,861 crore to Micro Enterprises for FY16 to total MSE credit of Rs. 55,535 crore as of brceding year stood at 53.70% in FY16. The MSME advances as on 31st March, 2016 contributed 19.58 % to the gross domestic advances of your Bank. The advances to Micro & Small enterprises were at the level of Rs. 49,571 crore.

Prime Minister Mudra Yojana (PMMY) was launched by Govt of India on 08.04.2015 and your Bank is participating actively in the said scheme. Bank has achieved 24% YOY growth in number of accounts under Micro Enterprises category as against 10% achievement during the same period brvious year.

Your Bank has set up Baroda Micro Enterprise (BME) Cells, concept under which these exclusive cells cater to Micro Enterprises. Bank has 90 such cells established across the country.

Retail Credit

Retail credit of your Bank is dispensed through 66 Retail Loan Factories (RLFs) and wide network of branches. During the year, Bank initiated the process of re-designing RLFs into Specialized Mortgage Stores (SMS) to undertake Sales and Marketing activities of mortgage loans and centralization of processing of retail loans through Centralized Processing Centres. Bank also undertook simplification of application forms for retail loans, revamped online home loan application system with instant ‘In principle sanction’ and initiated empanelment of direct selling agents.

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 83.12% of total Retail Loans as on March 2016. Home Loans grew by Rs. 2427 crore (10.77%) reaching a level of Rs. 24968 crore as of March,16. Total disbursements of Rs. 6632 crore were made during the financial year ended 31st March 2016 as against Rs. 6335 crore during the same period last year. Auto Loans grew by Rs. 268 crore (6.45%) reaching a level of Rs. 4428 crore as of March, 16. Fresh disbursement of auto loans were Rs. 1773 crore during the financial year ended 31st March 2016. Baroda Traders loans, Baroda Mortgage Loans and Education Loans were at a level of Rs. 8836 crore, Rs. 1914 crore and Rs. 2123 crore respectively. The other retail loan products included Baroda Personal Loan and other miscellaneous products viz. Doctors Loan, Loan against Government securities etc. Total Retail Loans stood at Rs. 50,850 crore as on 31st March, 2016 and constituted 18.82% of the Bank’s domestic advances.

During the year, your Bank undertook review and redesigning of various retail loan products and risk based pricing of loans linked to credit bureau score

Rural and Agricultural Lending

The Bank has always been a frontrunner in the area of Priority Sector and Agriculture lending. It has been harnessing the potential of the rural market through its wide network of 1,964 rural branches and 1,425 semi-urban branches. During FY16, your Bank has opened 95 new branches in rural and semiurban areas.

Your Bank is the 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 of India comprising of 14 in Gujarat, 12 in Rajasthan, 15 in Uttar Pradesh, 2 each in Uttarakhand, Madhya Pradesh and Bihar and 1 in Delhi.

Priority Sector Advances of your Bank increased from Rs. 1,03,342.67 crore as on March 2015 to Rs.1,13,121.13 crore as on March 2016 and formed 37.05% of the Adjusted Net Bank Credit (ANBC). The Direct Agriculture advances of your Bank increased to Rs. 28,094.12 crore with an absolute growth of Rs. 1483.20 crore (5.57%) during the year. The total agriculture advances (excl.RIDF) of your Bank has grown by Rs. 4085.67 crore and reached Rs. 36822.21 crore as at end-March 2016.

The Total Agricultural Advances were at 14.76% of ANBC. Under its flagship agriculture loan product “Baroda Kisan Credit Card”, your Bank issued as many as 2.29 lac Credit Cards during the financial year. Baroda Kisan RuPay Card, an ATM enabled smart card, has been issued to 9.32 lac farmers for their convenience. Your Bank financed as many as 303436 new farmers during FY16 granting them loans worth Rs. 5302 crore. As a part of its microfinance initiatives, your Bank credit linked 15170 Self Help Groups by granting loans amounting to Rs. 163.27 crore during FY16.

Key Initiatives

Your Bank introduced various initiatives/strategies to harness the emerging opportunities in rural and agriculture lending. Some of the key initiatives are mentioned below:

1. To add new farmers to our fold, your Bank conducted two special campaigns viz. ‘JODEN KISAN’ during the Kharif and Rabi seasons under which 1.17 lacs new farmers were added and were granted loans of Rs. 2,640 crores.

2. Your Bank has identified 482 thrust Branches across India to boost Agriculture lending. These branches contributed 33.01% of the total Agriculture outstanding of the Bank as at 31st March 2016.

3. Your Bank formulated various tailor made are as pecific schemes to the needs of the local farming community, with concessions in rate of interest & charges etc. Thirteen such schemes were approved and implemented during the year.

4. Your Bank has 49 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 FY16, 38274 youth beneficiaries were trained at these centres.

5. Your Bank has established 51 Financial Literacy Centres (FLCs) across India, christened as “SARATHEE” to impart financial literacy and credit counselling services to the needy to help them avail financial services from the Banking system and also to provide counselling services to those under financial distress.

Advances to SC/ST Communities during FY16

The outstanding advances granted by your Bank to SC/ ST communities have been growing year after year. The outstanding advances granted to these beneficiaries went up from Rs. 4997 crore as on March, 2015 to Rs. 5,298 crore as at end-March, 2016. SC/ST communities accounted for a share of 21.95% in the total advances granted to weaker sections by the Bank. Furthermore, a special thrust is laid by your Bank in financing SC/ST under various government sponsored schemes namely National Rural Livelihood Mission (NRLM) etc.

Baroda Swarojgar Vikas Sansthans (BSVS) give brference to SC/ST candidates while selecting the trainees. So far, these centres have trained 14,304 youths under the SC/ST category.

Performance of RRBs Sponsored by your Bank

Your Bank has sponsored three Regional Rural Banks (RRBs) in three states viz. Baroda Uttar Pradesh Gramin Bank, Baroda Rajasthan Kshetriya Gramin Bank, and Baroda Gujarat Gramin Bank. The aggregate business of these three RRBs rose to Rs. 42,640.52 crore as of March, 2016 from Rs. 37,440.67 crore as on March, 2015,registering a growth of 13.89%. The three RRBs together posted a Net Profit of Rs. 185.41 crore during FY16 as against Rs. 327.20 crore earned during FY15. The decline in profit is due to the payment of arrears on account of 10th Bipartite settlement. The “Net Worth” of these RRBs put together improved from Rs. 1851.02 crore as on 31.03.2015 to Rs. 2036.43 crore on 31.03.2016 and “Reserves and Surplus” from Rs. 1394.12 crore to Rs. 1579.53 crore.

Financial Inclusion (FI)

Financial Inclusion aims to provide easy access to financial services to all sections of the society who are deprived of it so far at affordable cost thereby bringing them into the mainstream of society. Financial Inclusion activities are being implemented by the Bank since inception through various Governments sponsored programs, lending to the poorest of the poor, lending to the minority communities, lending to SC/ST, lending to priority sectors, etc. Bank has approved disaggregated Financial Inclusion Plan for all 21526 service area villages of our Bank.

Models used by your Bank for FI

Your Bank has adopted following models for providing banking services under financial inclusion viz. Information and Communication Technology (ICT) based Business Correspondents models like POS based BC Model; KIOSK BC Model and Brick and Mortar branch.

Urban Financial Inclusion

The rural inhabitants have largely remained the focus of our financial inclusion efforts since a large proportion of our villages are still unbanked. Besides, people living in rural and far flung areas, urban poor who are largely migrants from villages to urban area still have no access to formal financial products and services like savings, credit, remittance and insurance, forcing them to depend on unscrupulous 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 completed first phase of Jan Dhan Yojana campaign in all states to bring these vulnerable groups under mainstream financial system. Your Bank has deployed 4530 urban BCs at various locations across the country.

Product/Services offered at our BC Points are Basic Savings Bank Deposit Account with in-built OD facility, Instant Account Opening, E-KYC Account Opening,Cash Withdrawal, Cash Deposit & Fund transfer, deposit in Current a/c, Cash Credit a/c, OD a/c and Loan a/c, Term Deposit & Recurring Deposit Account, Enrollment for Micro Insurance – PMJJBY and PMSBY, Aadhaar Seeding and Mobile seeding.

Highlights of Performance under Financial Inclusion for the year 2015-16

• All targets of Disaggregated FIP – 2016 were surpassed in December 2014 itself.

• Bank surpassed annual Basic Saving Bank Deposit Account opening and Amount target for financial year 2015-16, achievement was 220.18 % & 196.23% respectively.

• The balance outstanding in the “Basic Savings Bank Deposit Account” of the Bank is around Rs. 4925 crore as against a target of Rs. 2510 crore for FY16.

• Surpassed urban ward coverage targets for financial year 2015-16 (achievement 596.05%).

• Surpassed annual target for BC appointment for FY 2015-16 by appointing 11,131 BCs against target of 5503 (achievement 202.27%).

• Surpassed annual target for number of transactions and amount of transactions in FI accounts opened through BC for FY16 (achievement 403.02% & 1145.41% respectively)

• Surpassed annual target for OD amount disbursed in BSBDA account for financial year 2015-16 by 848.83%.

Promoting Financial Literacy

The desired objective of Financial Inclusion can be achieved only when enough demand for banking services is generated from the targeted group of population. In order to invoke responses amongst villagers, it requires financial literacy on various banking facilities and its benefits particularly the benefits of savings habit, Aadhaar seeding, maintaining minimum balance, eligibility for availing Overdraft, use and safekeeping of RuPay cards and its pin, USSD facility, eligibility of availing accidental & life insurance, lodgment of claim under insurance, micro insurance products, pensions, benefits of KCC, GCC, prompt repayment, availability of other retail and SME loans to them. Financial literacy would be the key to success of financial inclusion initiatives of the Bank. Your Bank’s link branches and BCs are organizing Financial Literacy campaign regularly by conducting meetings in their service area villages and schools.

The Bank has also taken the following major initiatives towards financial literacy in rural part of the country.

1. 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. Bank has established 49 such centers all over the country. They have conducted 1401 training programmes during the FY16 in which 38,274 candidates were trained. Out of these, 20,679 candidates established their business ventures successfully.

2. Fifty one Financial Literacy & Credit Counselling Centres (FLCCs) “SAARTHEE” are operational across the country.

3. 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 4 days & hassle free credit to the SHGs.

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

Pradhan Mantri Jan Dhan Yojana (PMJDY)

PMJDY is a combrhensive financial inclusion plan wherein the ambit of financial inclusion is enlarged to make it more meaningful. PMJDY is a National Mission for Financial Inclusion. Every household having bank account would gain access to banking and credit facilities. This will enable them to secure their savings in a better manner and also to come out from the habit of raising funds from informal sources. As a first step, every person who opens the account under PMJDY will get a RuPay debit card and would be eligible for Rs. 1,00,000/- accident insurance cover. After six months of satisfactory conduct of account, they would be able to get an overdraft facility up to Rs. 5000/-. Further, the account holders who opened account between 15.08.2014 to 31.01.2015 will get additional term insurance of Rs. 30,000/- from LIC. Financial Literacy is another important aspect of PMJDY. Further Government of India launched Jan Suraksha Yojana on 9th May 2015 whereby low brmium insurance products like Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana and pension product like Atal Pension Yojana were introduced.

Initiatives under PMJDY:

• Your Bank has been allotted 6829 SSAs by SLBCs covering 22,055 villages and 3023 wards across the country. Survey has been completed in all allocated SSAs and wards. Accordingly there are total 88,91,696 households in Bank’s service area. It has been Bank’s endeavor to provide banking services to each and every household in the service area. Bank has since saturated all households in service area by opening atleast one account per household. Bank has opened 1.25 crore accounts with a deposit of Rs. 2500 crore and issued 1.18 crore RuPay debit cards.

• Your Bank is organizing camps periodically for opening of accounts, conducting financial literacy sessions, distribution of financial literacy materials, distribution of pass books and RuPay Debit cards, etc.

• Launched a scheme for engaging Retired Bank Officers, ASHA workers, Anganwadi workers, fair price shop owners etc as Bank’s Direct BCs. Branches have been advised to identify and recommend performing SHGs and refer to Corporate BCs for appointment.

• Launched new products at our BC points like Instant account opening, Aadhaar Seeding, interoperable RuPay Card Based transactions, deposit in Current Account, CC accounts, loan accounts, Recurring Deposit and Fixed Deposit.

• Implemented automation of Overdraft Facility through ATM and SMS to PMJDY customers. The PMJDY customers can avail overdraft without even visiting the branch.

• Enabled Alternate Delivery Channels like ATM, Internet Banking, SMS and BC points for Aadhaar Seeding. Bank has also enabled enrollment of Micro insurance schemes such as PMSBY & PMJJBY through internet banking, SMS and at BC points.

• e-KYC has been implemented at the branches as well as BC points for opening of Aadhaar based accounts.

• Bank has rolled out Aadhaar Enabled Payment System (AEPS) facility at BC Points.

• Bank has rolled out Interoperable RuPay card based transaction facility at BC Points

• Bank has implemented Unstructured Supplementary Service Data (USSD) for carrying out mobile banking transactions on ordinary mobiles. Facilities available under USSD are balance enquiry, money transfer, mini statement, knowing Aadhaar link bank a/c.

• Adopted 3266 schools across India for imparting Financial Literacy to School Children. Regular Financial Literacy Sessions/Camps/chaupals are conducted by branches in schools, villages along with BC.

Standardized Financial Literacy materials such as comic booklet, audio visual in vernacular language for sbrading financial literacy have been launched.

• Bank has implemented Model Village concept by all Rural and Semi Urban branches with the sole objective of achieving 100% Aadhaar Seeding 100% mobile seeding, 100% coverage under PMSBY, PMJJBY & APY, 100% funding of zero balance accounts, 100% overdraft to eligible customers, 100% credit linkage, 100% NPA free and skilling of villagers.

• Introduced special incentive scheme for BCs for mobilizing deposits and follow up & recovery in small loan a/cs including NPA & PWO accounts.

• Standardized Financial Literacy material such as comic booklet, audio visual has been supplied to all operating units for sbrading financial literacy. In-house training and certification program for BCs.

• Joint workshops of branch heads and BCs to increase coordination and resolve field level issues. Pradhan Mantri Jan Suraksha Yojana

1. Pradhan Mantri Jeevan Jyoti Bima Yojana

• The scheme will be a one year cover Term Life Insurance Scheme, renewable from year to year, offering life insurance cover for death due to any reason.

• All savings Bank account holders in the age 18 to 50 years in participating banks will be entitled to join.

• Rs. 2 lakhs is payable on a subscriber’s death due to any reason. The brmium payable is Rs. 330/- per annum per subscriber.

• Your Bank has tie-up arrangement with IndiaFirst Life Insurance Company Ltd for this scheme.

2. Pradhan Mantri Suraksha Bima Yojana

• Rs. 2 lakhs is payable on a subscriber’s death or disability due to accident. The brmium payable is Rs. 12/-per annum per subscriber.

• All savings Bank account holders in the age 18 to 70 years in participating Banks will be entitled to join. In case of multiple saving Bank accounts held by an individual in one or different Banks, the person would be eligible to join the scheme through one savings bank account only.

• Your Bank has tie-up arrangement with National Insurance Company Ltd for this scheme. Performance of your Bank under PMJJBY and PMSBY as on 31.03.2016 is as under:

• No of Policies enrolled under PMJJBY– 14.42 lacs

• No of Policies enrolled under PMSBY – 40.24 lacs

Total Insurance Policies enrolled – 54.66 lacs

International Operations

Your Bank has been keeping continuous watch on the emerging trends in the International banking scenario and adapted itself to the changing environment. Bank had taken review of assets at overseas centres and moving towards calibrated re-balancing of portfolio to improve margins. This has led to conscious degrowth in the business levels.

International Presence

During the year, your Bank has further sbrad its brsence in Africa by opening two new branches of its subsidiary in Kenya.

The Bank also has following Joint Ventures/ Associates:

1. Indo Zambia Bank Ltd., Zambia having -27- branches

2. India International Bank (Malaysia) Bhd., Malaysia -1- branch

The international business of your Bank continued to support significantly to the total business of the Bank. As on 31.03.2016, the International business contributed 31.3% of Global Business. Of the total International loan-book, 47.92% comprised of Buyer’s Credit/BP/BD portfolio where the exposure is on the Banks. 22.03% of the exposure is to India related corporates by way of ECB/ Syndicated Loans. Exposure to non-Indian entities by way of syndicated loans is at 4.30% and remaining 25.75% exposure is by way of local credit.

UK Subsidiary

Your Bank is planning to carve out Retail business in UK in the form of a 100 % owned subsidiary, which will give boost to the retail business of the Bank as well as comply with the local regulatory guidelines.

Treasury Operations

Your Bank operates its Treasury operations from State of Art Dealing Room at its corporate Office in Mumbai. Treasury handles domestic treasury operations and is a prominent player in various markets e.g. Foreign Exchange, Interest rates, Fixed Income, Money Market, Derivative, Equity, Currency and Interest Rate Futures and other alternate asset classes. Bank is offering various services like interest rate swaps, currency swaps, and currency options, forward contracts through advanced dealing systems and through Authorized branches dealing in Foreign exchange across India.

Your Bank has been able to capitalize on the opportunity offered by higher yields in the first half of the year and has added bonds to the portfolio. Bank managed its portfolio efficiently and maintained average yield on SLR investment as on 31.03.2016 at 8.01%. During FY 2016, your Bank’s realized profit on Sale of Investment and Foreign exchange earnings are Rs. 1,162 crore and Rs. 612 crore respectively and earned Rs. 12,144 crore as Interest/ Discount. Bank’s Treasury mid-office monitors market exposures and limits fixed by the Bank on real time basis. The Risk management parameters, including Value-at Risk (VAR) are used to measure market risk on all portfolios. The VAR numbers are regularly back tested for evaluating the strength of the model. Stress testing is done on various investments and currency positions.

Government Business

Government Business forms an important part of business strategy of your Bank. It is the Accredited Banker to Ministry of Health & Family Welfare (MHFW) and newly formed Ministry of Ayush. Your Bank has been authorised to collect contribution and administrative charges on behalf of EPFO (Employees’ Provident Fund Organization). Bank has received approval from IRCTC (Indian Railway Catering & Tourism Corporation) for Debit Card integration, implementation of which is under progress. Your Bank undertook special efforts for mobilization of PPF accounts during FY16 and opened 91,370 new PPF accounts. Your Bank has been adjudged as the Best Performing Bank among Public Sector Banks (2nd Rank) by PFRDA by opening 155589 Atal Pension Yojana(APY) accounts during FY16. This has been possible due to concerted efforts put in by all branches of the Bank. During the year, your Bank conducted workshops on Government & PSU Business, covering 850 staff members and 150 BCs/ BFs/VLEs at 15 locations.

Your Bank participated in Digital India initiative of Government of India. Your Bank is one of the five Banks associated with Government of India’s brstigious e-Biz portal, which would launch about 50 services along with major state services. Digital Life Certificate (DLC) is successfully automated. Digitizing the whole process of securing life certificates will be beneficial to all pensioners. Your Bank is one of the Authorized Bank to undertake Goods & Service Tax (GST) collection which is likely to be implemented shortly. Work on Digitalization of Pension Payment Order (e-PPO) is under progress for speedier pension processing and disbursement.

Your Bank is being integrated for online payment of MHFW (Ministry of Health & Family Welfare) and DBT (Direct Benefit Transfer) with PFMS (Public Financial Management System). Your Bank is integrated for online receipt of MHFW with Bharat Kosh portal (Non tax revenue receipts).

Your Bank started providing e-stamping facility in the State of Punjab in -03- branches in the initial phase. Your Bank started the pilot project of E-panjiyan (a web enabled standalone system used for stamping and registration of documents developed by Department of Registration & Stamps, Madhya Pradesh) in -03- branches in the State of Madhya Pradesh.

Your Bank has implemented Sukanya Samriddhi Yojana, a small deposit scheme for girl child, launched by Govt. of India w.e.f. 27.05.2015. Sovereign Gold Bond, 2015 and Gold Monetization Scheme, 2015 were launched on 05.11.2015 with a view to reduce country’s gold import as well as mobilizing idle gold held by households and institutions in the country for putting the gold into productive use. Your Bank operationalised Sovereign Gold Bond scheme in all the branches in India to canvass maximum applications.

Wealth Management Services

Your Bank has realised growing aspiration of customers for earning higher returns and security through mutual fund and insurance respectively. Bank is in Wealth Management Services since 2004 and Mutual fund, Life Insurance, Non Life Insurance products are being distributed to the customers.

Your Bank crossed the mark of 1,10,000 new SIPs in FY16, first time ever resulting in increased customer participation. Your Bank has also covered 1.71 Lacs lives in addition to coverage under PMJJBY policies. Initiatives/ Strategies adopted during FY 16 are:

1. Bank created a separate vertical for Wealth Management Services and clubbed it with Marketing to put focus on the importance of Wealth Management Services.

2. Team at Corporate Level is strengthened by placing Wealth Management specialists and product managers have been identified for strategic and monitoring role.

3. Bank initiated special focused campaign for Mutual Funds and Life Insurance for canvassing business.

4. Bank has run pilot at 55 branches and conducted training/ refresher courses for broadening the vision in brvalent scenario of “Certified Officers” to source Mutual Fund and Insurance business. Your Bank looked it as a model for enhancement in customer bonding and fee generation by putting extra focus to draw the mileage.

5. Bank identified 1350 thrust branches for establishing Wealth Management Service desk and “Certified Persons/Officers “for distribution of Mutual Fund and Insurances have been attached at these branches.

6. Process initiated for inducting 2 Standalone Health Insurer and 2 General Insurance Cos after open architecture clause.

7. Bank is also in process of implementing integrated Wealth Management Solution to put all Mutual Fund and Insurance related information at one platform.

NPA Management

FY16 was a challenging year for the banking industry in terms of stress in asset quality on account of various macroeconomic and other factors. Fresh slippages were at 6.38% of the opening Standard Advances of your Bank. In view of high slippages, the ratio of Gross NPA to Gross Advances was at

9.99% as on 31st March 2016 and the ratio of Net NPA to Net Advances was 5.06%. During the year, Bank provided Rs.13,766 crore towards NPA provisions (last year Rs. 3,998 crore). These provisions were higher than the regulatory requirements by Rs. 2,954 crore to improve the provision coverage against stressed assets and strengthen the balance sheet. The Provision Coverage Ratio was at 60.09% during March 16 including Prudential/Technically Written Off advances.

Your Bank has developed a combrhensive structure for recovery and credit monitoring across different levels. The Nodal Officer at each DRT centre has been assigned the role of follow-up of legal cases on daily basis so as to minimize the delay in obtaining decrees and execution and maximize recoveries. For recoveries in all DRT Suit filed NPA accounts, the assets charged to the Bank are now sold through e-auction to get fair market value. In addition, Recovery Agents for assisting in taking possession of assets & other br/post sale activities and Consultants have been appointed to liaise with Official Liquidators (OL) to get the recoveries realized by OLs. The maximum participation in National Lok Adalats is ensured to expedite recovery in suit filed & non suit filed NPA a/cs. Recovery Camps were regularly conducted by your Bank’s branches to recover & reduce long pending cases and expedite recoveries in small accounts.

Your Bank continued emphasis on follow-up mechanism to effect recovery in NPA accounts. The system of monitoring of large value NPA accounts of Rs. 1 crore and above directly from corporate office by way of video conferencing with the Region and Zone have ensured proactive action by branches, advocates, recovery agents etc. The action under SARFAESI Act at various levels are also monitored by Bank’s Corporate Office.

Your Bank continued its emphasis on sectorwise follow-up mechanism to recover NPAs as under:

Large and Mid Corporate accounts

1. Engaging reputed senior Advocates/Law firms for high value cases and Fraud matters;

2. Distribution of High value NPA & PNPA accounts amongst Top Management for early resolution;

3. Monitoring of high value accounts by Top Management team headed by MD & CEO and EDs;

4. 3 General Managers from Corporate Office have been allocated Zones to monitor NPA and Written off accounts on one to one basis.

MSME Banking

1. Enriching data mining to identify delinquency in the bucket of 0-90 days;

2. Early detection of problem accounts, initiation of independent title re-verification, fresh valuation of properties and tracing uncharged assets in SMA-2 accounts;

3. Vigorous monitoring & follow up in small bucket accounts Pan India by the officers engaged in recovery;

4. Engaging dedicated team at ZO/RO/Branch level for Recovery and Monitoring the run rate on daily basis. Retail Lending

1. Leveraging Technology for Collection and Recovery, engaging 150 telecallers;

2. Seizing of vehicles;

3. Enhanced power to branches for compromise;

4. Private treaty, early resolution incentive for Recovery Agents;

5. Issuance of soft reminders;

6. Increase in SMS alerts;

7. Out sourcing Hard Buckets collection through FOS;

8. Establishment of Collection centre for FOS at major 100 centers is under process.

Rural Agriculture

1. Optimum utilizations of BCs for recovery in NPA accounts;

2. Incentive scheme (SANKALP 9) for recovery of small NPA accounts.

Pre delinquency Monitoring

• War room is established at Corporate level for collection/monitoring of accounts above Rs. 5.00 lacs to Rs. 1.00 Crs in SME and Retail loan Accounts;

• Team of 10-12 officers in each Region (Total 800 Officers)is working dedicatedly for followup for timely collection in all Retail and SME loan accounts to control delinquency.

Suit filed Accounts

• Nodal Officers for DRTs closely monitor each case and ensure to get the Recovery Certificate in shortest period. In RC execution, the Nodal Officer to ensure that RC execution process is started, as soon as the RC is issued by DRT. The Nodal Officer monitors timely compliance of the issues raised in DRT by base branches and concerned Advocates. Cash recovery in NPA accounts during FY16 stood at Rs. 1481 crore and the up gradation stood at Rs. 533.87 crore.

Credit Monitoring

Credit monitoring is one of the most important tools for ensuring asset quality. Your Bank has the system of monitoring of advance accounts at various levels (Branch/ Region/Zone and Corporate) to brvent slippages and to take timely corrective actions to improve asset quality. 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 and Regional Offices in terms of the Bank’s Domestic Loan Policy was activated for the purpose of arresting slippages and also for initiating necessary corrective action plan at an early stage in a time bound manner.

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

• Identification of weakness/Potential default/incipient sickness in the advance accounts at an early stage and initiating suitable and timely corrective actions for brventing impairment in advance accounts / deterioration in credit quality of the borrowal accounts;

• Based on the RBI guidelines for Revitalizing Distressed Assets, accounts with incipient stress are identified under Special Mention Accounts (SMA) categories of SMA0, SMA1 and SMA2. All SMA2 accounts are followed up for the formation of the Joint Lenders Forum and options to resolve stress under Corrective Action Plan are explored by way of Rectification, Restructuring and Recovery;

• Prevention of slippages in the Asset Classification and relegation in Credit Ratings through vigorous follow up;

• Identification of suitable cases for restructuring/ Strategic Debt Restructuring as well as further financing in deserving and genuine cases with matching contribution from the borrower;

• Taking necessary steps / regular follow up, for review of accounts and compliance of terms and conditions, thereby improving the quality of credit portfolio;

• Monitoring progress of accounts under Board for Industrial and Financial Reconstruction (BIFR);

• Your Bank has a mechanism of identifying the Red Flagged Accounts ( RFA) based on Early Warning Signals (EWS) as per the RBI guidelines on framework for dealing with loan frauds and reporting the accounts on CRILC platform. Further investigation into such RFA are made to classify the account as fraud or otherwise. Monthly Monitoring of Advances accounts On-line web-based software has been developed by the Bank for Monthly Monitoring Reports (MMR) in respect of advance accounts with Fund and Non-Fund Based (FB+NFB) exposure of Rs. 10 crore and above was launched in January 2013 and is being upgraded from 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 quality of your Bank’s credit portfolio.

Restructuring of Advances Accounts

In order to improve asset quality, your Bank scans the stressed advance portfolio on a continuous basis, industry wise as well as borrower-wise so as to initiate suitable action by way of restructuring based on the viability of the project/ activity. During the financial year 2015-16, the Bank undertook restructuring of various advances accounts as per the table given below

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 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, 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 implemented Enterprise Management System and modules have been deployed to effectively manage and monitor Bank’s growing IT infrastructure;

• Your Bank has deployed centralized 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 optimization of resources. Your Bank’s Regional Rural Banks (RRBs) are also on the CBS Platform with delivery channels;

• You Bank has initiated the upgradation of Core Banking Solution (CBS) to Finacle 10.x and e-banking upgradation to 11.x.

Digital Banking Initiatives

Internet Banking - BARODA CONNECT Your Bank continued to add more facilities under its Internet Banking (Baroda Connect) channels. During FY16, Baroda Connect has been enriched with multiple features to provide ease of use and better control for the customers. Steps taken in this regard are:

• Introduction of facility for Self Registration for Baroda Connect using Debit card for Retail customers. Using this new feature, all retail customers, who have not registered for Baroda Connect, can do so without visiting the branch;

• A facility for Self Regeneration of Transaction password for Baroda Connect has been introduced for Retail Customers by which the retail customer can reset their transaction password by using debit card in case they have forgotten the password/ expiry of password/ password getting disabled due to wrong attempts;

• Facility for self retrieval of User ID wherein the customer can himself get the User ID on registered email id without visiting the branch or contacting the Toll Free number

• Customers can now link their PPF account to their Baroda Connect portal. The customers can view the account statement and make credits to this account.

• Customers can now register for Pradhan Mantri Bima Yojana using Baroda Connect;

• Customers have also been provided option for linking/ delinking account facility using which customer can choose account, he wants to get displayed while making payments;

• Customers can now give request for Adhaar Seeding in their bank accounts;

• Facility is provided for investing in Monthly Income Plan, Regular Income Plan, Baroda MahaUtsav Deposit, Baroda Double Dhamaka Deposit Scheme, Baroda Tax Saving- RIRD, Baroda Tax Saving- MIP, Baroda Tax Saving –QIP and Short Deposit ORD.

Mobile Banking – BARODA M-CONNECT & IMPS

Mobile Banking application has been completely revamped in your Bank to attract the new generation and techsavvy customers by enhancing its look and feel, user-friendliness and experience. The Mobile Banking platform as an alternate delivery channel offers many features and facilities to customers, viz. icon based user interface, balance enquiry, mini statement, fund transfer, stop payment, cheque status, etc. Mobile banking application is made available in all

i-Phones, Blackberry, Android, Windows devices. Immediate Payment Services (IMPS) are implemented covering Person to Account (P2A), Merchant Payments (P2M) and Aadhaar based remittance (P2U). On the Mobile platform, other key facilities like Mobile banking registration through CBS and net banking, IMPS through branches, M-passbook for NRE customers, DTH recharge functionality etc. are added to mobile banking.

Baroda Non-Stop Lobby

Baroda Non-Stop Lobby comprises of five self service machines viz. Cash Recycler, ATM, Multi Function Kiosk, Passbook Printer and Digital Signage System for providing 24x7 banking services. The lobbies have increased visibility and are receiving encouraging response from customers as well as staff members. The number of Baroda Non-Stop lobbies increased from -151- as of March 2015 to -252- as of March 2016.

Baroda Exbrss - 24X7 Lobby

“Baroda Exbrss – 24X7” lobby is a lean version of Baroda Non-Stop lobby for smaller centres by expanding existing ATM cabins with minor changes in the interior and providing additional services by installing Cash Recycler and Passbook Printer in addition to ATM. Baroda Exbrss Lobby started functioning from September 2015. Bank has -451- Baroda Exbrss-24x7 lobbies as of March 2016.

Contact Centre

Contact Centre is providing most of the banking services through telephone channel. All customers or members of general public/customer can connect with Contact Centre by dialing the Toll Free Number 1800 22 33 44 or 1800 102 44 55 from anywhere in the country.

A dedicated Toll free no. 1800 102 77 88 is provided for Pradhan Mantri Jan Dhan Yojana (PMJDY) and other Financial Inclusion customers. Services through Contact Centres are available throughout the year without any holiday. Contact Centres are currently providing following services:

• Account Enquiry – Balance enquiry, transactions details etc;

• Cheque Services – Stop payment, Cheque book request, enquiry etc;

• Debit Card Services – Helpdesk, Hot-listing,

Regeneration of PIN, Reissuance of Card, Complaint of failed transactions etc;

• Internet Banking – Helpdesk, Handholding, Activation of password, Regeneration of password, complaint on failed transactions etc;

• Mobile Banking – Helpdesk, handholding etc;

• General Enquiry – Products and services, Branch/ATM location, interest rates information, lead creation for product queries etc;

• Most of these services are also available through Interactive Voice Response (IVR) 24X7. Services through agents are available during 6 AM to 10 PM (except Debit Card Hotlisting, Webchat & NRI helpdesk which are available 24X7).

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.

Baroda E Gateway – Internet Payment Gateway

Bank owns entire set up to provide electronic payment platform of its merchant’s business by enabling payment collection using credit card / debit card & Net banking. Bank is having tie-up with payment aggregators viz. BillDesk, Citrus Payment Solutions Pvt. Ltd. and PayTm to offer Net Banking of major Banks as additional payment option to customers. Your Bank is also in the process of upgrading IPG infrastructure with more robust and feature so as to offer rich experience to our merchants.

Self Service Pass Book Printer (SSPBP)

Self Service Pass Book Printer is an automated kiosk where customer can print Pass Book on their own. SSPBP kiosk recognizes the account details from the magnetic strip placed on the Pass Book, through these details kiosk fetches the account transaction and prints it on Pass Book. Customer can use this facility 24x7 from the SSPBP machine installed in Elobby/ATM.

ATM

During the year, your Bank installed 945 additional ATMs to provide uninterrupted basic banking facility to the customers at convenient places across India and replaced 206 ATMs which were older than 7 years. More than 50 ATMs have been redeployed at more convenient locations for the customers. As on 31.03.2016, Bank has ATM network of 8975 ATMs.

During the year, mobile banking registration through ATM on NFS network has been implemented. Gujarat Urja Bill payment facility is provided through ATM. Over Draft request facility through ATM for PMJDY customers have been provided. Cash withdrawal through Micro ATM for Bank’s customers including our RRB customers and other Bank customers is implemented. Rupay EMV implementation for all our RRBs, Lead capture through ATM, Bill payment through MFK using card and PIN, Multi language receipt printing in ATM and Cash Recycler was enabled. Cardless deposit facility in Cash Recycler, Rupay cash at POS, Mudra cards was launched for the customers. Online Baroda Connect user creation and password reset using debit card and PIN, OTP for registration of Rupay, Visa, Master e-com transaction,Visa Contact less debit card launched for Domestic and New Zealand territory. All debit card products are migrated to EMV cards,ESQ ATM monitoring solution to enable the Bank to minimize the ATM down time and serve the customer better. First use on POS enabled for Rupay cards,PIN at POS made mandatory for international transactions,Debit card blocking through SMS and branch,Visa EMV for OMAN territory implemented.

Cash Recyclers:-

Your Bank launched its first Cash Recycler on 20th July, 2014. Bank has deployed 1135 Cash Recyclers/BNAs as on 31.03.2016. Cash Recycler is enabled to accept cash as well as dispense cash apart from balance enquiry, mini statement and PIN change facilities. Cash recyclers are very popular with retail as well as business customers given the ease of operation and 24x7 availability. All successful transactions are immediately credited or debited in real time and customers are issued an acknowledgment slip confirming the transaction. Nearly 1.6 lacs transactions are taking place every day in Cash Recyclers.

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 RTGS and NEFT have been implemented for the Bank as well as RRBs. RTGS & NEFT have also been implemented in Uganda territory. Your Bank has successfully processed 782 lacs NEFT transactions and 74.07 lacs RTGS transactions during FY16.

• The SWIFT facility is provided at Foreign Exchange Authorized Branches in India as also in 22 overseas territories. A new interface ‘XMM’ is made available to all FOREX branches in India and also in 22 overseas territories for transmission of swift messages with Antimoney Laundering check. 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 FY16, under Cheque Truncation System (CTS), your Bank has migrated additional MICR centers to respective CTS grid centers of Western Grid (Mumbai), Northern Grid (Delhi) and Southern Grid (Chennai).

• National Automated Clearing House (NACH) is implemented for both debit and credit transactions.

Other Customer Centric initiatives

Your Bank has implemented Contactless VISA/Master Cards for Domestic Operations Customers, Card to Card Transfer for ONUS and NPCI network, FI switch and ATM switch integration. Your Bank has implemented EMV implementation at New Zealand, Oman and Mauritius. Your Bank has implemented facility to access e-filling account of the Income Tax Department through Internet Banking portal. Your Bank has implemented Statement of more than 6 months in e-Banking and User induced limit set in E-Banking. Your Bank has provided Value Added services on Multi function Kiosk and implemented online transaction password reset with Debit Card and pin. Your Bank has implemented online account opening for NRE domestic customers and online remittance to NRE customers

Information Security

A robust Information Security Management System has been implemented to protect the existing technology setup against security threat. A Combrhensive Audit by External Agencies is being successfully carried out by your Bank for its Data Centre/Disaster Recovery centre Infrastructure. Biometric Authentication is introduced for CBS Login at Branches. Your Bank has a Security Operation Centre (SOC) for enhanced IT security. Your Bank’s Data Centre as well as Disaster Recovery Centre are recertified and upgraded to ISO/ IEC 27001:2013 certification. Your Bank 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 thirteen Overseas territories by enabling Mobile App (ARCOT) OTP, PULL OTP and SMS OTP. Your Bank is regularly conducting VAPT (Vulnerability assessment & Penetration Testing) of external facing applications viz. E banking, mail messaging, CMS, IPG 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 unbrdictable 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 to arrest/minimise the damage. For this, your Bank has implemented following additional security measures:

• Your Bank has implemented the RBI mandates as part of Risk Mitigation measures for card brsent transactions.

• All new debit and credit cards are issued for domestic usage only unless international usage is specifically sought by the customer.

• Your Bank has enabled PIN at POS.

• Your Bank has enabled Digital signatures in Corporate Internet Banking for login and transactions providing additional security to corporate customers.

Back Office Operations

Regional Back Offices and City Back Offices

Your Bank is having 13 Regional Back Offices (RBOs) at brsent. Your Bank has one RBO in each zone for processing of CASA account opening forms and issue of Personalized cheque books. More than 5,281 branches of your Bank as on 31.03.2016 are linked for centralized account opening process through RBOs and issuance of Personalized cheque books. Your Bank is having all 22 erstwhile Service Branches functioning as City Back Office and 62 Main branches doing clearing activity and ECS covering 3030 branches at brsent for processing of inward and outward cheques through clearing. During the year under review, 100% 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. Also, CTS clearing has been implemented in Northern Grid consisting of 21 MICR centers. CTS clearing is functioning in all the 3 Grids viz., Southern, Western and Northern Grids smoothly.

Cash Management & Currency Chest

Your Bank has initiated steps to launch the Door Step Banking Services from and at the door step of customers of the Bank on Pan India basis. This will give a boost to Bank’s Current Deposit Portfolio. Bank has provided NSMs in all the branches and Chests to comply with the clean note policy of RBI. 4 new currency chests (Dum Dum, Karnal, Patan & Nipaniya) have been opened during the financial year. Now your Bank has -91- Currency Chests.

Marketing

During FY16, your Bank focused on promotion of Brand as well as various products and services through a variety of marketing initiatives. Marketing initiatives involved effective utilization of different media vehicles such as Print, Electronic (TV / Radio), Digital and Out of Home (OOH) for Above- The-Line (ATL) activities as well as to support the Below- The-Line (BTL) activities undertaken at the Zonal / Regional level.

Your Bank launched its brsence on Social Media viz; Facebook & Twitter on 1st January of this calendar year. Your Bank apbrciates the importance of social media as a platform to connect with individual customer across demographics and geographies. Your Bank also has plansto use social media for conducting a judicious mix of product promotion and customer education campaigns to gainfully engage with customers and evolve the relationships. Bank received positive response post the launch by engaging with desired target audiences

Bank undertook different campaigns in February and March with each campaign being designed to serve different objective e.g. online brand building, awareness with defined target segments, business acquisition, promote Alternate Delivery Channels to reduce cost of banking transaction etc. Couple of campaigns are elaborated below

#OneInALeap

#OneInALeap was a social media contest that was conducted on Facebook and Twitter on 29th Feb 2016. The objective was to capitalize on the Leap Day of the Year and enhance the brand visibility in the digital space and engage the target group on a single day event. #OneInALeap successfully increased awareness among desired target segments. The daily post volumes around this campaign are the record highest for a single day since our social media brsence.

Baroda SMS (Mortgage linked)

Baroda Specialised Mortgage Store (SMS) Campaign was executed with the dual objective of Brand & Product awareness for newly launched One Stop Store - Baroda Specialised Mortgage Store (SMS) Branch and business acquisition via lead generation for the branch through targeted mediums focusing only Mumbai. In a short duration of 15 days, more than 300 leads were generated for processing, sanction and disbursements.

Your Bank also undertook various product promotion campaigns amongst target audience through advertising across different geographies. Besides focusing on providing information on various products and services, Alternate Delivery Channels (ADCs) were aggressively promoted. Further special customer segments were also targeted such as special offerings for MSMEs, Rural &Agri segment, NRIs etc. through judicious use of various media channels on pan India basis.

In order to augment the Brand connect with its diverse stakeholders, your Bank also participated in various events such as FICCI-IBA Banking Conference 2015, MINT Annual Banking Conclave 2016, Dun & Bradstreet – Top BFSI Companies 2016, Standard Chartered Mumbai Marathon 2016, India – South Africa Cricket Series 2015 among many others thereby increasing visibility and Brand recall value

Corporate Social Responsibility (CSR)

Bank of Baroda, has a long legacy and tradition of contributing actively to the social and economic development of the communities through various developmental activities. Education, health, human welfare and other social activities are Bank’s main focus areas. In its continued efforts to make a difference to the society at large, Your Bank intensified its efforts further in this direction during FY 2015-16. Bank has sanctioned a sum of Rs. 1940.21 lacs to different organizations engaged in various community development and socioeconomic welfare activities for the benefit of weaker section, rural mass and others.

Some of the initiatives in the domain of CSR undertaken by Your Bank are as follows:

Baroda Swarojgar Vikas Sansthan (Baroda R-SETI)

 Your Bank has established 49 BSVS (Baroda R-SETI) in six states of the country, out of which 45 are in our lead districts and 4 are in non- lead districts for generating self employment of Rural and Semi Urban youth through skill development training. It reflects your Bank’s commitment towards the cause of poverty alleviation through self employment. Till now, our BSVSs have conducted 9188 programmes and trained 2,63,378 youth, out of which 1,59,731 have already secured either employment or setup their own venture. The settlement ratio is at 60.19%.

Financial Literacy & Credit Counselling Centres (FLCC)

Your Bank has also established 51 FLCCs in eight states of the country for providing financial counseling services and to educate the people in rural and urban area to various financial products and services available from the formal financial sector. These centers also take up activities that promote financial literacy, awareness about banking services, financial planning and amelioration of debt-related distress of an individual.

Risk Management

To ensure sustainable growth, your Bank has developed a sound risk management framework so that the risks assumed by the Bank are properly assessed and monitored. 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. Specific committees of the Board have been constituted to facilitate focused oversight on various risks. The Board has also constituted a Risk Management Committee of Board which oversees the inter linkages between different type of 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 Bank is as follows:-

Asset Liability Management

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. Asset Liability Management Committee (ALCO), which comprises of General Managers and Executive Directors and is headed by the Managing Director & CEO, ensures that the risk profile of the Bank in terms of Liquidity and Interest Rate risk is within the risk tolerance limits set by the Board.

Liquidity Risk is the inability to meet expected and unexpected cash and collateral obligation at reasonable cost. In your Bank, the liquidity risk is measured and monitored through Flow approach and Stock approach and other prudential stipulations as per the latest guidelines of the Reserve Bank of India. Your Bank has implemented Basel III Framework on Liquidity Standards – Liquidity Coverage Ratio (LCR), Liquidity Risk Monitoring Tools and LCR Disclosure Standards. The LCR standard aims to ensure that Banks maintain an adequate level of unencumbered High Quality Liquid Assets that can be converted into cash to meet liquidity needs for a 30 calendar day time horizon under a significantly severe liquidity stress scenario specified by the RBI. Your Bank has always been well above the stipulated level of LCR on solo basis as well as on consolidated basis.

Interest Rate risk arises due to mismatch between rate sensitive assets and liabilities which adversely impacts the earnings of the Bank with the change in rate of interest in the market. For measurement and monitoring of Interest rate risk, both Traditional Gap 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 by way of simulation, sensitivity and scenario analysis are used at regular intervals and tested against the contingency funding plan.

Your Bank’s combrhensive contingency funding plan has been formalized to foresee and mitigate liquidity crisis both for temporary and long-range liquidity disruptions. With a powerful suite of analytical and reporting tools, an efficient liquidity and interest rate risk management has been facilitated, enabling strategic decision-making and generating alerts against potential deviations.

Credit Risk

Credit risk is defined as the possibility of losses associated with diminution in the credit quality of borrowers or counterparties. In a Bank’s portfolio, losses stem from outright default due to inability or unwillingness of a customer or counterparty to meet commitments in relation to lending, trading, settlement and other financial transactions. Alternatively, losses result from reduction in portfolio value arising from actual or perceived deterioration in credit quality.

Credit risk is managed in your Bank through a well established Board approved framework that sets out policies, procedures and reporting which are in line with international best practices. Adequate attention is given to segregate the activities of policy framers with risk takers. Your Bank has a well structured credit approval process, which functions within the defined Board approved credit policy.

Credit Risk Rating in your Bank involves a method of systematically classifying credit proposals according to their quality and inherent risk characteristics. Rating is an important single point indicator of credit quality to the Bank as also to other stakeholders (viz. regulators, analysts, auditors etc.).

Your Bank has adopted a robust web based two dimensional credit rating system which consists of borrower rating as well as facility rating and is named as Bank of Baroda Risk Assessment Module (BOBRAM). This BOBRAM system which is in place since 2007, assesses four types of risks (viz. Industry Risk, Business Risk, Financial Risk and Management Quality Risk) pertaining to the characteristics of a borrower. While the first dimension, the borrower rating signifies the likelihood of default, the second dimension facility rating indicates the likely loss, in case the borrower defaults, and is exbrssed in terms of Loss Given Default (LGD). Facility rating depends on type of collateral offered and its coverage. The combined rating of the borrower is arrived at by the combination of these two dimensions depicting expected loss.

Over the years, your Bank has gained good experience in internal rating and has thus built up data on credit rating migration. This robust platform has enabled your Bank to get an approval of regulator for a parallel run under Foundation Internal Rating Based (FIRB) approach of Credit Risk under Basel II rules from 31st March, 2013. Under the IRB approach the banks are allowed to develop their own empirical model to quantify required capital for credit risk. IRB implementation will make your Bank more risk sensitive and would benefit the Bank with improved risk management systems and strong risk assessment processes, and possibly reduced credit risk capital requirements.

Your Bank’s Corporate Research Cell brpares industry report studies through industry experts to assess the risk brvalent in industries where the Bank has sizable exposure and also for the identification of sunrise industries. To manage imprudent concentration, your Bank has also put in place prudential caps across industries, sectors and borrowers. The Portfolio Review Cell carries out detailed studies on sectoral exposure, credit concentration, ratings distribution and migration, and charts out credit strategy of the Bank based on these studies. Your Bank has also implemented the Risk Adjusted Return on Capital (RAROC) Framework for all credit exposures.

RAROC is defined as the ratio of risk adjusted return to capital employed. Implementation of RAROC will facilitate us to evaluate whether the credit risk asset generates adequate profit to add economic value to shareholders’ funds.

Market Risk

Market Risk implies the risk of loss of earnings or economic value due to adverse changes in market rates or prices. The change in economic value of different market products is largely a function of change in interest rates, exchange rates, economic growth, business confidence etc. 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, PV01, Value at Risk for its investment portfolio consisting of fixed income securities on daily basis. It monitors the short-term Interest rate risk from the NII (Net Interest Income) perspective and long-term interest rate risk from the EVE (Economic Value of Equity) perspective. Moreover, the stress testing of fixed interest investment portfolio through sensitivity analysis and equities through scenario analysis is regularly conducted in your Bank. The foreign exchange risk and equity price risk is monitored too and measured through daily marking to market, stop loss limits, VaR limits, portfolio size limits, IGL, AGL etc. The Value at Risk for the treasury positions is calculated through historical simulation method for a ten days holding period, at 99.0% confidence level.

Operational Risk

Operational Risk is defined (as per BCBS and RBI) as 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. Operational Risk is integral part of Bank’s all activities and business. Hence, it is required to be managed with active engagement.

Operational Risk Management Committee (ORMC) of your Bank has the responsibility of controlling the operational risk losses so that they do not cause material impact to the Bank’s functioning. The robust management of operational risk is reflected from the effectiveness of the control environment. The Bank has initiated measures to modify the processes and install new systems to improve the control environment. Roll out of key Risk Indicators programme, Risk Control and Self Assessment Programme and Root cause analysis during the current year will further strengthen the control environment. Your Bank is one of the promoters and initial equity capital subscribers to Cordex India Private Limited, which will be a consortium of Operational Risk loss data in India for the banking industry.

Basel III Implementation

The Basel III capital regulations have been implemented by Indian Banks with effect from April 1, 2013. This implementation requires enhanced quality and quantity of capital on one side and more elaborate disclosure on the other. For augmenting and improving Core Capital of Bank, new measures for the inclusion of FCTR, DTA and Revaluation Reserves have been introduced by RBI in March 2016. Also from March 2016 onwards Bank will start maintaining CCB in phased manner and will reach 2.5% as per the regulator. The Bank is fully equipped to comply with all regulatory norms with reasonable cushion over the minimum regulatory capital requirements.

Risk Based supervision (RBS)

The Department of Banking Supervision (DBS) at RBI has adopted a Risk Based Supervisory (RBS) approach for Review of Supervisory Processes of Commercial Banks. The RBS framework has been named as “Supervisory Program for Assessment of Risk and Capital (SPARC)” and one of its important components/ tools employed in the process is the “Integrated Risk and Impact Scoring (IRISc)” Model. RBS is driven by Offsite as well as Onsite supervision which requires a Bank to put in place robust systems for data collection and compilation process and reporting. RBS was rolled out in your Bank in 2012-13 supervisory cycle. SPARC is risk focused and intended to increase the effectiveness of the supervisory process. The two major areas of assessment under SPARC are Risk and Capital Assessment. The risk assessment for a Bank covers the inherent risks, risks due to gaps in controls for the inherent risks, risks due to gaps in the Governance & Oversight as also the culture and degree of compliance to regulatory requirements. These assessments together determine the Aggregate Risk for a Bank. The Aggregate Risk and Capital Available together determine the Risk of Failure Score (RoFS) for a Bank.

Your Bank has successfully completed the third cycle under SPARC and is now well positioned to embark on the fourth supervisory cycle of 2015-16.

Internal Control Systems

Audit Committee of the Board oversees overall Internal Audit function of the Bank. The committee guides in developing effective internal audit, concurrent audit, IS Audit and all other inspection & audit functions of the Bank. The committee monitors the functioning of the Audit Committee of Executives and inspection / audit department in the Bank. Your Bank has a Central Internal Audit Division (CIAD) that examines the adherence to systems, policies and procedures of the Bank. The guidelines received on various issues of internal control from Reserve Bank of India, Government of India,

Your Bank’s Corporate Research Cell brpares industry report studies through industry experts to assess the risk brvalent in industries where the Bank has sizable exposure and also for the identification of sunrise industries. To manage imprudent concentration, your Bank has also put in place prudential caps across industries, sectors and borrowers. The Portfolio Review Cell carries out detailed studies on sectoral exposure, credit concentration, ratings distribution and migration, and charts out credit strategy of the Bank based on these studies.

Your Bank has also implemented the Risk Adjusted Return on Capital (RAROC) Framework for all credit exposures. RAROC is defined as the ratio of risk adjusted return to capital employed. Implementation of RAROC will facilitate us to evaluate whether the credit risk asset generates adequate profit to add economic value to shareholders’ funds.

Market Risk

Market Risk implies the risk of loss of earnings or economic value due to adverse changes in market rates or prices. The change in economic value of different market products is largely a function of change in interest rates, exchange rates, economic growth, business confidence etc. 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, PV01, Value at Risk for its investment portfolio consisting of fixed income securities on daily basis. It monitors the short-term Interest rate risk from the NII (Net Interest Income) perspective and long-term interest rate risk from the EVE (Economic Value of Equity) perspective. Moreover, the stress testing of fixed interest investment portfolio through sensitivity analysis and equities through scenario analysis is regularly conducted in your Bank. The foreign exchange risk and equity price risk is monitored too and measured through daily marking to market, stop loss limits, VaR limits, portfolio size limits, IGL, AGL etc. The Value at Risk for the treasury positions is calculated through historical simulation method for a ten days holding period, at 99.0% confidence level.

Operational Risk

Operational Risk is defined (as per BCBS and RBI) as 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. Operational Risk is integral part of Bank’s all activities and business. Hence, it is required to be managed with active engagement.

Operational Risk Management Committee (ORMC) of your Bank has the responsibility of controlling the operational risk losses so that they do not cause material impact to the Bank’s functioning. The robust management of operational risk is reflected from the effectiveness of the control environment. The Bank has initiated measures to modify the processes and install new systems to improve the control environment. Roll out of key Risk Indicators programme, Risk Control and Self Assessment Programme and Root cause analysis during the current year will further strengthen the control environment. Your Bank is one of the promoters and initial equity capital subscribers to Cordex India Private Limited, which will be a consortium of Operational Risk loss data in India for the banking industry.

Basel III Implementation

The Basel III capital regulations have been implemented by Indian Banks with effect from April 1, 2013. This implementation requires enhanced quality and quantity of capital on one side and more elaborate disclosure on the other. For augmenting and improving Core Capital of Bank, new measures for the inclusion of FCTR, DTA and Revaluation Reserves have been introduced by RBI in March 2016. Also from March 2016 onwards Bank will start maintaining CCB in phased manner and will reach 2.5% as per the regulator. The Bank is fully equipped to comply with all regulatory norms with reasonable cushion over the minimum regulatory capital requirements.

Risk Based supervision (RBS)

The Department of Banking Supervision (DBS) at RBI has adopted a Risk Based Supervisory (RBS) approach for Review of Supervisory Processes of Commercial Banks. The RBS framework has been named as “Supervisory Program for Assessment of Risk and Capital (SPARC)” and one of its important components/ tools employed in the process is the “Integrated Risk and Impact Scoring (IRISc)” Model. RBS is driven by Offsite as well as Onsite supervision which requires a Bank to put in place robust systems for data collection and compilation process and reporting. RBS was rolled out in your Bank in 2012-13 supervisory cycle. SPARC is risk focused and intended to increase the effectiveness of the supervisory process. The two major areas of assessment under SPARC are Risk and Capital Assessment. The risk assessment for a Bank covers the inherent risks, risks due to gaps in controls for the inherent risks, risks due to gaps in the Governance & Oversight as also the culture and degree of compliance to regulatory requirements. These assessments together determine the Aggregate Risk for a Bank. The Aggregate Risk and Capital Available together determine the Risk of Failure Score (RoFS) for a Bank.

Your Bank has successfully completed the third cycle under SPARC and is now well positioned to embark on the fourth supervisory cycle of 2015-16.

Internal Control Systems

Audit Committee of the Board oversees overall Internal Audit function of the Bank. The committee guides in developing effective internal audit, concurrent audit, IS Audit and all other inspection & audit functions of the Bank. The committee monitors the functioning of the Audit Committee of Executives and inspection / audit department in the Bank. Your Bank has a Central Internal Audit Division (CIAD) that examines the adherence to systems, policies and procedures of the Bank. The guidelines received on various issues of internal control from Reserve Bank of India, Government of India, Board and Audit Committee of the Board have become partof the Internal Control System for better risk management. With rising business levels year after year, Central Internal Audit Division is constantly aiming to curb the inherent risks through effective control mechanism so as to safeguard Bank’s interest. CIAD operates through thirteen Zonal Internal Audit Divisions to carry out audit of branches/offices as per the periodicity decided by the Audit Committee of the Board.

All the branches of the Bank are covered under Risk Based Internal Audit (RBIA). Out of 4455 branches inspected during 2015-16, 3671 branches (82.40%) were in Low Risk, 694 branches (15.58%) were in Medium Risk and 90 branches (2.02%) were in High Risk category.

Bank is undertaking an exercise for revamping of system and processes focusing on centralization of activities by use of technology, imaging solutions and digitization. The whole gamut of audit approach will undergo a change with extensive use of technology, analytics, sampling and advanced audit methodology. Bank proposes to engage a Knowledge Partner out of leading Audit firms to assist in putting in place an efficient audit mechanism and its implementation.

Operations and Services

Customer-Centric initiatives

Your Bank is highly responsive to the customer needs and believes that technology, products, processes and human resources must be leveraged for delivering superior banking experience to its customers. To further enhance customer service delivery and customer redressal, ‘Customer Service Department’ during the year was strengthened. Your Bank has taken several measures to improve the customer service at its branches and at the same time, strengthen the customer complaint redressal machinery for fast disposal of complaints.

During the year, an online Customer Satisfaction Survey 2015–2016 was launched from 08.06.2015 to 30.09.2015 by sending emails to customers to know about their feedback so as to take remedial measures. The findings of the survey and suggested action points to address the deficiencies were considered and necessary actions taken.

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 including senior citizens and pensioners are invited. The suggestions/views generated during the meetings are collated so as to examine the feasibility to implement the suggestions for improving 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, Internet Banking, Mobile Banking, etc., best suited to the diverse needs of various customer segments.

Customer Service Committee of the Board

Your Bank has a Sub-Committee of Board for Customer Service which is headed by your Banks’ Managing Director & CEO with the following members as on 31st March 2016 :

1. Shri P.S.Jayakumar, Managing Director & CEO

2. Shri B B Joshi, Executive Director

3. Shri M.K.Mehta, Executive Director

4. Shri Prem Kumar Makkar, Director

5. Shri Bharat Kumar D. Dangar, Director

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 Executive Directors and four General Managers of your Bank. This Committee oversees timely and effective compliance of the RBI instructions on Customer Service and also reviews the practices and procedures brvalent in your Bank and takes necessary corrective steps on an ongoing basis.

The suggestions emanating from the Branch Level Customer Service Committee meetings are obtained by your Bank’s Head Office on quarterly basis 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 Redressal and the same is placed on the Bank’s website. Your Bank is also having a well structured Customer Grievance Redressal Mechanism, due to which the outstanding complaints have also come down significantly.

The General Manager, Operations & Services, is designated as Principal Nodal Officer for customer complaints in your Bank. Moreover, all Zonal Heads and Regional Heads are designated as Nodal Officers for their respective Zones and Regions. Further, 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 service and grievances is placed before the Board of Directors comprising breakup and position of the customers’ grievances received by your Bank.

Your Bank is also focused on Root Cause Analysis of the complaints and suitable remedial measures including updation of the systems, procedures & sensitization of employees for enhanced customer service. Your Bank is having a web based online complaint registration and redressal portal named as Standardized Public Grievance Redress System (SPGRS). An icon is placed on the home page of your Bank’s website, through which your Bank’s customers as well as non customers can lodge their complaint online. The system generates tracker id for tracking the status of the grievances in future. It also facilitates the complainantfor uploading complaint in pdf or txt format upto a document size of 500 kb. Moreover, the complainants can re-open their complaints within 15 days of its redressal, if not satisfied with the resolution and the same complaint is escalated to the next higher authority/functional head for necessary action at their end. SPGRS also has a facility to capture suggestions/ feedbacks.

In terms of RBI directives, your Bank has appointed a Chief Customer Service Officer (Internal Ombudsman - CCSO) w.e.f. 29.01.2016. As directed by RBI, your Bank escalates those complaint cases to CCSO where Bank decides to reject a complaint and / or decides to provide only partial relief to the complainant.

Compliance of Banking codes and Standard Board of India(BCSBI)

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” and the “Code of Bank’s Commitment to MICRO and Small Enterprises” brscribed by the BCSBI . These have been placed on your Bank’s website and also made available to customers at the branches.

KYC/AML Compliance

Your Bank has well defined KYC-AML-CFT Policy, which 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 major highlights of KYC-AML-CFT implementation across your Bank are as under:

• The Bank electronically generates Cash Transaction Reports (CTRs) for submission to Financial Intelligence Unit-India (FIU-IND)

• The “AML Solution” for generating system-based alerts on the basis of transactions in the accounts of the customers is in place. The scope has been further widened with addition of more alert definitions as per recommendations of IBA working group. Your Bank has a designated Director for overall compliance of KYC-AML-CFT guidelines.

• Central Transaction Monitoring Unit (CTMU) has started functioning from 18.02.2016 at your Bank’s Head Office for exclusively monitoring of the transactions/ alerts generated in AML Solution and filing of STRs, if found suspicious.

• There is a scrutiny team for 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 half yearly i.e. in July and January.

• The Bank files Counterfeit Currency Reports (CCRs) and Non Profit Organizations Transaction Reports (NTRs) to FIU-IND, New Delhi every month. Your Bank generates Cross Border Wire Transfer Reports every month through electronic mode for submission to FIUIND, New Delhi

• The Bank is in the process of allotting Unique Customer Identification Code (UCIC) to all its existing customers as per the RBI guidelines.

• Online verification of PAN from NSDL has been operationalised as a major step to tackle money laundering activities.

• CBS system has been modified suitably so as not to accept cash deposits of Rs. 50,000/- and above in absence of PAN / Form No. 60/61.

• Your Bank has implemented Aadhaar based e-KYC in collaboration with UIDAI. Real-time checking of names from UNSCR list is available in all the branches as a step towards CFT.

• Online scanning of the customer’s name with the names of the individuals/ entities included in the updated AL Qaida/ Taliban Sanctions list or any other Blacklist issued by Govt. Authorities, while opening of accounts and generates the AML Alerts on brdefined criteria.

• Your Bank has successfully participated in Pilot Run of Central KYC Registry and completed the process of inclusion of the CKYC mandatory fields in the Account Opening Form and mapped the CKYC codes with the codes in our CBS system.

For achieving full KYC compliance, following measures are taken by the Bank:

• A combrhensive list of KYC documents is uploaded on your 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.

• 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 various institutes/establishments within the Bank and outside.

• Regular On-site and Off-site test checking is carried out to identify irregularities, if any and prompt rectification of the same.

Compliance Function

Your Bank has in place Compliance Policy outlining the compliance philosophy of the Bank. Compliance Function in the Bank is an integral part of governance along with internal control and compliance risk management process supported by a healthy compliance culture in the Bank Compliance Function ensures observance of Regulatory / Statutory provisions contained in various legislations viz. Banking Regulation Act, RBI Act, Foreign Exchange Management Act, Securities and Exchange Board of India Act and Prevention of Money Laundering Act and also the regulations of the various Regulators where the Bank is having its Offices / Branches in overseas centres. It also ensures Standards and Codes brscribed by BCSBI (Banking Codes and Standard Board of India, IBA (Indian Banks Association), FEDAI (Foreign Exchange Dealers Association of India), FIMMDA (Fixed Income Money Market and Derivatives Association of India).

A robust web based Compliance Management System is being put in place to further strengthen compliance function in the Bank.

In order to keep the compliance staff up-to-date with developments in the areas of banking laws, rules and standards, workshops on Compliance are conducted regularly. Knowledge Management Tools for the purpose have also been uploaded on the Bank’s site. Workshops on compliance are also arranged for Branch Managers of selected Branches and Regional / Zonal Compliance Officers wherein various compliance issues with focus on KYC/AML norms at Branch / Regional / Zonal and Corporate levels are discussed so as to create awareness about Compliance.

Vigilance

Vigilance machinery in the Bank is effectively performing its proactive role in traditional and emerging risk prone areas in computerised/e-banking environment, in addition to sensitising all categories of staff members with the various brventive measures. To bring about greater transparency in procurement and tendering processes in our Bank, Notice inviting tenders / details of tenders awarded by the Bank and summary of tenders/ contracts concluded are put on the Bank’s website for widest possible publicity. Also, Standardized Public Grievance Redress System (SPGRS) as advised by MOF for uniform implementation in PSBs is made active with effect from 11.01.2013.

Your Bank follows Central Vigilance Commission Guidelines on Whistle Blower Complaints under Public Interest Disclosure and Protection of Informers (PIDPI) resolution. A two way live global web telecast with all employees of the Bank on whistle blower policy was organized during the year. Bank has also designed software for lodgments of online complaints under whistle blower policy by employees.

Human Resources – Key to Business Excellence

Realizing the importance of human resources in the brsent dynamic and competitive environment with multi-pronged challenges viz. large number of superannuations, massive intake of talent, huge training requirements, succession planning and engagement for higher productivity, your Bank is remodeling its HR processes through a number of initiatives.

Some of the key accomplishments in FY16 are as under:

Strategic workforce planning and Recruitment drive:

A scientific manpower planning model has been put in place for estimating manpower needs by level, skills 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. A specially 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 brferred choice for any prospective applicant.

For a smooth and effective integration of the new hires into Baroda family, your Bank has also put in place a very well structured and focused “On-boarding Programme”. Your Bank has also launched a focused Mentoring programme “Baroda Sarthee” for the new hires wherein a senior employee - mentor handholds the new entrant to enable his smooth transition into the corporate world.

Baroda Manipal School of Banking”

The Baroda Manipal School of Banking is a unique association of your Bank and Manipal Global Education in which students undergo a focused 1 year programme customized to the Bank’s requirements, before they are absorbed in your Bank as Probationary Officers. The programme works on an inverted model of “Train, Hire and Deploy” instead of “Hire- Train and Deploy”. This innovative resourcing channel was initiated during the year FY12 and so far –3586- students have undergone/undergoing this course, of which –3120- students have joined the Bank as Probationary Officers.

Recruitment Drive during FY16:

To fulfil the business needs, your Bank recruited 1,896 officers in various Grades / Scales (both Generalists & Specialists), 2,562 Clerks and 749 Subordinate staff, thereby inducting a total of 5,207 new employees in the Bank during the year 2015-2016. The recruitment process will continue in the year 2016-17 also with various recruitment projects undertaken for filling up almost 3,283 posts of officers and 1,000 posts of clerks. Your Bank has a rich reservoir of Human Resources comprising of over 51,000 employees.

Engagement of Experts from Market for various Key positions on Contract Basis.

Your Bank has recruited/recruiting professionals/experts having specialized skill sets, knowledge & competencies for various critical positions in the Bank viz. Advisor (Credit & Risk), Advisor (Business Development) Trade Products, etc., on contract basis, for adopting the best technology/practices/ policies/products/processes existing in the Market/Industry.

Succession Planning for Various Critical Positions & Mentorship Scheme

Your Bank is addressing the issue of Succession Planning through a very structured Talent Management Programme. By this initiative, the Bank identifies young potential leaders on specified criteria who can take up various key/critical positions of the Bank and accordingly, the developmental plans are brpared for each of the identified future leaders. This is an annual exercise and in FY16, your Bank was able to clearly identify around 15-20% people in specific scales of Officers viz. in Scales II, III, IV, V and VI as the future leaders

HR Automation

Your Bank has put in place a very combrhensive HR technology platform covering HRM, Training, and 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. Certain processes have been automated thereby completely reducing the turnaround time.

Employee Engagement Survey 2016

Your Bank conducted an Employee Engagement Survey in February, 2016 to understand the engagement levels of employees particularly their perceptions, beliefs, views etc so that it can tailor various HR activities/initiatives suitably in order to address the gaps and to improve the engagement levels of employees further. The survey was launched on 22.02.2016 and completed on 20.03.2016. More than 85% of staff members (Officers & Clerks) have participated in the Survey.

Performance linked Incentive Scheme for employees:

A Combrhensive Performance linked incentive Scheme for the Bank encompassing all employees and all units under its ambit is in place in your Bank. A total of 12,846 employees received performance incentives covering 1218 Branches, 15 Regional offices, 4 Zones and 39 operating units and a total amount of Rs. 28.72 crore was disbursed as incentives for the year 2014-15.

Grievance Redressal Mechanism for Existing & Retired Employees

Your Bank has formulated a well defined Grievance Redressal Mechanism in FY 2015-16 for effective and timely resolution of grievances of any existing employee as well as those of retired staff. Your Bank endeavors to resolve all grievances of the staff members at the earliest.

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 society. Your Bank is one of those banks 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.

Reservation in Employment

Your Bank observes all guidelines stipulated by the Government of India for reservation of posts in employment in All India and local recruitment. 15 % 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, another channel of resourcing started by the Bank.

The staff strength and rebrsentation of SCs and STs as on 31st March 2016 is as under 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 & EXServiceman employees who ensures compliance of various guidelines pertaining to the SC/ST/PWD &EX-Serviceman employees.

Bharat Ratna Dr. BabasahebAmbedkar Memorial Trust Your Bank has established the “Bharat Ratna Dr. BabasahebAmbedkar Memorial Trust” in 1991 for promoting welfare activities for the benefit of SC/ST employees and their family members.

Learning and Development

Baroda Academy has taken a large number of initiatives that include fundamental changes in Onboarding programmes to Leadership Development Programmes. Apart from e-learning, your Bank has deployed several innovative digital channels for reaching out to each employee.

Baroda Net Academy:

Baroda Net Academy has practical and knowledge enhancing e-learning courses on varied banking subjects in the areas of Retail Assets and Liabilities, Rural & Agri banking, SME Products, Operations and Services,Compliance and Professional Skill Development.

Employees have so far undergone more than 35,000 man hours of training on Baroda Net Academy. This has resulted in substantial savings on training costs.

Mobile Snippets:

Your Bank launched first of a kind Mobile App for the benefit of employees. The app is being effectively used to keep the employees updated on areas related to Banking through Daily News Flash. Your Bank’s employees are provided real time alerts on issuance of important circulars and other developments. Employees participate in the quizzes which are held on Mobile Snippets.

Your Bank has further moved ahead on capacity building initiatives with the foundation stone laid for setting up a Regional Academy at Bangalore. Four new satellite units have been operationalised at Muzaffarpur, Coimbatore, Visakhapatnam and Guwahati during the year.  

Large pool of empanelment of Training Agencies:

Your Bank has engaged reputed institutes for services like training with a unique template to evaluate intangible like training effectiveness. The entire process was carried out to focus on role oriented & behavioral programmers with the support of partnering agencies. A total of 21 Agencies were taken on board from a large pool of applicants that included IIM Ahmadabad, ISB Hyderabad, MDI Gurgaon etc.

MOU with IIM, Ahmadabad :

Your Bank signed MOU with IIM Ahmadabad during the year for developing case studies for BFSI domain. These case studies shall be made available for the Bank’s internal training system.

New Training programmers during the year:

Apart from aligning training to corporate concerns, your Bank has introduced new programs during the year. Your Bank introduced a new program on “Ask for Business” for inculcating habits of cross selling at branch level. Dedicated programmes for physically challenged employees were conducted at Baroda Academy to equip with various tools to uplift their morale and to integrate them with the mainstream. A special programme on Retail “CASA” (Create A Smile Always) for CASA (Current Account and Saving Account) was conducted, focusing on customer service and business development in effective manner through knowledge upgradation. Your Bank designed a special programme christened as “Baroda Gaurav” to cover the entire sweeper cum peons in your Bank focusing on self esteem, customer service, business etiquettes, dress code and importance of cleanliness and hygiene at branch level. Your Bank conducted a special training programme for officers handling Forex Portfolio making Forex business a thrust area, true to its image as India’s International Bank. Your Bank has for the first time arranged training to local staff of overseas centers through video conference which turned out to be very resourceful in bridging functional and cultural gaps. A two day programme ‘Positive Approach to Vigilance Administration’ was conducted for Executives at Apex Academy for better apbrciation of Vigilance. It was brsented as a tool for risk mitigation and address operational risks. Thus, a positive attitude to vigilance is being fostered at the organization level.

This has also been extended to other officers of the Bank. Nurturing Ethics Bank launched Code of Conduct Module on E-Learning platform with tests that required to be taken by all officers with a deadline of March 31st 2016. Bank also launched Social Media Policy with emphasis on ethical conduct on Social Media.

Mind Gym Series

To broad base learning, your Bank has reached beyond the usual formal training programmes by way of organizing events such as motivational speeches, video shows and group activities etc under the name Mind Gym Series. Lectures under this series are held at Baroda Corporate Centre. For building a team of employees with a healthy body, mind and soul, ‘Office Chair Yoga’ sessions were organized in the corporate office.

External Training

During FY16, 3340 staff members were nominated to various external training programmes. Your Bank considers External Training as 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.

Domestic Subsidiaries and Associates

The performance of your Bank’s subsidiaries, Joint Ventures and Associates was satisfactory during FY16. BOBCARDS Limited is a wholly owned subsidiary of Bank established in 1994 for issuance of Credit Card and Merchant Acquiring (ME Business) and also providing support services to the Bank for Debit Card Operations. The Company is having 38 Area Offices across the country. The Company which was incurring losses continuously on account of huge NPAs turned around during FY11 and has been earning profit since then. The Company has focused on all qualitative aspects of business development, which has resulted in better profitability, quality card base and ME base.. The Company re-engineered the process flow resulting in reduction of TAT for issuance of credit card/POS with proper checks and control. The Company is providing range of offers in association with MasterCard and VISA. During the year, the Company in association with MasterCard has also initiated reward programmes (Discount Coupon worth Rs. 2,500/-) for onboarding customers opting for MasterCard affiliation. Various other customer centric initiatives have also been introduced viz. online application module for tracking credit card/POS applications and stage wise automated status via SMS/E-mail etc. As a part of expansion plan, the Company has entered into strategic business tie-ups with the Government of Rajasthan, D-mart and some other important tie-ups are in process to enlarge Merchant Base. The Company is in the process of augmenting its system, processes and customer value proposition including introduction of co-branded products for achieving substantial growth in its card / ME base in the next year. Recently, the company has amended its Memorandum & Article of Association and the Company is exploring the feasibility to enter into new lines of business within the purview of NBFC along with its existing card business.

BOB Capital Markets Limited is a wholly owned subsidiary established by Bank in 1996 for doing Capital Market related business. It has licenses for Merchant Banking, Institutional Broking, Retail broking, Investment Banking and distribution of financial products. The Company has been showing improved performance post hiring of professional team. The focus is on investment advisory services, Debt & Equity Syndication and Capital market activities. The Company has recently acquired software for promoting online trading platform and has big plans to develop Retail trading business. BOBCAPS’s focus remains with institutional broking and distribution of financial products. It has 45 well known institutions empanelled with the Company and is in process of setting up software for institutional dealing. It has recently acquired PMS license from SEBI for doing Portfolio Management Services. In FY 2016, BOBCAPS successfully did its first IPO in recent times of Bharat Wire ropes amounting to Rs 72 Crores.

The Nainital Bank Limited was promoted by Late Bharat Ratna Pandit Govind Ballabh 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. Bank has planned to issue debit cards to its customers. Bank is also planning to provide white label ATM service to its customers in collaboration with TCPSL.

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. IndiaFirst is amongst the fastest Life Insurance Company to break even in the 5th year of operation and its industry ranking is 9th among the private players with market share of 4% and AUM (Asset under Management )at 9061/- crores in March 2016. The Company bagged award “Celent Model Insurer Asia Award” in the IT Management Best Practices Category for implementing Disaster Recovery on Cloud.

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. The Company is in operation 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. The list of clientele includes Jadcherla Exbrssway Private Limited, Navayuga Devanhalli Tollways Private Limited, Oriental (Pathways) Indore private Limited , Renew Wind Energy (Jath) Limited apart from -4- toll way companies under umbrella of L & T etc for refinancing / take out financing.

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, the Company was able to increase its average AUM to Rs. 9656 Crores. The strong focus on the institutional segment to grow its debts & money market products coupled with focus on Systematic Investment Plans for retail investors has resulted into satisfactory growth in AUM. The Company continues to focus on B15 (Beyond the top 15 cities of India) to develop and promote its business especially on higher value SIPs and lump sum investments and consequently, the share of B15 towns has been growing steadily. The Company is active in investor education initiatives

Implementation of Official Language (OL) Policy

During the period under review, your Bank made outstanding progress in implementing the Official Language Policy of Government of India. Besides compliance of various statutory requirements under Official Language Policy of the Union Government and directives issued by Reserve Bank of India, your Bank moved forward to promote Hindi as a tool for business development.

Your Bank adopted a well-structured Annual Action Plan for Official Language in order to achieve various targets set by the Government of India under its Annual Implementation Programme 2015-16 and the assurances given to the Committee of Parliament on Official Language during its visits to various offices/branches of the Bank. Your Bank could achieve 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, brsided over by MD & CEO/ Executive Director of the Bank, were organized regularly on quarterly basis. Under the guidance from the Committee, several new initiatives were taken during the year FY16. Your Bank took initiative of providing Internet Banking services, Mobile Pass book services to its customers in Hindi. All the alternate delivery channels viz. self service Pass Book printiers, cheque deposit machines, cash deposit machines, Multi function Kiosks etc. were equipped with Hindi user interface for the convenience of customers. All the ATMs of the Bank were enabled for printing of transaction slips and mini statements in Hindi and major regional languages for the convenience of customers.

Your Bank made significant progress in respect to automation of Quarterly Hindi Progress report submission system in the Bank. All the branches/offices are now submitting their QPRs through Pragati Online Package which was implemented during the last fiscal. Your Bank has made remarkable progress to provide pass books and other statement of accounts in Hindi to all the customers of linguistic region “A”, as suggested by the Parliamentary Committee on Official Language.

Your Bank organized an All India Seminar on “Rural Marketing and New Dimensions of Banking Business” in Bengaluru during the year wherein rebrsentatives from different banks took part. An Inter Bank Seminar was organized at Corporate Office, Mumbai on “Language Technology and Marketing of Banking Products”, which was attended by rebrsentatives of various PSBs/FIs in Mumbai. Your Bank celebrated World Hindi Day in January, 2016 at its all overseas territories, which was attended by eminent personalities related to Hindi Literature and valued customers and officials of Indian Embassies at respective overseas territories.

To contribute towards financial inclusion drive and the Pradhan Mantri Jan Dhan Yojana, your Bank continued to brpare and propagate through cartoon booklets, animation films in Hindi and also in regional languages for inculcating the habit of saving, escalating the features of Kisan Credit Card and emphasizing the benefits of timely repayment of loans. These cartoon booklets and animation films in Hindi were christened as “Chhoti Bachat badi Khushhali”, “ Aam ke aam guthliyon ke daam” and “Samay Par Karj Ka Bhugtan, Jindagi Bane Aasaan”, “Retail Loan se Khushali”. Further, your Bank also used the platform of Rajbhasha Karyakrams/ workshops for disseminating the features of Pradhan Mantri Jan Dhan Yojana and other Govt. sponsored schemes.

In its pursuit to be on the forefront in terms of OL implementation, your Bank instituted an award namely “Maharaja Sayajirao Bhasha Samman” in memory of its founder Maharaja Sir Sayaji Rao Gaekwad-III. The award consists of a Citation/ Memento and cash award of Rs. 1.01 lac. During the year under review, your Bank honoured Shri Prasoon Joshi, the eminent lyricist, advertisement maestro and poet with this award. Your Bank started regional language training to its employees so that they learn the basics of the concerned regional languages which would help them in discharging their duties well while dealing with local customers.

The Third Sub-Committee of parliament on official language visited your Bank’s branches/offices at Manali, Varanasi and Baroda during the period under review. The Committee apbrciated the efforts put in by your Bank for progressive use of Hindi. All the assurances given to the Committee have been fulfilled within the brscribed time frame.

Your Bank’s efforts earned accolades from Government of India and Reserve Bank of India. The Government of India awarded your Bank with the 1st Prize in the Rajbhasha Gaurav Shield Competition in Region ‘B’. Further, your Bank was awarded first prize for ‘ B’ Region and second prizes for Region ‘A’ and ‘C’ by Reserve Bank of India (RBI) under the RBI Rajbhasha Shield Competition. Besides, your Bank’s bilingual house journal “Bobmaitri” and Hindi house journal “Akshayyam” also received awards from RBI. Jaipur, Baroda, Jodhpur, Ahmedabad and Lucknow offices of your Bank also received awards from Govt. of India for their outstanding implementation of Rajbhasa. Your Bank also received awards from Public Relations Society of India, Ashirvad and many other organizations.

Your Bank continued with its unique scheme “Medhavi Vidyarthi Samman Yojana” for popularising Hindi amongst the students’ community. Under this scheme, cash prizes and commendation certificates are given to two students securing First and Second positions in M.A.(Hindi) examinations. This scheme, at brsent, is applicable in 64 universities of the country.

Your Bank published books in Hindi viz.”Khudara Rin”, “Banking Ke Vividh Aayam”, “NPA-Banking Kshetra Ki Sabse Badi Chunauti” and “Badalte Parivesh Me Banking” during the year for providing informative reading material in Hindi language.

Board of Directors (Appointment /Cessation of Directors during the year)

Appointments

Shri Ravi Venkatesan was appointed as a part time nonofficial director as well as non-executive Chairman by the Central Government u/s 9(3)(h) of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980, wef 14.08.2015 for a period of 3 years or until further orders, whichever is earlier

Shri P. S. Jayakumar was appointed as Managing Director & CEO by the Central Government u/s 9(3)(a) of The Banking Companies (Acquisition and Transfer of Undertakings) Act,1970/1980, w.e.f 13.10.2015 for a period of 3 years or until further orders, whichever is earlier. Smt. Usha A. Narayanan, after scrutiny of nominations and determination of ‘Fit and Proper’ status, was declared elected as Shareholder Director on the Board of the Bank w.e.f. 12.12.2015.

Shri Mayank K. Mehta was appointed as Executive Director by the Central Government u/s 9(3)(a) of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980, w.e.f 22.01.2016 up to 30.09.2018 i.e. the date of his attaining the age of superannuation or until further orders, whichever is earlier.

Cessations

Shri Ranjan Dhawan, Executive Director, ceased to be Executive Director w.e.f 1st October, 2015 on his attaining the age of superannuation from the Bank’s service. Shri K.V. Rama Moorthy, Executive Director, ceased to be Executive Director w.e.f. 29th August, 2015 on his appointment as Executive Director of United Bank of India. Auditors’ Compliance Certificate on Corporate

Governance:

The Auditors Compliance Certificate regarding the compliance of the conditions of Corporate Governance for the year 2015-16 is annexed with this report pursuant to “Part ”E” of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Business Responsibility Report

Business Responsibility Report as required by SEBI has been hosted on the website of the Bank (www.bankofbaroda. co.in). Any member interested in obtaining a physical copy of the same may write to the Company Secretary of the Bank.

Directors’ Responsibility Statement

The Directors confirm that in the brparation of the annual accounts for the Financial Year ended 31.03.2016:

 a) the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

b) the accounting policies framed in accordance with the guidelines of Reserve Bank of India were followed and 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 applicable laws to the Bank for safeguarding the assets of the Bank and for brventing and detecting fraud and other irregularities;

d) the directors had brpared the annual accounts on a going concern basis; and

e) the directors had ensured that internal financial controls followed by the Bank are in accordance with guidelines issued by Reserve Bank of India in this regard 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.

Acknowledgement

The Directors exbrss 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 apbrciation 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 apbrciation for the hard work and dedication of the members of your Bank’s Staff at different levels, which enabled your Bank to record consistent growth with quality year after year despite economic challenges and consolidate its position as one of the brmier banks in the country.

For and on behalf of the Board of Directors,

P. S. Jayakumar

Managing Director & CEO