MANAGEMENT DISCUSSION AND ANALYSIS

Economic and Banking Environment

The global economic position was characterized by uncertainty and modest global growth, in context of low commodity prices, volatile financial markets, demographic changes and China's transition to lower rates of economic growth. Low and/or negative policy interest rates in many advanced economies have increased the risks of volatility in asset prices and capital flows, while increasing the propensity for competitive currency devaluations. UMPs (Unconventional Monetary Policy) targeted at reviving growth creating disruptive spillovers given the growing inter-connectedness of the global financial system. Flagging trade volumes, softening commodity prices, idle capacities and anaemic economic fundamentals, particularly in a number of large Emerging Market Economies (EMEs) are increasingly impairing their ability to sustain economic and financial resilience against rising risks.

However, growth in India remained robust, compared to other major developing economies, sustained by strong government reforms, RBI's inflation focus, benign global commodity prices and fall in oil prices. India's gross domestic product (GDP) at factor cost at constant (2011-12) prices for 2015-16 is Rs. 113.5 trillion (US$ 1.668 trillion), as against Rs. 105.5 trillion (US$ 1.55 trillion) in 2014-15, registering a growth rate of 7.6 per cent. The economy has emerged as the fastest growing major economy and a safer haven for long term growth, due to improvement in its macro situation. FDI inflows touched $51.64 billion in the first 11 months of 2015-16 compared to $44.29 billion in the whole of 2014-15. The surge in FDI inflows comes at an opportune time for the country, which is expected to see a meaningful pick-up in domestic investments.

Banking Environment

Though, the overall domestic macro situation improved in 2015, the banking sector continued to face challenges due to lack of recovery in asset quality, growth-oriented capital constraints and sluggish profitability. The overall asset quality for the industry itself weakened in December 2015 as the total gross non-performing assets (GNPAs) recognized stood at Rs. 4,37,860 crore, up 50 per cent y-o-y (for public and private sector banks). PSBs accounted for Rs.3,96,386 crore or 90 per cent of the total gross NPAs as on Dec 2015 with the average gross NPA ratio of 7.32 per cent. Though the profitability of the banks impaired in the short run, because of asset quality review, it is expected to support economic growth in a sustainable and profitable way. The performance of Scheduled Commercial Banks (SCBs) during 2015-16 remained subdued due to tepid growth in loans and advances. The decline in credit growth is due to slowdown in industrial growth, poor earnings by the corporates, rebalancing banks portfolio in the background of rising bad loans, switch over of corporate financing needs to corporate bonds and commercial paper. Enhanced spending on infrastructure, speedy implementation of projects and continuation of reforms are expected to provide further impetus to growth. All these factors suggest that India's banking sector is also poised for robust growth as the rapidly growing business would turn to banks for their credit needs.

The total deposits in the Banking system stood at Rs.93,786.5 billion as on 18th March, 2016 registering a Y-o-Y growth of 9.91%. Similarly, the system's advances stood at Rs. 75,776.5 billion as on 20th March, 2016 registering a Y-o-Y growth of 11.34%.

Bank's Operations

Domestic Deposits

The Bank's total domestic deposits stood at Rs. 2,18,556 crore as on 31st March 2016 as against Rs. 2,39,819 crore as on 31st March 2015. The reduction in deposits was on account of cautious step taken by the Bank towards reducing the bulk deposits with a view to reduce the cost. The domestic CASA has increased from Rs. 60,787 crore as on 31st March 2015 to Rs. 63,609 crore as on 31st March 2016. It is noteworthy to mention that the savings bank deposits have grown by 11.20% to end at Rs. 52,244 crore. The CASA% also improved to 29.10 % as of March 2016.

The Bank with an objective to improve the CASA level had launched a campaign in this regard from 1st December 2015 to 29th February 2016 named "IOB Phoenix". During the Campaign period 3,83,500 Savings Bank accounts, 10,600 Current accounts and a total of 3,94,100 CASA accounts were opened.

Domestic Advances

The incremental NPAs and slower credit uptake has forced the Bank to be more cautious on large scale lending. With a view to diversify the risk and to improve the margins, the Bank focused more on Retail and MSME sectors during the fiscal year. The Domestic gross Advances stood at Rs. 1,55,428 crore as on 31st March 2016 as against Rs. 1,62,837 crore as on 31st March 2015.

Overseas Operations

As at the end of March 2016, the Bank had 1 4 establishments abroad, including 8 overseas branches, 3 Rebrsentative offices, 2 Remittance Centres and 1 Joint Venture Subsidiary. There are two branches each at Hongkong, Sri Lanka and Bangkok and one each at Singapore and South Korea. Rebrsentative offices are located at Guangzhou, China, Ho Chi Minh City, Vietnam and Al Karama, Dubai. Remittance Centres operate at Boonlay and Serangoon, Singapore. The Joint Venture subsidiary is functioning at Malaysia. The overseas business stood at Rs. 23,257 crore as of 31st March 2016 compared to Rs. 22,433 crore as of 31st March 2015.

Forex Operations

The profit on sale of investments was lower at Rs. 450 crore during 2015-16 (Rs.530 crore during 2014-15) before accounting category transfer loss at Rs. 1.54 crore as against Rs 253.48 crore in the brvious year. The profit on exchange from Forex business stood at Rs. 216 crore as against Rs. 215 crore in the brvious year.

Investments

Net investments of the Bank decreased to Rs. 79,190 crore as on 31st March 2016 from Rs.81,310* crore as on 31st March 2015. Total profit including sale of securities & profit on exchange, amounted to Rs. 700 crore during the year 2015-16 as against Rs.772 crore for 2014-15. 10-year benchmark yield has gone down from 7.81% to 7.46% during the year. (*Includes investment in IRDF amounting to Rs.2012.25 Cr. as on 31.03.2015)

MSME

The outstanding credit to Micro, Small and Medium Enterprises stood at Rs.31,804 crore as on 31st March 2016 as against Rs.32,251 crore as on 31st March 2015. However, the share of credit to Micro, Small and Medium Enterprises (MSME) in the total Domestic Credit of the Bank has increased from 19.80 % to 20.46 % during the year 2015-16. The number of borrowal accounts under Micro Sector has increased by 53.11% during the year as against the mandatory target of 10%. The Bank also extended 78,685 collateral free loans amounting to Rs. 3,155 crore to Micro and Small Sector under the CGTMSE scheme.

The Bank launched MUDRA Loan Scheme under Pradhan Mantri Mudra Yojana and has sanctioned 1,63,854 loans amounting to Rs.1,101 crore. Bank also introduced Mudra Debit Card on 7th Sept 2015 for the beneficiaries under Pradhan Mantri Mudra Yojana.

The Bank modified the existing credit scheme IOB SME Easy to suit the requirements of the industry. During the year under review, the Bank signed MoU with Tamil Nadu Small Industries Development Corporation, M/s Ashok Leyland Limited & M/s Auto Print Machinery Pvt Limited with an objective to provide more offerings to MSME customers.

During the year, the Bank conducted road shows in Global Investors Meet at Chennai, PMEGP Exhibition held at Pragati Maidan, New Delhi and Exhibition organized by MSME - Development Institute under Ministry of MSME for familiarizing Bank's MSME products, in association with CII under FFC, SMERA and various industries associations.

The Chamber of Indian Micro Small and Medium Enterprises (MSME) has honoured the Bank with three awards namely Best Eco-Tech Savvy Bank, Best Bank under Mudra Yojana in Mid sized Banks category and Runner up under Promotional scheme for Mid sized banks during 2015-16.

Retail Banking and Marketing

The performance under Retail Credit Schemes (including Jewel Loans - others) as on 31st March 2016 was Rs. 23,044 crore registering an increase of 31.44% over March 2015. Housing Loan portfolio grew at 33.39% over March 2015 position while the fresh disbursement made was Rs. 2,504 crore. Similarly the Pushpaka loans grew at 25.13% with a fresh disbursement of Rs. 904 crore. Bank's Jewel loan portfolio recorded a growth of 48.94% during the year under review.

Nayi Udaan Campaign

In order to increase the Retail Loan portfolio, Bank launched Nayi Udaan contest among all the staff. A total amount of Rs. 1,285 cores has been sanctioned by the branches during the campaign period between 5th Oct 2015 and 31st Dec 2015. The contest had generated a lot of enthusiasm among our staff members.

Arogya Mahila SB Accounts

The Bank has introduced Arogya Mahila on 2nd Jan 2016, which is a specialized SB product for women customers with improved features along with health insurance and maternity benefits.

Memorandum of Understanding

0 Pradhan Mantri Awas Yojana - Housing for All (Urban): The PMAY scheme is being implemented by Ministry of Housing & Urban Poverty Alleviation, Government of India. Lending Institutions were asked to participate in the scheme for promoting affordable housing for weaker section through Credit Linked Subsidy by signing MOU with any one Central Nodal Agency. The Bank signed an MOU with National Housing Bank (NHB) which is one of the Central Nodal Agencies on 24th Aug 2015 towards implementation of the scheme.

0 The Bank has an existing MoU with Apollo Munich Health Insurance which offers innovative health and travel insurance plans under retail segment. The Bank canvassed 23,926 policies with a brmium of Rs. 13.02 crore earning a commission of Rs. 2.06 crore for the year.

0 The Bank with an objective to shore up its fee based income has entered into a MoU with UTIITSL (UTI Infrastructure Technology and Service Limited) for collection of PAN applications.

Vidya Lakshmi Portal

In order to administer and monitor scholarship as well as Educational loan Schemes in various Banks, Vidya Lakshmi portal was launched under Pradhan Mantri Vidya Lakshmi Karyakram. The Bank is a member in the programme and the portal accessibility is available for the bank, which is developed and maintained by NSDL e- Governance infrastructure Limited.

SkipTrace Activity

An exclusive exercise has been undertaken to recover dues from the retail loan untraced borrowers under Skip Trace Activity whereby a recovery of Rs. 33.57 crore has been recovered from 12,970 accounts.

Mid Corporate

Mid Corporate department caters to the lending requirements of borrowers in the range of Rs. 40 crore and upto Rs.100 crore. In the brvailing market conditions, the Bank has been selective in extending new/ enhancing existing credit limits. During the year 2015-16, Mid Corporate Group have sanctioned total credit limits of Rs.8,669 crore. Aggregate exposure under Mid Corporate segment as on 31st March 2016 stood at Rs.15,768 crore including Fund Based and Non fund based exposure.

Large Corporate

Large Corporate is a major vertical under credit portfolio taking care of credit requirement of borrowers other than Agriculture where credit requirement is above Rs.100 crore. Under this vertical, Bank has a fund based exposure of Rs.74,830 crore and Non Fund based exposure of Rs.25,376 crore for the year ended 31st March 2016. During the year, the Bank sanctioned 42 proposals for Rs.5,514 crore with enhancement and 8 fresh proposals for Rs.2,533 crore totaling to Rs.8,047 crore from Corporate Clients all over India.

To promote focused attention on Large Corporate accounts, the Bank operates Specialized Large Corporate branches at 7 places all over India (Ahmedabad, Bangalore, Coimbatore, Delhi, Hyderabad, Kolkata and Mumbai). These Specialized Large Corporate Branches have exposure of around Rs.15,862 crore as on 31st March 2016. Apart from the above, 15 existing branches in Metropolitan Centres are identified as Large Corporate Branches.

These Specialized branches are focusing in lending to borrowers coming under Large Corporate segment, making available necessary expertise in Credit Appraisal and quick delivery of credit.

Priority Sector Credit

The Bank's Gross Credit under Priority Sector has increased to Rs.67,615 crore as on 31st March 2016 which is 40.29 % of Adjusted Net Bank Credit (ANBC) as of March 2015. The Bank has surpassed the stipulated norm of 40% under priority sector credit during the year under review.

Agriculture

During the year, the agricultural credit portfolio of the Bank registered an incremental growth of Rs. 1,001 crore from Rs.29,236 crore as on 31st March 2015 to Rs. 30,237 crore as on 31st March 2016. The Bank's ratio of agricultural advances to Adjusted Net Bank Credit was at 18.02 % against the required norm of 18%. The Bank disbursed Rs.38,867 crore under Special Agricultural Credit Plan (SACP) as against the target of Rs.30,300 crore during the year.

Loans to Small and Marginal farmers

The Bank granted loans to Small/Marginal farmers and the outstanding as on 31st March 2016 was Rs.11,783 crore forming 7.02% of ANBC against the target of 7%.

Loans to Non-Corporate farmers

The Bank's outstanding under loans to non corporate famers stood at Rs.20,710 crore as on 31st March 2016. The Bank achievement under this segment stood at 12.34% of ANBC as against a target of 11.57% of ANBC.

Weaker Section

The Bank granted loans to weaker section of the society and the outstanding as on 31st March 2016 is Rs.21,824 crore forming 13.01% of ANBC as against the target of 10%. Outstanding under loans to SC/ST under Priority Sector as on 31st March 2016 stood at Rs.8,424 crore, 12.46% of total priority sector advances.

Microfinance

During the year, the Bank credit-linked 45,388 Self Help Groups (SHGs) with a credit outlay of Rs. 719 crore. The cumulative number of SHGs credit linked by the Bank is 6,21,439 with a total disbursement of Rs. 7,511 crore as of March 2016.

Credit flow to Women

Bank's credit flow to women stood at Rs.15,201 crore as of 31st March 2016 constitutes 9.06% of the Bank's Adjusted Net Bank Credit.

Specialized Agriculture Credit Branches

In order to increase the flow of credit to the farming community, Bank has opened 34 Specialised Agriculture Credit Branches in various parts of the country exclusively for Agricultural lending. These branches have loans outstanding of Rs. 269 crore as on 31st March 2016 with an incremental growth of Rs. 48 crore during the year.

Lead Bank Scheme

The Bank has been assigned Lead Bank responsibility in 13 districts in Tamil Nadu and one district in Kerala. The Bank is also the Convenor of State Level Bankers' Committee of Tamil Nadu (SLBC). During the year under review the Bank has conducted four meetings of the SLBC. In addition, the Bank convened 22 special / core committee / sub­committee meetings during the year.

Pradhan Mantri Jan-DhanYojana (PMJDY)

0 Banks have opened 79.87 lacs accounts in Tamil Nadu under PMJDY till 31.03.2016. 0 SLBC, Tamil Nadu has established an exclusive Toll Free number for grievance redressal pertaining to PMJDY. The complaints received through the call centre are sent to the respective Banks for immediate resolution. 0 SLBC organised the State Level Launch function of PMJJBY, PMSBY and APY schemes on 9th May 2015.

Pradhan Mantri MudraYojana (PMMY)

0 SLBC has conducted special Loan Distribution functions for Pradhan Mantri Mudra Yojana Loans (MUDRA) on 26th Sep 2015, 2nd Oct 2015 and 19th Dec 2015 in which Hon'ble Union Ministers have participated and distributed loans to the beneficiaries.

0 Banks in the State have sanctioned 47.81 lac loans under MUDRA scheme to the tune of Rs.15,846 crore as on 31st March 2016 out of which loans to the tune of Rs.15,497 crore have already been distributed against the annual target of Rs. 10,545 crore.

0 SLBC has established a dedicated Toll Free number for MUDRA loans as per the instructions of Ministry of Finance, Government of India for grievance redressal. The complaints received through the call centre are sent to the respective Banks for immediate resolution.

SLBC Initiatives for Financial Inclusion

0 SLBC, Tamil Nadu has conducted IBA's Capacity Building for Business Correspondents of various Banks through 31 RSETIs established in the State.

0 As instructed by Ministry of Finance, SLBC arranged to verify the functioning of the Business Correspondents engaged by the Banks in the State through PMJDY Call Centre.

0 More than 19 lac beneficiaries in the rural area are being paid pension through Smart Cards operated by Business Correspondents in the State under Tamil Nadu Government's Old Age Pension Scheme.

0 SLBC has initiated steps to cover 11 lac beneficiaries in the urban area also for payment of pension through bank accounts using smart cards.

0 1.91 lac fishermen are paid lean period assistance of Rs.4000/- twice a year through electronic bank credit in the State.

0 Around 8 lac brgnant women are being paid grant of Rs.12,000/- every year under Dr.Muthulakshmi maternity benefit scheme through electronic bank credit in the State.

0 The wages of more than 65 lac MGNREGS workers in the state are being routed through bank accounts.

SLBC Initiatives for Financial Literacy

0 SLBC has mapped 62 Government ITIs, 559 Private ITIs, 165 Skill Centres and 35 Vocational Training providing Institutions to the 59 Financial Literacy Centres in the State for providing Financial Literacy courses to the students.

0 The FLCs have completed Financial Literacy courses in all the Government ITIs and are conducting the courses in the Private ITIs and skill centres.

SLBC Initiatives on Credit Flow

Banks in Tamil Nadu have achieved the following as of December 2015

0 Achieved higher CD ratio of 113.56%.

0 102% under Annual Credit Plan 2015-16.

0 44.81% under Priority Sector against the national norm of 40%.

0 18.38% of Agricultural Advances against the national norm of 18%. 0 12.79% of advances to weaker sections against the national norm of 10%.

Regional Rural Banks

Bank has sponsored two Regional Rural Banks viz., Pandyan Grama Bank in Tamil Nadu and Odisha Gramya Bank in Odisha. Pandyan Grama Bank operates in 16 districts of Tamil Nadu with a branch network of 297 and staff strength of 1,263. As on 31st March 2016 the RRB had a business mix of Rs. 8,599 crore with a CD ratio of 92.04%. Odisha Gramya Bank has brsence in 13 districts of Odisha with a network of 549 branches and staff strength of 2,431 members. As on March 31, 2016 the RRB had a business mix of Rs.12,992 crore with a CD ratio of 51.55%. Financial Inclusion

Bank has introduced Smart Card Banking through 2,767 Business Correspondent as per the guidelines of Reserve Bank of India for providing Banking facilities in un-banked villages. The Bank has issued 20,13,212 smart cards and the number of transactions undertaken in the smart card terminal is 4,06,53,115. It is noteworthy to state that in co ordination with Government of Tamil Nadu, IOB Smart Card Banking has been enabling about 2.99 lac old age pensioners to get their monthly pension and about 0.25 lac Sri Lankan Tamil Refugees in 61 camps to obtain their monthly dole.

As per the guidelines from MoF, GOI, the Bank enabled Aadhar Enabled Payment System (AEPS) ON-US and OFF-US Transactions in Business Correspondent Hand Held Devices. As on 31st March 2016, 9,96,379 AEPS ON­US transactions and 1,774 AEPS OFF-Us transactions were carried out by Business Correspondents.

Pradhan Mantri Jan DhanYojana (PMJDY)

The Bank is implementing PMJDY as per the directives of Ministry of Finance, Govt. of India. The Scheme was launched by the Prime Minister of India on 15th August 2014. The Bank has opened 38,62,633 BSBD Accounts and issued 37,30,544 RuPay Debit Cards till 31st March 2016 under this scheme.

Jansuraksha Schemes

The Jansuraksha Schemes were launched by the Prime Minister of India on 1st June 2015. The Bank is enrolling customers under Jansuraksha schemes like PMJJBY, PMSBY and Pension schemes like Atal Pension Yojana.

Rural Self EmploymentTraining Institutes (RSETIs)

In line with the guidelines issued by Ministry of Rural development, Govt of India, the Bank had set up 12 RSETIs to provide training to farmers, members of SHGs, beneficiaries under SGSY, Educated unemployed youths, artisans and beneficiaries belonging to weaker sections. In addition to the above, the Bank has set up one RSETI in the Nilgiris District for the benefit of the tribals. The RSETIs are managed by SNEHA trust established by the Bank. During the year under review, the Bank has conducted 366 training programmes benefiting 9,270 unemployed youths.

Corporate Social Responsibility

0 Sakthi - Indian Overseas Bank Chidambaram Chettyar MemorialTrust

The Trust set up jointly by the Management of the Bank, Indian Overseas Bank Officers Association and All India Overseas Bank Employees Union to perpetuate the memory of Bank's Founder Shri M. Ct. M. Chidambaram Chettyar, continued to provide Entrebrneurial Development Training to women to empower them socially and financially to meet the challenges. The Trust has conducted several Entrebrneurship Development Programmes (EDP) and skill based training programmes exclusively for women at various centers. During the year, the Bank conducted 7 programmes covering 1 47 beneficiaries. The Bank has so far conducted 86 programmes covering 3,951 beneficiaries of which 1,217 belong to SC/ST and 112 belong to minority .

0 Participation under Special Industry Initiative for Jammu & Kashmir

The Special Industry Initiative for Jammu & Kashmir scheme "UDAAN" is a placement linked scheme in which Public & Private Sector Organizations were called to participate by selecting students from the Jammu & Kashmir state, providing them training and placing them either within their organization or outside or enabling them to become employable. The scheme was initiated by the Bank as part of Corporate Social Responsibility in coordination with National Skill Development Corporation (NSDC). The process included conduct of written examination and interview process. In response to the same, 47 candidates were selected for 2 months training programme at Bank's Staff College at Chennai from March, 2016, wherein 28 candidates have joined.

0 Financial Literacy During the year, the Bank has spent about Rs.0.28 crore towards Corporate Social Responsibility by imparting Financial Literacy through Financial Literacy Centers (SNEHA) established at 23 centres. The counselors of these centres are educating the people in rural and urban areas with regard to various financial products and services available from formal financial institutions, provide face-to-face financial counselling services and offer debt counseling to indebted individuals. They are also conducting periodical camps at various places. During the current year, they have handled sessions on Financial Literacy to 8,687 students of Industrial Training Institute, Skilling centres and various schools in the state of Tamil Nadu and Kerala.

0 Chennai Floods

The Bank had sponsored and contributed Rs. 1,50,000 for the flood relief camp during the floods in Chennai during December 2015.

Merchant Banking Activities

All general banking branches in India were made ASBA enabled branches to accept ASBA applications for IPO, FPO and Rights Issues. E-ASBA has continued to be in usage effectively by the customers. The Bank is also acting as a Syndicate ASBA bank to accept IPO/FPO/Rights applications from Brokers. The Bank continues to act as Merchant Banker for issues, Debenture Trustee, Dividend/Interest Warrants etc.

The Bank is a Depository Participant (DP) of NSDL and is extending depository related services through 56 service centre branches. In order to improve the number of demat accounts, the Bank became a Depository Participant of CDSL by offering the service through 13 service centres. During 2015-16, with approval of NSDL, 250 branches were authorized to open Demat Accounts in addition to the existing service centres with a view to increase the number of Demat Accounts.

The Bank has tied up with Emkay Global Financial Services Limited to provide 3 in 1 E-trading facility during the year 2015-16 to improve the fee based income. In order to cater to the financial requirements of Stock Brokers, Bank has a Capital Market Services Branch at Mumbai which takes necessary steps to improve its services.

Customer Service

The Bank is a member in Banking Codes and Standards Board of India (BCSBI). BCSBI has revised various Fair Practice Codes which is elaborately covering all the areas of Banking. As per the revised codes, 'Fair Practice Code for Lenders' has been incorporated.

A web based online system called SPGRS (Standardised Public Grievance Redressal System) assisting customers to lodge complaint online with status tracking facility is already in place. The Regional offices and Branches are enabled to view the complaints in the system and resolve the same immediately. Toll Free Teleservices for Redressal of Customer Grievances (No.1800-425-4445) is provided on 24x7 basis for receiving the complaints from the customers to resolve within 48 hours.

The Bank has conducted the Customer Service Survey for the year 2015-16 to assess the level of customer service rendered by the branches.

The Bank in the capacity as the Convener of Customer Service Centre in Chennai City has resolved all the complaints received during the year

Recovery Management

Bank has 16 specialised Asset Recovery Management Branches (ARMB) to improve the recovery under NPA accounts. The services of Recovery Agents were utilised to expedite recovery. High value Slippages of Rs.5 crore and above were reviewed by the Board and the specific directions given by the Board is duly carried out. Top NPA accounts of Rs.1 crore and above were monitored from the corporate office on a regular basis and the borrowers were personally met by the General Manager (Law & Recovery) wherever necessary. Top executives including the Managing Director & CEO, the Executive Director and the General Manager (Law & Recovery) review all high value NPA accounts on a regular basis with field functionaries.

Special Schemes empowering Branch Managers to accept One Time Settlements in small value NPA accounts for all NPAs of less than Rs.10 lac have been revalidated and valid up to 30lh June 2016. An amount of Rs. 794 crore was recovered in small value NPA accounts with outstanding less than Rs.10 lac. Out of this, recovery in accounts with outstanding less than Rs.1 lac amounted to Rs. 439 crore. Special scheme empowering Regional Managers to restore NPA accounts of value above Rs 10 lac and upto Rs 1 crore was launched and it is valid upto 30th June 2016. The recovery in accounts with outstanding of more than Rs.10 lac and upto 1 crore is Rs. 301 crore.

Action under SARFAESI act has been initiated in all eligible accounts and properties brought for sale. Frequent LokAdalats/Recovery camps have been conducted especially in respect of small value NPA accounts. In the National Lok Adalat, Bank's participation was significant. 6,503 cases amounting to Rs.54 crore were settled and an amount of Rs. 8 crore was recovered on the spot. In the brvious Lok Adalats 94,742 cases amounting to Rs.1,336 crore were referred of which 14,351 cases amounting to Rs. 147 crore were settled. Spot cash recoveries received in accounts amounting to Rs.43 crore.

Ministry of Finance has advised the Banks to initiate recovery action in the matter of RC issued cases. The Bank appointed Nodal Officers at various centres and they are directed to take up all RC issued cases and bring the securities for sale. Bank has been coordinating with Presiding Officers/Recovery Officers of various DRTs and these one to one discussions /deliberations have helped the Bank to identify the issues and speed up the recovery.

During this financial year, 1,133 DRT cases were filed amounting to Rs. 5,140 crore (claim amount). 467 cases involving Rs.1,376 crore have been decided. The recovery made in DRT cases is Rs.65 crore. There are 666 pending cases amounting to Rs.3,764 crore. The Bank is following up with DRTs closely and trying to bring speedy conclusion to the cases. In these cases DRTs are resorting to e-auction, wherever there are auction proceedings. As against the corporate target of Rs 2,750 crore for total cash recovery (including recovery from written off accounts and recovery of undebited interest) the achievement was Rs 2,191 crore. The up gradation of NPAs alone during the year was Rs.1814 crore as against the target of Rs. 2000 crores. In respect of SARFAESI action, the Bank has issued notices for 21,263 cases amounting to Rs.16,204 crores (cumulative). Amount recovered through compromise is Rs 2,267 crore from 6.693 accounts and partial recoveries were made in 19,715 accounts amounting to Rs 3,499 crore.

A separate Control Room (War Room) has been set up at Central Office with dedicated officers for analyzing recovery efforts and also to accelerate the process of recovery. The process is used optimally to show quantitative results in recovery efforts. The working of Control Room (War Room) is monitored by team of General Managers.

Disposal of petitions received under RTI Act

The Bank received 1,822 applications seeking information under RTI Act during the year 2015-16. All the requests were duly replied within the specified period and disposed of based on merits. The Banks First Appellate Authority received 194 First Appeals from those who were not satisfied with the reply of Central Public Information Officer and the same were duly disposed as per the provisions of the Act. 33 applications resulted as Second Appeals with the Hon'ble Central Information Commission were disposed by Central Information Commission by passing appropriate decisions, without any adverse remarks against the Bank, which were duly complied with.

Risk Management

The Bank adopted the New Capital Adequacy Framework (Basel II) with effect from March 31, 2008. In line with Reserve Bank of India guidelines, the Bank had adopted the Standardised Approach (SA) for computation of Credit Risk Capital, Basic Indicator approach (BIA) for calculating the capital for Operational Risk and Standardised Measurement Method (SMM) for Market Risk Capital computation. The Bank complies with the regulatory requirements in this regard and maintains capital as per Basel III guidelines issued by RBI with effect from 1 "April 2013.

With regard to the guidelines on Liquidity Coverage ratio and Net Stable funding ratio, Bank is reporting LCR to RBI from Jan, 2015 onwards. NSFR is effective from January 2018. Basel III introduced a simple, transparent and non-risk based leverage ratio, which is calibrated to act as a credible supplementary measure to the risk based capital requirement. Bank also complies with the regulatory requirement on Leverage ratio and reports to RBI on a quarterly basis from the quarter ending June 30,2013.

As a measure of robust credit risk management process, the Bank formulated Credit Risk Management Policy and Collateral Management & Credit Risk Mitigation Policy duly approved by the Board. The Credit Policy Committee (CPC) acts as an executive committee for appropriate management of Credit Risk. The Bank has implemented a tiered system for validation of internal credit ratings at specified levels, which is independent of credit departments, in order to draw unbiased rating for borrowers, for moving to advanced approaches. In respect of proposals falling under the powers of Bank's Central Office, the validations of ratings are done at Risk Management Department, Central Office. Exposures on Corporate /PSEs/Primary Dealers are assigned with risk weights based on available external ratings. For this purpose, the Reserve Bank of India has permitted Banks to use the ratings of the six domestic External Credit Rating Agencies and the Bank uses the ratings assigned by these ECRAs for capital relief purpose. The Bank uses the solicited ratings assigned by any of the ECRAs.

The Bank also conducts industry study for various industries wherever the exposure of the Bank for a particular industry is beyond a threshold limit fixed by the Bank. The Bank conducts portfolio analysis of the credit portfolio. The Bank is also in the process of upgrading its Risk Management systems and procedure for migrating to the advanced approaches under Basel III framework.

Reserve Bank of India issued final guidelines on Liquidity Risk Management effective from March 2013. The guidelines cover brparation and submission of the statements of Consolidated Operations including domestic operations and overseas operations separately at various frequencies. The Bank has put in place system and procedure in this regard in compliance with the RBI guidelines and submitted the data.

The Bank has put in place Board approved Market Risk Management Policy and Asset Liability Management (ALM) policy for effective management of Market risk, Liquidity Risk and Interest Rate Risk. The Liquidity risk is managed through gap analysis based on residual maturity/behavioral pattern of assets and liabilities on daily basis. The Market Risk management policy lays down well defined organizational structure for market risk management functions and processes whereby the market risks (carried by the bank) are identified, measured, monitored and controlled within the ALM framework, consistent with the Bank's risk tolerance level. The policies set various risk limits for effective management of market risk and ensure that the operations are in line with Bank's expectation of return to market risk through proper Asset Liability Management.

The Bank has put in place mechanism of short-term dynamic liquidity management and contingent funding plan. Prudential (tolerance) limits are brscribed for different residual maturity time buckets for effective asset liability management. Liquidity profile of the Bank is evaluated through various liquidity ratios. The Bank has also drawn various contingent measures to deal with any kind of stress on liquidity position. The Bank ensures adequate liquidity by Domestic Treasury through systematic and stable funds planning.

Interest rate risk is managed through use of gap analysis of rate sensitive assets and liabilities and monitored through prudential (tolerance) limits brscribed. The Bank estimates earnings at risk and modified duration gap periodically for assessing the impact on Net Interest Income and Economic Value of Equity with a view to optimize shareholder value. The Asset-Liability Management Committee (ALCO) / Board monitors adherence to prudential limits fixed by Ihe Bank and determines the strategy in the light of the market conditions (current and expected) as articulated in the ALM policy.

Basel II framework provides a combrhensive approach to risk measurement in the banking entities, by adopting three-pillar structure (such as minimum capital ratio, supervisory review process and market discipline). The supervisory Review Process (Pillar 2) is to ensure that banks have adequate capital to support all the risks in their business and also to encourage them to develop and use better risk management techniques for monitoring and managing their risks. Pillar 2 requires the banks to establish an Internal Capital Adequacy Assessment Process (ICAAP) to capture all the material risks that are not covered under Pillar I brscriptions, which includes those that are not covered or partly covered. Bank has adopted ICAAP framework and it is being annually reviewed.

Under the Pillar 2 of Basel II framework Banks are required not only to ensure adequate capital to support all the materials risks in bank's business, but also to develop and use better risk management techniques in monitoring and managing their risks. In line with BCBS document RBI vide their circular dated 26'" June 2007 had issued guidelines on Stress testing. Bank has adopted stress testing with an objective to evaluate bank's capacity to withstand stressed situations in terms of Net Interest Income (Nil) and Capital Adequacy (CRAR).

RBI on 17" Dec 2015 has issued guidelines on methodology of Marginal Cost of Funds based Lending Rate (MCLR) computation and interest rate on advances. Bank is implementing the new interest rate methodology of MCLR based pricing w.e.f April 1,2016.

The Bank framed operational risk management policy duly approved by the Board. It outlines organization structure and detailed processes for management of operational risk. The basic objective of the policy is to closely integrate operational risk management processes of the Bank by clearly assigning roles for effectively identifying, assessing, monitoring and controlling or mitigating operational risk and by timely reporting of operational risk exposures including material operational losses. Operational risks in the Bank are managed through combrhensive and well-articulated internal control framework. The Operational Risk Management Committee (ORMC) will be an executive committee for appropriate management of operation risk management function in the Bank. ORMC reviews operational risk exposures across the Bank.

Other policies adopted by the Board which deal with management of operational risk are (a) Information Systems security policy (b) forex risk management policy (c) Policy document on know your customer (KYC) and Anti-Money Laundering (AML) procedures (d) Business continuity and disaster recovery plan (e) compliance policy and (f) policy on outsourcing of Financial Services.

Credit Monitoring

The Bank focused towards containing the slippages to the minimum level by following up all SMA-2 accounts to the lower sub class viz SMA-1 & SMA-0 and to brvent accounts from slipping to NPA. Various system driven monitoring utilities were provided to Branches/Regional Offices/Zonal Offices for early detection of warning signals in the accounts to enable them to initiate timely corrective measures. The Bank has put forth rigorous efforts to ensure 100% review/renewal of accounts in time. The Bank also took immediate corrective actions on observations of adverse nature made by Statutory Auditors during quarterly reviews/ Annual audits.

Loan Review Mechanism

In compliance with 'Guidance Note on Credit Risk' issued by RBI in Oct 2002 and in tune with Bank's own 'Credit Risk Management Policy, a cross section of borrowal accounts with credit exposure of Rs.50 lac and above were subjected to on-site Credit Audit.

During 2015-2016, a total of 13,528 borrowal accounts were subjected to Credit Audit by Concurrent Auditors of the Bank covering total advance of Rs. 90,784 crore which includes 663 accounts with exposure of Rs 20 crore and above. The observations made in CALRM were informed to Credit Verticals apart from following up with Zonal Offices/ Regional Offices/Branches for compliance.

The Credit Audit exercise helped the Bank to identify deficiencies/early warning signals of sickness/weakness in borrowal accounts and to take appropriate and timely remedial measures to brvent deterioration in the quality of advances and thereby to protect the interests of the Bank.

Corporate Debt Restructuring

Under the CDR mechanism set up under the aegis of RBI, the Bank during the financial year 2015-16 received reference in only 1 account with an exposure of Rs. 60 crore. The flow of requests for restructuring under CDR mechanism stopped with RBI withdrawing regulatory forbearance on asset classification upon restructuring. With continued recession and consequence of RBI's asset quality review, the restructured accounts suffered downgradation and had to exit from CDR mechanism on account of failure of restructured package. The exposure of the bank in restructured accounts under CDR as on 31 'March 2016 reduced to Rs.8,249 crore in 75 accounts of which, 10 accounts aggregating Rs.1,092 crore have completed satisfactory performance period. One account with an exposure Rs.40 crore exited CDR after paying Right of Recompense. The companies engaged in Engineering Procurement and Construction (EPC) contract works catering to infrastructure sector, iron & steel industry and Infrastructure activities forms major part of restructured accounts. During the FY 2015-16, Strategic Debt Restructuring was invoked in 7 CDR accounts with exposure of Rs.1,433 crore under JLF mechanism.

Industrial Rehabilitation

As at the close of business as on 31" March 2016, total cases under BIFR and AAIFR are 55 accounts with an exposure of Rs.3,613 crore. Of the above, 8 accounts aggregating to Rs. 71 crore are Standard, 4 accounts amounting to Rs. 47 crore were sold to ARC and the remaining 43 accounts are NPA accounts amounting to Rs.3,542 crore. During the year, 25 new accounts with an exposure of Rs. 2,300 crore were registered with BIFR and 7 accounts amounting to Rs.229 crore came out of SICA/BIFR. The Bank is acting as operating agency in 5 accounts with an exposure of Rs.111 crore in 2 accounts while the other 3 accounts are settled under OTS. The Bank received operating agency fee of Rs. 0.50 lac during the year2015-16.

Compliance

The Bank has well defined Compliance Policy as per Reserve Bank of India guidelines and has in place systems and procedures for managing Compliance Risk and mitigating the same. Necessary circulars/instructions on the regulatory guidelines were issued. Each branch/Regional office/Zonal office/Central Office department has one Compliance Officer who submits compliance certificates. The overall compliance level is submitted to Board/Audit Committee of the Board(ACB). The directions from Board/ACB are carried out. The Bank has provided a Web Portal viz., Banking Rules.com  in Bank's intranet wherein all the regulations, guidelines of the various regulators like Ministry of Finance, RBI, SEBI etc., can be accessed at a single point.

Disciplinary Proceedings

During the Financial Year 2015-16, C&DAC has disposed off 490 files comprising of 205 Vigilance and 285 Non Vigilance cases. During the year under review, the Bank issued 445 charge sheets. The disciplinary proceedings are in various stages of progress in respect of 452 cases as on 31st March 2016. Efforts are made to complete the disciplinary action process within the stipulated time frame, by continuous review by executives. All long outstanding vigilance disciplinary cases, where domestic enquiry was in progress as on 30th  Sept 2015 were completed before 31st  March 2016. (Except 23 Cases which are pending with Courts).

Inspection

During the financial year, all the 2,684 branches allotted for Central Office Inspection were inspected and achieved 100% inspection of branches.

As per the directions of the Audit Committee of the Board, Information Security Audit was conducted at 39 Regional Computer Centres and 19 branches (Top 10 Deposits and Advances branches). The Bank proposes to conduct continuous Information Security Audit of Data Centre and Transaction Banking Departments operations from 2016-17. The Bank has floated Request for Proposal (RFP) in Feb 2016 and vendor has been selected.

Migration Audit of all the branches were undertaken and completed through the internal sources as the Bank migrated to Finacle Software during the year. The Bank also completed the process of selection of Auditor for migration Audit of Top 20 branches under the directives of ACB.

The Banks Internal audit software RBIA- e-THICK have also successfully migrated to FINACLE environment and was put to use after testing. Stock Audit was allotted for 832 accounts for the financial year 2015-16. Revenue Audit/ Test Check Audit was allotted for 2,468 branches during this financial year 2015-16. Central office Inspection of all CBO's and Currency Chests (32) were conducted during the financial year. The Bank has considerably reduced the expenditure during the financial year by conducting Review of concurrent Audit by Video Conferencing.

Vigilance

During the year 2015-16 the Bank continued to take effective steps for disposal of pending Vigilance Disciplinary cases within the time schedule brscribed by Central Vigilance Commission. As on 31 "March 2016,257 Vigilance Disciplinary cases were disposed and penalties awarded. As on 31March 2016,156 vigilance cases were pending of which only 11 cases were beyond 24 months mainly due to court stay. In most of the cases enquiries have been ordered and respective summing ups are awaited from Presenting Officer/Defence.

In compliance to the CVC guidelines, details of frauds were placed to Operational Risk Management Committee and Audit Committee of the Board and the observations/ suggestions received have been acted upon by the Bank. In compliance of RBI Master Circular, cases of Large Value Frauds (Amount involving Rs.100 lac and above) were placed to the Committee for Monitoring Large Value Frauds and the observations of the Directors were acted upon and the Action Taken Report was placed before the Bank's Board. Preventive Vigilance measures have been strengthened through periodical branch Inspection/visits by Chief Vigilance Officer. The following are some of the measures taken to strengthen brventive vigilance

> Periodical/Surprise Inspections: Periodical and surprise inspections of branches are conducted on compliance of systems and procedures including KYC/AML guidelines, etc.

> Alertness Award Scheme: This scheme is an exclusive scheme for recognition and reward of alertness in staff members in brvention/ detection/foiling of frauds, which has been approved by the Bank's Board on 20'" September 2013.

> IOB Vigil: A new quarterly in-house news letter to sbrad vigilance awareness was launched in June 2013. Learning points from frauds, success stories, vigilance news, messages from Top Management, etc. are circulated among staff members.

> Action against Third Party Entities: Bank has already put on intranet, the list of banned third party entities viz., Chartered Accountants, Valuers and Lawyers for their failure to comply with the bank's instructions which enabled perpetration of fraud on the bank by the borrowers.

> Bank has identified Officers having aptitude for investigation, data analysis etc. and they are given appropriate training in investigations.

> To create vigilance awareness, Bank conducted essay competition for all the officers and award staff members and awarded prizes to winners during Vigilance Awareness Week 2015.

> Bank released a book "A Handbook on Investigations" for investigators with formats for reporting.

All the Regional Offices have been posted with Vigilance Officers to handle Vigilance matters and their role functions have been well defined which includes submission of monthly report on visit to branches. A Workshop on Investigation, Enquiry Proceedings, was conducted for a team of senior officers for investigating large value frauds through Video conferencing from Central Office. The participants were refreshed on various issues relating to Preventive Vigilance measures and post-fraud follow-up action. Vigilance Awareness week was observed by the Bank in October 2015 i.e. from 26°" October 2015 to 3151 October 2015.

Information Technology

Core Banking Solution

The Bank has successfully migrated all Domestic branches and other offices from Home grown Crown-CBS solutions to the Infosys Finacle software.

Alternate Delivery Channels

> Internet Banking: The Bank has home-grown Internet Banking suite, which has contemporary offerings like Multiple scheduling of payments. Tamilnadu Chief Minister Relief Fund donations are collected online through IOB as well as Other Bank Internet banking and through VISA Cards.

> Payment Gateway: Payment Gateway for payment of utility bills have been implemented. Many religious institutions and educational institutions have been brought under payment gateway for E-payment. IOB Debit Card as payment option in IRCTC site, has been enabled.

> Mobile Banking: New Mobile banking Solution has been enabled catering to various services. Mobile Banking solution provides second factor authentication through OTP (One Time Pin) and transactions can be done through Smart phone application and USSD. Recently IMPS - M2P (Merchant to Person) has been introduced. This enhances the E-brsence across all merchant websites using IMPS. Reset of Mobile Banking MPIN is enabled in Internet Banking for customers.

> M-Passbook: This electronic application of a physical passbook for savings bank was enabled. This facility empowers users to view their SB transaction on their smart phones.

> E-Corridors: Bank is planning to open E-Corridors which will provide ATM, Self Pass-Book Printing Kiosks, Cash Recycler and Internet-Banking Kiosks. This facilitates the customers to print their passbooks, deposit cash, withdraw cash and use the internet banking facility at one place. 635 Pass Book Printing Kiosks and 10 Cash recycler have been installed.

> Financial Inclusion Project: The utilities such as Withdrawal, Deposits Balance enquiry. Funds Transfer & Mini Statement Ru-Pay card On-us Transactions have been enabled through Business Correspondent's Hand Held Device(Micro ATM) in branches.

> Business Intelligence & Data Warehousing: The

Bank has introduced Business Intelligence(BI) Suite, which gives interactive Dash Boards, alerts, analytics etc,. System is established to store huge amount of historical data and data relating to 12 years have been ware-housed.

Transaction Banking

> ATM / Cash Dispensers (CDs): The total number of ATMs/CDs of the Bank stood at 3,793 as on 31 "March 2016 comprising of 2,719 onsite and 1,074 offsite ATMS. During the year under review, the Bank has installed 250 ATMs /CDs. The Bank's 810 ATMs are sbrad across Metro Centres, 928 in Urban Centres, 1061 in Semi Urban Centres and 994 in Rural Centres.

r- Debit Cards: The Bank has a card base of 119 lac as on 31" March 2016 with 49.57 lac new debit cards issued during the year under review. The Bank has issued more than 40.01 lac Rupay Debit Cards under PMJDY Scheme. The Bank has also launched a Platinum RuPay EMV Debit Card with added benefits to customers. EMV chip Debit Cards which has additional security features has also been introduced. Bank issues Special Cards (Connect Cards) to Gen Next customers, RuPay Debit cards, Classic/Gold/Platinum/Signature Debit cards under VISA, Master Debit Cards, Kissan Debit Cards for Agriculture Borrowers and SME Debit Cards for Small Industrial Customers and RuPay Platinum Cards.

> Credit Cards: The Bank has 52,283 credit cards as on 31s' March 2016 with 2,978 cards issued during the year. Bank issues Classic and Gold EMV Credit Cards with varying credit limits.

> Payment Gateway Operations: The Bank has 11 aggregators who have nearly 12,000 sub-merchants under their banner including public sector organizations like BSNL, LIC of India etc. The Bank's direct clients include State government enterprises & Educational institutions.

> RTGS/NEFT/lnternet Banking/Mobile Banking:

The Bank is one among the top 20 Banks in terms of NEFT volume and transactions. The internet banking registrations have shown a good growth during 2015-16. Presently 10.22 lac customers registered for Internet Banking and 1.09 lac customers registered for Mobile Banking as on 31st March 2016.

The Bank enabled online fee collection facility in internet banking for 8 institutions. The Bank also introduced OTP as additional factor of authentication for amounts of Rs.30,000 and above and for all E-Commerce transactions through internet banking.

Net Banking customers can Initiate Intra Bank Funds Transfer and Inter Bank transfers through NEFT and RTGS transactions, PPF accounts, payment of Income Tax, Excise Duty, Service Tax, Customs Duty, Port Trust Payment, State Government VAT payments, Maharashtra GRAS, Maharashtra Sales Tax, West Bengal GRIPS and Tamil Nadu Transport Department Charges through online. The Bank introduced remittances to Chief Minister Flood Relief Funds through net banking. The Bank offers facility to open /close/renew Term Deposits online. The Bank also offers options to pay their Utility and Bills payments, seed AADHAAR Number with Bank accounts and attach PAN number. E-token/Digital signature facility is available to Corporate & Individual Net Banking customers for enhanced security. The Bank has introduced Mobile App based OTP generation which is more secured and cost saving. As at the end of March 2016, electronic transactions stood at 68.4% of the total transactions of the Bank. After introducing the new mobile banking application, the number of mobile banking transactions and amount increased substantially. Funds Transfer P2P, P2A and P2M introduced in IMPS module. Customer friendly M-passbook introduced during the year in which a customer can view their account statement upon downloading the mobile app. Balance enquiry through missed call was also introduced during the year.

Cheque Truncation System (CTS) has been implemented in 1,877 branches in 46 regions across the country. The Bank plans to complete the implementation in all the regions during this FY 2016-17 in all centres as and when clearing houses take decision to migrate to CTS.

Branches, Regional Offices are periodically sensitized to effectively market e-products and to reduce paper based transactions. Training is imparted through Staff Training Centres. Customers requesting for DDs/POs and who issue cheques are being advised to make use of RTGS/NEFT/lnternet Banking. The Bank issues Debit cards to all active SB accounts and has advised Staff members to use only e-channels. Business Intelligence analytics have been developed and deployed to monitor and analyse the performance of branches in multiple alternate delivery channels.

Government Accounts Department Direct Tax Collections

The Bank is authorized to collect Income Tax and other Direct Taxes in physical mode and through On Line Tax Accounting System (OLTAS) by 354 branches all over India. The Bank is also authorized to receive e-payment of Direct taxes. During the year under review, the Bank handled transactions worth Rs. 9,545 crore earning an agency commission of Rs.1.81 crore.

Indirect Tax Collections

The Bank is authorized to collect indirect taxes through Electronic Accounting System in Excise and Service Tax (EASIEST) by 217 branches authorized by CBEC. The Bank is also authorized to receive e-payment of Excise and Service Tax. E-payment of Customs Duty and e-refunds of Duty drawback have started in March 2011. The Bank handled transactions amounting to Rs. 8,302 core earning commission of Rs. 1.43 crore.

Collection of State Government revenues

The Bank handles e-collection of Commercial Taxes (VAT) through internet banking in the states of Tamil Nadu, Pondicherry, Andhra Pradesh, Karnataka, Uttar Pradesh, Jharkhand, Odisha, Delhi, Gujarat, West Bengal and Maharashtra and UT. The Bank is also handling physical collections in selected locations in Gujarat, Uttar Pradesh, Maharashtra, West Bengal and Delhi. The Bank handled transactions worth Rs.5,821 crore under State Government revenues earning commission of Rs.4.28 crore.

Payment of Pension

The Bank is servicing 2.20 lac pensioners belonging to Central Civil, Defence, Railways, Telecom, State Civil, EPFO, CMPFO, TNEB, Chennai Port Trust, Chennai Dock Labour Board, Local Fund Audit of Tamil Nadu and Malaysian Government Pension apart from credit through ECS.

Centralised Pension Processing Centre disburses pension on a centralized basis to Central Civil, Defence, Railway and Telecom Pensioners for 56,486 pension accounts. The Bank has disbursed about Rs.865 crore during the year and received reimbursement under single window scheme for Central Civil, Defence, and Railway and Telecom pensions within 2-3 days from the date of disbursement. The Bank is actively pursuing for centralization of Tamil Nadu State Civil Pension by the end of June 2016. The Bank also disbursed various types of pension payment to the tune of Rs.2,364 crore during the year. During the period under review bank has earned commission of Rs.4.30 crore.

The Bank also handles Treasury business of the Government of Tamil Nadu at 13 branches and Government of Orissa at 3 branches and handled Rs.257 crore of receipts and Rs. 2,273 crore of payments. The Bank also received authorization for handling treasury business by one branch in Kerala. The Bank services the account of Planning Commission, National Informatics Centre and Department of Telecommunications and handled receipts and payments of Rs.6,118 crore and Rs.125 crore respectively. Post Office Collection (Drawing and Deposit) Account is maintained at 63 branches in Tamil Nadu handling Rs.60 crore receipts and Rs.183 crore of payments. The Bank actively participates in the Government of India Savings Schemes like Senior Citizens Savings Scheme 2004,8% Taxable Bond, Public Provident Fund contributing subscriptions of about Rs. 107 crore.

Inter Branch Reconciliation

Inter - branch reconciliation has assumed greater significance in view of its vulnerability. Reserve Bank of India has advised Banks to accord priority to inter-branch reconciliation at par with Business development. RBI has fixed six months time for elimination of inter-branch entries.

Physical inter branch advices have been done away with and only system generated inter branch advises are being issued. There are no debit entries outstanding in Compass and Demand Draft Reconciliation accounts as on 31.03.2016 beyond six months. The elimination of Credit entries in DDR is possible only on brsentation of the drafts by the payees. No debit entries are outstanding for more than 3 months under Funds Transfer and 2 months under TT's Paid Reimbursement Accounts as against RBI norms of six months. Both Demand Draft reconciliation and Compass account have been migrated to CBS (Finacle) environment.

Human Resources Development

Training

As a customer centric Bank, training has been imparted on contemporary issues of banking apart from basic areas of banking through internal and external modes.

As the Bank's software migrated from CBS to Finacle Version 10x in FY 2015 - 16, the focus of training was on imparting knowledge to end users on the operations of Finacle Version 10x. Training on Finacle Version 10x has been imparted to 14,703 staff members in FY 2015 -16.

Apart from the above, regular training on Banking topics have been imparted to officers and clerks in the field of Credit Appraisal/ Credit Monitoring, Non Performing Asset Management and Recovery, Risk Management, Priority Credit, Foreign Exchange, Know Your Customer/Anti Money Laundering, Banking Codes, Small & Medium Enterprises / Micro Finance & Rural Credit, IT Products & Preventive Vigilance.

Special Training Programmes on Leadership Development, Customer Relationship Management, Faculty Development were conducted during the year. Special training programme for women officers were also conducted. A special workshop was conducted during the year for developing the internal assessors of the Bank to ensure smooth implementation of the competency assessment exercise. Induction programme for newly recruited probationary officers, specialist officers have been conducted apart from br confirmation programme for Probationary Officers. Pre Promotion Training for SC/ST members who are eligible for promotion have been conducted at various Staff Training Centers.

The Pre Retirement counseling programme has been conducted for Officers and Award Staff Members who retired during the year. Bank has engaged the services of retired executives on contract basis to derive the benefit of their experience, knowledge and expertise in various facets of banking. Executives/Officers have been nominated for overseas training to acquire international perspective on banking & technology and share their expertise and experience with other participants.

The internal training system comprises of One Staff College, eleven Staff Training Centers and One Rural Banking Training Centre. Internal training was imparted to 22,863 staff comprising of 14,725 Officers, 7,994 Clerical and 144 Sub-staff by conducting 1,128 programmes. Of the total staff trained 4,366 belonged to Scheduled Caste (SC) and 1,661 belonged to Scheduled Tribe (ST). Bank has conducted 3 On-location programmes across various branches for 81 participants and deputed 1,104 Executives/ Officers for training programmes conducted by reputed external institutes. Further, 5 executives were deputed for training abroad.

The Bank in coordination with external agencies conducted various health awareness sessions by medical professions on various topics such as Lifestyle and Health, Cardiac Screening, Orthopedics, Cancer awareness, Gas safety, Dental Camp, Eye Camp, etc.

Succession Planning & Motivation

To identify and describe the Behavioral and Managerial competencies which are critical for success in a work situation or work role, Competency Assessment was initiated at the level of Chief Managers in the Bank. Various assessments were conducted for 41 identified Chief Managers to develop their competencies and groom them to take up more complex & higher responsibilities in key critical areas in future.

As a part of Motivation scheme, Online Quiz Programme on Banking products across all regions pan India was conducted in FY 2015 -16. Quotes, articles, stories, etc. are being sent daily from Mentoring Cell at Central Office to all the employees.

Recruitment & Staff Strength

During the year 2015-16, the Bank recruited 242 Specialist Officers (106 Rural Development Officers, 31 Marketing Officers, 11 Rajbhasha Officers, 33 IT Officers, 6 Law Officers, 5 HR/ IR Officers, 3 Security Officers and 47 Credit Officers), 792 Probationary Officers, 1,311 Clerks and 8 Subordinate staff.

The Bank's staff strength stood at 31,846 comprising 16,000 Officers, 12,325 Clerks and 3,521 Sub-staff as on 31s' March, 2016. Of the total staff strength, 6,440 members belong to Scheduled Caste category, 2068 to Scheduled Tribe Category, and 7522 to Other Backward Caste Category. Staff Strength includes 10,097 Women employees, 1,121 ex-servicemen and 567 physically challenged members.

Industrial Relations

In order to monitor and maintain good industrial relations climate in all offices/Branches of the Bank, circulars/ guidelines are issued from time to time regarding enforcement of discipline, policies to be followed in recruitment, promotion and redressal of grievance between Management and Union as well as among employees etc., which has led to reduction of cases/ disputes under Industrial Relations.

Online submission of Return of Movable, Immovable and valuable properties by officer employees as on 31st March 2015 has reached a record of 99% submission. As per Lokpal and Lokayukthas Act, 2013, the award staff members of the bank were also advised to submit their assets and liability statement every year, starting from 2015. With regard to complaints/matters pertaining to IR matters committed by staff members, disciplinary action, wherever necessary, had been initiated against erring members to maintain discipline and harmonious industrial relations in the Bank. The guidelines issued by the Ministry of Finance and Indian Banks Association with regard to staff matters are implemented expeditiously by issuing circulars for the benefit of employees. The Industrial relations environment for the Bank remained cordial and conducive for achieving organization's objectives.

Court cases are reviewed by the Bank at Apex level as per Ministry of Finance guidelines and efforts are taken to settle/ get the Court cases disposed of expeditiously. In such cases which cannot be settled, the cases are contested strongly. As per the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act 2013, all Administrative offices (Central, Zonal & Regional office) have constituted internal complaints committee. As per the recommendations of the Committee, appropriate action has been taken to redress the grievance.

Security

Security measures, mandatory and recommendatory, were correctly and strictly implemented at all the branches, ATMs and administrative offices. Reviews were done periodically keeping in view the local law and order situation and necessary steps were taken to fortify security thereby creating a safe business environment for customers and staff. The Bank continued to stress on brventive measures for security and fire fighting arrangements and inculcation of security consciousness among staff to ensure safety to life and property. Bank has sensitised staff members regarding security awareness and ensured installation and functioning of CCTV and Burglar Alarm 24 x7x365 days incorporating Passive Infra Red (PIR) sensors and vibrations sensors in all branches and deployment of Armed Guards/ Watchmen respectively at vulnerable branches and ATMs from outsourced private security agencies registered vide Director General Resettlement/reputed agencies.

Rajbhasha (Official Language Policy)

The Bank took all efforts to implement the Official Language Policy of Government of India during the year 2015-16. During the year 267 Staff members who do not possess working knowledge of Hindi were trained in IOB Praveen and Banking Pragya Courses. 2,976 Staff members possessing working knowledge of Hindi were trained in General Hindi Workshops held during the year.

Minutes of all meetings of all board level committees were translated in Hindi. As per the directives of Govt, of India, the Bank enabled Hindi Unicode font in Regional Offices and provided the facility of downloading of the same on Bank's intranet. Banking terminology has been provided on Bank's intranet for the benefit of staff members. Training has imparted to 2,196 staff members for the use of Hindi in computers. Six issues of quarterly Hindi Magazine "VANI" were published during the year and all the issues have been ported on Bank's intranet. Bank's website has been made available in Hindi also. During the year IOB -LEKHMALA was also published.

Drafting and evidence committee on Official Language had inspected Ernakulam Regional offices on 9th January 2016. Third Sub Committee of Parliamentary Committee on Official Language inspected Thangachimadam Branch on 23rd January 2016. Both the committees had exbrssed satisfaction over the implementation of Official Language in these centres. Annual Official Language Review Meeting for Official Language Officers was held on 9th to 11th April 2015 to assess the progress made in the area of Official Language implementation in Regional Offices and provided inputs for intensive implementation in all Regions.

Govt, of India has awarded First prize to bank's In-house Hindi magazine VANI for the year 2014-15 in 'C Region on September 14, 2015. During the year, Reserve Bank of India awarded third prize to Banks inhouse Hindi Magazine "Vani" for the year 2013-14 in the Inter-Bank competition for Hindi house magazines of banks and financial institutions. Regional Offices were inspected on Official Language implementation and Rajbhasha Shields were awarded to Regional Offices and branches for doing commendable work in official language implementation. All India level Seminar and Review Meeting was held on 18lh & 19* March 2016 at Guwahati by Department of Financial Services.

Planning & Economic Desk

The Planning function continue to derive useful results towards monitoring region wise monthly Profit & Loss movement, Corporate level Budgeting, reporting provisional daily MIS to top Management & various study analysis. The economic desk supports top management with day-to-day developments apart from analyzing the Government/ RBI policies at regular intervals.

Parliamentary Committee

The Bank hosted the visit of following committees during the financial year 2015-16:

A) Committee on Industry at Ootcamund from 31st May -2nd June 2015.

B) Committee on Paper Laid on Table (COPLOT) at Ootacamund from 10,h -12* June 2015.

C) Committee on Subordinate Legislation at Ootacamund from 18th-20* June 2015.

D) Committee on Constitution 122nd Amendment at Chennai from 20,h -23rd June 2015.

E) Committee on House Committee at Chennai from 9lh to 11,n Sep 2015.

F) Committee on welfare of OBC at Chennai from 4,n -11* Feb 2016.

Outlook 2016-17

The global economy is projected to grow at 3.2 percent in 2016 and 3.5 percent in 2017. Domestic growth outlook remains positive for 2016-17 mainly on account of various structural reforms undertaken, expectations of a normal monsoon, easing of CPI inflation and rising private consumption. Focus on rural and social infrastructure sector and decline in subsidy outgo have resulted in improvements in the fiscal front, both quantitatively and qualitatively. Over the recent past, steel prices have strengthened both, globally and domestically, especially after introduction of the Minimum Import Price. Domestic consumption is expected to be the main driver of the likely acceleration in economic growth this year. Benign inflation and an accommodative monetary policy stance of the RBI are expected to help increase discretionary spending. With new guidelines from the central bank requiring banks to set their lending rates based on marginal cost of funds, or rates offered to new deposits, there will be greater transmission of reduced policy rates to lending rates. The consequent reduction in the cost of borrowing is likely to boost aggregate demand. Owing to moderate level of inflation, reduced current account deficit, fiscal consolidation, increased industrial production coupled with more focus on government reforms would expect to accelerate the growth rate between 7-7.5 per cent in 2016-17.