MANAGEMENT DISCUSSION AND ANALYSIS

Global Economy

• Global output is estimated to have grown by 3.1 percent in 2015, with 1.9 percent growth for advanced economies and 4.0 percent growth for emerging market and developing economies. Global growth is projected to remain modest in 2016, at 3.2 percent, before picking up to 3.5 percent in 2017.

• The modest acceleration of growth in advanced economies to a large extent reflects support from lower energy prices and accommodative monetary policies, notwithstanding the expected gradual Federal Reserve tightening in the United States.

• Growth in emerging market and developing economies accounts for a huge share of projected global growth in 2016 and prospects across the countries remain uneven and generally weaker than overthe past two decades.

• International Monetary Fund (IMF) has projected growth in advanced economies at 1.9 per cent for 2016 and is expected to marginally improve to 2.0 per cent in 2017. Growth is projected to increase marginally, as the projected decline in growth in Japan due to the planned consumption tax increase is more than offset by slightly stronger performance in most other advanced economies.

• Growth in China is expected to decline to 6.5 percent this year and 6.2 percent in 2017, reflecting announced policy stimulus of 4-trillion-yuan. Afurther weakening is expected in the industrial sector, as excess capacity continues to unwind, especially in real estate and related upstream industries, as well as in manufacturing. Services sector growth should be robust as the economy continues to rebalance from investment to consumption. High income growth, a robust labor market, and structural reforms designed to support consumption are assumed to keep the rebalancing process on track over the forecast horizon

Indian Economy

• The Indian economy has emerged as a bright spot in the world economy, becoming one of the fastest growing large economies in the world. Indian economy has made substantial improvements in its macroeconomic fundamentals and taken immense strides in reducing macro-vulnerability with reforms in key areas: fiscal prudence, price stability and comfortable level of external current account. The recent growth revival in India is brdominantly consumption-driven. As per the four-year data from the new series, the share of private final consumption expenditure in GDP at current market prices increased from 56.2 per cent in2011-12to59.8 per cent in 2015-16.

• As per the Advanced Estimates released by the Central Statistics Office, economy is estimated to grow at 7.6 per cent in 2015-16, higher than growth of 7.2 per cent achieved in 2014-15.

• Growth in the agriculture sector in 2015-16 has continued to be lower than the average of last decade, while growth in the services sector moderated slightly, but still remains robust; while the acceleration in manufacturing growth compensated for it. The farm sector has experienced two years of low growth on account of two consecutive years of deficient south-west monsoon rainfall. Hence, growth in Agriculture is estimated to grow at 1.1 per cent for FY 2015-16 as compared to (-) 0.2 per cent in 2014-15.

• Growth in industries is projected at 7.3 per cent in FY 2015-16 vis-a-vis 5.9 per cent in the corresponding period of the brvious year. Within the industrial sector, manufacturing is expected to register a growth of 9.5 per cent. In the first nine months of 2015-16, the growth rate in terms of the IIP was 3.1 per cent as compared to 2.6 per cent in the corresponding period of 2014-15. The industrial sector has continued to perform well in the wake of various reforms measures undertaken by the government recently.

• Services sector is projected to decline marginally on a year-on-year basis to 9.2 per cent from 10.3 per cent in 2014-15. There is a decline across all the sectors while there was a steeper fall in 'Public administration & defence' which is projected at 6.9 per cent in 2015-16 vis-a-vis 10.7 per cent in 2014-15.

• Growth in Core industries for the Financial Year 2015-16 declined to 2.7 per cent as against 4.5 per cent in Financial Year 2014-15.

• Nikkei India Manufacturing Purchasing Managers' Index (PMI) - a composite indicator of manufacturing performance, improved in March on the back of better domestic demand and increased output. At an eight-month high of 52.4 in March, the seasonallyadjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI) pointed to a manufacturing upturn.

• Headline inflation as measured by Retail Inflation or CPI was under RBI's target of+/- 4 per cent. CPI for the month of March 2016 was at 4.8 per cent as compared to 5.3 per cent in March 2015. Despite the rise in Pulses which remained in the double digits, inflation declined owing to steep fall in global oil prices as well as metals on account of the declining economic trend in China.

• Headline Wholesale Price Index (WPI) inflation declined following the global trend of declining commodity and producers prices. WPI-based inflation was flat at (-) 0.9 per cent in March 2016 as compared to (-) 2.8 per cent in March 2015. The inflation for primary commodities increased, while the decelerating trend in inflation for manufacturing and fuel products continued.

• India's merchandise exports for the period April-March 2015-16 contracted by 15.85 per cent to US$ 261.1 billion as against US$ 310.3 billion. Imports for the period April-March 2015-16 contracted by 15.28 per cent to US$ 379.6 billion as against US$ 448.0 billion. Oil imports during April-March, 2015-16 were valued at US$ 82.6 billion which was 40.24 per cent lower than the oil imports of US$ 138.3 billion in the corresponding period last year. The trade deficit for April-March, 2015-16 was estimated at US$ 118459.37 million which was lower than the deficit of US$ 137694.95 million during April-March, 2014-15.

• India's Current Account Deficit (CAD) narrowed in third quarter of the fiscal mainly on account of lower trade deficit. CAD declined to $7.1 billion (1.3% of GDP) in Q3 of 2015-16 as against $7.7 billion (1.5% of GDP) in Q3 of 2014-15 and $8.7 billion (1.7% of GDP) in Q2 of 2015-16. However, there was strong foreign direct investment inflows into the economy which was sufficient to cover the CAD, resulting in accretion in foreign exchange reserves during the quarter On a cumulative basis, the CAD narrowed to 1.4% of GDP in April-December from 1.7% in the corresponding period of 2014-15, on the back of the contraction in the trade deficit.

Monetary Developments

• The agreement on monetary policy framework signed between the Government and Reserve Bank of India (RBI) in February 2015 has shaped the monetary policy stance in 2015-16. Monetary Policy Framework was essential to have a modern monetary policy framework to meet the challenge of an increasingly complex economy.

• Monetary policy framework in the economy witnessed two landmarks since the September 2015 Monetary Policy Report (MPR). Firstly, the inflation target of 6 per cent for January 2016 adopted formally under the Monetary Policy Framework Agreement (MPFA) was achieved. Secondly, in the Union Budget for 2016-17, the Union Finance Minister announced that the Reserve Bank of India Act is being amended to provide statutory basis for a monetary policy framework and a monetary policy committee (MPC). This committee-based decision making will mark a watershed in the historical evolution of monetary policy in India.

• RBI's monetary policy stance in FY 2015-16 was to reach the inflation target of 6 per cent by January 2016 and fuller transmission of monetary measures by the Bank statement. Inflation evolved closely along the trajectory set by the monetary policy stance. 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 100 bps - 25 bps each on March 4, 2015 and June 2, 2015 and another 50 bps on September 29, 2015. RBI kept the policy repo rate unchanged at 6.75 per cent in the sixth bi-monthly monetary policy review on February 2,2016.

• Credit growth in the economy weakened due to weak industrial and corporate activity. Non-food bank credit of the Bank was weaker in the first half of the financial year and picked up in the second half of the financial year. For the FY 2015-16, Credit growth improved to 11.3 per cent as compared to 9.1 per cent of the corresponding period of the brvious year while Deposits growth declined to 9.9 percent as against 10.7 per cent in FY 14-15. CD ratio of the banking industry was at 77.6 per cent.

• The 7.59 per cent 2026 10-year benchmark G-sec yield closed at 7.5 per cent as at end-March 2016.

• Call money rates generally hovered above the repo rate during the year and ended at 5.8 per cent.

• Broad money (M3) growth for the FY 2015-16 marginally declined to 10.3 per cent as compared to 10.8 per cent in the corresponding period of the brvious year.

• FII's net investments in Indian equities and debt have touched record highs in the past financial year, backed by expectations of an economic recovery, falling interest rates and improving earnings outlook. FIIs net investments stood at Rs.18,106 crore in March 2016, out of which Rs. 16,731 crore was invested in equities and Rs. 1,375 crore (US$ 201 million) was invested in debt.

• Gross and net market borrowing requirements of the Government for FY16 were budgeted at Rs.6,00,000 crore and Rs. 4,56,406 crore which were higher by 1.4 per cent and 2.1 per cent, respectively, than Rs. 5,92,000 crore and Rs. 4,46,922 crore in the revised estimates for FY15. During Q3 of FY16, the Government issued dated securities worth Rs. 1,50,000 crore taking the gross borrowings from Apr-Dec of FY16 to Rs. 5,01,000 crore (83.5 per cent of BE), as compared to Rs. 4,97,000 crore (83.9 per cent of BE) during corresponding period of FY15. The gross market borrowings is planned to be lowered by Rs. 15,000 crore expecting similar amount to be raised through Sovereign Gold Bond Scheme and Gold Monetisation Scheme. Government issued securities with maturity of 40 years to elongate maturity on Oct 26,2015.

• Equity markets in India were affected by weaker than expected corporate earnings forecasts and the debrciation of the rupee. The sensex surged a day after the Union Budget with a return of portfolio flows, improvement in business sentiment and recovery in the rupee amidst strong cues from Asian and European equity markets after China's central bank cut the reserve requirement ratio.

• Some of the key measures and guidelines taken by Government of India in Financial Year and Reserve Bank of India (RBI) 2015-16:

-Micro Units Development Refinance Agency (MUDRA) Bank was launched on8April 2015.

-In order to mobilize gold for productive purpose and to reduce the country's reliance on imports of gold, two main schemes were launched in 2015: (i) the Sovereign Gold Bond Scheme and (ii) the Gold Monetization Scheme.

• RBI granted "in-principle" approval to 11 Applicants for Payments Banks

• RBI granted "in-principle" approval to 10 Small Finance Banks

• RBI revised the Priority Sector Lending-Targets and Classification

• Review of Prudential Guidelines - Revitalising StressedAssets in the Economy

• RBI released Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises (MSMEs)

• RBI revised the guidelines on Financial Inclusion Fund (FIF)

• Early Recognition of Financial Distress, Prompt Steps for Resolution and Fair Recovery for Lenders: Framework for Revitalising Distressed Assets in the Economy

• RBI announced Marginal Cost of Funds Methodology for Interest Rate on Advances

Year ahead

Indian economy in 2016-17 will witness a continuation of the reform momentum built in the brvious year which is aimed at growth and macroeconomic stability. The reforms that were initiated last year for 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 programme delivery through direct benefit transfer and other measures, encouraging saving and financial linkages through deepening of banking services and liberalising foreign direct investment policy in various sectors will be taken forward this year.

Strong growth in FY 2017 is built on the following key developments: movement in the crude oil prices, which would have a three-fold impact on fiscal deficit, current account deficit and price levels in the economy, recovery in the global economy, expected level of monsoon in the economy as brdicted by Indian Meteorological Department (IMD) and the possible impact of the implementation of 7th Pay Commission on the inflation target of 5 per cent in 2016-17.

DETAILED BUSINESS OVERVIEW

• Global Business of the Bank has touched a level of Rs. 3,10,918 crore as on March 31, 2016 from Rs. 2,98,057 crore in the brvious year, registering an increase of Rs. 12,861 crore or 4.31 percent.

• Domestic Business has increased by Rs. 14,974 crore to Rs. 2,99,738 crore from Rs. 2,84,765 crore as on March31,2015, registering a growth of 5.26 per cent.

RESOURCE MOBILISATION

• Global Deposits of the Bank reached a level of Rs. 1,78,286 crore as on March 31, 2016 from Rs. 1,69,225 crore in the brvious year, with an increase of Rs. 9061 crore or 5.35 per cent. Domestic Deposits of the Bank has increased by Rs. 10,794 crore to Rs. 1,72,652 crore from Rs. 1,61,858 crore in the brvious year, registering a growth of 6.67 per cent.

• Domestic CASA Deposits has reached the level of Rs. 55,153 crore as on March 31, 2016 from Rs. 48,039 crore in the brvious year, recording a growth of 14.81 per cent.

CREDITDEPLOYMENT

• Gross Advances of the Bank stood at Rs. 1,32,632 crore as against Rs. 1,28,832 crore as on March 31, 2015, recording a growth of 2.95 per cent. Domestic Credit has increased by Rs. 4180 crore (3.40 per cent) to Rs. 1,27,087 crore as on March 31,2016 as against Rs. 1,22,907crorelastyear.

• Domestic Non food credit has increased by Rs. 4154 crore (3.44 per cent) to Rs. 1,25,072 crore as on March 31, 2016 as against Rs. 1,20,918 crore in the brvious year.

• Global Credit-Deposit Ratio as on March 31,2016 stood at 74.39 percent.

BRANCH NETWORK AND EXPANSION

• Bank has expanded its distribution network by 153 branches during the year to 2562 branches, comprising of 740 Rural, 682 Semi urban, 654 urban and 486 Metropolitan branches. The Bank has opened 109 branches across 22 states on August 21st 2015, a third unique event in the history of the Bank.

• In the 375 underbanked districts identified by Reserve Bank of India, the Bank has 981 branches. The bank also has 417 branches in Minority concentrated Districts and 179 branches in the unbanked centres.

• Bank has 3 foreign branches in Singapore, Colombo and Jaffna.

SEGMENT-WISE PERFORMANCE

Priority Sector Credit:

• Priority Sector advances stood at Rs. 50,333.52 crore as on 31.03.2016 and constituted 40.85 per cent of Adjusted Net Bank Credit (ANBC) as of March 2015.

Agriculture credit:

• Agriculture advances stood at Rs. 23,017.56 crore as on 31.03.2016 and constituted of 18.68 per cent of Adjusted Net Bank Credit (ANBC) as of March 2015.

• Bank's exposure to lending to Small Farmer/Marginal Farmer stood at 8.27 per cent of ANBC as against the mandatory target of 7 per cent by March 2016.

• Bank's position with regard to overall direct lending to noncorporate farmers is 17.77 per cent as of March 2016, which is 6.20 per cent more than the system wide average of 11.57 per cent fixed by RBI for the year 2015-16.

Agricultural Disbursement:

• Under Special Agricultural Credit Plan (SACP) during the year 2015-16, Bank disbursed farm loans to the tune of Rs. 19,185.31 crore during the FY 2015-16 surpassing annual target of Rs. 16,500 crore. Bank leads the farm sector growth with a disbursement of Rs.10,066.01 crore to

16.08 lakh small/marginal farmers, the backbone of rural economy.

• Progress under Revised Kisan Credit Card (KCC) Scheme: Ease of Agri Investment Credit is made available through revised KCC with 5 year assessment. Kisan Credit Cards have been issued to 1.64 lakh farmers with bank loan of Rs. 1755.30 crore.

Intensive Farm Credit Campaigns:

• With the dual objective of enhancing credit flow to agriculture and strengthening relationship with the farmers, every year the Bank is observing "Intensive Farm Credit Campaigns" during Kharif and Rabi Seasons to extend timely and adequate credit to farmers.

• During the campaigns, at the villages, applications are mobilized from the farmers and loans are sanctioned on the spot obviating the branch visit.

• During "Intensive Farm Credit Kharif Campaign" from 16/06/2015 to 16/09/2015, a sum of Rs. 4729 crore was disbursed and during "Intensive Farm Credit Rabi Campaign" from 23/11/2015 to 29/02/2016, a sum of Rs. 5010 crore was disbursed under agriculture covering a total of 14.27 lakh farmers.

Investment Credit to Agriculture:

• Agri "Investment credit campaign" was conducted from November 2015 to February 2016 for a period of four months and a total amount of 17 crore was disbursed.

• A Joint Liability Group (JLG) is an informal group comprising brferably of 4 to 10 individuals but can be up to 20 members, coming together for the purposes of availing bank loan either individually or through the group mechanism against mutual guarantee.

• Bank is encouraging financing through Joint Liability Groups, with a view to render credit support to those category of farmers who do not possess proper land records/not having own lands.

• The outstanding credit to JLGs stood at t22.09 crore covering 1064 JLG, as against the March 2015 level of t 0.16 crore, with an increase of t 21.93 crore over March 2015.

Credit flow to Self Help Groups:

• Self-Help Group (SHG) is a small voluntary association of poor people, brferably from the same socio-economic background. They come together for the purpose of s o l v i n g their common problems through self-help and mutual help. SHG concept offers opportunity for participative decision making on conduct of meetings, thrift and credit decisions.

The outstanding credit to SHGs stood at Rs.2763.88 crore covering 1.39 lakh SHGs, as against the March 2015 level of Rs.2569.00 crore, with an increase of Rs.194.88 crore over March 2015. During the current financial year, the Bank had disbursed Rs.1753.91 crore to 47147 SHGs.

Microsate Branches:

• To make available the benefit of SHG concept to scores of urban poor living in huts, slums and tenements and near the gullies in Metropolitan cities and Urban centers, specialized outfits that can serve as a "one stop shop", called Microsate Branches were established, for the entire financial needs of the poorer section.

• The Bank has established 43 Microsate Branches exclusively to serve the SHGs. During the current financial year, credit amounting to Rs.500.20 crore has been extended to 12627 SHGs through the Microsate branches. The total outstanding advances of these Microsate Branches stood at Rs. 700.56 crore covering 36195 SHGs as against the March 2015 level of Rs. 651.99 crore, with an increase of Rs. 48.57 crore over March 2015.

Weaker Section Advances:

Bank has been continuously surpassing the mandatory advance target set for the weaker sections which includes Small and Marginal Farmers, Artisans, Village and Cottage Industries, Scheduled Castes and Scheduled Tribes, Self Help Groups, etc.

• Credit outstanding to Weaker Sections stood at Rs. 13918.33 crore as at the end of March 2016, working out to 11.30% of ANBC against stipulated norm of 10%.

• Outstanding credit to SC/ST beneficiaries stood at Rs. 2146.34 crore as on 31.03.2016, which worked out to 4.26 % of Priority Sector advances of the Bank.

• Special campaigns were conducted for extending credit to Minority Communities. Advances to Minorities stood at Rs. 7082.01 crore for the month ended March 2016, which works out to 15.07% of the total Priority Sector Advances as against the stipulated norm of 15%.

Education loan scheme:

• The Educational loan exposure has increased from Rs. 3287.55 crore (as on 31.03.2015) to Rs. 3497.82 crore (as on 31.03.2016).

During the year ended March 2016, the Bank disbursed a sum of Rs. 392.96 crore as educational loans to 29673 students.

• For Vocational education and training, so far 510 students are benefited and the outstanding balance under the scheme as on 31.03.2016 is Rs.4.92 crore. During the current year, 107 students were assisted with credit to the tune of Rs.1.16 crore.

• Bank steps out of its brmises and organises educational loan camps at universities and College making the process simple and easy.

• Bank is connected to "Vidya Lakshmi Portal" developed by M/s. NSDL e-Governance which provides a single window, featuring information about Educational Loan Schemes of Banks and Common Educational Loan Application Form for Students.

• Bank has been registered as MLI (Member Lending Institution) with National Credit Guarantee Trustee Company Ltd. (NCGTC) for educational loans granted under IBA scheme up to a limit of Rs. 7.50 lakh and IB Skill Loan Scheme. Introduction of'IB Educational Loan Prime' for the meritorious students of IITs/IIMs/ XLRI/BITS and IISc under IBA Scheme, at 9.65% p.a.; "IB Educational Loan Prime - NIT" for students of NITs at 10.15% p.a.; Collateral free loan upto Rs. 25.00 lakh at Base rate to students of Indian School of Business and IB Skill loan scheme to support the national initiatives for skill development are some of the new initiatives taken.

Interest Subsidy schemes for Educational Loans:

• There are three interest subsidy schemes for educational loan borrowers namely Central Scheme for Interest Subsidy for educational loans (CSIS), Dr. Ambedkar Central Scheme for Interest Subsidy for Other Backward Classes and Economically Backward Classes (ACSISOBCEBC) and Padho Pardesh Scheme.

• The schemes provide for full interest subsidy during the period of moratorium on loans taken by students belonging to Economically Weaker Sections under IBA Scheme, other Backward Classes community and Minority Communities, for pursuing any of the approved courses of studies in technical and professional streams, from recognized institutions in India and abroad. During the year 2015-16, the Bank has claimed an interest subsidy of Rs.227.85 crore.

Lead Bank Scheme:

• Bank is SLBC convenor in UT of Puducherry and Lead Bank in 13 districts (10 in Tamil Nadu, 2 in Andhra Pradesh and 1 in Kerala). The Lead Districts are actively involved in implementing Financial Inclusion Plan to provide Banking Services in Unbanked villages.

Model Village Development Plan:

• With a view to achieve overall development of the villages to be adopted, Model Village Concept was thought of to bring in sustained and co-ordinated approach by all the stake holders and ensure that the benefits of various schemes are brought to the villages. Accordingly Model Village Scheme was formulated and launched on 15.08.2015 coinciding with the Independence Day in 21 villages sbrad over 13 districts and UT of Puducherry, where the Bank has Lead Bank responsibility.

As per the scheme, a Model Village Development Plan (MVDP) involving credit and non credit activities for three years has been brpared and being implemented. It is envisaged to assist 26164 beneficiaries to the tune of Rs.213.98 crore during this three year plan period. During the year 2015-16, an amount of Rs. 42.78 crore has been disbursed benefitting 4662 beneficiaries.

The MVDP involves non-credit activities like counseling services involving development departments such as Agriculture, Animal Husbandry etc. and other CSR initiatives such as health, sanitation, education and tree planting programs.

Capacity Building Initiatives:

• The Bank has established RUDSETI Model Training institutes named as "Indian Bank Self Employment Training Institute (INDSETI) in twelve centers viz., Chittoor, Cuddalore, Dharmapuri, Kancheepuram, Krishnagiri, Namakkal, Puducherry, Salem, Thiruvannamalai, Tiruvallur, Vellore and Villupuram. Atotal of 1096 training programmes have been conducted by the INDSETIs benefitting 31004 individuals so far.

• Apart from the above exclusive initiatives of the Bank towards capacity building, the Bank is already participating in Rural Training Centre, Karaikudi, Tamil Nadu (jointly with NABARD & IOB) and Andhra Pradesh Bankers' Institute of Rural & Entrebrneurship Development - APBIRED, Hyderabad (jointly with Government of AP, NABARD & five other Banks). These two training institutes offer wide range of skill oriented training programmes with a focus on rural population.

A total of 365 training programmes have so far been conducted by RTC, Karaikudi (benefitting 10001 members) and 347 programmes byAPBIRED, Hyderabad (benefitting 8845 members).

Dr.APJ Abdul Kalam Skill Development Training Institute:

• Bank along with Swarna Bharat Trust, a service oriented Non-Governmental Organization (NGO) in Vijayawada, Andhra Pradesh and Koneru Lakshmaiah University (KLU), an autonomous University established a "Skill Development Training Institute" by the name Dr.A PJ Abdul Kalam Skill Development Training Institute at Atkur Village, Krishna District , Andhra Pradesh for training and developing people and improving the skilled man power position by imparting quality training.

• Bank has sanctioned Rs.69.00 lakh to the Institute towards the construction and fixed costs for establishment of the Institute under Corporate Social Responsibility (CSR). Besides, the annual recurring expenditure will be shared with KLUniversity (KLU).

FINANCIAL INCLUSION

• Branches have been opening Basic Saving Bank Deposit Accounts (BSBDA) under PMJDY from 16.08.2014 and as on 31st March, 2016, 29.93 lakh BSBD accounts have been opened.

• RuPay cards have been issued to 29.59 lakh BSBD account holders under Pradhan Mantri Jhan Dhan Yojana (PMJDY). The deposit mobilised in these accounts is Rs.316.35 crore.

• As of March 2016, various SLBCs have allotted 2975 SSAs (Sub-Service Areas) and 2023 urban wards to the Bank under PMJDY. All the 2975 SSAs are provided with banking services by our Bank. Of these, 2517 SSAs are provided with banking services through Bank Mitrs (Business correspondents) and 458 SSAs through Brick and Mortar branches already functioning in the SSAs.

• Bank had offered overdraft to 1,92,886 eligible account holders to the tune of Rs. 37.95 crore. Of which 79,784 BSBD account holders have availed the limit amounting to Rs.14.57 crore. Facility of an overdraft to every BSBD account holder is considered after satisfactory operation / credit history of six months. Bank has automated the overdraft facility and made the same available through ATMs of our Bank to the eligible PMJDY account holders.

• All the SSAs allotted to the Bank are covered by either brick or mortar branch or with Bank Mitr and all the Bank Mitrs are provided with Micro ATM devices.

• 100% of POS (Point of Sale) devices of the Bank have been enabled for carrying out RuPay Card transactions.

• All BCs are enabled for enrollment of application under Micro Insurance and Atal Pension Yojana at their points.

• Bank stood first among all Banks in terms of number of transactions done by BCs with an average transaction done per BC being 784 for the month of March 2016.

• Aadhaar Enabled Payment System (AEPS) inter operability facilities are enabled in all POS machines deployed in Bank's SSAs. All BCs are doing AEPS transactions and as on 31.03.2016, 34.22 lakh AEPS transactions (both financial and non financial) have been done by the BCs.

• PMJDY account holders are being issued with RuPay debit cards having inbuilt accidental insurance cover of Rs.1 lakh and life cover of Rs.30,000/- for the customers who opened accounts between 15.08.2014 to 26.01.2015.

• Under RuPay Accidental insurance claim, 19 claims to the nominees of the insured to the tune of Rs.0.19 crore were settled. Similarly, under RuPay life insurance, 42 claims to the nominees of the insured to the tune of Rs. 0.13 crore were settled.

Performance under Jan Suraksha Yojana:

• In the second phase of PMJDY, Hon'ble Prime Minister launched three Social Security Schemes viz., Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) - a life insurance scheme, Pradhan Mantri Suraksha Bima Yojana (PMSBY) - an accidental insurance scheme, Atal Pension Yojana (APY) - pension scheme in May 2015 for the under privileged sections of the society. The performance of the Bank under the Schemes as on 31.03.2016 is furnished below:

• Under PMJJBY, Bank has settled 623 claims to the nominees of the insured to the tune of Rs.12.46 crore and similarly under PMSBY, Bank has settled 115 claims to the nominees of the insured to the tune of Rs.2.58 crore.

• The Bank's P2P (performance to potential) ratio in PMJJBY and PMSBY is 63.68% as on 31.03.2016 and Bank is the toppest among all the PSBs in P2P ratio.

Financial Literacy activities:

•  As a step towards getting closer to the rural people, Bank has set up a Trust by name "Indian Bank Trust for Rural Development'' (IBTRD) for undertaking various developmental activities.

• Under the trust, the Bank has established Financial Literacy and Credit Counseling (FLCC) centres at Chittoor and Machilipatnam (Andhra Pradesh) Cuddalore, Dharmapuri, Kancheepuram, Krishnagiri, Namakkal, Salem, Thiruvannamalai, Thiruvallur, Villupuram and Vellore (Tamil Nadu), Kollam in Kerala and Puducherry.

• Urban Financial Literacy Centres were established in Chennai, Delhi and Mumbai for the benefit of poor masses in slum areas to assist financial inclusion in 3 Metros.

• Block level Financial Literacy Centres (FLCs) were established at Chadayamangalam and Parassala Blocks in Kerala.

• A total of 151644 individuals were provided financial counseling so far.

• Bank branches and FLCs conducted Financial Literacy Programme in Villages, Schools, Industrial Training Institutes, Vocational Training Centres covering 31,590 beneficiaries during the FY 2015-16 and provided Financial Literacy materials to the trainees.

Payment of pension under Social Security Scheme in Tamil Nadu:

• In Tamil Nadu, under Social Security Scheme, Old Age pension is being paid to beneficiaries using Information and Communication Technology (ICT) based Smart Card enabled Business Correspondent (BC) Model, since July 2012.

• As on date, pension is disbursed to 3.12 lakh beneficiaries every month through Bank Mitrs in Tamil Nadu.

CREDIT FLOW TO SMALL AND MEDIUM ENTERPRISES (SME)

• The Bank's exposure to Micro Small & Medium Enterprises grew by 12.81 percent to Rs.21031.57 crore as on 31.03.2016.

• Bank has approved cluster specific schemes for Textile Cluster in Bhilwara, Ichalkaranji and Surat Regions, Ceramic Cluster in Morvi Region, Rig Cluster in Namakkal and Tiruchengode Region, Export cluster in MEPZ Chennai, Hosiery Cluster at Ludhiana, Saw Mill Cluster at Ahmedabad, Auto components cluster at Hosur, Cycle part, auto parts, machine tools and fasteners manufacturing units at Jalandhar & Ludhiana, Irrigation pump manufacturing units at Rajkot, Packaging units at Vapiand Pharmaceutical cluster at Vadodara.

• Bank is actively implementing the MUDRA scheme and introduced a special Rupay debit card, called MUDRA card, co-branded with MUDRA.

MUDRASCHEME

• Micro Units Development and Refinance Agency Ltd. (MUDRA) was launched by the Hon'ble Prime Minister on April 8, 2015 as a new financial entity, for refinancing Banks, NBFCs, MFIs etc; who are in the business of lending to micro enterprises.

• The loans given to non-farm enterprises in manufacturing, trading and services whose credit needs are below Rs.10.00 lacs, for income generation is known as MUDRA loans under the Prime Minister's Mudra Yojana (PMMY). Loans upto Rs.50,000 is termed as "Shishu", Loans from Rs.50,000 to Rs. 5 lakhs is termed as "Kishore" and loans from Rs. 5 lakhs to Rs.10 lakhs is termed as "Tarun". The overdraft amount of Rs. 5,000 sanctioned under PMJDY is also classified as MUDRA loans under PMMY.

SUCCESS STORIES

1. M/s KISHORE PHYSIO CARE - UNDER TARUN SCHEME

• M/s Kishore Physio Care: Ms T Ambika, a physiotherapist wished to start her own physio centre.

• Madurai Main branch of the Bank extended handholding support for brparation of project report. Accordingly, on seeing the passion and determination to grow in her career, loan of Rs. 5,28,000 was sanctioned under TARUN (PMMY) scheme for setting up a physical fitness centre at Madurai.

Bank also guided her to apply for 25 per cent subsidy assistance to the District Industries Centre as the loan application was found to be eligible for subsidy under one of the State Government programs, namely, NEEDS (New Entrebrneur cum Enterprise Development Scheme).

Bank also guided her to apply for 25 per cent subsidy assistance to the District Industries Centre as the loan application was found to be eligible for subsidy under one of the State Government programs, namely, NEEDS (New Entrebrneur cum Enterprise Development Scheme).

2. J MAHALAKSHMI- UNDERTARUN

• Ms.J Mahalakshmi wanted to start her own parlour and approached many banks in her vicinity.

• Underthe TARUN scheme, a loan of Rs. 7,89,000 for setting up of a Beauty Parlour was granted.

• She has successfully set up a new parlour with our assistance and started establishing herself with good service in the Goripalayam (Madurai) area and the income of her family has increased to Rs. 34,000/- per month.

PERSONAL SEGMENT LOANS:

• Bank's Personal Segment loans comprising of Home Loan, Automobile Loan, Personal Loan, NSC Loan and Mortgage Loan witnessed an increase of 14.25% during the year to Rs. 11,858.76 crore.

• Total outstanding loans under Personal Segment was at Rs. 19,159.83 crore as on 31.03.2016.

• Balance outstanding under Home Loan as on 31.03.2016 was at Rs. 9168.53 crore registering a growth of 9.61 per cent.

• Balance outstanding under Automobile Loan as on 31.03.2016 was at Rs.816.34 crore registering a growth of 14.58 per cent.

Balance outstanding under Mortgage Loan as on 31.03.2016 was at Rs. 944.32 crore registering a growth of 42.59 per cent.

Bank extended various relief assistance for the flood affected customers in Tamil Nadu and Puducherry.

• Salary Loans to 19709 clients amounting to Rs. 133.06 crore.

• Additional Home Loan/Mortgage loan for repairs and renovation of properties to 570 customers amounting to Rs.21.93 crore.

• Special clean loan for repairing the affected vehicles for 35 customers amounting to Rs.0.36 crore.

• Restructuring of Home loan for 1594 customers involving an amount of Rs.189.85 crore.

• Restructuring of Vehicle loan for 283 customers involving an amount of Rs.8.95 crore.

CREDIT MONITORING CELL

• As part of Bank's Credit Risk Management process, review of accounts under Loan Review Mechanism (LRM) and Credit Audit have been carried out at various levels including the review of borrowal accounts sanctioned by various Committees at Corporate Office and Zonal Offices.

• During the year 2015-16, 69 percent of standard non-food credit outstanding have been put under LRM and Credit Audit as against the minimum coverage of 50 percent as per LRM policy.

• Special Mention Accounts (SMA) are monitored on a daily basis and followed up effectively for regularization.

The Standard Asset Monitoring Committee comprising of Department Heads of Functional credit departments at Corporate Office reviewed all SMAaccounts every month

• Large borrowal accounts with deteriorating asset quality upto SMA-2 level and reported to RBI under CRILC have been closely monitored and appropriate remedial action was taken as per guidelines contained in the Framework for Revitalizing DistressedAssets.

• Board Level Committee on monitoring of recovery periodically reviews and oversees the status of implementation of the Revitalizing Distressed Assets policy with regard to formation of Joint Lenders' Forum (JLF), implementation of Corrective Action Plan (CAP) and reporting to RBI under Central Repository of Information on Large Credits (CRILC).

ASSET QUALITY MANAGEMENT

• Bank has deployed prudent credit monitoring tools, with continuous and consistent focus on quality of assets. Bank has been following a system-driven identification of NPA (Non Performing Assets) successfully since June 2011 and introduced monthly flagging of NPAs from February 2016.

• Bank has taken timely action for recovery/upgradation of fresh NPA accounts and stressed accounts are regularly followed up to minimize the slippages by identifying and monitoring Special MentionAccounts (SMA).

• The Bank has recorded good performance towards recovery and reduction of fresh NPA. Increase in Fresh NPAs was partly due to Asset Quality Review (AQR) impact. Different recovery mechanisms like Lok Adalats, Negotiated settlements through One Time Settlement (OTS) and recovery measures through DRT / SARFAESI Act have resulted in improved recovery performance.

Zones/Branches have been advised to aggressively implement all recovery measures including classification of the accounts as willful defaulter/non-cooperative borrower, invocation of personal guarantee, filing of winding up petition, transfer of pledge of shares, etc.

• Bank Conducted Five Mega e-auctions all over India wherein 300 Properties mortgaged to the bank were brought for sale and a recovery of Rs. 63.93 crore was effected.

• Bank actively participated in the six National Lok Adalats held on various dates during the year. A total number of 1,58,455 cases were referred involving Rs. 1637.39 crore and cases were settled in 22,545 accounts for Rs.208.37 crore and spot recovery to the tune of Rs. 38.20 crore was made.

• Besides, Bank organised Lok Adalats during the Financial year where in 91,731 cases involving an amount of Rs. 848.45 crore were referred. Total number of cases settled was 14,638 for Rs.109.11 crore and spot recovery was made to the tune of Rs. 43.60 crore.

• In line with the changing economic scenario, Recovery Policy has been fine tuned and frontline officials have been sensitised for improving recovery performance.

Besides, during the visit of officials from Recovery Department to Zones, the importance of reduction in provision by way of increasing recovery and upgradation in Fresh NPAs/Doubtful accounts was emphasised.

• In response to the call given by Shri. Mahesh Kumar Jain, MD & CEO, Employees Union and Officer Association pledged their support for the recovery efforts of the Bank.

• In the Intensive recovery Camp involving door to door campaign held during the Holidays, i.e., on 12.03.2016 & 13.03.2016 and 26.03.2015 & 27.03.2016 across the country, the rebrsentative of Employees Union and Officers Association and our staff actively participated and visited the borrowers at their residence / place of work and urged them to pay the dues immediately. On cluster basis, 456 recovery camps were conducted and cash recovery of Rs. 224 crore was made. There was good response for the campaign with brss covering the events at some centres.

• Arecovery of Rs. 269.81 crore were made under recovery of Bad Debts and Written offAccounts during the year.

• Loan Review Management Committee (LRMC) reviews Standard Assets through Loan Review Mechanism and Credit Audit functions on a regular basis. Standard Assets Monitoring Committee (SAMC) reviews Special Mention Accounts (SMA) on continuous basis and timely recovery action is initiated to brvent slippage of Standard Assets to Non Performing Assets.

BANCASSURANCE AND MUTUAL FUND BUSINESS

• Bank has Corporate Agency Arrangement (CAA) with United India Insurance Co. Ltd. (UIIC) for Non-life/General/Health Insurance business and with LIC of India (LIC) for Life Insurance business

• For Mutual Fund distribution, Bank has tie-up arrangements with UTI Asset Management Co. Ltd, Reliance Capital Asset Management Ltd. and SBI Funds Management Pvt. Ltd

• Bank offers various group insurance products on optional basis to its customers by having arrangements with the companies as mentioned below:

• Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY - Social Security Scheme of Government of India) by LIC of India for life cover

• Pradhan Mantri Suraksha Bima Yojana (PMSBY - Social Security Scheme of Govt of India) by UIIC for accidental death & disability cover

• IB Jeevan Kalyan & Jeevan Varishta by LIC of India covering death due to any reasons

• IB Chhatra by UIIC covering death due to accidents

• Arogya Raksha by UIIC extending Group Mediclaim Insurance for our Account Holders

• IB Yatra Suraksha by UIIC extending Group Travel Insurance for domestic travels other than byAir

• IB Griha Jeevan by LIC of India covering our Home Loan borrowers

• IB Home Suraksha by Kotak Life covering our Home Loan borrowers

• IB Jeevan Vidya by LIC of India covering our Educational Loan student borrowers

• IB Vidyarthi Suraksha by PNB Met Life covering our Educational Loan student borrowers

RISK MANAGEMENT:

• Bank's risk management framework is based on a clear understanding of various risks, disciplined risk assessment and measurement procedures and continuous monitoring. An independent Risk Management Department is functioning for effective Enterprise-Wide Risk Management and responsible for assessment, monitoring and reporting of risk exposures across the bank. All the risks the Bank is exposed to, are managed through following three committees viz,

• Credit Risk Management Committee (CRMC)

• Asset and Liabilities Management Committee (ALCO)

• Operational Risk Management Committee (ORMC).

These committees work within the overall guidelines and policies approved by the Board and Risk Management Committee of the Board.

Bank has put in place various policies to manage the risks.

To analyze the enterprise-wide risk and with the objective of integrating all the risks of the Bank, an Integrated Risk Management policy has also been put in place. The important risk policies comprise of Credit Risk Management Policy, Liquidity Management Policy, Market risk management policy, Operational Risk Management Policy, Internal Capital Adequacy Assessment Process (ICAAP) Policy, Stress Testing Policy, Collateral Management Policy and Disclosure Policy, Reputational risk management Policy and Strategic Risk management Policy.

All the policies are reviewed at a minimum on an annual basis by Risk Management Committee (RMC)/Board. In order to disseminate the risk management concepts and also to sensitize the field level functionaries, the relevant policies were circulated to the branches, in addition to imparting training at the Bank's training colleges.

Credit Risk:

Risk Management Systems are in place to identify and analyze the risks at the early stage and manage them by setting and monitoring prudential limits besides taking other corrective measures to face the changing risk environment.

Limit Framework:

• In order to limit the magnitude of credit risk and concentration risk, a limit framework has been laid down for following type of exposures: Single and group borrower exposure, sensitive sector exposure, unsecured exposure, interbank exposure, country-wise exposure, internal rating wise exposure, geographical exposure and term loan exposure.

• These exposure limits are monitored on regular basis and placed to various apex level committees of the Board.

Rating Model:

• All credit proposals are subject to a rigorous credit risk rating/scoring process to support credit approvals and decision making as well as to enhance risk management capabilities for portfolio management, pricing and risk based capital measurement.

• Software driven rating mechanism is in place to assign the rating to ensure credit quality besides an entry level scoring system. The output of the rating model is used in decision making i.e. sanction, pricing and monitoring of credit portfolio. In order to test the robustness of the rating model, the rating model has been validated by an external agency. Bank would undertake periodic validation exercise for the model.

• As part of Risk management activities, vetting of credit proposals (except schematic loans) coming under corporate office level are undertaken by Risk management Department.

Scoring model:

• Bank has developed entry level scoring model. All the fresh sanctions coming under personal loan products are subjected to entry level scoring.

• Loan review mechanism and Credit audit system are in place for the periodical review/audit of large value accounts and to bring about qualitative improvements in credit administration of the Bank. In addition, Standard Assets Monitoring Committee reviews the Special Mention Accounts periodically to initiate timely action to brvent slippage of standard assets to non performing assets. As a part of monitoring mechanism, accounts which are downgraded from investment category are identified and monitored closely on quarterly basis.

• Migration of rating of accounts is done on annual basis. Also weighted average rating of industry based on Bank's portfolio is done on quarterly basis. Analysis of rating wise distribution of advances is done on quarterly basis.

• As part of Risk Management activities, vetting of credit proposals (except schematic loans) coming under Corporate Office level are undertaken by Risk Management Department.

Asset Liability Management:

Asset liability Management allows the Bank to measure and monitor risk exposures which may arise from both liquidity risk and interest rate risk on its balance sheet. This allows the Bank to provide suitable strategies for asset liability management.

The asset liability management framework consists of the following key components:

-Liquidity risk management

-Interest rate risk management

-Balance sheet and Basel III liquidity ratios

-Stress Testing and scenario analysis

-Contingency funding plan

Bank has set in place ALM policy in view of two primary objectives as listed below:

Short Term Objective:

To optimize the Net Interest Margin (NIM) of the Bank To provide adequate liquidity

To manage re-pricing risk

Long Term Objective:

• To maximize the shareholders' wealth

Asset Liability Management is the function of Asset Liability Management Committee (ALCO). It operates under the guidance and supervision of the Board and/or Sub-Committee of Board on ALM and Risk Management. It meets at regular intervals to review the interest rate scenario, product pricing for both deposits and advances, maturity profile of the incremental assets and liabilities, demand for Bank funds, cash flows of the Bank, profit planning and overall Balance Sheet Management.

Liquidity risk is measured and monitored through two approaches - Flow approach and Stock approach. Flow approach involves combrhensive tracking of cash flow mismatches and is done through brparation of Structural liquidity statement on a daily basis. Appropriate tolerance levels/prudential limits have been stipulated for mismatches in different time buckets. Under Stock Approach various balance sheet ratios are brscribed with appropriate limits. The compliance of ratios to the brscribed limits ensures that the Bank has managed its liquidity through appropriate diversification and kept it within the sustainable limit.

Bank also assesses its short-term liquidity mismatches and reports the same in the short term dynamic liquidity report which rebrsents the cash flow plans of various asset and liability generating units and seasonal variation of cash flow patterns of assets and liabilities of the Bank over a period of 1-90 days.

For measurement and monitoring of Interest rate risk, currency wise, both traditional gap approach and duration gap approaches are followed. The short-term impact of interest rate movements on Net Interest Margin (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. The monthly interest rate sensitivity statement is reviewed byALCO / Board.

Bank has procured ALM FTP software and is in the process of implementing the same.

Stress testing of liquidity risk and interest rate risk is conducted on regular intervals as per RBI defined and internally defined stress scenarios. The results of the same from internal Liquidity stress testing are used to draw contingency funding plan under different liquidity stress scenarios.

In addition to the above, Bank is computing Liquidity coverage ratio as per latest guidelines issued by RBI and is using it as a risk measurement tool to manage short term liquidity. On a monthly basis Liquidity Coverage Ratio (LCR) statement is reviewed byALCO.

Market Risk Management:

Market risk is the possibility of loss caused by changes in the market variables. The Bank for International Settlements (BIS) defines market risk as "the risk due to which the value of 'on' or 'off' balance sheet positions will be adversely affected by movements in equity and interest rate markets, currency exchange rates and commodity prices". Thus, Market Risk is the risk to the Bank's earnings and capital due to changes in the market level of interest rates or prices of securities, foreign exchange and equities, as well as the volatilities of those changes. The objective of market risk management is to assist the business units in maximizing the risk adjusted rate of return by providing analytics driven inputs regarding market risk exposures, portfolio performance vis-a-vis risk exposures and comparable benchmarks. Following risks are managed under Market Risk.

-Interest Rate Risk

-Exchange Rate Risk

-Equity Price Risk

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

Market Risk Management (MRM) Framework of the Bank is as follows:

a) Risk Identification: The Policy is focused on setting a framework for identifying, assessing and managing market risk in order to provide clarity on various dimensions of risk identification and recognition to each of the business functions.

b) Risk Measurement and Limits: Bank recognizes that no single risk statistics can reflect all aspects of market risk. Therefore various statistical and non-statistical risk measures are used to enhance the stability of risk measurement of market risk because, taken together, these risk measures provide a more combrhensive view of market risk exposure than any single measure. Market risk is managed with various metrics viz. Value at Risk (VaR), Earnings at Risk, Modified duration, PV01 Limits, Net Overnight Open Position Limits (NOOPL), Individual Gap Limit (IGL) and Aggregate Gap Limit (AGL) currency wise and also through sensitivity analysis. Stress testing is also conducted on a regular basis to monitor the vulnerability of the Bank to extreme but plausible unfavorable shocks.

c) Risk Monitoring: Bank monitors and controls its risk, using various internal and regulatory risk limits for trading book which are set based on economic scenario, business strategy, management experience and Bank's risk appetite. Rate scan is carried out to ensure that transactions are executed and revalued at brvailing market rates.

d) Risk Reporting: Monitoring of Treasury operations is done by Mid Office and a daily report is put up to Head of the Risk Management Department, Monthly basis (First fortnight) to EDs/MD & CEO and on monthly basis (Last Fortnight) to ALCO. Capital charge on account of Market Risk is computed and reported to ALCO and Board on quarterly basis. Stress testing is done for assessing market risk by following assumptions brscribed in Stress Test Policy and reported toALCO on Quarterly basis.

Market risk management is governed by combrhensive Board approved Market Risk Management Policy, Investment Policy, Stress testing and Derivative Policy to ensure that the risks sbrad across different activities and carrying an underlying market risk are within the stipulated risk appetite of the bank. All the policies are benchmarked with industry-best practices and RBI regulations. The risk reporting mechanism in the Bank comprises disclosures and reporting to the various management committees.

Operational Risk:

Operational risk is now the focus of intense interest among industry participants, regulators and other stake holders. The Bank has put in place Operational Risk Management Frame work (ORMF) and Operational Risk Management Systems (ORMS) to ensure effective governance, risk capture and assessment and quantification of operational risk exposure. Operational risk is well managed by using appropriate qualitative and quantitative methods and established internal control systems in day to day management processes and adopting various risk mitigating strategies. The risk perceptions in various products / processes are critically analysed and corrective actions if required, are initiated.

Bank has implemented a sophisticated web-based Operational Risk Management System to capture, measure, monitor and manage its operational risk exposure. Bank has built up internal loss data base for the last 5 years.

During the year, monitoring of operational risk through credit spurt and analysis of frequency and severity of operational loss through statistical technique have been done.

Stress Testing framework:

A combrhensive stress testing framework is put in place. Bank conducts stress test on quarterly basis based on scenarios brscribed by RBI as well as bank specific scenarios. The Stress test results are placed to various apex level committees.

Inter Capital Adequacy Assessment (ICAAP) framework:

Under Pillar II of Basel framework, i.e., ICAAP, the Bank identifies measures and manages the risks that are either not fully captured or not at all captured under Pillar I and if necessary, makes an additional provision of capital for such risks.

Internal Capital adequacy of the Bank was assessed on quarterly basis and placed to the various apex level committees.

Risk Management Approaches adopted by the Bank:

The Bank has brsently adopted Standardised Approach for Credit Risk, Standardised Duration Approach for Market Risk and Basic Indicator Approach for Operational Risk. Software is in place for accurate computation of credit risk capital charge.

The Bank has been progressing as per the roadmap laid down for moving over to the advanced approaches under BASEL framework.

Basel III Capital Regulations:

The Bank has fairly high level of Common Equity Tier 1 Capital and also has headroom available for raising all forms of capital in case of need. The Bank has adopted RBI guidelines on the Basel III capital regulations with effect from April 1, 2013. To ensure smooth transition to full Basel III, appropriate transitional arrangements have been made for full implementation as on March 31,2019.

The Basel III capital rules also require an enhanced set of disclosures on the components of Capital Adequacy Ratio (CAR) which are published on quarterly basis on Bank's website. Bank is also disclosing leverage ratio and Liquidity Coverage Ratio (LCR) Framework.

Major initiatives undertaken

• Bank has worked out capital requirements till full implementation of Basel III guidelines.

• Bank has identified various areas of capital optimization and has taken necessary steps to optimize the capital.

• Operational Risk Management project is in advanced stage with collation of internal loss data. For external loss data, Bank has entered in to an agreement with CORDEX. Bank has rolled out RCSA as part of phase I implementation.

• In order to migrate to advanced approach, Credit Risk Models are being developed. PD (Probability of Default) Modeling framework has been developed on the basis of which PD has been estimated for Corporate Asset Class defined as per IRB guidelines. Retail Pooling Framework and LGD (Loss Given Default) and EAD (Exposure at Default) framework is being developed to create retail pools as well estimate LGD and EAD.

• Credit risk Model Validation Framework has been introduced in the bank which covers various qualitative and quantitative tests that should be undertaken with a view to regulatory compliance as well as to define sound and efficient credit risk model management.

This framework has been used to conduct quantitative and qualitative validation of Internal rating models and changes done in the models accordingly for improving the discriminatory power of rating models.

• Bank has formulated reputation risk and strategic risk management policies and developed score card for measurement of reputation risk and strategic risk.

• Risk culture is being embedded through training of staff at all levels through training process.

HUMAN RESOURCES MANAGEMENT (HRM)

Recruitment Drive

• As part of succession planning, to fill up vacancies caused on account of superannuation, branch expansion and business growth, the Bank has undertaken recruitment of manpower in various categories in line with emerging business needs.

• During the year, Bank recruited 317 Probationary Officers. The Bank also recruited 116 Specialist Officers in different functional areas.

• 928 clerks were recruited during the year.

• 1 Armed Guard was recruited in the services of the Bank during the year.

Welfare Measures for SC/ST/OBC/PWD Employees

• As per Government of India's guidelines, reservations are provided to Scheduled Castes (SCs), Scheduled Tribes (STs), Other Backward Classes (OBCs) and Persons with Disability (PWD) candidates in Direct Recruitment.

Reservations for SC/ STs in Promotions are provided as per Government guidelines.

• Periodical Quarterly Meetings with All India Indian Bank SC/ST Employees' Welfare Association are conducted and grievances, if any are resolved immediately.

The SC/ST Welfare Cell / Reservation Cell at CO/HRM also ensures prompt disposal of grievances / rebrsentations (if any) of SC/ST employees. One General Manager has been nominated as Chief Liaison Officer (CLO) to look after the interest of employees belonging to SC/ST and another GM is nominated as CLO for OBC employees.

Capacity Building Initiatives

Capacity building is a continuous and unique process which unlocks the employees' latent potential by imparting knowledge and sharpening their professional skills. The Bank's Capacity building initiatives spearheaded by the apex Training College viz. Indian Bank Management Academy for Growth & Excellence (IMAGE), an ISO 9001-2008 certified Academy with state of the art training facilities, located in Chennai, supported by 9 Staff Training Centres, Bangalore, Chandigarh, Chennai, Delhi, Kolkata, Mumbai, Thanjavur, Thiruvananthapuram and Vjayawada.

During the year 2015-16,10391 trainees were covered under in-house and external training comprising of 6122 officers, 3924 clerks and 345 substaff. Specialised programs were also conducted by IMAGE for creation of Talent Pool in Corporate Credit, MSME Finance and Forex Business.

e-Initiatives

As a part of Talent Management Exercise, the Training System has developed a Self- Learning Mechanism through several e-initiatives. The e-journals Knowledge Bank' and Banking Updates are ported in the IMAGE portal and made available 24x7 thorough internet/intranet. While Knowledge Bank' contains articles contributed by Faculty members on contemporary issues of banking and economy, Banking Updates' elucidates the recent happenings in the banking industry and economy. Yet another new e-initiative' of the Training System is the e-Question Bank'. This contains multiple choice questions on all important topics relating to the operational aspects of day-to-day banking, brpared and uploaded in the IMAGE portal, which can be accessed by any employee, anywhere and anytime. This e-initiative enables all employees to test their knowledge skills at their convenience and comfort. Bank has also conducted three on-line tests' during March 2016 and the marks obtained in these tests were considered for the Annual Performance Appraisal Report (APAR).

Research & Development

IMAGE has set up a separate Research and Development Wing and conducted various study projects viz. Avenues for increasing Non Interest Income, Strategies for turnaround of Loss Making Branches of Chennai South and North and Strategies to reduce operating expenses to total expenditure ratio etc.. IMAGE also carried out product comparison study with peer Banks viz. Agri, MSME and Retails products to explore the scope for further value addition and highlighted the USPs (Unique Selling Points) of the Bank's products.

Industrial Relations

• The Top Management of the Bank interacts with the leaders of Employees' Unions, Officers' Associations and their response is positive resulting in desired growth in business and cordial relationship between the Management and the Unions/Associations.

SAP

SAP HR software is being put to use for HR related activities as part of HRMS. The HRMS is used as decision support system in areas like promotion, transfer, placement. As a measure of extending technological advancement to the entire workforce and in aiming to achieve a paperless processing of HR related issues, a cohesive web-site for Human Resources Management through Intranet has been hosted.

SAP - Implementation team has initiated and launched several applications online for use by the staff members.

StaffWelfare Measures

• The Central Welfare Committee of the Bank constantly reviews the welfare schemes available to the employees and improvements are being made based on their recommendations.

CUSTOMER SERVICE

Bank gives top priority to grievance redressal in its effort to serve the customers. Being a tech friendly bank, the Bank combines technology with personalised service.

Modes of Grievance Redressal

The Bank has introduced various modes of grievance redressal to enable quick access to the customers for redressing their grievances in addition to Standardised Public Grievance Redress System (SPGRS) as below:

• Complaint register is maintained at all the branches.

• Complaint cum suggestion box is placed in the banking halls of all the branches.

• Integrated Call centre with Toll free number 180042500000 is available 24x7

• Customers can lodge complaint through e-mail at ibhocustomerservice@indianbank.co.in , customercomplaints@indianbank.co.in ; nodalofficer@indianbank.co.in ; customerfirst.cmd@indian-bank.com .

• If any customer sends the message 'complaint' to the number 56677 from any mobile, the officer from the Bank will call back to hear the grievance.

Appointment of Chief Customer Service Officer (Internal Ombudsman)

• Bank focuses on providing a good customer service for ensuring customer delight. In this direction, the Bank has appointed Shri. Suresh Chandra Sharma as Chief Customer Service Officer (Internal Ombudsman) of the Bank.

Chief Customer Service Officer (Internal Ombudsman) -Shri Suresh Chandra Sharma

Office Address

 Indian Bank Corporate Office 254-260, Avvai Shanmugam Salai Royapettah, Chennai - 600 014

E-mail ID: ccso@indianbank.co.in  

The appointment of the Internal Banking Ombudsman (Chief Customer Service Officer) aims at strengthening the Internal Grievance Redressal Mechanism.

The CCSO shall help in strengthening customer confidence in the Internal Grievance Redressal Mechanism in the Bank and to ensure that the grievances are settled through internal mechanism.

Standardised Public Grievance Redress System

• As per the directions of Government of India, Bank has launched the Standardised Public Grievance Redress System w.e.f 18.02.2013. Bank has developed in-house software for Standardised Public Grievance Redress System (SPGRS). The system has the following unique features:

• Customer can register the complaint online through the SPGRS site provided in the web site of the Bank.

• The complainant can attach scanned copies of documents which he/she wants to provide to the Bank along with the complaint.

• The complainant gets instant acknowledgement with a system generated complaint number to their mobile / e-mail id.

• The complainant may get the status of the complaint lodged by him in SPGRS by giving the complaint number provided to him on registering the complaint.

• On resolution of the complaint reply / resolution for the complaint are sent to the e-mail id /mobile number

• SMS is being sent to the Branch Manager concerned on porting a complaint by a customer against their Branch for enabling them to attend the complaint immediately.

• SMS to the designated officer at Zonal Offices sent on daily basis informing the number of pending complaints and escalated complaints for follow up with the Branches for immediate redressal.

• Complaints received through various modes are integrated with SPGRS.

• Scanned copies / documents can be sent to the complainant along with the reply.

• Customer service extends beyond grievance redressal to areas such as Information Dissemination, Transparency, Customer Centricity and Customer Feedback and the Bank endeavors to continuously upgrade the services and orient towards improved customer services.

• Bank is a member of the Banking Codes and Standards Board of India (BCSBI) having adopted the Codes of Commitment to Customers/MSE for implementation in letter and spirit.

Customer Day:

• Bank celebrated Customers' Day uniformly at all the Branches on 24.08.2015 as part of its Founding Day celebrations. Large number of Customers participated in the Customers' Day/Customer meets. Many customers had given valuable suggestions for improvement of customer Service in the Branches and the feasible suggestions were implemented.

Regulatory Meetings / Notes:

• Regulatory/ Mandatory Meetings relating to Customer Service held as per the schedules.

• Reviews to the Customer Service Committee of the Board / Board were placed to Board as per the calendar of Reviews.

RegulatoryAuthorities Observations:

• No adverse remarks by RBI in the Risk Based Supervision and BCSBI in the Annual Code Review. No awards have been passed by the Banking Ombudsman (BO) against the Bank during the year excepting a few minor directions issued by BO for the operational issues.

RIGHT TO INFORMATION (RTI) Act 2005

• A separate desk attached to Customer Service Cell at Corporate Office is handling the applications, first appeals/ second appeals received by the Bank under the RTI Act. Since its inception, Bank has been adopting a single window approach as suggested by the Parliamentary Committee on implementation of RTI Act.

• Bank received 2495 applications, 312 first appeals and 52 second appeals under the RTI Act during FY 2015-16. All RTI applications/appeals were disposed off within the stipulated time.

FOREX BUSINESS

• The turnover in Foreign Exchange business of the Bank amounted to Rs. 23,936 Crore during the year.

Of this, export and other inward remittances amounted to Rs.10,147 Crore, while imports and other outward remittances amounted to Rs. 13,789 Crore.

• During the year, the total turnover in the interbank forex market amounted to Rs. 265,800 Crore.

• 94 branches of the Bank are authorised to handle forex business and all other branches are considered as Non-authorised branches and they cater to the Foreign Exchange need of their clients through these Authorised Branches. The Bank has Correspondent Arrangements with 223 banks in 71 countries.

• FCNR/NRE Deposits: 483 branches are authorised to handle Foreign Currency Non-Resident (FCNR) Accounts. Non Resident Indian (NRI) Deposits recorded a growth of 13.85 per cent at Rs. 8744 Crore as compared to Rs. 7681 Crore in the brvious year.

REMITTANCES

• Enterprise Remittances Scheme from Singapore offers instant credit to customer accounts in India with rupee equivalent of the foreign remittances within minutes of receipt at Singapore Branch and an SMS message is forwarded to the remitter at Singapore informing the credit. The facility is available on all days of the week.

• Other remittance facilities offered by the Bank for NRIs include "Xbrss Money", "Money Gram", "Western Union Money Transfer", besides normal SWIFT based Money Transfer across the globe.

• Electronic Funds Transfer arrangements have been launched with 8 Exchange Houses viz., M/s. UAE Exchange Centre LLC-Abu Dhabi, UAE Exchange Centre WLL- Kuwait, Oman UAE Exchange Centre & Co LLC - Oman, Al Zaman Exchange WLL-Qatar, GCC Exchange - Dubai, Belhasa Global Exchange - Dubai, Al Dar For Exchange - Qatar, Al Ghurair Exchange LLP- Dubai.

Remittance arrangement with M/s Al Rajhi Bank, Saudi Arabia has already been launched and running successfully.

INTERNATIONAL OPERATIONS

• The Bank has three foreign branches located at Singapore, Colombo and Jaffna. Total Deposits and Advances (gross) of the foreign branches as on March 31 2016 was Rs.5634.16 crore and Rs.5545.34 crore respectively.

• Singapore branch established in 1941 has carved a niche by offering a variety of banking services using the latest technology and enjoys enormous goodwill and customer loyalty. The branch is brsently maintaining its business in two accounting units - Domestic Banking Unit (DBU) for Singapore Dollar business andAsian Currency Unit (ACU) for business in currencies other than Singapore Dollar.

• Colombo branch established in the year 1932 has active market brsence extending trade finance. The Foreign Currency Banking Unit (FCBU), Colombo is engaged in offshore banking operations.

• Jaffna branch established in 2011 plays a crucial role in the economic development of Jaffna Region.

Upgradation of Misys software at Singapore branch:

• Singapore branch is using the Misys Core banking Package and Equation besides other software which was upgraded in 2008 and 2010. Branch is going for upgradation of the software package at a cost of SGD 2.44 Mio (Eqv. INR 11.47 crore) The new upgraded system will integrate additional facilities including computerization of treasury operations (Front Office), integration of back office and mid office with core banking, automation of NPAand Web based client application.

• This software is devised to cater to the reporting requirements of Monetary Authority of Singapore (MAS), RBI and Corporate Office. The historical data kept in back up for brvious years can be restored as and when required.

• This software is under implementation in phased manner and expected to be fully operationalised within 3 months.

Welcome Kit for NRI customers at UAE

• Bank has created an In-house Application for immediate opening of NRI accounts at UAE by Bank's rebrsentatives atAbu Dhabi.

• Through the In-house application, account opening process is simplified where in the entire details of the customers will be keyed in by the UAE rebrsentatives and the account opening and activation process will be instantly done. The customers will be issued a Welcome Kit comprising of a cheque book, ATM card, pamphlets, etc. immediately on opening of the account.

Branch opening at Myanmar

• Bank is in the process of opening a Rebrsentative Office at Myanmar.

TECHNOLOGYINITIATIVES

Information & Communication Technology

The Bank has exploited the innovations and advancements in Technology for achieving the business objectives and offers a wide variety of Tech savvy products in tune with the customer needs. The Bank has re-christened the tag line as "Your Own Bank". The IT strategy of the Bank has been aligned with the business goals of the Bank. The Bank's IT initiatives aim to provide hassle free, convenient and safe transaction facilities to further enhance the Customer Service and meet customers' expectations.

Core Banking Solution

Technology has now positioned itself as a critical business enabler, pervading new frontiers and encompassing all aspects of banking activities.

• All the 2562 branches and 28 Extension counters in India are on CBS platform. The 3 overseas branches at Singapore, Colombo and Jaffna are connected to CBS network. CBS implemented at all the 48 administrative offices also.

• 46 Banking Service Centres (BSC) are operational in various parts of the country to increase outreach under Financial Inclusion

• Bank has adopted versatile approach for ensuring uninterrupted connectivity like Leased Line with ISDN Backup, VSATs, GPRS etc. All the branches are having 2 connectivity options to ensure uninterrupted customer service

• Revamping of Bank's WideArea Network done to connect Branches directly to MPLS network in addition to Zonal Offices which are already on MPLS.

• 100% CBS implementation achieved in all the 3 RRBs (Pallavan Grama Bank, Pudhuvai Bharathiar Grama Bank and Saptagiri Grameena Bank) sponsored by the Bank.

ATMs/BNAs/ Kiosks:

• 2531 ATMs (Including 649 offsite ATMs and 5 mobile ATMs) are in operation.

• Deployed 253 Cash Deposit Machines (BNA's) enabled with Cash recycling functionality, wherein the machines can receive and dispense cash to the customers. Bank installed 102 e-lounges which are unmanned kiosks with BNAs, secured pass book printers and cheque deposit machines with 24x7 operations on all days including holidays.

• MobileATM is functional at 5 places.

• RuPay Debit Cards issued to customers of all 3 RRBs.

• More than 2,21,000 ATMs in India are available to Bank's customers through sharing arrangements.

• Free SMS mobile alert message sent to customers on issue of ATM card and pin-mailers to their registered mobile number for collection from branches.

• Reached the mile stone of 1 crore monthly hits/ transactions inATMs.

• Passbook Printing Kiosks have enabled the customers to print their Passbook without waiting for a long time in the branch counter, at their convenient time even after the business hours of the Bank.

• Cheque Acceptor Kiosks have been installed for hassle free deposit of the cheques at any time by the customers without filling the challans, which will be scanned automatically without intervention of the branch staff.

• BNAs help customers especially Traders who close their business late night to deposit their money safely at any time.

Internet Banking:

The Bank has introduced self service delivery channels through Net Banking, which facilitates, banking through internet, funds transfer, tax and utility bills payments, at customers' convenience. The net-banking facility is provided for both individuals and corporate customers with 24x7 accessibility.

The various new services offered through Net Banking facility are as follows:

• Bank website has been given a new look and details of various products along with their features are available for each product.

• Online Registration for Net Banking facility has been provided, wherein customer can set their own Password (Green PIN).

• Online SB account opening facility has been provided.

• Resend OTP facility has been introduced in the net banking.

• Integration with various Government (Tamilnadu, Gurajat, Kerala, Haryana) Tax and Non-Tax collection Portal for making e-payments through net banking has been done.

• e-Filing of Tax Return through net banking provided to customers. This facilitates customer to file Income Tax return based on Bank's net banking credentials.

Mobile Banking:

IndPay' Mobile Banking application launched by the Bank on Android, Windows & iOS platforms providing the following banking transactions:

• Balance enquiry of accounts linked under CIF Number

• Mini statement (last five transactions) of accounts.

• Fund transfer within the Bank from one account to another

• Fund transfer to accounts of other banks using NEFT scheme of RBI.

• Fund transfer to accounts in other banks on 24x7 basis through IMPS.

• Value Added Services like Change MPIN & MTPIN, Mobile Top up, DTH Recharge, Bill Pay services, Scan & Pay etc.,

• The customers having active Internet Banking or Debit Card credentials can register online for 'IndPay' Mobile Banking facility.

Other new initiatives:

• SMS alerts are sent for Cheques brsented by the customers in clearing along with account debit information which alert the customers to contact branch before cutoff time of return, if any discrepancy is noticed.

• SMS alerts sent to customers on maintenance of minimum monthly balance in Savings Bank account.

• Disbursement of NREGA payments through PFMS with 823.15 lakh transactions amounting to Rs. 4781.79 crores during the Financial Year 2015 -16.

• Online UAEX customer account opening implemented for easy opening of account by NRIs working in UAE.

• Facilitated FD interest through NEFT for customers who have only Term Deposits with the Bank to get their FD interest through NEFT.

• E-purse: E-Purse is an innovative product launched to allow customers to have control over their expenses and to protect their debit cards from various frauds such as card skimming, phishing, card theft etc. Customers have facility to transfer funds from their main account to their e-Purse account as per their requirement. For brventing loss of money to customers due to misuse of cards, customers can transfer the whole amount to main account whenever they are not using the cards and also to allow them to reduce the limit of card usage so that the extent of loss can be minimised if card misuse happens.

• IB SMART Remote: A Mobile App to control the operations in the Debit card / Credit card wherein customers can Lock / Unlock (or) Increase / Decrease the withdrawal limit in ATM/ PoS / Online transactions. Further, account balance enquiry and facility to link multiple accounts has also been introduced. The mobile App is available onAndroid, Windows & iOS platforms.

• IB D-Elite: Exclusive Digital Lounge for High Networth Individuals (HNI) customers made available in the brmises of Corporate Office.

• Introduced insurance focused Deposit and Gift Schemes for PMSBY and PMJJBY:

1. SURAKSHADEPOSITGIFT

2. JEEVANSURAKSHAGIFT

3. SURAKSHADEPOSITYOJANAGIFT

• Implementation of Dynamic One Time Password

(OTP): Implemented Dynamic password (OTP) instead of the static password through MasterCard secure code authentication fore-commerce transactions.

• IB V-Collect (Virtual Account Collection): Through this, collection of funds payable to our customer with remitter information was facilitated using multiple options - Branch counters and through NEFT.

• Home loan Certificate for every month: Facility created for the branches to issue home loan interest certificate at any time.

• Near Onsite for Disaster Recovery (DR) operations made operational as Business Continuity Planning (BCP).

• Deployment of PoS terminals implemented for augmenting acquiring business and for increasing cashless purchases.

• Introduced Card to Account funds transfer functionality in ATMs.

• Implementation of Card + OTP for e-commerce transactions done using Rupay cards for reducing instances of decline of e-commerce transaction.

• OROPArrears: Anew program was developed in Pension software for calculation and payment of Defence OROP arrears to nearly 25000 eligible defence pensioners as per the direction of PCDA, Allahabad.

Training:

• Computer related training is imparted to staff on an ongoing basis to empower them to handle the Technology platform. During the current year, 5096 officers and 4124 award staff have been trained against the target of 4000 officers and 4500 clerks. Apart from this 36 concurrent auditors were also trained by our training centres on handling CBS related reports for audit purpose.

MANAGEMENT INFORMATION SYSTEM

• To derive full benefit of automation through 100 percent CBS, the MIS department has been providing various reports/data for furnishing to different agencies and departments. To facilitate the same, a new MIS portal has been developed with facility to generate tailor made reports.

INFORMATION SYSTEMS SECURITY

• Bank's Information System & Security processes have been certified with ISO 27001:2013 standard and the Bank is among the very few Banks that are certified worldwide. The certification adds credibility, a testimonial for the reliability of the Bank's information security system and reassures the clients that the Bank's information security is of high quality. The standard also lays emphasis on measuring and evaluating performance of Information Security Management System (ISMS). Also, the certified security standard has additional controls in cryptography, secured development, security testing, supplier relationship etc. Information Systems Security Policies as per ISO 27001 - 2013 Standards were formulated and put in place to secure the Information Systems of the Bank.

• Separate Information System Security Department is functional.

• IS audit of Core Banking Solutions software, Network infrastructure of the Bank, Internet Banking and ATM network is being done by external agency, every year to strengthen Information Security.

• Guidelines issued to observe Computer Security on an ongoing basis.

• Security Operation Centre (SOC) established for monitoring all the existing and proposed security devices on a 24x7 basis. Under this project, Firewalls, Network Intrusion Prevention System (NIPS), Host Intrusion Detection System (HIDS) are deployed in CDC and DR Site. The Log Management solution with Security Incident and Event Management (SIEM) Solution has been implemented which correlates all the logs from the critical devices on a real time basis and generates alerts on any security incident.

Implementation of Asset and Patch Management Solution:

• As part of the enterprise wide security project, the Asset and Patch Management Solution is implemented, using which the computer hardware/ assets can be identified, tracked and maintained by deploying the necessary operating system patches. The solution has been deployed in Corporate Office, Zonal Offices and all CBS branches.

Disaster Recovery Drill

• As per RBI guidelines, Disaster Recovery Drill for CBS, Eximbills, ATM, Net banking, Website, EVVR, Colombo CBS and Eximbills, History and Signature operations were conducted twice during the financial year 2015-16.

RBI Working group guidelines on Information Security, Electronic Banking, Technology Risk Management and Cyber Frauds

• A gap analysis was conducted by M/s.AAA Technologies and a total of 56 gaps were identified in nine broad areas mentioned in RBI Working group guidelines on Information Security.

• Out of the gaps identified, 54 gaps were complied as on 31.03.2016 and the remaining 2 gaps are taken up for compliance

brMISES

• As part of green initiative, all payments to vendors, suppliers etc., are made through electronic channel viz., direct Credit / NEFT/RTGS (only under exceptional circumstance, payment by way of cheque is made).

• Introduction of Solar Power and LED lights at Corporate Office for energy saving.

• Bank owns 149 properties in India and 2 properties in Singapore.

• Bank has put in place uniform policies for Premises, Expenditure, purchases, contracts, printing and stationery, Air conditioning, Automobiles, Telephone / Cell phone and has adopted the same at all branches / Zones.

GREEN INITIATIVES BY INDIAN BANK

• The brsent scale of banking operations has considerably increased the carbon footprint of banks due to their massive use of energy (e.g., lighting, air conditioning, electronic/electrical equipments, IT, etc), high paper usage etc.

• As a part of implementation of sustainable business practices in Banking, Bank has taken proactive steps for energy conservation in offices and branches.

• Paperless initiatives are implemented across the country by promoting e-lounges, e-statements, internet banking, phone banking etc. which in turn help to reduce the carbon footprint of the customers as they do not have to resort to printed bank statements.

• Over 2531 Indian Bank Automated Teller Machines (ATMs) and Cash Deposit Machines (CDMs), Debit Cards, Credit Cards etc. ensure reduced consumption of paper used for transaction at Branches.

Solar Power:

• Bank switched to green power by harnessing solar power to Corporate Office, which is already under Green Building (Gold rating) status. In adopting alternative source of energy, Bank as Public Sector Bank joined hands with other entity to form Green India.

Bank initiated the 'Green Power' Plant by implementing 66kWp Power Plant at Corporate Office.

• Solar power is being implemented in all the Bank's own brmises, wherever it is technically feasible and this is expected to reduce the annual overall expenditure on energy consumption by about 4-5 per cent.

LED Lamps:

• Bank is in transition stage in adopting new technological products in the illumination systems by furnishing the interior lighting systems with new LED lamps.

• All the new branches furnished are being illuminated with LED lighting only.

• Lighting provided in existing branches is being altered in a phased manner. Presently 158 Branches/Offices are provided with LED lighting.

Other Green Initiatives

• The Sewage Treatment Plant housed at the basement of the Bank's Corporate Office generates 20,000 litres of treated water per day, which is utilised for daily usages.

• Rainwater Harvesting System has been implemented in all the Bank's Buildings across the country.

• Energy Audits are conducted for branches & offices periodically.

• Air-conditioners installed at branches and offices are provided with timers for auto-cut-off to reduce energy consumption. Installation of harmonic filters and the usage of star rated electrical appliances have considerably reduced the consumption of electricity.

INTERNALCONTROLS

• During the year, Risk Based Internal Audit (RBIA) was carried out in 1803 branches. Information system Audit covered 1796 branches and 1273ATMs during the year.

• 530 branches were covered under concurrent audit, covering 62.62 per cent of total domestic deposits and 71.19 per cent of domestic advances as on 31.03.2016.

Overall, 66.17 per cent of domestic business was covered under ConcurrentAudit.

• Risk Based ConcurrentAudit is in vogue from 01.04.2013.

• Revenue Audit covering 1930 branches with business exposure of Rs.10 crore and above was carried out to identify leakage of income if any, in addition to RBIA and Concurrent Audit.

• Management Audit of 38 Zonal Offices was conducted during the year under review and follow up action initiated for compliance.

• Information Systems (IS) Audit of information & Communication Technology (ICT) infrastructure - CBS application suite, data centre and CBS project office was carried out by an external audit firm during the period of review.

• Meetings with Concurrent auditors were conducted in all the Zones to tone up the efficiency of concurrent audit system and for improving the quality of concurrent audit reports. On the job training programmes were conducted at various centres to Concurrent auditors to make them more familiar with the CBS and other systems of the Bank.

• Offsite monitoring activities were carried out in the Bank on a two tier setup at Corporate Office and Zonal Offices to sensitize the Branches for corrective action on a daily basis.

• Separate programme for inspectors was conducted during the year to make them familiar with the latest developments and to improve their reporting skills.

• The Anti Fraud Cell is functioning under Inspection Department with the brdominant responsibility of coordinating all activities related to fraud, comprising identification, classification, reporting, investigation, monitoring and follow-up, closure, surveillance for fraud brvention, pooling of fraud data and analysis of the data for systemic improvements.

COMPLIANCE:

• The Bank's Compliance Policy has been duly approved by the Board. In accordance with the Reserve Bank of India guidelines, an independent Compliance Department headed by a Deputy General Manager has been set up in the Bank. The Department monitors adherence to various statutory and regulatory guidelines governing the Bank's functioning such as:

• Various legislations such as Banking Regulation Act, Reserve Bank of India Act, Foreign Exchange Management Act, Prevention of Money Laundering Act etc.

• Regulatory guidelines issued by Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and DevelopmentAgency etc.

• Voluntary standards and codes brscribed by industry associations such as Indian Banks' Association, Foreign Exchange Dealers' Association of India, Fixed Income Money Market Dealers Association etc.

• Bank's internal policies, codes of conduct, guidelines etc. issued by way of Circulars, Manuals etc.

VIGILANCE

• Vigilance department is responsible for vigilance administration of the Bank. The department is guided by Central Vigilance Commission (CVC) guidelines on Vigilance administration and is the single point of contact for consultations with CVC.

• The department is headed by Chief Vigilance Officer (CVO) who is appointed to the post by Government of India on the recommendations of Central Vigilance Commission. CVO is the nodal Officer to liaise with RBI/CBI in respect of frauds.

• All officers of the rank ofAsst General Manager and above come within the jurisdiction of CVC in the matter of disciplinary proceedings. CVO tenders advice as to the nature of disciplinary proceedings and punishment in respect of vigilance disciplinary proceedings involving Officers below the rank of Assistant General Managers and all award-staff employees. CVO ensures that advices tendered by CVC in respect of officers of the rank of Assistant General Managers and above are duly considered for compliance by the Bank.

• The department is functioning in a proactive manner, focused on increasing the fraud deterrence quotient within the Bank and disposing of all vigilance disciplinary cases in line with the Central Vigilance Commission's time norms and guidelines.

• Investigations of complaints and frauds are undertaken through vigilance officers located in the various Zonal offices of the bank. Analysis of frauds is undertaken at corporate office by Anti-Fraud Cell functioning under Inspection Dept.

• Vigilance Awareness Week was observed from 27th October 2015 to 31st October 2015. As per the advice of CVC, outreach activities were organised in 8 centres namely Chennai, Coimbatore, Guntur, Madurai, Puduchery, Salem, Tiruchirapalli, and Tirunelveli. Debates, panel discussions, elocution and essay competitions were organised in select colleges and schools (for students of class IX & above) in the allotted centres. Various topics relating to corruption and its ill effects, importance of morals and values, honesty and integrity, ethics, transparency in governance and how youth can participate in the fight against corruption and such related issues were topics for these outreach activities.

• Three exclusive in-house training programs were held for the Presenting Officers/Inquiring Authorities, Vigilance Officers and Disciplinary Authorities during the year.

SECURITY

• Security mechanisms of the Bank are well established to supplement the Operational Risk Management Systems.

Precautions and Prevention is the prime core around which Security guidelines are formulated.

• Bank has a healthy mix of modern Security Systems viz.,

Burglar and Fire Alarm Systems with Auto Dialer, Fire Extinguishers, and CCTV Systems with high resolution (IR) cameras in consonance with current requirement is provided to all branches and ATMs.

• Automatic Fire Extinguishers are installed in all server rooms of branches. Biometric Access Control System is installed in Currency Chests. All Currency Chests are provided with Bank's Armed Guards. All new ATMs are grouted.

• Adhered to Asset protection measures and followed procedural safe guards during cash remittances for safety of Bank's assets.

• Regular inspection of Branches / Currency Chests is carried out by a team of Security Officers. Deficiencies / Shortcomings observed during the inspection are followed for rectification to strengthen the security aspects of the Branch / ATM with the objective of brventing untoward incidents.

• Annual Training of Security Officers is carried out every year where the officers are updated with the latest technological advancement for implementing the same in our Bank. Live firing practice and fire fighting training is conducted for armed guards, every year.

• To enhance security awareness amongst staff members, topics highlighting current security scenario with brcautionary measures to overcome inherent threats are ported on CBS Help Desk to catch the attention of the staff members and customised Short Message Service (SMS) are sent to Branch Managers, Zonal Managers, Secondin- Command and Zonal Security Officers reiterating the same.

• Security aspects highlighted during State Level, District Level Standing Security Committee meetings and other statutory meetings are disseminated to respective Zones and Compliance ensured.

IMPLEMENTATION OF OFFICIAL LANGUAGE

• Bank is actively implementing Official Language based on the Official Language Act, 1963 and the Official Language Rules, 1976. Official Language is implemented as per the Annual Programme issued by the Ministry of HomeAffairs, Government of India and the guidelines issued from time to time by the Ministry of Finance and Reserve Bank of India.

• In keeping with the Bank's objective of being "Your Own Bank" to the common man, the facility of Hindi in CBS and in ATM operations has been provided to cater to the common man.

• Bank's Home Page as well as its Website is available in Hindi. Bank's intranet, through which all the policies, products and developments in the Bank reach the entire Indian Bank team, has a separate Hindi Section.

• SMS messages for disseminating information to customers for marketing and on the various governments sponsored schemes like APY, PMJDY etc are being sent in Hindi along with vernacular languages. All the computers of the Bank have the facility of word processing in Hindi and to work in Hindi by using Unicode.

• Special emphasis is continuously being laid by the Bank to train the staff members in Hindi through workshops. Hindi workshops have also been organised by Zonal Offices. Bank had organised 60 workshops in the country during this period.

• Visits of various Parliamentary Committees to the Bank have been successfully coordinated by Official Language Cell.

• Various Zones of the Bank have received prizes from the Town Official Language Implementation Committees of their area for their contribution to "Hindi" implementation Atal Pension Yojana (APY): Bank sourced more than one lakh APY subscribers and was thereby entitled for a commission of Rs.1.30 crore.

Sovereign Gold Bonds: Bank has made a collection to the tune of Rs. 131.39 crore in the 3 tranches during FY 2015-16.

Point of Sale (PoS): Bank has entered into PoS acquiring business by engaging M/s MRL Posnet Pvt Ltd, under OPEX model with effect from 31.12.2015. The following types of terminals are provided to the merchants based on their need:

• GPRS POS Terminals:

• Digital POS Terminals (green initiative-wireless without printer)

• Hand held POS Terminals (wireless with printer)

• Desktop POS Terminals (wired with printer)

• MPOSTerminals (to be launched shortly)

• PSTN POS Terminals (wired with printer)

Pension Adalats were conducted in 26 Zones in the months ofJuly 2015, August 2015 and January 2016.

Bank is having 87 Coin Vending Machines, of which 7 were installed during the year 2015-16. Bank has received incentives from RBI to the tune of Rs. 265.45 lakhs on Exchange of soiled notes, installation of CVMs and BNAs.

During the year, 70 Soiled Note Exchange Melas were conducted in various places. Notes to the tune of Rs. 1.53 crores and Coins to the tune of Rs. 1.55 crores were exchanged / distributed.

• Bank has been authorised to collect CST / VAT for the States of Gujarat and Madhya Pradesh during the Financial Year 2015-16 and number of authorised branches have gone up from 452 to 462.

• 2452 Sukanya Samridhi accounts were opened during the year and the amount collected was Rs.686.67 lakhs.

MARKETING

• Digital Initiatives and Migration into Digital Channels:

Digital advertisement board is placed at ATM brmises located in Chennai Central railway station.

• Aclosed Facebook group, namely "Ind Kutumb" has been launched during March 2016 with the twin objective of providing another official channel of internal communication to the Bank's employees to share their field experiences and learn from each other and establish a brlude to the Official launch of Bank on Social Media platforms.

• A first-of-its-kind lead generation campaign for Home Loan was centrally conducted on www.99acres.com, a leading real estate search and database company in India to promote our Festive Home Loan Offers. This 45-day campaign, which was executed via banner ad on website, direct emailers and calls to a curated list of interested customers (as offered by 99acres), reached over 13 lakh users. It elicited over 1650 enquiries, out of which a potential business of Rs.31 crore is expected.

Bank changed its Tagline to a new Tagline -

BANK

YOUR OWN

• Suryan FM: A 3-day advertisement campaign was run on Suryan FM 93.5 FM, the leading FM radio channel in Tamilnadu, for promoting the festive offers under Home Loan and Vehicle Loan during October - November 2015.

CORPORATE COMMUNICATION

• During 2015-16, Bank focused on various activities to reach out the customers with the Bank's products, achievements and welfare for the general public.

•Bank changed its Tagline to a new Tagline – YOUR OWN BANK

• Bank organised several editorial coverage on various occasions of Product Launch, Financial Results, and Important Meets/ events.

Bank had been widely covered by Economic Times, Times of India, Business Standard, Financial Exbrss, Hindustan Times, New Indian Exbrss, Daily Thanthi, Rajasthan Patrika, Lokmat, Dina Mani etc during plantation drive, uninterrupted banking services during the flood situation at Chennai in December 2015, Swachh Bharat abhbiyan at Marina Beach, Pan-India

Blood/ Organ Donation Camps and 109th Foundation Day Celebration.

During the floods, Bank made special efforts to reach out the masses through mass media.

Bank ran successful advertisement campaign covering different media vehicles to improve visibility of the Tech products like IndPay, e-purse, missed call facility, IB V Collect, IB Smart Remote and IMPS simultaneously through Print Media in 5 Southern States, FM in select Metro and Class-A cities and Top Brand websites pan-India.

Bank as a responsible Corporate Citizen worked to reach out to the needy and marginalised population through various contributions:-

Swasth Bharat: Construction of consultation rooms forSankarNethralaya, Chennai.

Bank contributed equipped Medical Van for Johar Health Medical Organization to be operated in Hazaribagh

Skill India: - Supported building and running Swarna Bharat Trust at Vjaywada for skill building of youth.

Beti Bachao: - Contribution towards gender equality issue by Population First - Laadli.

CORPORATE SOCIAL RESPONSIBILITY

• Corporate Social Responsibility (CSR) initiatives of the Bank extend beyond banking and lead it to honour ethical values and respect people, communities and the natural environment.

• As a strong corporate, the Bank is taking up various initiatives for the benefit of the society with the commitment to serve the people of India. Proud of its humanitarian services, the Bank has achieved many accolades in recent past to touch many lives and bring in positive change.

Bank's structure for CSR Activities

• Bank had identified an Officer as Champion, based on their flair for serving the citizens in their upliftment and growth.

• Based on the aptitude and attitude towards CSR, the faculty of IMAGE identifies volunteers for CSR activities.

• 2 days CSR workshop (November 30 - December 1, 2015) was conducted for 83 volunteers from various states at IMAGE

• Trainees are given classroom and field exposure during the workshops, visits are organised to orphanages/ old age homes. Conducted cleanliness drive on an ongoing basis. 270 such trainees have been exposed to such CSR activities

• CSRinitiativestakenbytheBank:

Pan-India Blood Donation, Health and Eye Check-up Camps through the Branches/ Zones

Swachh Bharat Abhiyan : Continuing the crusade of Swachh Bharat Mission launched on October 2, 2014 by the Hon'ble Prime Minister, Team Indian Bank joined the mission with great enthusiasm. Team Indian Bank lead by MD & CEO cleaned up Light House area in Marina Beach, Chennai.

Swachh Vidyalaya Abhiyan : Construction of 108 Toilets in Girls Schools.

Divya - Indian Bank adopted Daughter in the year 2012 is now pursuing Nursing with the help of the Bank.

Chennai Floods:

-Adoption of Fishermen village Nochikuppam, Chennai

-Bank organised distribution of notebooks in School.

-Health check-up camp was organised in the village in association withApollo Hospital and Kaveri Hospital.

-Bank distributed 800 food-packets, 200 water bottles, 100 new bed-sheets apart from soap, tooth-paste, brush, coconut oil, match-box, mosquito coils etc.