Karur Vysya Bank Ltd
Directors Reports
<dhhead>DIRECTORS REPORT </dhhead>
by eight Asset Recovery Branches spread across India for effective
recovery. Your bank has also engaged recovery agencies to assist the Asset recovery
Branches to reach the end customers and for continuous follow-up.
The Gross NPAs of your Bank downsized by Rs 1,972.89 Crore and dropped
to Rs 1,458.15 Crore as on MarcRs 31, 2023, from the level of Rs 3,431.04 Crore as on
MarcRs 31, 2022. Correspondingly, Net NPA of your Bank downsized by Rs 792.64 Crore and
dropped to Rs 468.15 Crore as on MarcRs 31, 2023 from the level of Rs 1,260.79 Crore as on
MarcRs 31, 2022. In terms of percentage, your Bank's Gross Non-Performing Assets (Gross
NPA) and Net Non-Performing Assets (Net NPA) downsized at 2.27% and 0.74% as against 6.03%
and 2.31% of the previous year respectively. Further, your Bank's SMA30+ levels has been
well contained and confined to 0.56% as against 0.82% of previous year. Your Bank has
carried out focused recovery drive on a continuous basis which resulted in improved
recovery performance during the past three years. The Provision Coverage Ratio stood at
92.14% and your Bank is continuously strengthening the ratio for the past five years. Your
Bank will take all possible steps to curtail slippages and expedite recovery in existing
SMA / NPAs.
Your bank has implemented several measures to minimize slippages and
enhance recovery, including strengthening credit risk assessment processes, implementing
proactive monitoring systems, offering timely restructuring options for stressed
borrowers, collaborating with specialized recovery agencies, leveraging data analytics for
early warning signals, and streamlining legal and recovery frameworks. These steps ensure
proactive identification of potential defaults, prompt action for resolution, and
efficient recovery processes, ultimately contributing to the reduction of slippages and
improved recovery rates.
INVESTMENTS
Your Bank's investment portfolio increased by RS 1,656.64 Crore and
stood at RS 19,411.72 Crore as on MarcRs 31, 2023, registering a growth of 9.33% on RS
17,755.08 Crore as on MarcRs 31, 2022. The average investment for the financial year
2022-23 stood at RS 18,966.08 Crore. The investment portfolio's composition is consistent
with the Investment Policy of the Bank and lays stress on liquidity and regulatory
management besides providing gains.
Interest income earned on investments during the financial year 2022-23
was RS 1,099.13 Crore as against RS 924.79 Crore in financial year 2021-22. Profit made on
sale of investments was at ^ 17.27 Crore for the fiscal 2022-23. With a view to prevent
large volatility, Modified Duration of overall portfolio including Held to Maturity
(HTM) was maintained at a lower level of 2.86 years. Liquidity position
was maintained at comfortable levels throughout the financial year 2022-23.
FOREIGN EXCHANGE TRANSACTIONS
During the financial year 2022-23, Bank's merchant turnover stood at RS
23,345 Crore as compared to the previous financial year's level of RS 21,623 Crore. Banks
Export credit was RS 1,270.50 Crore for the financial year 2022-23 as against RS 1,352.85
Crore of the previous financial year due to reduced demand from cotton export borrowers.
Total Income earned through foreign exchange transactions was RS 65.12 Crore for the
financial year 2022-23 as against RS 66.02 Crore for the previous financial year due to
subdued revaluation gains on account of shrink in forward premiums. Exchange Profit of RS
33.82 Crore and Commission & others of RS 31.30 Crore forms part of total Income
earned through foreign exchange transactions.
INCOME
Your Bank's Interest Income sizably increased by RS 928.88 Crore and
reached RS 6,516.55 Crore for the financial year 2022-23, registering a growth of 16.62%
on RS 5,587.67 Crore for the financial year 2021-22. Net Interest Income of your Bank
increased by RS 633.44 Crore and reached to RS 3,348.81 Crore for financial year 2022-23,
an increase of 23.33% on RS 2,715.37 Crore for the financial year 2021-22. The growth in
Net Interest Income is in tandem with the topline growth in loan books of the Bank.
Further, your Bank's Non-Interest Income increased by RS 389.88 Crore and reached RS
1,158.94 Crore for the financial year 2022-23, an increase of 51 % on RS 769.06 Crore for
the financial year 2021-22. The Yield on Advances and Investment stood at 8.93% and 5.80%
respectively.
EXPENDITURE
Your Bank's Interest expenditure increased to RS 3,167.74 Crore during
the financial year 2022-23, an increase of RS 295.44 Crore (10.29%), over the previous
year Interest Expenditure of RS 2,872.30 Crore. The Operating expenses also increased to
RS 2,031.96 Crore during the financial year 2022-23 from RS 1,854.22 Crore of the previous
financial year in line with the business growth. Your Bank regularly monitored both its
operating and establishment expenses during the year and tight controls were exercised on
the expenditures.
Your Bank's Cost of Deposits eased to 4.27% as against 4.31% of the
previous financial year. The Net Interest Margin (NIM) improved by 46 bps and stood at
4.18% over the previous year position of 3.72%, Cost of Deposits decreased by 4 bps while
yield on Advances has improved by 37 bps and Investment by 39 bps. Thus, cost of funds was
lower by 3 bps whereas yield improved by 42 bps, aiding the spread improving by 48 bps to
3.50%.
PROFIT
Your Bank's Operating Profit increased by RS 845.58 Crore and reached
RS 2,475.79 Crore for the financial year 2022-23, registering a significant growth rate of
51.87% on RS 1,630.21 Crore for the financial year 2021-22.
The Net Profit of your Bank surpassed the historical milestone of RS
1,000 Crore and registered RS 1,106.09 Crore for the financial year 2022-23, a remarkable
growth rate of 64.29% on RS 673.27 Crore for the financial year 2021-22.
APPROPRIATIONS
The Net Profit of RS 1,106.09 Crore along with RS 2.39 Crore brought
forward from the previous financial year, aggregating to RS 1,108.49 Crore, was
appropriated as follows:
Appropriation - Transfer to Reserves |
Amount (Rs in Crore) |
Statutory Reserve |
276.60 |
Capital Reserve |
- |
Investment Fluctuation Reserve |
- |
Investment Reserve |
6.68 |
Special Reserve |
55.00 |
General Reserve |
607.00 |
Balance carried to Balance Sheet (including Proposed Dividend
of RS 160.41 Crore) |
163.21 |
DIVIDEND
Your Bank has formulated the Dividend Distribution Policy as per the
requirements of Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, ("SEBI LODR") and guidelines issued by Reserve Bank India.
The objective of the Policy is to ensure an equitable balance between rewarding the
shareholders through dividend and retaining sufficient funds for future growth of the Bank
subject to compliance with the dividend pay-out ratio matrix prescribed as per extant
guidelines issued by Reserve Bank of India. The Dividend Distribution Policy is available
on the Bank's website at https://www.kvb.co.in/docs/dividend- distribution-policv.pdf
Accordingly, considering the capital position of the Bank and the
quantum of dividend pay-out permitted, Board of Directors of the
Bank are pleased to recommend a Dividend of RS 2/- per equity share of
face value of RS 2/- each i.e., 100%, for the financial year 202223. Your Bank has
notified closure of Register of Members and Share Transfer Books from Tuesday, August 08,
2023 to Wednesday, August 23, 2023 (both days inclusive) for determining the names of
members eligible for dividend on Equity shares. The Dividend pay-out is in accordance with
Bank's Dividend Distribution Policy and is subject to the approval of the shareholders at
the ensuing 104th Annual General Meeting and also any regulatory/statutory
authorities, if required.
In accordance with Accounting Standards 4 - Contingencies and Events
occurring after the Balance Sheet date - notified by the MCA on MarcRs 30, 2016, the
proposed dividend amounting to RS 160.41 Crore has not been shown as an appropriation from
the Profit and Loss account as of MarcRs 31, 2023 and correspondingly not reported under
Other Liabilities and Provisions as at MarcRs 31, 2023 (is reported under balance of
profit).
SHARE CAPITAL
The Authorised share capital of the Bank stood at RS 200 Crore divided
into 100 Crore equity shares with a face value of RS 2/- each as on MarcRs 31, 2023.
During the financial year under review, there has been no change in the Authorised share
capital of the Bank.
During the financial year under review, Bank has allotted 20,41,791
Equity Shares of face value RS 2/- each to the employees who exercised their options under
KVB ESOS 2011 Scheme and KVB ESOS 2018 Scheme during financial year 2022-23. Post
allotment of the aforesaid equity shares, the Issued Share Capital increased from RS
160,13,55,212 to RS 160,54,38,794 comprising 80,27,19,397 equity shares with a face value
RS 2/- each and the Paid-up Share Capital increased from RS 160,00,23,344 to RS
160,41,06,926 comprising 80,20,53,463 equity shares with a face value RS 2/- each. Other
than the aforementioned, there is no change in capital structure of the Bank during the
year under review.
The Bank's Net owned funds grew to RS 8,584.05 Crore as on MarcRs 31,
2023 from RS 7,596.20 Crore of the previous financial year. The Market Capitalisation of
the Bank stood at RS 8,370.96 Crore as on MarcRs 31, 2023.
EARNINGS PER SHARE/BOOK VALUE
Bank's Earnings Per Share (Basic) stood at RS 13.81 for the financial
year 2022-23 as against RS 8.42 for the financial year 2021-22. The Book Value of shares
was RS 105.03 per equity share of face value RS 2/- each (fully paid up) as on MarcRs 31,
2023 as against previous year position of RS 94.95.
DEBT INSTRUMENTS & CREDIT RATING
The Bank had issued Basel III Compliant Unsecured, Redeemable
Non-Convertible Tier II Bonds to the value of ^ 487 Crore with a coupon rate of 11.95%
p.a. and a tenor of 123 months (maturing on June 12, 2029) in MarcRs 2019 through Private
Placement, having a call option at 5th Coupon Payment date i.e., MarcRs 12,
2024 or on any Coupon Payment date thereafter. The fourth coupon interest has been duly
paid to the Debenture holders on MarcRs 12, 2023. Bank has not issued any Debt instruments
during the year under review.
Particulars |
Rating Agency |
Rating |
Rating Action |
Date of Revision |
Basel III Tier II Bonds - Issue of RS 1,200 |
ICRA |
[ICRA] A+ |
Upgraded |
November 30, 2022 |
Crore where RS 487 Crore was utilised |
|
(Stable) |
|
|
|
India Ratings & Research |
IND A+/Stable |
Affirmed |
February 03, 2023 |
Certificate of Deposits Programme - |
ICRA |
[ICRA] A1 + |
Reaffirmed |
September 22, 2022 |
RS 3,000 Crore |
|
[ICRA] A1 + |
Reaffirmed |
November 30,2022 |
|
|
[ICRA] A1 + |
Reaffirmed |
December 29, 2022 |
|
|
[ICRA] A1 + |
Reaffirmed |
MarcRs 31, 2023 |
|
CRISIL |
CRISIL A1 + |
Reaffirmed |
April 22, 2022 |
|
|
CRISIL A1 + |
Reaffirmed |
June 22, 2022 |
|
|
CRISIL A1 + |
Reaffirmed |
August 29, 2022 |
|
|
CRISIL A1 + |
Reaffirmed |
October 28, 2022 |
|
|
CRISIL A1 + |
Reaffirmed |
January 06, 2023 |
|
|
CRISIL A1 + |
Reaffirmed |
MarcRs 09, 2023 |
As per ICRA ratings schedule: ICRA A+: instruments with this rating are
considered to have very strong degree of safety regarding timely payment of financial
obligations. Such instruments carry lowest credit risk.
ICRA A+(Stable): instruments with this rating are considered to have
adequate degree of safety regarding timely servicing of financial obligations. Such
instruments carry low credit risk.
As per CRISIL ratings schedule: CRISIL A1+: instruments with this
rating are considered to have very strong degree of safety regarding timely payment of
financial obligations. Such instruments carry lowest credit risk.
As per India Ratings & Research schedule: !ND A+ZStabie:
instruments with this rating are considered to have an adequate degree of safety with
respect to the timely servicing of financial obligations. Such instruments carry a Sow
credit risk.
CAPITAL ADEQUACY
The Bank's Capital Adequacy Ratio stood at 18.56% as on MarcRs 31,
2023, as per BASEL III norms. This is well above the statutory limit of 11.50% (9% plus
Capital Conservation Buffer of 2.50% is required to be maintained as of MarcRs 31, 2023)
as prescribed by the Reserve Bank of India Guidelines.
SUBSIDIARIES AND ASSOCIATES
Your Bank does not have any Subsidiaries or Associates/JVs to report
during the year under review.
MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to provisions of the Regulation 34(2) (e) of SEBI LODR, the
Management Discussion and Analysis Report for the year is forming part of this Annual
Report.
NETWORK OF BRANCHES
Whilst geographical presence of your Bank has been widening throughout
the country year on year, the digital presence is spreading without any boundaries, which
will provide improved access and proximity to the bank's services. The Digital Banking
Unit is yet another recent initiative of your Bank that will not only
enhance customer experience but also environment friendly which
is a core focus area of the bank's ESG initiatives.
Your Bank has added Ten (10) Regular Branches, One (1) Retail Asset
& Personal Banking Branch, Two (2) Asset Recovery Branches (ARBs) and Eleven (11) NEO
Offices during the financial year 2022-23. Further, Consumer Banking Department was
established during the year under review. The branch network including Corporate Business
Units, Business Banking Units, Asset Recovery Branches, NEO and Precious Metal Division
totals to 833 as on MarcRs 31, 2023, excluding three Extension Counters and five Satellite
Offices.
During the year under review, your Bank has installed 88 new ATMs, 23
Bunch Note Recycler Machines (BNRM) and 14 Self Service Passbook Kiosks. As of MarcRs 31,
2023, 1,643 ATMs, 597 Bunch Note Recycler Machines (BNRM) and 192 Self-Service Passbook
Kiosks are providing uninterrupted Banking services to customers.
CURRENCY CHEST
As on MarcRs 31, 2023, your Bank has eight Currency Chests across
different locations in Tamil Nadu, Andhra Pradesh, Telangana and Karnataka to supply
adequate cash to Branches & ATMs in its respective areas and the Clean Note Policy of
RBI is being adhered to. Currency Chests also support the branches maintain cash within
the retention limit for smooth operations. Your Bank also conducted soiled note exchange
melas and distribution of coins through Currency Chest linked branches.
FINANCIAL INCLUSION
Financial Inclusion ensures availability of basic banking services and
products to all, thereby reaching the unreached, un-banked and under-banked areas. Bank
has been actively pursuing the agenda of Financial Inclusion with key interventions in
offering appropriate financial products, using technology and financial literacy. Bank is
providing various Business Correspondents (BCs) services & implementing comprehensive
Financial Inclusion Program through effective utilisation of BCs in Sub Service Area
(SSA). SSA is a cluster of few villages and is linked to one base branch of the Bank.
Your Bank has reached the underprivileged segment of the society and
extended its focused financial services througRs 147 Bank Mitras in rural villages, 3 Bank
Mitras in urban locations including 39 Ultra Small Branches. The Bank Mitra use Micro ATM
for providing the banking services to the customers.
Your Bank continues to provide basic financial products including Basic
Savings Bank Deposit Account (BSBDA), Social security schemes of Insurance and Pension
products and thereby support the Government in implementation of various social welfare
schemes.
Pradhan Mantri Jan Dhan Yojana (PMJDY):
Your Bank has opened 1,008 PMJDY accounts during the year under review.
The balances outstanding in the PMJDY accounts as on MarcRs 31, 2023 was RS 19.57 Crore.
The Bank has issued 1,008 Rupay Debit Cards under PMJDY accounts during the year. Micro
ATM devices are provided to Bank Mitras for facilitating payments, which are enabled for
accepting Rupay Card transactions/Aadhaar enabled Payment system (AePs)/Third Party
deposit, Balance enquiry, Mini statement. Bank Mitras have done 5.39 Lakh transactions,
amounting to RS 67.25 Crore during the year under report which includes of DBT/Old Age
Pension/MGNREGS transactions.
Micro credit (SHGS Bank linkage):
Your Bank is providing credit facilities to Self-Help Groups (SHG) /
Joint Liability Groups (JLG) to meet the credit needs of the poor. As on MarcRs 31, 2023,
the Bank has 6,564 JLG loans with outstanding of RS 27.65 Crore.
Financial literacy:
Financial Literacy campaigns are intended to provide basic banking
knowledge to people across various corners of the Society. Your Bank has been in the
forefront in creating awareness to the rural mass on the financial services and products
through the Financial Literacy Campaigns. During the financial year 2022-23, your Bank has
conducted 85 financial literacy campaigns in Rural, Semi Urban/Urban areas.
In line with Reserve Bank of India's emphasis on propagating financial
literacy and cyber security measures, the Bank organized Financial Literacy Awareness
campaign by way of street corner plays in 580 locations reaching out to 34,000 rural adult
population across Tamilnadu under CSR Activity.
TECHNOLOGY INITIATIVES
Your Bank is always inclined to plan and implement latest trends,
technological advancements and innovations. Such long term projects are initially taken up
as a study projects. Based on its technical feasibility, these study projects are
converted to regular action plan projects to reap benefit to our customers. Presently,
your bank is exploring adaption to, contactless / wearable payment solutions,
digitalisation of back offices, virtual debit card.
DIGITAL TRANSFORMATION PROJECT
Web based online business loans:
Your bank has digitised its entire range of products in the Loan
Portfolio viz. Retail, Commercial, and Agricultural Advances. Your Bank is making the best
use of its technological infrastructure to manage operations from on-boarding of borrowers
till disbursement of loans, resulting in better portfolio performance. Your Bank is the
first to implement a complete end-to-end digitised loan sanction process flow and has been
consistently redefining the Business Rule Engine with underwriting models on an ongoing
basis. Bank is poised to grow its market share by leveraging the digital capabilities and
has also digitised Credit, Risk and Monitoring activities for better internal control.
During the year, your Bank has implemented the digital journeys for commercial &
agricultural products. Your Bank has integrated its digital journeys with CERSAI portal
for Registration of Security Interest (Land, Building).
Retail loans on Mobile/Tablet:
During the year, the Retail Loan segment of your bank was strengthened
further by including more loan products on the tablet- based application, as a part of its
Digital Transformation. The Retail Lending Digital application is now equipped with
Housing Loans, Personal Loans, Vehicle Loans, Education Loans, Loan against Sovereign Gold
Bonds, OD against property and thus empowering the branches/business units to source
quality applications from the market. This digital system will also enable your bank to
fetch the bank statement via Account Aggregator Eco System for all Retail loans with ease.
Also, your Bank has added the Pre-Approved Personal loan journey via Dlite Mobile Banking
App. Customers spanning across all geographies are now offered various loan products with
quicker turnaround time and best-in-class user experience on the digital platform.
Co-Lending initiations:
Your Bank has commenced co-lending activities with Non-Banking Finance
Companies in the Commercial Vehicle and Construction Equipment segments. In the Retail
segment, your Bank has on- boarded and sanctioned consumer durable loans to 34.77 Lakh of
customers during this fiscal year. Going forward, your Bank will continue to focus new
business opportunities under this model for widening its horizons and regularly upgrading
the existing digital lending system to adhere the compliance norms and by adding
functionalities for business growth.
INFORMATION SECURITY
The Board and Senior Management of your Bank have envisaged the Risk
associated with the Cyber and Information Security in the modern world. They have
established an Information Security Group headed by Chief Information Security Officer
(CISO) who is specialised in Information and Cyber Security to protect the Bank's
Information Assets.
Your Bank has approved Security Policies and procedures to protect the
Information Assets in accordance with the determined risk profile of the assets. Your Bank
understands the importance of Cyber Security and enhanced requirements in the connected
world. Information Security function designs, develops, implements, maintains and monitors
the Information Security Management System (ISMS), to handle the continuously evolving
threat vectors.
Your Bank's Information & Cyber Security Framework is derived from
ISO27001, Regulator Guidelines and Industrial Standards. The Policy and Procedure is
designed not just to focus on CIA Triad viz Confidentiality, Integrity and Availability of
Information; but also, on the other principles such as Authenticity, Non-Repudiation and
Accountability in order to ensure the following:
Safety and privacy of sensitive customer and Bank information.
Prevent IT Assets and Information System from Unauthorized
Access.
Protect the Data / IT Systems from Phishing, Ransomware, and
other Malware, Security threats across using Cloud and integrated systems in multiple
locations over the Internet and zero-day attacks.
Ensuring the Data / IT Systems availability to the authorised
users.
Your Bank has established fully functional Security Operations Centre
(SOC) to monitor and defend the cyber combat in 24 x 7 x 365 days to protect the Bank
Information and also invested in Artificial Intelligent based monitor and defence solution
against Dark web cyber combat to protect the Bank Information. Apart from technology tools
and solution to safeguard the Bank's Information, Bank contributes equally to up skill the
awareness of employees about new threats in the cyber security landscape.
Your Bank is maintaining the ISO/IEC 27001 Certification issued by M/s
TUV SUD since 2018, which is the international standard that is recognised globally for
managing risks to the Information Security.
CALL CENTRE
The Call Centre of your Bank is a one stop Contact point of the bank
which addresses queries / requests from customers, and works seamlessly round the clock.
INBOUND CONTACT CENTRE:
Phone Banking - Customers contact the Phone Banking through various
modes such as IVRS, Email & Chat to register their queries / requests related to
banking services. Your Bank has a dedicated team assigned for the above channels to honour
the customers' requirements in best in class service. EFRM calling - to verify the
rightness of transactions of customers through outbound calls based on the data available
from NPCI portal for fraud transaction monitoring. Video-KYC - This activity is performed
inorder to convert Dlite accounts which are opened under Low KYC to Full KYC. Mobile
number change verification - verification calls for the changes in registered Mobile
number requested through Dlite & Internet Banking. Door-step banking services feedback
calls - Calls are made to the customers to obtain their feedback on the services rendered
to them through door step banking.
OUTBOUND CONTACT CENTRE:
At Outbound Contact Center an agent outcalls the customer on behalf of
the Bank, for Sales / Service and collection activities. All the Tele Conversations are
recorded for Quality and Monitoring Purposes. Activities undertaken are Welcome Calling
for CASA and Newly Opened Loan accounts, Tele Sales to generate Revenue and to service our
existing and potential customers. Your Bank has two types of Credit Cards viz., Corporate
and Retail Credit Cards - For Customers who had availed Corporate Credit Card, the
activities such as Welcome Calling, Statement Generation, Pre due, and Post due
Collections calling are performed. Tele Collections - Calling is primarily done to remind
Individual / Corporate customers of their Equated Monthly Instalments / Payments.
Tele-collections for SMA 0 / 1 / 2 for CBD and SBG products are performed by Outbound
Contact Centre. Reminder calling with Nominal intensity are practiced for ABG accounts.
Based on the Unpaid Data spooled from the backend, two type of activities viz.,; a) PREDUE
calling b) POSTDUE calling are performed. PREDUE Calling is initiated to remind customers
of their due date and the EMI amount which is due to be paid. This calling helps the
customer to ensure that the EMIs are serviced on time. Post Due Date calling is initiated
to customers who have missed to pay their dues on the acceptable payment date. Payment
Missed Data is spooled and segregated on the basis of (i) Severity of delinquency (ii) No
of Days Past Due (iii) Track on repayment (iv) Relationship with bank & the available
data base. Centralised Collections - Collections Data is analysed based on the risk
pattern, and accounts are allocated to the field collections team. SMS / Email is
initiated to Post due customers as reminder to pay their pending arrears. ADHOC activities
- Apart from the above regular outbound activities, Adhoc calling request from different
departments to outcall customers are also performed.
CHANGE IN NATURE OF BUSINESS
There was no change in the nature of business of the Bank during the
financial year under review.
SYSTEM FOR INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY
The Bank has strong and time-tested computerized solutions to serve its
customers in respect of all banking requirements. Adequate infrastructure has been
established in processing the day to day transactions. "Flexcube" is the CBS
platform used in the Bank which is commonly used in several well-known banks in the
Country. The CBS platform has well defined set-up to ensure
internal financial controls viz maker-checker requirements with
adequate credentials. Automation of interest & charges application and accounting
transactions ensures necessary internal financial control. IT audit in respect of CBS is
also being conducted as per the stipulated periodicity which ensures adherence to the
regulatory and mandatory guidelines. Exclusive unswerving reporting software is used by
Bank with appropriate systems and protocols which have periodical review. The same ensures
reporting of Bank's business without any ambiguity. The Bank has standardised operating
procedures in monitoring the account operations to have effective internal controls.
Separate monitoring team has been identified to prevent and detect frauds and errors in
the Bank. Compliance of regulatory/mandatory requirements are being taken care by an
individual team which has its exclusive procedure in adhering to regulated and framed
policies besides reporting of financial information in a disciplined manner. These systems
enable the Bank to have established internal control over financial information reporting.
The Bank has Board approved policies in respect of various banking
activities like lending, investment, borrowing etc. with well-defined hierarchy of
officials vested with sanctioning powers. Inspection Department and Risk Management
Department review various aspects of internal control, adherence to procedure and review
credit assessment protocols periodically.
Internal Financial controls of the branches are verified by the
Statutory Branch Auditors during their branch audit and covered in the report. Statutory
Central Auditors of the Bank audit the internal controls over financial reporting of the
Bank and submit a separate report containing the salient features of their observations to
the Board of directors. Thus, the Bank ensures that the Internal Financial Controls placed
are operating effectively.
RISK MANAGEMENT
Risks are inherent in any business and banking is not an exception to
this. Bank has adopted a multi-layered risk management process to identify, assess,
monitor and manage risks through the effective use of processes and information
technology.
Objective of risk management of the Bank is to balance between risk and
return, and ensure that the Bank operates within the Board approved risk appetite
statement. An independent risk management function ensures that the risk is managed
through policies and processes approved by the Board of Directors encompassing independent
identification, measurement and management of risks across the various businesses of the
Bank. The risk management function in the Bank strives to proactively anticipate
vulnerabilities at the transaction as well as at the portfolio level, through quantitative
or qualitative examination of the risks. The Bank continues to focus on
refining and improving its risk measurement systems including automation of processes, not
only to ensure compliance with regulatory requirements, but also to ensure optimal capital
utilisation with a better risk-adjusted return. The Board reviews the risk profile of the
Bank at periodic intervals and ensures that risk levels are within the defined risk
appetite.
The independent risk management structure in the Bank is responsible
for managing the credit risk, market risk, liquidity risk, operational risk, other Pillar
II risks like reputational risk and strategic risk.
The Board is responsible for overseeing the overall risk management
framework by approving various policies relating to the Risk functions and has delegated
powers to Board Level Risk Management and Asset Liability Management Committee (RM &
ALM) for monitoring the implementation of Risk Governance Framework, compliance to various
policies & processes. The RM & ALM Committee ensures the same by closely
monitoring & guiding the functions through Executive Level Credit Risk Management
Committee, Market Risk Management Committee, Operational Risk Management Committee and
Fraud Risk Management Committee, Asset Liability Management Committee, which regularly
assess the functional efficiency of the Bank's risk management processes. Minutes of these
Committee meetings are placed to the RM & ALM Committee of the Board for its perusal
and further guidance.
Risk Management department maintains different policies covering inter
alia credit, credit risk rating, market, liquidity, treasury, operational risk, risk
culture, strategic risk management, Reputational risk and integrated risk management
functions and other risk related policies.
Bank's risk management objectives broadly cover proper identification,
assessment, measurement, monitoring, controlling, mitigation and reporting of the risks
across various business segments of the Bank. The risk management strategy adopted by the
Bank is based on a clear understanding of the risks and level of risk appetite, which is
dependent on the willingness of the Bank to take risks in the normal and stressed course
of business operations.
Bank is viewing risk management as a core competency and tries to
ensure that the Bank takes only calculated risks, which it can understand, monitor,
mitigate and control, thereby minimizing unexpected outcomes. All material risks of the
Bank emerging in the course of its business are identified, assessed, monitored, managed
and mitigated with the effective control measures in place.
Bank is well capitalized; CRAR stands at 18.56% as on MarcRs 31, 2023.
Capital provides the required buffer to manage and meet any unexpected risks / losses that
materialize in spite of prudent and timely risk management actions. In view of foregoing,
apparently there are no material risks which threaten the existence of the Bank.
VIGIL MECHANISM/WHISTLE-BLOWER POLICY
In compliance with RBI Guidelines, provisions of the Companies Act,
2013, the SEBI LODR and SEBI (Prohibition of Insider Trading) Regulations, 2015 as
amended, your Bank has in place robust "Whistle-Blower Policy" since 2011. The
Policy also incorporates the Protected Disclosure Scheme (PDS) for Private Sector Banks,
instituted by the Reserve Bank of India. The Audit Committee of the Board reviews the
complaints received through Vigilance Mechanisms on quarterly basis. The Bank's
Whistle-Blower Policy is in synchronisation with all statutory and regulatory guidelines
on Vigilance Mechanism. The details of the Whistle-Blower Policy is made available on the
website of the Bank. https://www.kvb.co.in/ docs/whistle-blower-policv.pdf
Bank is encouraging the staff to share all kinds of unlawful/unethical
instances/practices followed by any employees to take appropriate action upon review.
Further, bank is ensuring that the details shared are kept confidential and protection of
staff who blown the whistle.
DISCLOSURES PERTAINING TO THE SEXUAL HARASSMENT OF WOMEN AT THE
WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The details related to Internal Complaints Committee under the Sexual
Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 are
furnished in the Corporate Governance Report that forms part of this Annual Report.
RELATED PARTY TRANSACTIONS
All transactions entered into by your Bank with related parties are
repetitive in nature in ordinary course of business and on an arm's length basis. Omnibus
approval is obtained from the Audit Committee for transactions which are repetitive in
nature and the same are reviewed on periodic basis. The Bank's policy on Related Party
Transactions can be viewed at: https://www.kvb.co.in/docs/
related-party-transactions-policy.pdf.
During the year, your Bank has not entered into any materially
significant transactions with the related parties, which could lead to potential conflict
of interest. Therefore, pursuant to Section 134(3)(h) of the Act Companies Act, 2013 with
Rule 8(2) of the Companies (Accounts) Rules, 2014, there are no related party transactions
to be reported under Section 188(1) of the Companies Act, 2013 and Form AOC-2 is not
applicable to the Bank.
AUDIT COMMITTEE RELATED DISCLOSURE UNDER SUB-SECTION 8 OF SECTION 177
OF THE COMPANIES ACT, 2013
The Bank has constituted a Board level Audit Committee in line with the
requirements of the Companies Act, 2013, SEBI LODR and Reserve Bank of India guidelines,
as amended from time to time. Board has accepted all the recommendations of the Audit
Committee. The details of the composition of the Audit Committee is disclosed in the
Corporate Governance Report that forms part of this Annual Report.
DISCLOSURE RELATED TO DETAILS OF DEPOSITS ACCEPTED UNDER RULE 8(5) (V)
OF COMPANIES (ACCOUNTS) RULES, 2014
Being a Banking company, the disclosures required as per Rule 8(5) (V)
of Companies (Accounts) Rules, 2014, read with Section 73 and 74 of the Companies Act,
2013 are not applicable.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Pursuant to Section 186 (11) of the Companies Act, 2013, the provisions
of Section 186 of the Companies Act, 2013, except sub-section (1), do not apply to a loan
made, guarantee given or security provided or any investment made by a banking company in
the ordinary course of business. Hence, the particulars of loan and guarantees as required
under Section 134(3)(g) of the Companies Act, 2013 are not disclosed. The particulars of
investments made by the Bank are disclosed in the Financial Statements as per the
applicable provisions of the Banking Regulation Act, 1949.
AUDITORS
Statutory Auditors
In terms of Section 139 of the Companies Act, 2013 read with Section
30(1A) of the Banking Regulation Act, 1949, it is proposed to re-appoint, M/s R G N Price
& Co., Chartered Accountants (Registration No. FRN 002785S) and M/s Sundaram &
Srinivasan, Chartered Accountants (Registration No. FRN 004207S) as Joint Statutory
Central Auditors of the Bank, who are retiring at the conclusion of the ensuing 104th
Annual General Meeting (AGM), subject to the approval of Reserve Bank of India and
shareholders of the Bank. The Bank has received consent from the Auditors on their
reappointment and confirmation to the effect that they are not disqualified to be
reappointed as the Auditors of the Bank in terms of the provisions of the Companies Act,
2013 and the rules made thereunder.
Accordingly, the Board of Directors have recommended to the
shareholders, the reappointment of M/s R G N Price & Co., Chartered Accountants
(Registration No. FRN 002785S) and M/s Sundaram & Srinivasan, Chartered Accountants
(Registration No. FRN 004207S) as Joint Statutory Central Auditors of the Bank, to hold
office from the conclusion of the ensuing 104th AGM till the conclusion of the
next AGM. Fee payable to Statutory Auditors is proposed at RS 1,21,00,000 (Rupees One
Crore Twenty One Lakh only) plus applicable taxes and out of pocket expenses with a cap of
10% of fees for the financial year 2023-24, subject to the approval of Reserve Bank of
India and Shareholders of the Bank.
Members are requested to consider the re-appointment of M/s R G N Price
& Co., Chartered Accountants (Registration No. FRN 002785S) and M/s Sundaram &
Srinivasan, Chartered Accountants (Registration No. FRN 004207S) as Joint Statutory
Central Auditors of the Bank.
Pursuant to the Regulation 33(1)(d) of the SEBI LODR, the Statutory
Auditors have confirmed that they are subjected to the peer review process of the
Institute of Chartered Accountants of India (ICAI) and that they hold a valid certificate
issued by the Peer Review Board of ICAI.
Independent Auditors' Report
The Joint Statutory Central Auditors of the Bank viz., M/s R G N Price
& Co., Chartered Accountants (Registration No. FRN 002785S) together with M/s Sundaram
& Srinivasan, Chartered Accountants (Registration No. FRN 004207S), have audited the
accounts of the Bank for the financial year 2022-23 and their Report forms part of this
Annual Report. Pursuant to Section 143(3) (i) of the Companies Act, 2013, the Statutory
Auditors have also reported on the adequacy and operating effectiveness of the internal
financial controls system over financial reporting, which has been enclosed as
"Annexure A" to Independent Auditor's Report.
There are no qualifications, reservations or adverse remarks made by
the Statutory Auditors in their report for the financial year 2022-23.
During the period under review, no frauds were reported by the Auditors
under sub-section (12) of Section 143 of the Companies Act, 2013.
Secretarial Audit and secretarial compliance report
In line with Section 204 of the Companies Act, 2013 and Regulation 24A
(1) of the SEBI LODR your Bank has appointed M/s S.A.E. & Associates LLP, Company
Secretaries, Chennai to undertake the Secretarial Audit of the Bank for the financial year
2022-23. The Bank produced all necessary records to the Secretarial Auditors for smooth
conduct of their Audit. The Secretarial Audit Report for the financial year 2022-23 is
annexed to this report as Annexure - 1.
There are no qualifications, reservations or adverse remarks made by
the Secretarial Auditors in their report for the financial year 2022-23.
Pursuant to regulation 24A (2) of the SEBI LODR and SEBI circular No.
CIR/CFD/CMD1/27/2019 dated February 09, 2019, the Bank has obtained Secretarial Compliance
Report, from the Secretarial Auditors of the Bank on compliance of all applicable SEBI
Regulations and circulars/guidelines issued thereunder and the copy of the same was
submitted to Stock Exchange within the prescribed timelines.
Implementation of Indian Accounting Standards (Ind AS)
As per RBI guidelines, Proforma IndAS statements have to be submitted
on half-yearly basis and accordingly the same is submitted to RBI. During the current
year, RBI has issued discussion paper on introduction of Expected Credit Loss Framework
for provisioning by banks. Final guidelines are awaited. Further details are given in
Schedule 18 - Notes to Account of the Balance Sheet.
COMPLIANCE WITH SECRETARIAL STANDARDS
During the financial year 2022-23, your Bank is in compliance with the
applicable Secretarial Standards issued by The Institute of Company Secretaries of India.
STATUTORY DISCLOSURES
Disclosures relating to conservation of energy, technology absorption
and foreign exchange earnings and outgo, pursuant to Section 134(3)(m) of the Companies
Act, 2013 read with Rule (8)(3) of the Companies (Accounts) Rules, 2014 are detailed as
under:
Conservation of Energy
Your Bank owns a 850 KW Wind Turbine Generator at Govindanagaram, Theni
District in Tamil Nadu and the said Wind Turbine generated 13,69,932 units during the year
under review. The Bank is utilising the power generated by Wind Turbine Generator for its
Registered & Central Office at Karur and also premises of Divisional Office at
Chennai.
Technology Absorption
Your Bank has implemented the following customer centric projects
during the financial year 2022-23:
WhatsApp Banking - The Bank has enabled its customers, an additional
service channel for catering to their non-financial services such as Balance enquiry, mini
statement, Term / Recurring deposit interest rate enquiry, cheque book request, debit card
blocking, net banking block / unblock.
Chat bot - "Kaaru" an interactive chat bot leveraging
Artificial Intelligence and Machine Learning technologies has been hosted in our corporate
web site to assist the customers with banking queries on 24 X 7 basis.
IRCTC integration in Dlite app.- Train ticket booking through direct
account debit facility without involving payment gateway.
Face ID login, e-Deposit loan through Dlite app.- Customer can use face
id to login in Dlite similar to fingerprint login. Further customer can avail deposit loan
without visiting branches through Dlite app.
Bharat Bill payment system integration in Dlite App.- With
BBPS implemented, customers have the convenience of payment by
cataloguing various utility providers under one platform
Government business (GST and CBDT) payment through branch and Internet
Banking - Payment of GST and CBDT enabled through internet banking facilitates customer to
pay their taxes on time and to stay complied with Government norms.
Implementation of e-Mandate for debit cards - Customers can now provide
e-Mandate / standing instruction on his/her Debit Card for regular/recurring payment
transactions.
Card tokenisation as per regulatory guidelines - Tokenisation refers to
replacement of actual card details with an alternate code called the "token",
which shall be unique for a combination of card, token requestor and device. A tokenised
card transaction is considered safer as the actual card details are not shared with the
merchant (card not present transaction) during transaction processing.
Foreign Exchange Earnings And Outgo
Your Bank continuously supports and encourages the country's export
efforts through its export financing operations. The details on foreign exchange earnings
and outgo are furnished in the Foreign Exchange Transactions section that forms part of
this report.
MATERIAL EVENTS THAT HAVE OCCURRED AFTER THE BALANCE SHEET DATE
There are no material events/changes and commitments, which affect the
financial position of the Bank between the end of the financial year of the Bank and the
date of the Directors' Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS
During the financial year 2022-23, no significant and material orders
were passed by the Regulators or Courts or Tribunals against the Bank which impacts its
going concern status and Bank's operations in future.
MAINTENANCE OF COST RECORDS
Being Banking Company, your Bank is not required to maintain cost
records as per sub-section (1) of Section 148 of the Companies Act, 2013
ANNUAL RETURN
The Annual Return for the financial year ended MarcRs 31, 2023, as
required under Section 92 (3) and Section 134(3)(a) of the Companies Act, 2013 is
available on the Bank's website at
https://www.kvb.co.in/investor-corner/annual-eeneral-meetine/ annual-return/.
DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE
INSOLVENCY AND BANKRUPTCY CODE, 2016 (31 OF 2016) DURING THE YEAR ALONG WITH THEIR STATUS
AS AT THE END OF THE FINANCIAL YEAR
Bank has been filing cases in NCLT under IBC, 2016 as a part of its
recovery mechanism and the status of the cases as at the end of the financial year 2022-23
is furnished as below:
S No |
Particulars |
No of cases |
Book Balance J in Crore |
Status |
01 |
Case filed by KVB against Corporate Debtors under IBC |
2 |
401.24 |
Under Liquidation |
02 |
Case filed against Individual Guarantors of Corporate Debtors |
15 |
236.80 |
Filed and Pending |
DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME
OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR
FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF
Being Banking Company, the aforesaid provision is not applicable to
your Bank.
PARTICULARS OF EMPLOYEES
The information as required under Section 197(12) of the Companies Act,
2013 read with Rule 5 of the Companies (Appointment & Remuneration of Managerial
Personnel) Rules, 2014 are annexed to this report as Annexure - 2.
EMPLOYEE STOCK OPTION SCHEME
Your Bank has formulated and adopted Employee Stock Option Schemes to
provide a platform to employees for participating in the ownership of the Bank and in its
long-term growth. Bank uses stock options as a compensation tool to attract and retain
critical talent and encourage employees to align individual performances with that of
Banks' objectives. Currently, the Bank has the following Schemes in compliance with the
provisions of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021
("SEBI SBEB & SE Regulations") erstwhile SEBI (Share Based Employee
Benefits) Regulations, 2014.
Karur Vysya Bank Employees Stock Option Scheme 2011 ("KVB-
ESOS-2011")
Karur Vysya Bank Employees Stock Option Scheme 2018
("KVB-ESOS-2018")
During the period under review, your Bank has granted 4,42,161 options
under KVB-ESOS-2018 to Key Managerial Personnel (Managing Director & CEO and President
& COO) of the Bank and Senior Management towards their variable pay as a part of
non-cash component. The said variable pay is in accordance with Bank's Compensation policy
read with Reserve Bank of India circular DOR.Appt.BC.No.23/29.67.001/2019-20 dated
November 04, 2019. As a part of their non-cash component of variable pay for the financial
year 2020-21 in terms of compensation structure, your Bank has allotted 24,635 Equity
Shares to Shri B Ramesh Babu, MD & CEO and 18,539 Equity Shares to Shri J Natarajan,
President & COO, under KVB ESOS 2018 during the year under review. Further Bank has
allotted 19,98,617 Equity Shares of face value RS 2 each to the employees who
have exercised their options under KVB ESOS 2011 Scheme and KVB ESOS
2018 Scheme during the year under review.
Your Bank's Secretarial Auditors, M/s S.A.E. & Associates LLP,
Company Secretaries, have certified that the Bank's above- mentioned Schemes have been
implemented in accordance with the Resolutions passed by Shareholders for 2011 & 2018
Schemes and the SEBI SBEB & SE Regulations. Disclosures as required under the SEBI
SBEB & SE Regulations are available on Bank's website at
https://www.kvb.co.in/investor-corner/other-disclosures/esos- disclosures/.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
As per Sections 124 and 125 of the Companies Act, 2013 read with
Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund)
Rules, 2016 (IEPF Rules'), the dividend remaining unclaimed for consecutive period
of 7 years and its corresponding shares are liable to be transferred to the Investor
Education and Protection Fund (IEPF'). The said requirement does not apply to shares
in respect of which there is a specific Order of Court, Tribunal or Statutory Authority,
restraining transfer of the shares. Further details are provided in the Corporate
Governance Report that forms part of this Annual Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Articles of Association of the Bank drafted in 1916, provided for
setting aside of one percent of the annual profits to a "Charity Account", which
would be used to support the needy for their health and education requirements. The Bank
continues with that tradition even today after 106 years in the modern avatar of Corporate
Social Responsibility. A Corporate Social Responsibility (CSR) Committee has been
constituted in accordance with the provisions of Section 135 of the Companies Act, 2013,
read with the Companies (Corporate Social Responsibility Policy) Rules, 2014.
During the year under review, your bank had CSR budget of RS 11.58
Crore, against which the Bank spent RS 12.84 Crore. Further in line with the CSR policy of
the Bank, spends have been spread across the core focus areas viz., health, sanitation,
clean drinking water, education, skill development, women empowerment and environment
protection, as defined in Schedule VII of the Companies Act, 2013.
The brief outline of the CSR policy of the Bank, CSR spends and other
mandatory disclosures are annexed to this Report as Annexure - 3.
BUSINESS RESPONSIBILITY & SUSTAINABILITY BOARD OF DIRECTORS
REPORTING (BRSR)
ESG has been the forefront of your Bank's business activities. We
strongly believe the significance of environmental, social and governance aspects on the
Bank's performance and have been proactively taking initiatives in this regard. Due credit
must be given to the Indian capital markets regulator, the Securities & Exchange Board
of India (SEBI) for taking the lead in putting together the Business Responsibility &
Sustainability Reporting (BRSR) framework. We believe it is the right step towards making
ESG disclosures consistent and measureable across entities to facilitate better
benchmarking.
In terms of Regulation 34(2)(f) of the SEBI LODR read with SEBI
circular SEBI/HO/CFD/CMD-2/P/CIR/2021/562, the filing of BRSR shall be mandatory for the
top 1000 listed companies (by market capitalisation) and accordingly Bank would file BRSR
for financial year 2022-23. It is to be noted that your Bank has published business
responsibility and sustainability report from the financial year 202122 itself on
voluntary basis in order to adapt to the regulatory requirements and build transparency
among our stakeholders.
The Business Responsibility & Sustainability Reporting (BRSR) of
the Bank for the financial year 2022-23 is annexed to this Report as Annexure - 4.
BOARD MEETINGS
The composition of the Board of Directors is in compliance with all the
relevant applicable statutory regulations. The Board meets at regular intervals to discuss
and decide on Bank's business policy and strategy, apart from other items of business.
During the year under review, Fifteen Board Meetings were conducted and the relevant
periodicity for holding the meetings was complied. The schedule of the meetings of the
Board is circulated in advance to the Members of the Board, for their consideration and
approval. Details of the composition of Board, Meetings held and attendance of the
Directors at such Meetings are provided in the Corporate Governance Report which forms
part of Annual Report.
BOARD EVALUATION
Pursuant to Section 134(3) (p) of the Companies Act, 2013, Regulation
17(10) of SEBI LODR and other applicable regulations, Board has carried out annual
evaluation of its own performance (Board as a whole), Committees of the Board, all its
Directors including NonExecutive Chairperson and MD & CEO. The manner of evaluation
conducted during the financial year 2022-23 is furnished in the Corporate Governance
Report that forms part of this Annual Report.
The Board comprises of Nine Directors as on the date of this report,
with rich experience and specialised knowledge in various areas of relevance to the Bank
including Accountancy, Agriculture and Rural Economy, Banking, Economics, Finance, Law,
MSME, Information Technology, Payment & Settlement Systems, Human Resources, Risk
Management, Business Management, Strategic Planning, Credit Recovery, Marketing, Credit,
Cyber Security, Treasury Operations, Audit, Taxation, Governance, Supervision and Business
Analytics.
Appointment
Dr Meena Hemchandra (DIN: 05337181), was co-opted as an Additional
Director of the Bank under "Non-Executive Independent Director" category by the
Board in its meeting held on May 26, 2022 and subsequently appointed as Non-Executive
Independent (Parttime) Chairperson with effect from July 25, 2022 with the approval of
Reserve Bank of India. The said appointment was approved by the shareholders at the 103rd
AGM held on August 03, 2022, for a period of three (3) years with effect from May 26,
2022, not liable to retire by rotation.
Shri Murali Ramaswami (DIN: 08659944), was co-opted as an Additional
Director of the Bank under "Non-Executive Independent Director" category by the
Board in its meeting held on June 14, 2022. The said appointment was approved by the
shareholders at the 103rd AGM held on August 03, 2022 for a period of three (3)
years with effect from June 14, 2022, not liable to retire by rotation .
CA Chinnasamy Ganesan (DIN: 07615862), was co-opted as an Additional
Director of the Bank under "Non-Executive Independent Director" category by the
Board in its meeting held on April 25, 2023, subject to the approval of the Shareholders
of the Bank. In terms of Regulation 17 (1C) of SEBI LODR, the listed entity shall ensure
that approval of shareholders for appointment of a person on the Board of Directors at the
next general meeting or within a time period of three (3) months from the date of
appointment, whichever is earlier. Accordingly, the said appointment was approved by the
shareholders through postal ballot having Remote e-Voting process on June 30, 2023, for a
period of three (3) years with effect from April 25, 2023, not liable to retire by
rotation.
Re-Appointment
Shri K G Mohan (DIN: 08367265) was re-appointed as an Additional
Director of the Bank under Independent Category, for second term of three (3) years,
w.e.f. October 12, 2022 in the Board Meeting held on September 22, 2022 subject to the
approval of shareholders of the Bank. In terms of Regulation 17 (1C) of SEBI LODR, the
listed entity shall ensure that approval of shareholders for reappointment of a person on
the Board of Directors at the next general meeting or within a time period of three (3)
months from the date of appointment, whichever is earlier. Accordingly, the said
reappointment was approved by the shareholders through postal ballot having Remote
e-Voting process on December 30, 2022, for a period of three (3) years with effect from
October 12, 2022, not liable to retire by rotation.
Previously, Shri K G Mohan was co-opted as an Additional Director under
Independent Category on February 01, 2020 and elected as Non-Executive Independent
Director for a period from February 01, 2020 to October 11, 2022 for the first term in the
101st AGM of the Bank held on September 23, 2020.
Shri B Ramesh Babu (DIN: 06900325) was re-appointed as the Managing
Director & CEO of the Bank, for the second term of three (3) years, with effect from
July 29, 2023, subject to the approval of Reserve Bank of India and Shareholders of the
Bank. The said reappointment was approved by the shareholders through postal ballot having
Remote e-Voting process on June 30, 2023.
The Reserve Bank of India vide its letter dated July 14, 2023 approved
the reappointment of Shri B Ramesh Babu, Managing Director and CEO of the Bank for second
term of three years with a revised fixed pay of RS 1.80 Crore per annum with effect from
July 29, 2023. The Variable pay shall be based on the achievement of performance
parameters of the respective financial years subject to the approval of RBI.
Previously, Shri B Ramesh Babu was appointed as Managing Director &
CEO of the Bank for a period of (3) three years from July 29, 2020 to July 28, 2023 for
the first term in the 101st AGM of the Bank held on September 23, 2020.
Dr Harshavardhan R (DIN: 01675460) was re-appointed as NonExecutive
Independent Director of the Bank in the Board Meeting held on May 15,2023, subject to the
approval of shareholders of the Bank. The said reappointment was approved by the
shareholders through postal ballot having Remote e-Voting process on June 30, 2023, for a
period of Five (5) years with effect from July 30, 2023, not liable to retire by rotation.
Previously, Dr Harshavardhan R was co-opted as an Additional Director
under Independent Category in the Board Meeting held on July 30, 2020 and elected as
Non-Executive Independent Director for a period of three (3) years from July 30, 2020 to
July 29, 2023 for the first term in the 101st AGM of the Bank held on September
23, 2020.
Opinion of the Board with regard to integrity, expertise and experience
(including the proficiency) of the Independent Directors appointed during the year:
In the opinion of the Board, the Independent Directors appointed during
the year possess requisite qualifications, proficiency, expertise, track record,
integrity, independence, vast and rich experience in the field of Banking. Independent
Directors appointed during the year have qualified the online proficiency self-assessment
test/have undertaken to comply with the requirements relating to passing of online
proficiency self-assessment test for Independent Director's Databank, within the timelines
prescribed.
Retirement by rotation
Shri R Ramkumar (DIN: 00275622), Non-Executive NonIndependent Director,
retires by rotation at the ensuing 104th Annual General Meeting (AGM) and being
eligible, offers himself for re-appointment in terms of Section 152 of the Companies Act,
2013. He hails from the promoter's family and was on the Board since June 25, 2018 and
would be representing "Minority Sector- Business Management, Finance, Human
Resources". Approval of the shareholders is being requested for reappointment of Shri
R. Ramkumar as Non-Executive Non-Independent Director of the Bank, liable to retire by
rotation.
The brief profile and details in terms of Regulation 36 (3) of SEBI
LODR and the Secretarial Standard on General Meetings, in respect of the Director seeking
re-appointment has been annexed to the Notice of the ensuing AGM and also in the Corporate
Governance Report that forms part of this Annual Report.
Retirement on completion of tenure
Shri N S Srinath (DIN: 01493217), Non-Executive (Independent) Part-time
Chairman of the Bank, demitted office consequent to completion of his three years tenure
at the close of office hours on May 26, 2022.
Dr V G Mohan Prasad (DIN: 00002802), Non-Executive Independent Director
of the Bank, demitted offce at the close of office hours on June 14, 2022 consequent to
completion of his eight years tenure in terms of Section 10A(2A)(1) of the Banking
Regulation Act, 1949.
Shri M K Venkatesan (DIN: 00032235) and Shri A K Praburaj
(DIN:07004825), Non-Executive Non-Independent Directors of the Bank, demitted office at
the close of office hours on December 08, 2022 consequent to completion of their eight
years tenure in terms of Section 10A(2A)(1) of the Banking Regulation Act, 1949.
CA K L Vijayalakshmi (DIN:07116809), Non-Executive Independent Director
of the Bank demitted office on MarcRs 21, 2023 consequent to completion of her eight years
tenure in terms of Section 10A(2A)(1) of the Banking Regulation Act, 1949.
Board placed on record its sincere appreciation for the valuable
services rendered and contribution made by them during their tenure as Directors of the
Bank.
Apart from the above, there were no changes in the Board of Directors
of the Bank.
KEY MANAGERIAL PERSONNEL
There were no changes in the Key Managerial Personnels during the year
under review.
CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES FOR
APPOINTMENT/ REAPPOINTMENT OF DIRECTORS
Pursuant to provisions of Section 178(3) of the Companies Act, 2013 and
relevant guidelines of RBI, the Nomination and Remuneration Committee (NRC) formulated the
criteria for determining qualifications, positive attributes and independence of a
Director to adhere the various provisions and guidelines as detailed below:
Fit and Proper' criteria as per Dr. Ganguly Committee
Norms which stipulates age, qualification, experience, track record, integrity, etc., and
various circular instructions and guidelines issued by Reserve Bank of India from time to
time.
Norms laid down by the Banking Regulation Act, 1949 as amended
from time to time which stipulates substantial interest, sectorial representation as per
Section 10A(2) (a), restrictions as per Section 16 and 20 of the Banking Regulation Act,
1949, etc.,
Disqualification/Conflict of Interest of Directors, and other
norms as per the provisions of the Companies Act, 2013 and rules made thereunder from time
to time.
Criteria of Independence of a Director as per the provisions of
the Companies Act, 2013 and rules made thereunder and other applicable provisions as
amended from time to time.
Applicable listing regulations as amended from time to time.
Articles of Association of the Bank.
Any other factors as the NRC may deem fit and in the best
interest of the Bank and its stakeholders.
The terms and conditions of appointment of Independent Director are
available on the website of the Bank at https://www.kvb.co.in/
docs/terms-and-conditions-of-appointment-of-independent- directors.pdf. Your Bank's
Nomination and Remuneration Committee (NRC) oversees matters of succession planning of its
Directors, Senior Management and also Key Managerial Personnel & the Board of the Bank
ensures that proper plans are put in place for orderly succession of appointment to the
Board and to Senior Management of the Bank including KMPs.
Policy on remuneration of directors
The remuneration of Directors is governed by the Compensation Policy of
the Bank in terms of RBI circular no. DOR.Appt. BC.No.23/29.67.001/2019-20 dated November
04, 2019, which covers the aspects of remuneration payable to Board of Directors, Whole
Time Directors/ Chief Executive Officers/Material Risk Takers, Key Managerial Personnels,
Control Function Staff and all other employees. This Policy is in tune with the guidelines
issued by the Reserve Bank of India, provisions of the Companies Act, 2013 and the SEBI
LODR amended from time to time. Your Bank has adopted a board approved compensation policy
on the basis of the aforesaid regulatory guidelines and the Policy is available on the
Bank's website at https://www.kvb.co.in/docs/investor-compensation-policv.pdf.
DECLARATION BY INDEPENDENT DIRECTORS
Your Bank has received necessary declarations from all the Independent
Directors under Section 149(7) read witRs 149(6) of the Companies Act, 2013 and Regulation
25(8) read with Regulation 16(1)(b) of the SEBI LODR, that they meet the criteria of
independence laid down thereunder. As required under Schedule IV of the Companies Act,
2013, Board has reviewed the declarations submitted by the Independent Directors and
opined that, they fulfil all the conditions specified in the Companies Act, 2013 and SEBI
LODR, and are independent of the management.
FAMILIARISATION PROGRAMMES OF INDEPENDENT DIRECTORS
All Directors including Independent Directors are made familiar with
their rights, roles and responsibilities in the Bank at the time of appointment and also
on a recurrent basis. Details of familiarisation programmes attended by all Directors
including Independent Directors are provided at https://www.kvb.co.in/investor-corner/,
pursuant to regulation 46 of SEBI LODR. Other details on the same are also covered in
Corporate Governance Report forming part of Annual Report.
CORPORATE GOVERNANCE
The details on Corporate Governance standards followed by your Bank and
the relevant disclosures as stipulated under SEBI LODR and the Companies Act, 2013 and the
rules made thereunder are deliberated in Corporate Governance Report that forms part of
this Annual Report. A certificate from M/s S.A.E. & Associates LLP, Company
Secretaries, confirming compliance to the conditions of Corporate Governance as stipulated
under SEBI LODR is annexed to Corporate Governance Report which forms part of this Annual
Report.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act, 2013 with respect to
the Directors' Responsibility Statement, it is hereby confirmed that:
a) In the preparation of the annual accounts, the applicable accounting
standards had been followed along with proper explanation relating to material departures;
b) The Directors had selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and prudent so as to
give a true and fair view of the state of affairs of the Bank at the end of the financial
year and of the profit and loss of the Bank for that period;
c) The Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the provisions of the
Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and
detecting fraud and other irregularities;
d) The Directors had prepared the annual accounts on a going concern
basis;
e) The Directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were adequate and operating
effectively; and
f) The Directors had laid down internal financial controls to be
followed by the Bank and that such internal financial controls are adequate and were
operating effectively.
AWARDS AND ACCOLADES
Your Bank received the following awards during financial year 2022-23,
majority of the same for implementation of innovative technologies:
S. No |
Name of the Award |
Awarded by |
01 |
Best MSME Friendly Bank (Private Sector), 2021 - Runner up |
Chamber of Indian Micro Small & Medium Enterprises |
02 |
Best Innovative Bank (Private Sector) - Runner up |
Chamber of Indian Micro Small & Medium Enterprises |
03 |
Tech Enable Ease of Banking |
Quantic India |
04 |
APAC BFSI Innovation |
Banking Frontiers |
05 |
Banking RPA Integrator of the Year |
Synnex Group & India Banking Summit |
06 |
Data Centre Company of the Year |
Synnex Group & India Banking Summit |
07 |
Tech Enabled Ease of Banking Award |
KRYPTON BFSI LEADERSHIP AWARDS |
08 |
Bank with Best Technology Orientation - Economic Times Ascent |
Asia Pacific HRM Congress Awards, 2021 |
09 |
Digital Bank - India BFSI Awards 2022 |
Governance Now |
10 |
Digital Transformation of Bank |
Sri Adhikari Brothers Group |
11 |
Intelligent Automation (AL, ML, RPA) |
CIO Crown |
12 |
Design Management (Infrastructure Management) |
UBS Forums |
13 |
Innovation - New Initiatives (Infrastructure Management) |
UBS Forums |
14 |
CIO of the Year |
UBS Forums |
15 |
Digitalisation from Application to Disbursement won in the
Best in Future of Digital Infrastructure |
IDC future enterprise Awards |
16 |
The Best Technology Bank of the Year (Winner) |
IBA Awards |
17 |
The Best Fintech collaboration ( Runner-up) |
IBA Awards |
18 |
The Best AI ML adoption (Special Prize) |
IBA Awards |
S. No |
Name of the Award |
Awarded by |
19 |
The Best Digital Financial Inclusion (Special Prize) |
IBA Awards |
20 |
Best Use of Technology |
Synnex Group & India Banking Summit |
21 |
Business Transformation Awards 2022 for competitive edge with
workforce transformation |
Mint & Techcircle |
22 |
Best bank for promoting social schemes |
Chamber of Indian Micro Small & Medium Enterprises |
23 |
Best Government Scheme Implementing Bank - Runner up |
Chamber of Indian Micro Small & Medium Enterprises |
24 |
Best Innovative Bank - Runner up |
Chamber of Indian Micro Small & Medium Enterprises |
25 |
Best CSR Initiative & Business Responsibility Bank -
Runner Up |
Chamber of Indian Micro Small & Medium Enterprises |
26 |
Best Bank in implementation of COVID Scheme - Runner up |
Chamber of Indian Micro Small & Medium Enterprises |
27 |
Best Digital Customer Experience initiative of the year |
ASSOCHAM - Financial Conclave 2023 & Excellence Award |
28 |
Product Quality Management |
Dun & Bradstreet - ESG Leadership Summit 2023 |
29 |
Best Technology Enabler of the Year - Winner |
ASSOCHAM |
30 |
Best SME lending - Runner-up |
ASSOCHAM |
31 |
Emerging Bullion Bank for the year 2022 |
India Gold Conference (IGC Excellence Award 2022) |
ACKNOWLEDGEMENTS
The Board of Directors place on record their thankfulness to the
Government of India, Reserve Bank of India, Securities Exchange Board of India (SEBI),
Ministry of Corporate Affairsairs (MCA), National Stock Exchange of India Limited and BSE
Limited, Rating Agencies, Statutory Auditors, Secretarial Auditors, various State
Governments & Union Territories and other regulatory authorities in India for their
valuable guidance and strong support.
The Board expresses its sincere thanks to the Bank's valued
shareholders, debenture holders esteemed customers, and all other stakeholders and
well-wishers for their continued faith, confidence and patronage on us and look forward
for their continuous support.
The Board also appreciates entire staff for their sincere and dedicated
services rendered for overall performance of the Bank during the year and look forward to
their continued cooperation in the realisation of the corporate goals of the Bank in the
years ahead.
|
|
For and on behalf of the Board of Directors |
Place: Karur Date: July 17, 2023 |
Dr Meena Hemchandra (DIN: 05337181) Non-executive Independent
(Part-time) Chairperson |
B Ramesh Babu(DIN: 06900325) Managing Director & CEO |