Axis Bank Ltd
Chairman Speech
TOUCHING AND TRANSFORMING LIVES
Dear Shareholders,
As we complete our 25th year of operations, I feel honoured
and proud to lead the Bank - a neighbourhood bank striving to serve a billion lives
everyday in a meaningful and humane manner. Trust and customer centricity have always been
the hallmark of the Bank's association with its customers.
The Bank has over these years stood by customers as a reliable friend
in need - by not only being approachable and available at all times, but also helping them
to meet their needs and life aspirations. I would like to thank all my predecessors over
the years - Ms. Shikha Sharma, Dr. P. J. Nayak and Mr. Supriya Gupta, for their vision and
contribution towards building this great institution.
It is the same feeling of warmth and friendliness that is reflected in
the Bank's culture; and was one of the first things that struck me when I joined the Bank
six months ago. I believe that our culture is one of the biggest unsung strengths of Axis
Bank. This has been one of the key driving forces for us to build a great institution and
ensure that we survive tough times.
Over the last decade, the Bank has gone from strength to strength, and
in addition built a lot of hidden gems among its businesses. Let me spell out some of
them. The Bank has an extremely Strong Current Account and savings account (CASA) deposits
franchise and has grown its loan book over five times in the last ten years to '494,798
crores. Amongst the private sector banks, we currently have the third largest branch
network and the highest number of ATM machines in the country.
In the credit cards business, where we were not present some ten years
back, we are now a strong number four player and have been growing at a much faster pace
than the industry leaders in the last five years. We have the country's third largest
merchant acquiring business. In mobile banking, we feature amongst the top players in
terms of innovation. We are the largest issuer of foreign exchange cards in the country
and are a number three player on the UPI side of the business.
On the Wholesale Banking side, we have built deep relationships across
the spectrum with corporates, Small and Medium Enterprises (SMEs) and government clients.
Our SME business has been built into an enviable franchise with extremely healthy metrics.
We have one of the largest franchises amongst the private banks in dealing with the
government and its various arms. The Bank continues to remain at the top of the leader
board in the Debt Capital Market segment for the last thirteen years.
Similar achievements can also be witnessed for the Bank's subsidiaries,
even though we started our innings later than many of our peers. As a group, we are
engaged in businesses that are contiguous to banking, such as nonbanking finance, retail
broking, asset management, and institutional equities and investment banking. Axis Asset
Management Company set up in 2009 is now among the top ten mutual fund houses in India.
Our broking business,
Axis Direct, established in 2011, currently ranks amongst the top three
players in terms of active client base. Axis Capital continues to remain one of the best
equity capital market franchises in the country. Axis Finance is one of the fastest
growing Non-Banking Financial Companies (NBFCs) with some of the best returns in the
industry. Axis is the only Bank with two Fintech companies as subsidiaries, one in the
payments space and the other in the digital invoice discounting space. All these
businesses complement the parent Bank's strategy and allow us to offer our customers a
comprehensive offering under the umbrella of 'One Axis'.
However, I must also acknowledge that in the recent years, the Bank has
faced some headwinds, especially on the asset quality front due to corporate slippages.
The Bank's strategic bet on project lending to infrastructure sectors
like steel and power in the 2010-12 period turned out to be its Achilles' heel. There was
also an increase in operational risks in recent years. Though we have done exceedingly
well in some segments, we have not executed well on all fronts consistently. We are not
yet out of the woods, but we are cautiously optimistic about the future. We need to learn
from the mistakes of the past and ensure that they are never repeated again. We realise
changing ourselves will be arduous and time consuming but we also strongly believe we are
ready for the battle ahead and have the team in place to overcome any odds.
Over the last six months, I have spent time extensively with the
various business units across the Bank. I have also met many of our large corporate
customers. Based on these interactions, I do believe there is lot of potential for us to
grow and be among the top few players in each of our business segments and aspire for
larger market share.
I am pleased to state that we have taken some strong and positive
strides towards defining our priorities, the goals that we want to accomplish and how we
will get there. We intend to get our winning mind-set back, re-claim our growth momentum
and get our fair share of business from our customers. We also want to strengthen our core
technology platform and improve our execution.
To achieve these, we came out with an Execution Strategy 2022 for the
Bank earlier this calendar year. The strategy pivots around delivery of three important
vectors - Growth, Profitability and Sustainability.
At the same time, we have embarked and made rapid progress on the 'One
Axis' ideology for the Bank and its subsidiaries which, focusses on projecting the Bank's
various businesses and subsidiaries together as 'One' that can offer a comprehensive suite
of products, services and solutions to the customer. The focus for our subsidiaries would
be to attain size and scale, for which we would continue to invest in them over the next
few years.
As we embark on achieving the goals set in our 2022 vision, the
strategic direction of 'One Axis' will serve as a bedrock to drive brand synergies across
the Bank and all its subsidiaries. We will start by delivering a consistent brand identity
across our branches, subsidiaries and all our digital touchpoints. Over the next few
months, the messaging across our products and our verticals will also align with the above
strategic direction so that we create a force multiplier effect for the brand. More
importantly, we are an industry built on the foundation of trust and one of the best ways
to improve trust is to come across as consistent and unified in our language and approach
to our customers.
We now have the entire senior management team in place to execute the
strategy and convert our aspirations into reality over the next three years. We have
reoriented the organisational structure that would enable us to streamline and simplify
our functioning and bring in greater accountability, productivity and efficiencies. We
have also made considerable progress in building cost consciousness across the Bank, and
expect to improve our cost efficiency over the next few years.
We have incorporated the learnings from the last credit cycle to
improve our policies and processes. We have raised the bar further for the credit filters
applicable to new credit proposals and strengthened our early warning systems. As a Bank,
we are looking to move towards a more conservative view on provisioning, compliance and
risk. In retail, our provisioning norms are more conservative than the RBI prescribed
norms. On the wholesale side, we are increasing the level of provisions we hold against
some weak, yet standard stressed assets.
Moving on to financial performance, the profitability and the asset
quality metrics for the Bank in fiscal year 2019 improved materially after having
witnessed two consecutive challenging years. The Axis franchise delivered healthy
operating performance with core operating revenue growth of 21% and moderation in
operating expenses growth. The Bank continues to have a strong balance sheet with one of
the best provision coverage and capital adequacy ratios of 77% and 15.84%, respectively.
Our subsidiaries had another good year as they continued to gain scale and market share in
their respective segments.
On the wholesale side of our business, we have been focussing on
portfolio diversification, reduction in concentration to select sectors and project loans
and have further increased our focus on transaction banking and working capital business.
The performance of the corporate segment in fiscal 2019 improved as compared to the past
few years with steady decline in the low rated 'BB & below' outstanding pool,
significant decline in corporate slippages and stabilisation of corporate credit linked
fees.
We have reoriented the wholesale segment. The credit underwriting
function has been taken out from the businesses and has been made an independent function.
Product specialists and business relationship responsibilities have also been segregated
to ensure sharper focus on client coverage and product groups. We follow a risk adjusted
return philosophy in the wholesale bank and would focus on growing our midcorporate and
commercial banking book. In the commercial banking segment, we are focussing on building a
relationship based model with SME and current account business customers to drive growth
across both assets and liabilities.
The Bank's retail franchise continues to remain robust with a healthy
growth in loans, fees and retail deposits. Axis continues to remain a strong customer
centric bank and has shifted its deposit strategy to focus on getting higher CASA plus
retail term deposits from earlier focus on CASA. During the year, we added 347 branches to
take our domestic branch distribution network to 4,050 branches. For us, branch banking
continues to be an integral part of our growth strategy. The role of branches in deposit
mobilisation from new customers drives the Bank's acquisition strategy across products and
provides customer service and builds trust. However, the branch formats continue to get
smaller with enhanced productivity led by automation and digitisation of service
operations.
Our wealth management business, Burgundy with assets under management
of over '132,702 crores, has done exceedingly well over the last few years and now
features amongst the top wealth management businesses in the country.
We intend to expand the franchise and build a leadership position in
the space.
The Bank's ability to innovate and offer right product proposition to
its customers has helped the retail loan book to grow over five times in the last ten
years to reach '245,812 crores, with a 50% share in total advances. We have achieved
significant diversification within our retail portfolio mix with a strong risk management
architecture that has ensured that our asset quality in retail has been much better than
peer average. The Bank has always been ahead of the curve in terms of building its digital
capabilities and has made significant investments in technology and digital analytics to
underwrite, manage risk outcomes and optimise costs. During the year, the Bank
increasingly started offering pre-approved loans and stepped up the pace of digital
lending. The contribution of digital lending in personal loans increased to 43% from 22%
in the last one year.
Axis Bank continues to remain committed towards promoting a less-cash,
digital economy and enjoys strong market position across most digital payments spaces in
India. The Bank continues to engage in partnership driven innovations to provide its
customers with a differentiated payments experience and drive the Digital India mission.
During the year, the Bank's Kochi1 Card became the country's first inter-modal transit
card while the Raipur Smart Card project was also initiated to offer digital payment
solutions to the citizens of Raipur. The Bank also launched 'Axis Tap & Pay', a mobile
application for making contactless payment at merchant terminals, as well as India's first
of its kind in-home 'Smart bill pay' initiative that allows users to pay their utility
bills by scanning a QR code.
The Bank has traditionally used Savings Accounts as a product to start
its relationship with customers and then build on it by cross-selling other products and
services. Though that has not changed substantially over the last ten years, we are
increasingly looking beyond deposit base for customers. We are now looking to leverage
other platform businesses of the Group for cross-sell opportunities.
We plan to invest significantly in setting up a Digital Bank. Our idea
here is to have a full team with all the requisite banking as well as digital expertise
and skill sets required to rethink traditional banking processes. It will start afresh,
end-to-end customer journeys, which will be completely digital. This will, however, take
time to fructify and we will share our progress over the coming years.
The Bank continues to invest in enhancing employee capabilities and
provides career development opportunities to its employees. We have made sure that the
communication on GPS strategy and vision of creating 'One Axis' is consistent within the
internal organisation as well, and that everybody in the Bank knows what they have to do.
The organisation structure and the KPIs have been re-aligned to ensure direct
accountability, greater differentiation and focus on developing relationship-based
long-term business model instead of focussing on shorter term targets.
During the year, the Bank revamped its internal job posting process to
allow internal talent to take on leadership positions based on their merit irrespective of
age and tenure. The Bank also launched an internal portal to allow employees to seek
careers across departments and subsidiaries within the Axis Group.
Axis Bank has always believed that its long-term success depends on the
progress of communities and the people we serve. The Bank continues to play an active part
in extending credit to the economically active but under-banked rural population,
particularly women, through its retail microfinance initiative 'Axis Sahyog'. Axis Bank
Foundation, in its 13th year of operations, continues to work towards providing
sustainable livelihoods and creating value for the target communities through its various
integrated rural skill development and educational programmes.
During the year, 'Axis Dil Se' - the Bank's CSR initiative in
partnership with 17000 ft Foundation, 108 schools in Leh and Kargil districts of Ladakh
were adopted by 20 senior Axis Bank leaders for a period of three years - completed its
second phase. Under this initiative, the Bank installed 'Digi Labs' in schools, which
enabled access to the digitised curriculum both for the students and the teachers. Also
during the year, the Bank played an active role in providing disaster relief to over 400
flood affected families in four regions in Kerala.
The Bank won the 'Excellence' certificate in Corporate Social
Responsibility category at the prestigious CII ITC Sustainability Awards 2018 and was
included in the prestigious FTSE4Good Emerging Index for the second consecutive year in
2018 in recognition of its Environmental, Social and Governance (ESG) practices.
In recent years, driven in part by some unexpected negative surprises
at the Bank, we have dented the trust of investors. We need to win it back. The only way
to win
it back is to have a business model, which sustains and generates
credible financial outcomes quarter after quarter over a long period of time. Our
aspiration is to deliver around 18% Return On Equity (ROE) on a sustainable basis. The
reduction in credit cost to below our long-term averages, portfolio choices driven by a
risk-adjusted returns framework and improvement in operational efficiency would be the key
drivers for RoE improvement over the next three years. Though it seems a tall order, the
Bank has delivered ROEs in excess of 18% few years back and hence we aspire to do it again
- on a sustainable and consistent basis.
India continues to be a fast-growing economy with significant
opportunities and possibilities. From the perspective of the financial industry as a
whole, the liquidity issues faced by some of the nonbanking financial companies and
housing finance companies over the last year can create some friction going ahead, but it
presents opportunities for banks. The banking industry has seen return of credit growth
and pricing power on account of shift in credit demand from NBFCs and bond markets back to
banks. Banks with a healthy capital position, NBFCs with a robust parentage and financial
intermediaries with significant market share are well placed to grow profitably, at a
faster pace than their peers in their respective industries. In this context, 'One Axis'
franchise with its presence across business segments is uniquely positioned to leverage
this opportunity and grow at a faster pace. Great product mix, vast physical footprint,
cutting-edge digital capabilities, robust corporate governance practices and one of the
most valuable brands in India - all these combined open many possibilities for the Axis
franchise in the near future.
I believe that Axis Bank is a great franchise with great culture and
great set of people.
If we execute well, we have the potential to improve our market share
rankings without sacrificing anything whatsoever on our credit and risk management
practices. While delivery of growth and profitability is important, sustainability forms
the foundation of the Bank's strategy. We want to build sustainability in our business
performance and operations with disciplined execution and conservatism at the core.
However, one thing that still concerns me is the level of control and confidence we have
on operational risk parameters. Any large bank will have a vast number of systems and
processes and to reach the level of efficiency, control and monitoring that we have in
mind will take time, but we are at it relentlessly everyday, improving bit by bit. We also
need to ensure that the quality of our wholesale book improves materially over the next
few years. We cannot afford to repeat what we went through in the last few years. That
would also require a change in how we think about risk and how we proactively manage it.
Another area of work would be the tone from top on compliance. We cannot compromise on
doing things right and doing them right all the time, even at the cost of losing business.
We need to do a better job of saying no to businesses and deals.
I would like to take this opportunity to thank my colleagues for
believing in Axis and the vision of the Bank. I am also deeply grateful to all the
customers and shareholders for standing by us and showing their faith in us all these
years.
Warm Regards,
Amitabh Chaudhry
MD & CEO
  Â
Axis Bank Ltd
Directors Reports
The Board of Directors of the Bank (the Board) have the pleasure of presenting the 26th
Annual Report of the Bank together with the Audited Statement of Accounts, Auditors'
Report and the Report on the business +
`and operations of the Bank, for the financial year ended 31st March 2020.
Financial Performance and the State of the Bank'sAffairs:
The financial highlights for the year under review, are presented below:
| Particulars |
2019-20 |
2018-19 |
Growth |
| Deposits |
640,105 |
548,471 |
17% |
| • Savings Bank Deposits |
173,592 |
154,129 |
13% |
| • Current Account Deposits |
90,114 |
89,265 |
1% |
| Advances |
571,424 |
494,798 |
15% |
| • Retail Advances |
305,400 |
245,812 |
24% |
| • Non-retail Advances |
266,024 |
248,986 |
7% |
| Total Assets/Liabilities |
915,165 |
800,997 |
14% |
| Net Interest Income |
25,206 |
21,708 |
16% |
| Other Income |
15,537 |
13,130 |
18% |
| • Fee Income |
11,019 |
10,127 |
9% |
| • Trading Profit111 |
2,420 |
971 |
149% |
| • Misc. Income |
2,098 |
2,032 |
3% |
| Operating Expenses |
17,305 |
15,833 |
9% |
| Operating Profit |
23,438 |
19,005 |
23% |
| Provision for Tax |
3,277 |
2,297 |
43% |
| Other Provisions and Write offs |
18,534 |
12,031 |
54% |
| Net Profit |
1,627 |
4,677 |
(65%) |
| Balance in Profit and Loss account brought forward from previous year |
24,323 |
23,043 |
|
| AmountAvailable ForAppropriation |
25,950 |
27,720 |
|
| Appropriations |
|
|
|
| Transfer to Statutory Reserve |
407 |
1,169 |
|
| Transfer (from)/to Investment Reserve |
- |
(103) |
|
| Transfer to Capital Reserve |
341 |
125 |
|
| Transfer to Reserve Fund |
1 |
1 |
|
| Dividend paid (includes tax on dividend) |
289 |
- |
|
| Transfer to Investment Fluctuation Reserve |
328 |
600 |
|
| Cumliic r-ii-riorl /~i\v tn D-i 1 nr-o Choof |
OA CAi; |
OS Q9fl |
|
[jiuj x^cii i i ovui hj uaiai
(1) Excluding Merchant Exchange Profit
Key Performance Indicators
| Key Performance Indicators |
2019-20 |
2018-19 |
| Interest Income as a percentage of working funds* |
7.56% |
7.38% |
| Non-interest Income as a percentage of working funds* |
1.87% |
1.76% |
| Net Interest Margin |
3.51% |
3.43% |
| Return on Average Net Worth |
2.34% |
8.09% |
| Operating Profit as a percentage of working funds* |
2.83% |
2.55% |
| Return on Average Assets |
0.20% |
0.63% |
| Profit per Employee** |
' 2.40 lakhs |
' 7.61 lakhs |
| Business (Deposits less inter-bank deposits + Advances) per employee** |
' 17.27 crores |
' 16.53 crores |
| Net non-performing assets as a percentage of net customer assets*** |
1.56% |
2.06% |
* Working funds represent average total assets.
** Productivity ratios are based on average number of employees for the year. ***
Customer assets include advances and credit substitutes.
Previous year figures have been re-grouped wherever necessary
Covid-19 Pandemic
The Bank has undertaken proactive steps right from the inception of the COVID - 19
Pandemic crisis. The framework of proactive action has been focused on reducing the
heightened risks arising out of the COVID - 19 Pandemic, across all facets of risks
impacting the business, safety of staff and business continuity from operational risk,
likely impact on asset quality from credit risk, trading risk due to sharp change in
underlying risk factors in the investment book, liquidity pressure owing to change in the
perception of borrower on cash flows as well as deposit withdrawals, owing to disruptions
under civic lockdown etc.
The actions have been taken on the following five fronts:
i. Protecting people - issuing and implementing advisories around staff health, hygiene
in office premises, quarantine and social distancing etc.
ii. Ensuring continuity - testing and deploying business continuity plans, including
driving and scaling up work-from- home initiative.
iii. Protecting operations - puffing in place additional controls and monitoring around
key operational risk parameters that could see an increase in a lockdown and
work-from-home environment.
iv. Maintaining liquidity - enhanced monitoring of liquidity position and deposit
withdrawals to take pre-emptive action.
v. Conserving capital - credit advisories around originating and disbursal of new
exposures with enhanced monitoring of existing vulnerable credit exposure.
The governance around the above has been put in place under the aegis of a Central
Emergency Response Team (CERT) headed by the Executive Director (Corporate Centre) of the
Bank, reporting directly to the Management Committee of the Bank. This team has been
meeting daily to review the situation in each of the said fronts, on which risk profile
would be heightened and take appropriate mitigation measures in response to the situation
at the ground level.
CSR Initiatives towards COVID-19 Pandemic
The Bank continues to stand together with the country in its collective battle against
COVID-19 Pandemic, and is committed to a multi-pronged response supporting the Bank's
customers, employees, business partners, government agencies and the community at large.
The Bank is directly supporting government entities towards meeting their urgent equipment
and sanitation requirements and under Axis Cares it is supporting nearly 35,000
individuals towards meeting their food requirements for a month.
Towards augmenting the country's collective efforts in fighting the COVID-19 Pandemic,
Axis Group has committed to contribute to the PM CARES Fund and to Givelndia's India COVID
Response Fund. In addition, Axis Bank Foundation, the CSR arm of the Bank, is working
closely with its implementation partners across India towards augmenting on-ground
activities to address the COVID-19 Pandemic related challenges.
Change in the Nature of Business
During the year under review, there has been no change in the nature of business of the
Bank.
Capital Structure Share Capital
During the financial year 2017-18, the Bank had issued 4,53,57,385 convertible warrants
convertible into 4,53,57,385 equity shares at a price of ' 565.00 per warrant, on a
preferential basis. The allottees of the said convertible warrants were entitled to
exercise the option of converting one convertible warrant into one equity share of '
2/- each of the Bank, within a period of 18 months from the date of its allotment, i.e. on
or before 17th June 2019.
During the year, the Bank allotted 4,53,57,385 equity shares pursuant to exercise of
convertible warrants by the allottees of the said convertible warrants. As a consequence,
the paid-up share capital of the Bank increased by ' 9.07 crores and the reserves
of the Bank increased by ' 2,551.03 crores after charging off issue related
expenses.
During the year, the Bank also raised additional equity capital through allotment of
19,87,28,139 equity shares of ' 2/- each of the Bank, pursuant to a Qualified
Institutional Placement Issue. Consequently, the total issued and paid-up equity share
capital of the Bank increased by ' 39.75 crores and the Reserves of the Bank
increased by ' 12,392.50 crores after charging of issue related expenses. The said
funds were raised to enhance the capital adequacy, in accordance with regulatory
requirements, to finance the growth strategy and for general corporate purposes, in
accordance with applicable law. The Audit Committee of Board of the Bank (Audit Committee)
at its meeting held on 22nd January 2020, has reviewed and confirmed that the
Bank has utilized the said funds for the above-mentioned purposes and there was no
deviation in utilization of the said funds.
During the year, the Bank allotted 59,47,539 equity shares of ' 2/- each of the
Bank, pursuant to exercise of options by some of its Whole Time Directors/Employees and
that of the subsidiary companies of the Bank, under the various Employee Stock Option
Scheme(s).
Pursuant to the above allotments, the total issued and paid-up equity share capital of
the Bank, as on 31st March 2020 increased by ' 50.01 crores to ' 564.34
crores, as compared to ' 514.33 crores, as on 31st March 2019.
The category wise Shareholding Pattern of the Bank, as on 31st March 2020,
was as under:
| Sr. No. Category / Shareholder |
No. of Shares held |
%of total issued & paid-up Capital |
| Promoters |
|
|
| 1 Administrator of theSpecified Undertakingof theUnitTrustof India (SUUTI) |
12,96,52,427 |
4.59 |
| 2 Life Insurance Corporation of India |
25,43,77,246 |
9.02 |
| 3 General Insurance Corporation of India |
3,17,15,229 |
1.12 |
| 4 The New India Assurance Company Limited |
2,05,91,585 |
0.73 |
| 5 National Insurance Company Limited |
5,49,681 |
0.02 |
| 6 The Oriental Insurance Company Limited |
49,77,520 |
0.18 |
| 7 United India Insurance Company Limited |
9,13,248 |
0.03 |
| Foreign Investors |
|
|
| 8 Overseas Investors (including Flls/OCBs/NRIs) |
1,44,95,54,331 |
51.37 |
| 9 Foreign Direct Investment (GDR) |
5,48,68,145 |
1.94 |
| Domestic Financial Institutions |
|
|
| 10 Financial Institutions / Mutual Funds / Banks / NBFC / INC /AIF |
64,31,64,609 |
22.79 |
| 11 Others |
23,13,13,913 |
8.21 |
| Total |
2,82,16,77,934 |
100.00 |
Debt Capital
During the year, the Bank issued and allotted 41,750 Senior Unsecured Redeemable
Non-Convertible Debentures of face value of ' 10 lakh each, aggregating to '
4,175 crores, on a private placement basis. The said Debentures were issued for enhancing
long term resources for funding infrastructure projects and affordable housing. The Audit
Committee at its meeting held on 28th April 2020, has reviewed and confirmed
that the Bank has utilized the said funds for the above-mentioned purposes and there is no
deviation in utilization of the said funds.
The Equity Shares of the Bank and the Unsecured Redeemable Non-Convertible Subordinated
Perpetual Debentures issued by the Bank, on a private placement basis, are listed on
National Stock Exchange of India Ltd. (NSE) and BSE Ltd. (BSE). The Bonds issued by the
Bank under the MTN programme are listed on Singapore Stock Exchange and the Green Bonds
issued by the Bank are listed on London Stock Exchange.
Depository Receipts
The Global Depository Receipts (GDR) issued by the Bank are listed on London Stock
Exchange.
The Bank has paid the listing fees to the said Stock Exchanges, in respect of the above
securities, for the financial year 2019-20.
Dividend
In terms of Regulation 43A of the Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations, 2015 ("Listing
Regulations"), the Bank has formulated and adopted a Dividend Distribution
Policy with the objective of providing clarity to its stakeholders on the profit
distribution strategies of the Bank. During the year, the said Policy was reviewed by the
Board and the same has been hosted on the website of the Bank at https://www.axisbank.com/shareholders-corner/corporate-governance/Compliance-Report
.
The Diluted Earnings Per Share (EPS) of the Bank for the financial year 2019-20 stood
at '5.97 per equity share of ' 2/- each as compared to ' 18.09 per equity share of
' 2/- each in the previous financial year.
The Reserve Bank of India, vide its circular dated 17th April 2020, has
advised that banks shall not make any further dividend pay-outs from profits pertaining to
the financial year ended 31st March 2020 until further instructions, with a
view that banks must conserve capital in an environment of heightened uncertainty caused
by COVID-19 Pandemic. Accordingly, the Board of Directors of the Bank has not proposed any
dividend for the year ended 31st March 2020.
Deposits
Being a banking company, the disclosures relating to deposits as required under Rule
8(5)(v) and (vi) of the Companies (Accounts) Rules, 2014, read with Sections 73 and 74 of
the Companies Act, 2013, are not applicable to the Bank.
Ratings ofVarious Debt Instruments
The Senior Unsecured Redeemable Non-Convertible Debentures (Series 5) issued and
allotted by the Bank, on a private placement basis, during the financial year 2019-20,
were rated "CRISILAAA" by CRISIL Ltd. and "ICRA AAA" by ICRA Ltd.
The Bonds issued and alloted by the Bank under the MTN programme, on a private
placement basis, during the financial year 2019-20, were rated "BBB-" by
Standard & Poor's.
The details of all credit ratings obtained by the Bank along with any revisions
thereto, during the financial year 2019-20, for all the debt instruments outstanding as on
31st March 2020, is disclosed in the Corporate Governance Report, forming part
of this report.
Board of Directors
During the year, the following changes took place in the composition of the Board:
• Dr. Sanjiv Misra ceased to be the Non-Executive (Part-Time) Chairman of the
Bank, pursuant to completion of his tenure, with effect from the close of business hours
on 17th July 2019. In light of the above, Dr. Sanjiv Misra decided not to
continue as an Independent Director of the Bank for the remainder of his tenure and
accordingly resigned as the Independent Director of the Bank, with effect from the close
of business hours on 17th July 2019. In accordance with Clause 7B of Schedule
III, Part A of the Listing Regulations, Dr. Sanjiv Misra confirmed that there was no other
material reason for his resignation, other than the above. The Board acknowledges the
invaluable contributions rendered by Dr. Sanjiv Misra during his tenure as an Independent
Director of the Bank and places on record its deep appreciation for the insightful
perspectives and suggestions provided by him at the meetings of the Board/ Committee of
the Bank and for his leadership, as the Non-Executive (PartTime) Chairman of the Bank.
• Shri Rakesh Makhija, Independent Director of the Bank, was appointed as the
Non-Executive (Part-Time) Chairman of the Bank, for a period of 3 (three) years, with
effect from 18th July 2019 upto 17th July 2022 (both days
inclusive), in terms of the approval granted by the Reserve Bank of India (RBI) and by the
Shareholders of the Bank at the 25th Annual General Meeting held on 20th
July 2019.
• Prof. Samir Barua ceased to be an Independent Director of the Bank, with effect
from the close of business hours on 21st July 2019, upon completion of the
maximum permissible tenure of 8 (eight) continuous years, in terms of the provisions of
Section 10A (2A) of the Banking Regulation Act, 1949. The Board acknowledges the
invaluable contributions rendered by Prof. Samir Barua during his tenure as an Independent
Director of the Bank and places on record its deep appreciation for the insightful
perspectives and suggestions provided by him at the meetings of the Board/ Committees of
the Bank.
• Shri Pralay Mondal was appointed as the Executive Director (Retail Banking) of
the Bank, for a period of 3 (three) years, with effect from 1st August 2019
upto 31st July 2022 (both days inclusive), in terms of the approval granted by
the RBI and the Shareholders of the Bank at the 25th Annual General Meeting
held on 20th July 2019.
• Shri Rajiv Anand, Executive Director (Wholesale Banking) and Shri Rajesh Dahiya,
Executive Director (Corporate Centre) of the Bank, were re-appointed as the Executive
Director (Wholesale Banking) and Executive Director (Corporate Centre) of the Bank,
respectively, for a further period of 3 (three) years, with effect from 4th
August 2019 upto 3rd August 2022 (both days inclusive), in terms of the
approval granted by the RBI and the Shareholders of the Bank at the 25th Annual
General Meeting held on 20th July 2019.
• Shri Som Mittal ceased to be an Independent Director of the Bank, with effect
from the close of business hours on 21st October 2019, upon completion of the
maximum permissible tenure of 8 (eight) continuous years, in terms of the provisions of
Section 10A (2A) of the Banking Regulation Act, 1949. The Board acknowledges the
invaluable contributions rendered by Shri Som Mittal during his tenure as an Independent
Director of the Bank and places on record its deep appreciation for the insightful
perspectives and suggestions provided by him at the meetings of the Board/ Committees of
the Bank.
• Smt. Usha Sangwan, Nominee Director of Life Insurance Corporation of India
(LIC), Promoter of the Bank, on the Board of the Bank, tendered her resignation as the
Non-Executive (Nominee) Director of the Bank, with effect from 12th December
2019. The Board acknowledges the invaluable contributions rendered by Smt. Usha Sangwan
during her tenure as the NonExecutive (Nominee) Director of the Bank and places on record
its deep appreciation for the insightful perspectives and suggestions provided by her at
the meetings of the Board/ Committees of the Bank.
• The Board of Directors of the Bank on 9th December 2019, re-appointed
Shri S. Vishvanathan, as the Independent Director of the Bank, for his second term from 11th
February 2020 up to 10th February 2023 (both days inclusive) i.e. up to the
expiry of his tenure of 8 (eight) continues years, in terms of the provisions of Section
10A (2A) of the Banking Regulation Act, 1949, taking into account the outcome of his
performance evaluation and pursuant to the recommendation of the Nomination and
Remuneration Committee of Directors of the Bank (Nomination and Remuneration Committee).
The said re-appointment was approved by the Shareholders of the Bank, by means of a
Special Resolution, passed through Postal Ballot on 9th January 2020. During
the said period, Shri S. Vishvanathan shall not be liable to retire by rotation, in terms
of the provisions of Section 149(13) of the Companies Act, 2013.
The Board at its meeting held on 29th April 2020, approved the proposals
relating to re-appointment of Directors of the Bank:
• Re-appointment of Shri B. Baburao, as the Non-Executive (Nominee) Director of
the Bank, who is liable to retire by rotation at the ensuing Annual General Meeting, and
being eligible has offered himself for re-appointment, in terms of Section 152 of the
Companies Act, 2013.
• Re-appointment of Shri Rakesh Makhija, as an Independent Director of the Bank,
for his second term as such, from 27th October 2020 up to 26th
October 2023 (both days inclusive) i.e. up to the expiry of his tenure of 8 (eight)
continuous years in terms of the provisions of Section 10A (2A) of the Banking Regulation
Act, 1949, Section 149 of the Companies Act, 2013 and the Listing Regulations, subject to
the approval of the Shareholders of the Bank, at the ensuing Annual General Meeting by
means of a Special Resolution.
The ordinary/special resolution(s) in respect of re-appointment of the Directors, as
aforesaid, have been included in the Notice convening the 26th Annual General
Meeting of the Bank. Brief profiles of the said Directors have been annexed to the said
Notice.
The composition of the Board, is in compliance with the applicable norms.
Selection and Appointment of Directors
The selection and appointment of Directors of the Bank is done in accordance with the
relevant provisions of the Companies Act, 2013, the relevant Rules made thereunder, the
Banking Regulation Act, 1949, the Guidelines issued by the RBI and the relevant provisions
of the Listing Regulations relating to Corporate Governance, as amended, from time to
time.
The Bank has formulated and adopted the Succession Planning Policy for the Board of
Directors and Key Officials of the Bank (the Policy). The objective of the Policy is to inter
alia assess, identify and nominate suitable candidates to fill vacancies that may
arise for positions of the Non-Executive (Part time) Chairman, Independent Directors,
Managing Director & CEO (MD & CEO), Whole Time Directors (WTD), Group Executives,
Key Managerial Personnel and other Key officials of the Bank, from time to time, to plan
for succession of the said roles and any vacancies that may arise out of impending move or
retirement or resignation or sudden exit or for any reason whatsoever in such roles,
incumbent or named successors, significant changes in role accountabilities, substantive
changes in the business parameters and changes to the role holder or successor's
aspiration.
The Policy also seeks to identify the competency requirements for the said positions,
the process to identify potential candidates and develop required competencies through
planned training, development and learning initiatives and to ensure systematic and
long-term development of personnel for taking higher roles and responsibilities at the
senior management levels at the Bank or that of its subsidiary companies, which may arise
due to impending move or retirement or resignation or sudden exit or for any reason
whatsoever, of the role, incumbent or named successors.
The Nomination and Remuneration Committee is responsible to the Board for leading the
succession planning process in respect of appointments/re-appointments in respect of
Directors, employees in the grade of Senior Management and Key Managerial Personnel ofthe
Bank.
In terms of the Policy, which has been reviewed by the Nomination and Remuneration
Committee and by the Board, the succession planning process for the post of the
Non-Executive (Part-Time) Chairman/ Independent Director is required to be initiated
at-least 9 (nine) months prior to the expiry of their current term or in case of
unforeseen circumstances, with immediate effect.
Further, the succession planning process for the post of the MD & CEO/WTD of the
Bank is required to be initiated at-least 9 (nine) months prior to the expiry of the
current term or the date of retirement or as soon as the Bank is informed of the decision
of the MD & CEO/WTD to resign from the services of the Bank or to opt for Early
Retirement, as the case may be or in case of unforeseen circumstances, with immediate
effect.
The Policy also provides for the course of action to be initiated in case of delay or
non-receipt of regulatory/statutory approvals, relating to the appointment/re-appointment
of the MD & CEO/WTD ofthe Bank or in case of a sudden vacancy in the position of MD
& CEO/WTD of the Bank, caused due to death or permanent incapacitation or for any
other reason whatsoever.
The RBI has vide its circular no. RBI/2019-20/204 DoR.Appt.No.58/29.67.001/2019-20
dated 31st March 2020 on "Appointment of Managing Director and Chief
Executive Officer (MD & CEO) / CEO / Part-Time Chairperson (PTC) in Banks -
'Declaration and Undertaking1 and allied matters, prescribed new format for
declarations/ undertakings to be submitted by the Directors of a Bank. The Bank has
accordingly, obtained the prescribed declarations / undertakings from all its Directors,
in the revised format.
The Bank adheres to the process and methodology prescribed by the RBI in respect of the
'Fit & Proper1 criteria as applicable to Private Sector Banks, signing of
deed of covenants which binds the Directors to discharge their responsibilities to the
best of their abilities, individually and collectively in order to be eligible for being
appointed/re-appointed as a Director of the Bank. The prescribed declarations /
undertakings given by the Directors other than that of the Members of the Nomination and
Remuneration Committee are placed before the Nomination and Remuneration Committee and the
declarations / undertakings given by the Members of the Nomination and Remuneration
Committee are placed before the Board, for its review and noting. The said declarations /
undertakings are obtained from all the Directors on an annual basis and also at the time
of their appointment / re-appointment, in compliance with the said laws. An assessment on
whether the Directors fulfil the prescribed criteria is carried out by the Nomination and
Remuneration Committee and the Board, on an annual basis and also at the time of their
appointment / re-appointment.
The Nomination and Remuneration Committee also reviews the structure, size, composition
of the Board, the regional and industry experience, track record, expertise and other
relevant information and documents of all the Directors before making appropriate
recommendations to the Board with regard to their appointment / re-appointment, terms and
conditions relating to such appointment / re-appointment, including remuneration, designed
to enhance the Board's effectiveness and in compliance with the applicable norms. Wherever
necessary, the Nomination and Remuneration Committee is authorized to engage the services
of an External Consultant(s) / expert in the field of succession planning, to identify and
assess the suitability of candidates for the post of a Director of the Bank.
The Nomination and Remuneration Committee takes into account the profile, skill sets,
experience, expertise, functional capabilities etc., and identifies potential candidates
from diverse backgrounds including but not limited to accountancy, agriculture and rural
economy, banking, co-operation, economics, finance, law, small-scale industry, information
technology, core industries, infrastructure sector, payment and settlement systems, human
resource, risk management and business
management, thus providing the Board with Members who have diverse knowledge, practical
experience and skills, to serve the business interests of the Bank.
Declaration of Independence
All the Independent Directors of the Bank have submitted the requisite declarations
stating that they meet the criteria prescribed for independence under Section 149 of the
Companies Act, 2013 and Regulation 16 of the Listing Regulations, which were placed before
the Board for their review. The Board has confirmed and taken on record the said
declaration of Independence provided by the Independent Directors, after undertaking due
assessment of the veracity of the same. In the opinion of the Board, the Independent
Directors fulfill the criteria prescribed for independence and are independent of the
Management.
Certificate from a Company Secretary in Practice
In terms of Regulation 34(3) read with Schedule V of the Listing Regulations, the Bank
has obtained a Certificate from BNP & Associates, Practising Company Secretaries
confirming that none of the Directors on the Board of the Bank have been debarred or
disqualified from being appointed or continuing as Directors of the Companies either by
the Securities and Exchange Board of India or the Ministry of Corporate Affairs or any
other Statutory Authorities. The said certificate is annexed as part of this report.
Key Managerial Personnel
Shri Jairam Sridharan, resigned as the Group Executive & Chief Financial Officer
(CFO) and Key Managerial Personnel of the Bank, with effect from the close of business
hours on 5th March 2020. The Board places on record its appreciation for the
invaluable contributions rendered by Shri Jairam Sridharan during his tenure as the Group
Executive & CFO of the Bank.
Pursuant to the vacancy caused by the resignation of Shri Jairam Sridharan, as
aforesaid, and pursuant to the recommendations of the Nomination and Remuneration
Committee and the Audit Committee of the Bank, the Board at its meeting held on 27th
February 2020, approved the appointment of Shri Puneet Sharma, as the Chief Financial
Officer (CFO) and Key Managerial Personnel of the Bank, with effect from 6th
March 2020.
The Board at its meeting held on 29th April 2020, appointed Shri Rajiv
Anand, Executive Director (Wholesale Banking), Shri Rajesh Dahiya, Executive Director
(Corporate Centre) and Shri Pralay Mondal, Executive Director (Retail Banking) as the Key
Managerial Personnel of the Bank, with effect from 29th April 2020, in terms of
Section 203(1) read with Section 2(51) of the Companies Act, 2013.
Shri Amitabh Chaudhry, Managing Director & CEO, Shri Rajiv Anand, Executive
Director (Wholesale Banking), Shri Rajesh Dahiya, Executive Director (Corporate Centre),
Shri Pralay Mondal, Executive Director (Retail Banking), Shri Puneet Sharma, CFO and Shri
Girish V. Koliyote, Company Secretary are the Key Managerial Personnel of the Bank, in
terms of Section 203(1) read with Section 2(51) of the Companies Act, 2013, and the
relevant Rules made thereunder.
Board Performance Evaluation
The Companies Act, 2013 and the Listing Regulations relating to Corporate Governance
provides for evaluation of the performance of the Board, its Committees, Individual
Directors and the Chairman of a company.
The Nomination and Remuneration Committee is the nodal agency for conducting the said
performance evaluation. The Nomination and Remuneration Committee has reviewed and
approved the manner for effective evaluation of the performance of the Board, its
Committees, its individual Directors and its Chairman and determined the criteria for
conduct of such performance evaluation. The manner in which the evaluation has been
conducted and the details of the outcome of the board performance evaluation for the
financial year under reference, along with the proposed action for implementation by the
Bank during the FY 2020-21, is provided in the Report on Corporate Governance, which forms
part of this report.
Meetings of the Board/Committees of the Board
The schedule in respect of the meetings of the Board / Committees thereof to be held
during the next financial year and for the ensuing Annual General Meeting is circulated in
advance to all the Members of the Board. During the year, 10 meetings of the Board were
held and the gap between the said meetings did not exceed the limit of 120 days, as
prescribed under the
relevant provisions of the Companies Act, 2013, the relevant Rules made thereunder and
the Listing Regulations relating to Corporate Governance.
Audit Committee
The composition, role and functions of the Audit Committee of the Bank, is disclosed in
the Report on Corporate Governance, which forms part of this report.
Remuneration Policy
The Bank has formulated and adopted a Comprehensive Remuneration Policy for its
Directors, Material Risk Takers, Key Managerial Personnel and other Employees (the
Policy), in terms of the relevant provisions of Section 178 of the Companies Act, 2013,
the relevant Rules made thereunder, the Listing Regulations relating to Corporate
Governance and the Guidelines issued bythe RBI, in this regard.
The said Policy was reviewed and approved by the Nomination and Remuneration Committee
and by the Board, pursuant to the revised Guidelines dated 4th November 2019
issued by the RBI on Compensation of Whole Time Directors/ Chief Executive Officers/
Material Risk Takers and Control Function staff.
The Nomination and Remuneration Committee reviewed the impact of the revised Guidelines
to the said Policy and on the various aspects of the compensation structure such as Fixed
Pay, Variable Pay, Stock Options etc. and also inter alia took into account,
effective alignment of compensation with prudent risk taking, international scenarios,
external benchmarks on remuneration trends in the Banking/ NBFC sector in India,
implications under tax laws, macro trends relating to employment / remuneration etc. and
recommended the same for the approval of the Board.
In terms of the revised Guidelines, which is effective from 1st April 2020,
the Bank formulated and adopted Remuneration Policy for Non-Executive Chairman and
Non-Executive Directors of the Board and Remuneration Policy for MD & CEO, Whole-time
Directors, Material Risk Takers, Control Function Staff and other employees of the Bank.
The details of the said Policy have been disclosed in the Report on Corporate
Governance, which forms part of this report. The said Policy has been hosted on the
website of the Bank at https://www.axisbank.com/shareholders-corner/corporate-
governance/Compliance-Report , in terms of the Listing Regulations.
Whistle Blower Policy and Vigil Mechanism
The details of the Whistle Blower Policy and Vigil Mechanism have been disclosed in the
Report on Corporate Governance, which forms part of this report.
Subsidiaries, JointVentures and Associates
As on 31st March 2020, the Bank has the following eleven unlisted subsidiary
companies and one step down subsidiary;
i) Axis Asset Management Company Ltd. undertakes the activities of managing the mutual
fund business.
ii) Axis Mutual Fund Trustee Ltd. acts as the trustee for the mutual fund business.
iii) Axis Capital Ltd. provides services relating to investment banking, equity capital
markets, institutional stock broking, mergers and acquisition advisory etc.
iv) Axis Finance Ltd. is an NBFC and carries on the activities of corporate and
structural lending, loan against property etc.
v) Axis Securities Ltd. is in the business of retail broking services.
vi) A.TREDS Ltd. is engaged in the business of facilitating financing of trade
receivables.
vii) Axis Trustee Services Ltd. is engaged in trusteeship activities, acting as
debenture trustee and as trustee to various securitisation trusts.
viii) Freecharge Payment Technologies Private Ltd is in the business of providing
Merchant acquiring services, payment aggregation services, payment support services, and
business correspondent to a Bank/Financial Institution, distribution of Mutual Funds.
ix) Accelyst Solutions Private Ltd. is in the business of providing Online marketing
and sales promotion solutions, providing facilities to recharge online prepaid, postpaid
mobile phones connections, DTH connections and data cards etc., distribution of mutual
fund & insurance services.
x) Axis Bank UK Ltd. is the banking subsidiary of the Bank in the United Kingdom and
undertakes the activities of banking.
xi) Axis Private Equity Ltd. primarily carries on the activities of managing equity
investments and provides venture capital support to businesses.
xii) Axis Capital USA, LLC. is a wholly owned subsidiary of Axis Capital Limited
incorporated in USA and provides financial services relating to equity capital market,
institutional stock broking to institutional investors in USA.
Merger of Freecharge Payment Technologies Pvt. Ltd. (FCPTL) and Accelyst Solutions Pvt.
Ltd (ASPL)
On 27th March 2018, the Board of Directors of ASPL and FCPTL had approved a
Scheme for Amalgamation of ASPL into and with FCPTL. ASPLand FCPTL filed the final
petition for approval of the said merger before the National Company LawTribunal('NCLT').
The appointed date for amalgamation is 7th October 2017 and the effect of the
said merger will be given on this date or any other date as may be prescribed by the NCLT.
Subsequent to the final hearing in the matter conducted during the year, FCPTL received
the copy of the order approved by NCLT, Delhi and the same was filed with the Ministry of
Company Affairs, in November 2019. However, in the case of ASPL, NCLT, Mumbai amended the
appointed date of amalgamation from 7th October 2017 to 1st April
2018. Since the Scheme of Amalgamation filed by the FCPTL was already approved by NCLT,
Delhi with the appointed date of 7th October 2017, the order of NCLT, Mumbai
sanctioning the Scheme of Amalgamation could not be implemented due to discrepancy in the
appointed date, as aforesaid. Therefore, ASPL is in the process of filing a modification
application before NCLT, Mumbai to amend the appointed date from 1st April 2018
to 7th October 2017 as originally and mutually decided by FCPTL and ASPLand as
mentioned in the said Scheme of Amalgamation. Accordingly, no accounting impact of the
Scheme has been taken in the consolidated financial statements, as at 31st
March 2020.
Merger ofAxis Finance Ltd. and Axis Private Equity Ltd.
Axis Private Equity Ltd., is in the process of amalgamating with Axis Finance Ltd. and
has submitted an application for amalgamation before the NCLT on 13th October
2017. At the last hearing held in February 2020, the NCLT has fixed the matter as
"reserved for order" and the order is awaited, as at the Balance Sheet date.
The Bank does not have any associate company. During the year, the Bank has not entered
into anyjoint venture.
In accordance with the provisions of Section 129(3) of the Companies Act, 2013 read
with Rule 8 of the Companies (Accounts) Rules, 2014, as amended, the Bank has prepared its
consolidated financial statements including that of all its subsidiary companies, which
forms part of this report. The financial position and performance of each of the said
subsidiary companies are given in the Management Discussion & Analysis Report and the
statement containing the salient features of the financial statements of the said
subsidiary companies of the Bank, which is annexed to this report.
In accordance with the third proviso to Section 136(1) of the Companies Act, 2013, the
Annual Report of the Bank, containing therein its standalone financial statements and the
consolidated financial statements and all other documents required to be attached thereto
have also been hosted on the website of the Bank https://www.axisbank.com/shareholders-corner/
shareholders-information/annual-reports.
Further, in accordance with the fourth proviso to the said section, the audited annual
accounts of each of the said subsidiary companies of the Bank have been hosted on the
website of the Bank https://www.axisbank.com/shareholders-corner/
shareholders-information/annual-reports.
Any shareholder interested in obtaining a physical copy of the said financial
statements may write to the Company Secretary at the Registered Office of the Bank.
Further, please note that the said financial statements will also be available for
inspection by the shareholders of the Bank and Trustees of Debenture holders at the
Registered Office of the Bank during business hours from 11.00 a.m. to 1.00 p.m. on all
working days except Saturdays, Sundays, Bank Holidays and National Holidays.
Related Party Transactions
Du ring the year, the Bank has not entered into any materially significant transactions
with its Promoters, Directors, Management, Subsidiaries or Relatives of the
Directors/Management, which could lead to potential conflict of interest between the Bank
and these parties, other than transactions entered into in the ordinary course of its
business.
Transactions entered into by the Bank with related parties in the normal course of its
business were placed before the Audit Committee. There were no transactions entered with
related parties, which were not in the normal course of the business of the Bank, nor were
there any transactions with related parties or others, which were not on an arm's length
basis. Accordingly, Form AOC-2 is not applicable to the Bank. A statement giving details
of all related party transactions, entered pursuant to the omnibus approval so granted, is
placed before the Audit Committee for their review. The Bank has developed a Standard
Operating Procedure for the purpose of identifying and monitoring such transactions.
During the year, the Policy on Related Party Transactions has been reviewed by the
Audit Committee and the Board and the same has been hosted on the website of the Bank at https://www.axisbank.com/shareholders-corner/corporate-governance/
Compliance-Report, in terms of the Listing Regulations, relating to Corporate Governance.
Employee Stock Option Plan (ESOP)
Since the financial year 2000-01, the Bank has formulated and adopted Employee Stock
Option Schemes (ESOS) for the benefit of the eligible Employees/Managing Director &
CEO and Whole Time Directors of the Bank and that of its subsidiary companies
("eligible Employees/Directors"), in terms of the Securities and Exchange Board
of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999 / Securities and Exchange Board of India (Share Based Employee Benefits) Regulations,
2014, as amended. The objective of the said ESOS is to enhance employee motivation, enable
employees to participate, directly or indirectly, in the long-term growth and financial
success of the Bank, to act as a retention mechanism by enabling employee participation in
the business of the Bank as its active stakeholder and to usher an 'owner- manager'
culture.
In terms of the said ESOS, as on date, up to 26,50,87,000 stock options are available
for grant by the Bank to the eligible Employees/Directors of the Bank and that of its
subsidiary companies. The eligibility and number of stock options to be granted to such
eligible Employees/Directors is determined on the basis of the outcome of their
performance evaluation and such other criteria as may be approved by the Nomination and
Remuneration Committee / Board, from time to time.
During the period from February 2001 to January 2019, the Shareholders of the Bank had
approved the grant of stock options, as aforesaid, on seven occasions. Under the first two
ESOS of the Bank and in respect of the grant of stock options made by the Bank upto 29th
April 2004, the option conversion price was set at the average of the daily high-low price
of the Bank's equity shares traded during the 52 weeks preceding the date of
approval of grant by the Nomination and Remuneration Committee/ Board, prevailing on the
Stock Exchange which had the maximum trading volume of the Bank's equity share during the
said period. Thereafter, under the third and subsequent ESOS of the Bank and with effect
from the said grants made by the Bank on or after 10th June 2005, the stock
option conversion price was changed to the latest available closing price of the equity
shares of the Bank, prevailing on the Stock Exchange which recorded higher trading volume,
on the day prior to the date of approval of grant by the Nomination and Remuneration
Committee.
Pursuant to the sub-division of the equity shares of the Bank, the Shareholders of the
Bank at the 20th Annual General Meeting held on 27th June 2014, also
approved the consequent adjustments to the stock options granted to the eligible
Employees/ Directors, under the various ESOS of the Bank, such that all stock options
available for grant (including lapsed and forfeited options available for reissue) and
those already granted but not vested and those vested but not exercised, as on the record
date fixed for the purpose of sub-division, were proportionately converted into options
bearing equity shares of the face value of ?2/- each of the Bankand the grant price of all
the outstanding stock options (unvested, vested and unexercised) as on the
said record date for the purpose of sub-division were proportionately adjusted by
dividing the existing grant price by 5. The record date for the said sub-division was 30th
July 2014.
Since 24th February 2001 up to 31st March 2020, the Nomination
and Remuneration Committee / Board had out of the said 26,50,87,000 stock options,
approved the grant of 28,16,13,850 stock options (including 2,80,03,497 stock options
which had lapsed and were forfeited) to the eligible Employees/Directors, in terms of the
various ESOS of the Bank. The said stock options are non-transferable and vest at rates of
30%, 30% and 40% on each of three successive anniversaries following the date of
respective grant, subject to standard vesting and other conditions as set out in the
respective ESOS of the Bank. The said stock options are required to be exercised by the
concerned eligible Employees/Directors, within a period of three / five years, from the
date of its respective vesting, in terms of the respective ESOS of the Bank.
As of 31st March 2020, out of the said 28,16,13,850 stock options so granted
22,88,18,308 stock options have been vested, out of which 20,84,44,468 stock options have
been exercised and the balance 2,03,73,840 stock options remain unexercised. Further,
2,47,92,045 stock options remained unvested and 2,80,03,497 stock options had been treated
as lapsed and forfeited.
There were no material changes in the Employee Stock Option Scheme(s) of the Bank
during the financial year 2019-20 and the same is in compliance with the relevant
provisions of the SEBI (Share Based Employee Benefits) Regulations, 2014, as amended.
Statutory disclosures as mandated under Regulation 14 of the SEBI (Share Based Employee
Benefits) Regulations, 2014, as amended, have been hosted on the website of the Bank at https://www.axisbank.com/shareholders-corner/corporate-
governance/compliance-report .
Corporate Governance
The Bank is committed to achieving and adhering to the highest standards of Corporate
Governance and it constantly benchmarks itself with best practices, in this regard.
The Quarterly Report on Corporate Governance has been submitted by the Bank to the
Stock Exchanges, in terms of Regulation 27(2) of the Listing Regulations, relating to
Corporate Governance. The said reports have been uploaded on the website of the Bank at
https://www.axisbank.com/shareholders-corner/corporate-governance/compliance-report .
The Report on Corporate Governance for the financial year 2019-20 along with the
Certificate issued by the Statutory Auditors of the Bank confirming compliance with the
mandatory requirements relating to Corporate Governance as stipulated under Chapter IV of
the Listing Regulations, relating to Corporate Governance, forms part of this report.
The Corporate Governance framework of the Bank incorporates all the mandatory
requirements as prescribed in the Listing Regulations. The Bank has also adopted the
non-mandatory requirements as recommended in the Listing Regulations, as detailed in the
Report on Corporate Governance, which forms part of this report.
Information under the Sexual Harassment of Women at Workplace (Prevention, Prohibition
and Redressal) Act, 2013
The Bank has complied with the provisions relating to the constitution of Internal
Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013. The information relating to complaints received and
redressed during the financial year 2019-20 is disclosed in the Report on Corporate
Governance, which forms part of this report.
Directors' Responsibility Statement
The Board of Directors of the Bank hereby declares and confirms the following
statements, in terms of Section 134(3)(c) of the Companies Act, 2013:
a) That in the preparation of the annual accounts for the financial year ended 31st
March 2020, the applicable accounting standards had been followed along with proper
explanation relating to material departures.
b) That such accounting policies have been selected and applied consistently and
judgments and estimates have been made that are reasonable and prudent so as to give a
true and fair view of the state of affairs of the Bank as at 31st March 2020
and of the profit of the Bank for the year ended on that date.
c) That proper and sufficient care has been taken 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) That the annual accounts have been prepared on a going concern basis.
e) That internal financial controls to be followed by the Bank, were in place and that
the same were adequate and were operating effectively.
f) That proper system to ensure compliance with the provisions of all applicable laws
was in place and the same were adequate and operating effectively.
Annual Return
In accordance with the Companies (Amendment) Act, 2017, read with Section 134(3) of the
Companies Act, 2013, the Annual Return, under Section 92 (3) of the Companies Act, 2013,
can be accessed on the website of the Bank at https://www.axisbank.com/shareholders-corner/shareholders-information
and the extract of the Annual Return in Form MGT 9, is provided as an annexure to this
report.
Particulars of Employees
The information required pursuant to Section 197 read with Rule 5 (1) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, in respect
of Directors / Employees of the Bank, is provided as an annexure to this report.
As on 31st March 2020, the Bank had 88 employees who were employed
throughout the year and were in receipt of remuneration of more than ?1.02 crores per
annum and 16 employees of the Bank who were employed for part of the year and were in
receipt of remuneration of more than '8.50 lakhs per month.
In terms of Section 136 of the Companies Act, 2013, the copy of the financial
statements of the Bank, including the consolidated financial statements, the auditor's
report and relevant annexures to the said financial statements and reports are being sent
to the Members and other persons entitled thereto, excluding the information in respect of
the said 104 employees of the Bank containing the particulars as specified in Rule 5 (2)
of the said Rules, which is available for inspection by the Members at the Registered
Office of the Bank during business hours of the Bank up to the date of the ensuing Annual
General Meeting. Any Member interested in obtaining a copy thereof, may write to the
Company Secretary of the Bank at its Registered Office or at shareholders@axisbank.com .
Conservation of Energy & Technology Absorption:
Conservation of Energy
Energy and natural resource conservation have been focus areas for the Bank and
conscious efforts are being made towards improving energy performance, year on year. For
Sustainable Development, Energy efficiency initiatives have been implemented across
several branches and offices through energy and resource conservation projects.
The Bank ensures strict compliance with all statutory requirements and voluntarily
undertakes several sustainable steps in order to contribute towards a better environment.
i) The steps taken by the Bank, for utilizing alternate sources of Energy:
(a) Implementation of Solar energy projects across select Branches / Offices,
aggregating ~ 7.05 MW. (Internet of Things) IOT based monitoring of power generated
through solar plants across rooftop over 245 branch locations.
(b) Centralised Energy Management System (CEMS) augmented to 1,493 branches from
earlier 893 branches to monitor and control energy consumption.
(c) Agreement to Procure Solar power ~1MW (3.50 lakh units p.a.) under Power Purchase
Agreement Model for Banks Business Continuity Centre (Data Centre), Bangalore.
(d) Replacement of conventional lighting to LED lights in 1,100 existing branches
(reducing estimated annual power consumption by 1.5 MW) over and above 250 plus branches
already completed in previous fiscal. All new branches/ offices are provided with LED
light fittings as a standard feature.
(e) Implementation of On Grid Inverter Solution to reduce diesel consumption in rural
branches augmented to 260 branches from earlier 100 branches. Estimated savings in Diesel
consumption works out to ~2.22 lac litres per annum.
(f) Conversion of Food/ Wet waste at Axis House, Mumbai, into manure through compost
machine for use in landscaping/gardening.
(g) Maintenance of unity power factor through APFC panels in auto mode for optimum use
of power at Axis House, Mumbai and Noida.
(h) Installation of Motion sensors for workstations and common area lighting at Axis
House, Mumbai.
(i) Re-cycling of Dry waste at Axis House, Mumbai, into stationery items like notepads.
(j) Daily re-cycling of 150 KL of water through Sewage Treatment Plant at Axis House,
Mumbai.
(k) Reduction of water consumption at Axis House, Mumbai through use of aerators.
(l) Rain Water Harvesting of ~2000 KL of water yearly at Axis House, Mumbai.
(m) Savings of water consumption by use of Bio-blocks in urinals at Select Large
Offices.
(n) Installation of sensors in washbasins to optimise flow of water at Select Large
Offices.
ii) Capital Investment made on Energy Conservation Equipment:
(a) Capital Investment incurred of 79 Lacs towards implementation of On Grid Inverter
across rural Branches.
(b) LED light replacement project has been undertaken under amortization model over
period of 5 years.
(c) CEMS project is on saving and sharing Model basis.
(d) Capital investment incurred of~ ' 71.63 Lacs towards implementation of Internet of
Thing (loT) based remote solar monitoringacross245 Branches.
Technology Absorption
i) The efforts made towards technology absorption:
With the objective of making banking simple and hassle-free for customers, the Bank has
undertaken various technology driven business initiatives to deliver value through
continuous technology adoption and innovation. During the year, large scale IT
transformation was undertaken augmenting the Bank's infrastructure to further build
capabilities. The Bank continues to upgrade its core systems for better scalability,
stability and enhanced security.
(a) The Bank's Digital Lending platform has been at the forefront of the digital
innovation initiatives enabling quicker adoption of capabilities needed to develop any
lending product. The Bank aims to leverage the platform and extend its capabilities across
other products like Cards, SME etc.
(b) By leveraging technology and digitisation to build a "full-stack" digital
foundation, the Bank is providing customers with a seamless payment and banking
experience. The Bank's Award winning Mobile application is one of the highest rated
banking application on Appstore. The Mobile application has been continuously evolving to
provide consistent, seamless, intuitive and contextual digital banking offerings.
(c) Pre-approved customers can nowavail ICC, a virtual credit card, which is issued
instantaneously. The Bank has partnered with Flipkart and Freecharge to offer instant
credit card solution. Additionally, the Bank provides a frictionless and time-saving
experience to customers by issuing credit cards through self-service kiosk at select
branch locations.
(d) The Bank continues to re-invent and re-invest in technologies including mobility,
cognitive intelligence, application programming interface (API) banking, RPA and AI/ML to
develop winning propositions for its customers. In order to drive seamless integration
with partners, Bank's Open API platform has been further enhanced to onboard merchants
thereby generating more business and driving volumes. The Bank has future scaled the
adoption of robotics process automation and Artificial Intelligence/Machine Learning
augmenting operational efficiency, higher accuracy and reduction in processing time while
serving customers. To leverage customer's historical behavior and sharpen their product
offerings, Bank is upgrading its Big Data Lake platform to provide enhanced analytics and
data processing capabilities.
(e) The Bank has also embarked on its journey of re-architecting its technology
infrastructure to be Cloud native providing the necessary agility, speed and elasticity
for scale. To improve Branch network and address infrastructure limitations in remote
geographies, the Bank has empanelled multiple national level large reach providers and
local broadband providers. The Bank has also invested in software defined data centers and
network which will enhance Branch bandwidth exponentially.
(f) The Bank pursues a holistic cyber security program with a comprehensive Cyber
Security Policy and Standards based on industry best practices in compliance with
regulatory guidelines. The Bank has deployed its cyber security structure and framework
based on National Institute of Standards and Technology (NIST) Standard. The Bank's cyber
security framework is built and operated around five fundamental areas including Identify,
Protect, Detect, Respond and Recover. The Bank is compliant with IS027001 and PCIDSS
standards. The Bank has a 24x7 Security Operations Centre and Cyber Security Operations
System.
(g) Following the present COVID-19 Pandemic situation, the Bank has been committed to
provide uninterrupted services to its customers. The Bank has actively encouraged large
scale Work-From-Home mandate and has provided all enablement necessary to support its
employees to efficiently perform their duties. The Bank has allocated laptops, activated
VPN/VDI connections along with application access and triggered enterprise mobility and
collaborative tools to all critical employees to enhance productivity and ensure seamless
collaboration. The Bank also swiftly made changes necessary for RBI moratorium across all
applicable systems.
(h) Additionally, the Bank mobilized its service architecture and taskforce to provide
necessary support to customers and employees whilst continuing to focus on development
efforts of strategic initiatives.
ii) The benefits derived like product improvement, cost reduction, product development
or import substitution:
As organization transitions to a dual-speed structure, the focus is on balancing
development of new age products with strengthening of the core applications. The
dual-speed structure will address front-end and back-end needs to improve end user
experience at the same time improve time-to-market by agile, DevOps methodologies
adoption.
In addition to investing in new age products and initiatives as stated above, the Bank
has also undertaken several key initiatives to upgrade its core applications like Finacle,
FinnOne, Prime among others to help scale up to the requirements. The core infrastructure
is also being upgraded to deliver a 24 x 7 availability of services to end users. The Bank
is looking at monitoring the performance of all key parameters across applications to
ensure a consistent and delightful customer experience. The monitoring also provides
insights into improvement areas that will continuously be worked on over a period of time.
The Bank is also actively looking at using open technology platforms which provide
reliability and agility, which will help reduce the overall cost of licensing and AMS.
With Intelligent Automation the Bank has created Bot store and Al model store while
automating 300+ processes and 1700+jobs; thereby benefiting in FTE cost savings, TAT &
error reduction and auto scale up/down to manage volume fluctuation.
iii) In case of imported technology (imported during the last three years reckoned from
the beginning of the financial yea
(a) The details of technology imported
1. No hardware procurements have been made in foreign currency.
2. Software licenses and upgrades have been procured over the past 3 financial years,
detailed as under.
(b) The year of import:
The details for the Financial Years 2017-18, 2018-19 and 2019-20, are provided below:
| PO IssueYear |
Currency |
Paid Amount |
| FY17-18 |
USD |
7,34,180 |
| FY18-19 |
USD |
17,63,702 |
| FY 19-20 |
USD |
3,75,000 |
| Total |
|
28,72,882 |
(c) Whether the technology been fully absorbed:
All licenses procured have been put to use.
(d) If not fully absorbed, areas where absorption has not taken place, and the reasons
thereof: NA.
iv) The expenditure incurred on Research and Development: Nil
Foreign Exchange Earning and Outgo:
The provisions relating to Section 134(3)(m) of the Companies Act, 2013 on particulars
relating to Foreign Exchange Earning and Outgo are not applicable to a Banking Company, as
such no disclosure is being made in this regard
.
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