South Indian Bank Ltd
Directors Reports
To the Members,
The Board of Directors is pleased to place before you, the 95th Annual
Report on the business and operations of the South Indian Bank Ltd. ("the Bank")
along with the audited accounts for the Financial Year (FY) ended March 31, 2023.
PERFORMANCE OF THE BANK
The performance highlights of the Bank for the financial year ended
March 31, 2023 are as follows:
C in crore
Key
Parameters |
2022-23 |
2021-22 |
Deposits |
91,651.35 |
89,142.10 |
Gross
Advances |
72,092.07 |
61,815.76 |
Total
Gross Business |
1,63,743.42 |
1,50,957.86 |
Operating
Profit |
1,507.33 |
1,247.57 |
Net
Profit |
775.09 |
44.98 |
Capital
& Reserves |
6,674.58 |
5,853.13 |
Capital
Adequacy (%) - Basel-III |
17.25 |
15.86 |
Earnings
Per Share (EPS) |
|
|
(a) Basic
EPS (in C ) [face value C 1/-] |
3.70 |
0.21 |
(b)
Diluted EPS (in C ) [face value C 1/-] |
3.70 |
0.21 |
Book
Value per Share (in C ) [face value C 1/-] |
31.89 |
27.97 |
Gross NPA
as % of Gross Advances |
5.14 |
5.90 |
Net NPA
as % of Net Advances |
1.86 |
2.97 |
Return on
Average Assets (%) |
0.73 |
0.04 |
Previous year's figures have been regrouped / reclassified, wherever
necessary to conform to current year's classification.
BUSINESS ACHIEVEMENTS
The Bank has achieved a total Business of C 1,63,743.42 crore,
consisting of Deposits of C 91,651.35 crore and Gross Advances of C 72,092.07 crore as on
March 31, 2023.
DEPOSITS
The total Deposits of the Bank as on March 31, 2023 was C 91,651.35
crore as against C 89,142.10 crore as on March 31, 2022, registering a growth of 2.81%.
The break-up of the deposits as on March 31, 2023 is as under:
|
Amount (C
in crore) |
% to
total Deposits |
Current
Deposits |
C
4,985.98 |
5.44% |
Savings
Deposits |
C
25,241.08 |
27.54 % |
Term
Deposits |
C
61,424.29 |
67.02% |
Total |
C
91,651.35 |
100% |
The Bank during the year has focused on Retail Advances and CASA.
The CASA has grown from C 29,601.37 crore as on March 31, 2022 to C
30,227.06 crore as on March 31, 2023, with a growth of 2.11%. The Savings Bank Deposits
grew by 2.03 % on a year on year basis. Current Deposits grew by 2.56% on a year on year
basis. While opening new banking relationships, the Bank has accorded priority to
meaningful financial inclusion during the period under reporting.
ADVANCES
The advance portfolio of the Bank grew by 16.62% on a YoY basis to
reach C 72,092.07 crore as on March 31, 2023. The focussed strategies implemented by the
Bank has facilitated rapid growth in advances.
The Bank has registered a robust recovery and up- gradation of GNPA
aggregating to C 1,295.82 crore, during the financial year 2022-23. The Gross NPA of the
Bank as on March 31, 2023 as a percentage to gross advance is 5.14 and Net NPA stood at
1.86%. Ensuring the Bank's vision on asset quality, the underwriting standards are
revisited and reviewed from time to time. The GNPA and Net NPA percentage of the new loan
book stood only being 0.09 and 0.06 respectively, excluding '21 Crore of Credit card
business that have fully been backed by FLDG and '5.00 Crore Gold Loan.
During the financial year 2022-23, the Bank could register growth with
focus on building quality assets across all Verticals like Corporate, SME, Housing Loan,
Auto Loan, Credit Card, Personal Loan, Gold Loan, etc. The Housing Loan policy of the Bank
was revamped during the year 2022-23, to make the Housing Loan products more competitive
in the market without compromising on credit quality. The technical team embedded with
proficiency on valuation of securities also started full- fledged functioning during the
financial year.
The Bank has adopted a forward looking approach and envisaged more
co-lending arrangements to enhance
priority sector lending. All the priority sector advance targets stands
achieved and the Bank was also able to generate additional revenue of C 79.75 crore during
the year, through sale of Priority Sector Lending Certificates (PSLCs).
Priority sector target & achievement as on March 31,2023 is as
follows:
|
% of
Target |
% of
Achievement |
Overall
PSL |
40.00% |
53.72% |
Agriculture |
18.00% |
21.16% |
Small
& Marginal Farmers |
9.50% |
12.23% |
Non-Corporate
Farmers |
13.78% |
15.35% |
Micro
Enterprises |
7.50% |
7.66% |
Weaker
Sections |
11.50% |
14.42% |
Break-up of exposure under Priority Sector as on March 31, 2023 is
furnished below:
Amount (
' in crore) |
A) |
Agriculture
& Allied activities (Net of PSLC) |
11,370.03 |
B) |
MSME (Net
of PSLC) |
15,357.50 |
C) |
Other
Priority Sector |
2,141.28 |
(TOTAL PS (Net of PSLC) |
28,868.81 |
The high quality portfolio growth was channelized by the Relationship
Management structure at numerous locations/touch points which helped the Bank in tapping
various Retail, SME and cross-sell opportunities. Decentralisation of credit processing
centres resulted in speedy disposal of credit facilities.
Endeavours for profitable credit growth through quality credit
To achieve the vision of 'profitable credit growth through quality
credit', the Bank has made an arrangement with Mckinsey & Company India LLP and
re-designed the credit underwriting model - SIB MSME Integrated Lending Engine (SMILE) for
SME lending up to C 2.00 crore. The banking industry too, witnessed a wave of changes as
everything from business models to operations transitioned to a digital world. The Bank is
in the process of migrating to an advance suite provided by 'M/s Nucleus Software Exports
Ltd' & 'M/s NewGen Software Technologies Ltd' which can handle all the procedures from
sourcing to collection, including documentation in retail and SME lending digitally.
FINANCIAL PERFORMANCE
Profit
The Net Operating Income (Net Interest Income and Other Income) of the
Bank increased by C 550.85 crore (16.83%) from C 3,273.86 crore in FY 2021-22 to C
3,824.71 crore in FY 2022-23. The decrease in Non- Interest Income was C 221.47 crore
(21.42%) during the year, which was mainly on account of depreciation on security receipts
charged during the FY 2022-23. The Operating Profit for the year under review was C
1,507.33 crore (before taxes and provisions) as against C 1,247.57 crore for the financial
year 2021-22. The Net Profit for the year was C 775.09 crore as compared to a net profit
of C 44.98 crore during the previous year and the profit available for appropriation are
as per details given below:
C in crore
Profit
before taxes and provisions |
1,507.33 |
Less:
Provision for NPI |
(137.54) |
Provisions
for Non- Performing Assets |
623.06 |
Provision
for FITL |
(22.17) |
Provision
for Income Tax |
258.38 |
Provision
for Deferred Tax |
213.00 |
MAT credit |
(138.25) |
Provision
for Standard Assets |
(58.61) |
Provision
for Restructured Assets |
(0.05) |
Provision
for Other Impaired Assets |
(6.53) |
Provision
for Un-hedged Forex Exposure |
1.66 |
Provision
for Non-Banking Asset Provision |
(0.71) |
Net
profit |
775.09 |
Brought
forward from previous year |
(37.87) |
Profit
available for appropriation |
737.22 |
Appropriations: |
|
Transfer
to Statutory Reserves |
193.78 |
Transfer to
Capital Reserves |
4.57 |
Transfer to
General Reserves |
130.00 |
Transfer
to Investment Fluctuation Reserve |
104.39 |
Transfer
to Special Reserve |
80.00 |
Balance
carried over to Balance Sheet |
224.48 |
Total |
737.22 |
Dividend
The Board of Directors has recommended a dividend of 30% i.e. C 0.30
per Equity share of face value of C 1/- each per share for the financial year ended March
31, 2023 (previous year Nil).
CAPITAL & RESERVES
The Bank's issued and paid-up capital stood at C 209.27 crore as on
March 31, 2023. The Bank has not issued any securities during the financial year 2022-23.
The capital plus reserves of the Bank has moved up from C 5,853.13
crore, as on March 31,2022 to C 6,674.58 crore as on March 31, 2023, mainly on account of
plough back of profits and fixed asset revaluation during the current financial year.
THE CAPITAL TO RISK WEIGHTED ASSETS RATIO (CRAR)- BASEL III
The Capital to Risk Weighted Assets Ratio (CRAR) of the Bank according
to Basel III guidelines is 17.25 as on March 31, 2023 as against the statutory requirement
of 11.50 (including Capital Conservation Buffer). Tier I CRAR constitutes 14.74 while Tier
II CRAR works out to 2.51. The Bank follows Standardized Approach, Standardized Duration
Approach and Basic Indicator Approach for measurement of capital charges in respect of
credit risk, market risk and operational risk, respectively.
LISTING AGREEMENT WITH STOCK EXCHANGES
The Bank's shares continue to be listed on BSE Ltd. and The National
Stock Exchange of India Ltd. The Tier I/II Bonds issued by the Bank continue to be listed
on BSE Ltd. The Bank confirms that it has paid the listing fees to all the Stock Exchanges
for the year 2023-24. The securities of the Bank are actively traded on NSE (Shares only)
and BSE (Shares and Bonds) and have not been suspended from trading.
EXPANSION PROGRAMME
The Bank has been successful in widening its network across India with
946 banking outlets (940 Branches, 3 Satellite branches and 3 Ultra small branches) and
1,289 ATMs/CRMs as on March 31, 2023. The Bank has opened 16 new outlets and closed 4
branches. The Bank has also opened 40 new ATMs, 9 CRMs across the country during the
financial year 2022-23 and closed 23 ATMs and 8 CRMs. The branch network now covers 26
States and 4 Union Territories. The Bank plans to open 17 banking outlets and 25 ATMs
& 10 CRMs during the financial year 2023-24. Construction of Currency Chest at Kannur
has been completed. Construction of Currency Chest at Kakkanad is under
progress and the same is expected to be completed in the FY 2023-24, as per the time line
permitted.
INVESTMENT
As the pandemic seemed to abate, the Russia-Ukraine conflict caused
inflation in India and across the world. Consumer Price Index (CPI) inflation in India
persisted at elevated levels during 2022-23, impacted by a series of adverse supply shocks
and the continuing pass through of high input costs. To curb the high inflation, the RBI
has increased the policy repo rate by 250 basis points (bps) during May 2022-February 2023
to 6.5%, keeping the stance to "accommodative" and monetary policy remaining
focused on progressively aligning inflation with the target, while supporting growth. This
was preceded by the introduction of the Standing Deposit Facility (SDF) at a rate 40 bps
higher than the fixed rate reverse repo. Thus, the effective rate hike since April last
year has been 290 bps. These increases have been fully transmitted to the overnight
weighted average call money rate (WACR), the operating target of monetary policy, which
has gone up from daily average of 3.32% in March 2022 to 6.52% in March 2023.
Meanwhile, in the few weeks during March, 2023, global economy started
witnessing a renewed phase of turbulence with fresh headwinds from the banking sector
turmoil in some advanced economies. Bank failures and contagion risk have brought
financial stability issues to the forefront. Given the stubbornness in inflation, central
banks continued to tighten monetary policy, although at a reduced pace. Inflation globally
has moderated in the recent months, but its descent to the target is proving to be long
and arduous. The RBI projects CPI inflation to moderate to 5.2% for FY24. Looking ahead,
India's headline inflation is likely to moderate at 4-5% in FY24, and this may augur well
for RBI to continue the pause. The next move by the RBI will likely to be a cut, albeit
conditional on global policy moves.
The nominal exchange rate of the Indian rupee (INR) depreciated from C
75.24 to record low of C 83.26 relative to the US Dollar (USD) in FY23 amidst tightening
global financial conditions, an uncertain global environment and portfolio capital
outflows.
The Bank's gross investment portfolio stood at C 26,014.21 crore as on
March 31, 2023 compared to C 22,534.01 crore as on March 31, 2022, reported an increase of
15.44%. Investment Deposit Ratio moved to 28.40 as on March 31,
2023 from 25.28 as on March 31, 2022. Profit on sale of investment for
the FY 2022-23 stood at C 70.01 crore. Total interest Income (Interest + Dividend) from
investment for the year was C 1,285.72 crore. Yield on investments (profit + interest
earned to average investments) during the FY 2022-23 was 5.38%.
During the year, the trading desks in Treasury Department have all
managed their portfolios well with data-backed analysis. The SLR trading desk also planned
and executed the Bank's participation in Government's Securities Market. The desk has
successfully managed the held-to-maturity (HTM) book. The equity trading desk took well
thought out positions in the secondary market and participated actively in the various
primary market offerings. The forex trading desk too contributed actively to overall
profits by taking gainful trading positions.
System's liquidity remained in large surplus especially in the first
half of FY23, but it moderated to C 0.4 lakh crore during H2 from C 3.3 lakh crore during
H1. The net LAF slipped occasionally into deficit mode in H2, triggered by frictional
pressures from festival-related currency demand, month-end GST outflows and quarterly
advance tax payments.
The Fund Management and Money Market Desk at Treasury Department
successfully managed the liquidity risk by maintaining appropriate levels of surplus
funds. The desk also ensured compliance with the regulatory requirements of Cash Reserve
Ratio (CRR) and Statutory Liquidity Ratio (SLR).
Besides the above, the Forex Merchant Desk in Treasury Department
offers to the Bank's customers solutions for foreign exchange risk hedging and
remittance-related services. A significant portion of the total Treasury profits for FY
2022-23 came from Forex Merchant activities. Going forward, Treasury Department intends to
focus on Forex Merchant business and other similar offerings to customers for diversifying
its revenue mix.
A new Treasury Management Software will be implemented in the Financial
Year 2023-24. This will enhance product portfolio and better the customer service. The
Treasury Department was able to operate continuously and without interruptions during the
year, which demonstrates the resilience of the risk management systems and processes in
place.
NON-PERFORMING ASSETS (NPA)
During the FY 2022-23, as a result of focused and sustained efforts
using legal recourse available under the SARFAESI Act, DRTs and Civil Courts, the Bank has
been able to improve its overall recovery. The Bank has also relied on expeditious
deciding on requests for one-time settlement. The cumulative effect of the sustained
action has facilitated the Bank to reach an all-time high recovery figure of C 1,814.69
crore, which is 24% higher than the recovery during the last financial year 2021-22. The
recovery was largely in cash and the Bank has recorded its highest ever cash recovery at C
1,570.66 crore. During the financial year 2022-23, in order to improve the quality of
assets, special thrust was given to selection and underwriting of credit. Further, focus
on building efficiency of collection team, resulted in marked improvement in collections
and the Bank reaching its lowest ever SMA2 numbers at C 711.65 crore (against C 892.15
crore in FY2021-22). Incremental NPA was also controlled and addition to GNPA was limited
at C 1,513.22 crore, as against C 2,159.23 crore in FY 2021-22. The Gross NPA of the Bank
has decreased to 5.14% from 5.90% as on March 31, 2022. The Net NPA has decreased to C
1,293.61 crore, from C 1,777.77 crore as on March 31, 2022. In terms of percentages, the
Net NPA has decreased to 1.86 from 2.97 as on March 31, 2022. On the recovery front, the
Bank has managed to outperform peer group banks and strives to build capability to sustain
the momentum and deliver higher numbers during the years to come.
RISK MANAGEMENT
Risk is an integral part of banking business. In the recent past, the
Bank has exerted focused efforts in building a robust, and sustainable risk governance
framework and to create risk awareness culture across all tiers of the organization's
hierarchy and continues to do so. Various initiatives such as comprehensive review of
Credit Risk Policy and other Risk Management Policies have been initiated along with other
process improvements. Liquidity is also actively being managed through the ALCO forum,
where the Bank is pursuing actively into increasing the sticky and retail deposits along
with operationalizing majority of the wholesale banking financing relationships. As part
of the Business Continuity Management, the Bank's Operational Risk team is working in
close coordination with various stakeholders to ensure smooth conduct of operations.
The risk management strategy of the Bank is based on a clear
understanding of various risks, disciplined risk assessment, risk measurement procedures
and continuous monitoring for mitigation. The policies and procedures established for this
purpose are continuously evaluated and benchmarked against the best practices followed in
the industry. Through continuous refinement/ improvement of the risk measurement/
management systems, including automation of feasible processes, the Bank aims to ensure
regulatory compliance as well as better return on and utilization of the capital in line
with the business objectives. The Risk Management Department received Certificate of
approval under ISO 9001:2015 Standard during the Financial Year 2022-23. There are no
elements of Risk identified, which may, in the opinion of the Board, threaten the
existence and stability of the Bank.
RISK MANAGEMENT POLICY FRAMEWORK
The Bank has a comprehensive policy framework which contains separate
policies for identification, measurement and management of all material risks including
but not limited to credit, market, operational, liquidity and other Pillar-II risks. The
Bank has put in place an integrated risk management policies which ensures independence of
the risk governance structure. The required standard operating procedures also follows the
Policies to ensure that all the parameters are well covered while implementing the
approved policies. The details of risk management practices are provided in Management
Discussion and Analysis Report annexed to the Director's Report.
COMPLIANCE WITH CAPITAL ADEQUACY FRAMEWORK
In compliance with regulatory guidelines on Pillar I of Basel III
norms, the Bank has computed capital charge for credit risk as per the Standardized
Approach, for market risk as per the Standardized Duration Method and for operational risk
as per the Basic Indicator Approach. To address Pillar II risk, the Bank has implemented
ICAAP (Internal Capital Adequacy Assessment Process), to integrate capital planning with
budgetary planning and to capture residual risks which are not addressed in Pillar I, like
credit concentration risk, interest rate risk in the banking book, liquidity risk,
earnings risk, strategic risk, reputation risk, pension obligation risk etc. The Bank has
adopted a common framework for additional disclosures under Pillar III for adhering to the
market discipline norms of Basel III guidelines. This requires the Bank to disclose its
risk exposures, risk assessment processes and
its capital adequacy to the market in a consistent and comprehensive
manner.
PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
FOREIGN EXCHANGE EARNINGS AND OUTGO PURSUANT TO SUB SECTION (3)(M) OF SECTION 134 OF THE
COMPANIES ACT, 2013 READ WITH RULE (8)(3) OF THE COMPANIES (ACCOUNTS) RULES,2014
The Bank ensures strict compliance with all statutory requirements and
voluntarily undertakes several sustainable steps in order to contribute towards a better
environment. The Bank has undertaken various initiatives for energy conservation at its
premises. The Bank has taken various initiatives to reduce its carbon footprint and
improve resource efficiency. It ranging from using better technology to improve energy
efficiency, recycling and generating energy from renewable sources. A detailed report on
the same is included in the Business Responsibility and Sustainability Report forming part
of this annual report. Digital & Technology Department of the Bank has been focusing
on the innovation, improvement and implementation of projects on Bank's digital platforms
viz., ATM, Net Banking, Mobile Banking, etc. The Department also ensures the highest level
of service and integrity of the internal applications and infrastructural support to
enable a seamless growth in the Bank's business operations. Digital strategy of the Bank
is instituted on 4 pillars viz. INPF i.e., Indulge (customer selfservice), Nudge
(assistance to be nudged to go digital), Purge (remove redundant processes using
automation) and Forge (impactful Fintech partnerships). Enhancing selfservice capability
across channels, empowering branches with technology solutions to nudge the customers to
go digital, automating manual processes at branches & back-offices to improve customer
TAT using AI & RPA and tie up with Fintech's are an integral part of Bank's overall
strategy. The Bank has grown the share of digital transaction to 95% in the last Financial
Year 2022-23. The Bank is planning to increase this share further in the coming Year.
Technology strategy focuses on leveraging cloud adoption, high availability, fraud
detection, cyber security and modernization of infrastructure to stay competitive and
provide better services to the customers. The Bank, being a banking company and an
authorized dealer in Foreign Exchange, has taken all possible steps to enhance export
credit. Through its export financing operations, the Bank supports and encourages the
country's export efforts.
Number of cases filed, if any, and their disposal under section 22 of
the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act,
2013
The Bank has zero tolerance towards any action on the part of any
executive/employees which may fall under the ambit of 'Sexual Harassment' at workplace and
is fully committed to uphold and maintain the dignity of every women staff working in the
Bank. The Bank has complied with provisions relating to the constitution of the Internal
Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013 [14 of 2013]. The Policy provides for protection
against sexual harassment of women at workplace and for prevention and redressal of such
complaints. All the employees (permanent, contractual, temporary, trainees) are covered
under this policy.
Number of complaints pending as at the beginning of the financial year
- Nil
Number of complaints filed during the financial year - Nil
Number of complaints pending as at the end of the financial year - Nil
Particulars of Employees
The Bank had 9678 employees as on March 31, 2023. The details of the
top 10 employees including the employees who were in receipt of aggregate remuneration of
more than C 1.02 crore per annum (employed throughout the year) or who were in receipt of
remuneration of C 8.5 lakhs per month (employed for a part of the year ) during the FY
202223, in terms of remuneration drawn pursuant to provisions of Section 197(12) of the
Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 is annexed to this report (Annexure A).
The ratio of the remuneration of each director to the median employees' remuneration and
other details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read
with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014, is annexed to this report (Annexure B).
THE ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES:
A brief outline of the Bank's CSR Policy, including overview of
projects or programs to be undertaken.
South Indian Bank's CSR Policy
The South Indian Bank is grateful to the society that has supported and
encouraged the Bank during its long journey of growth and development. The Bank believes
that no organization can make sustainable development without the patronage of the
society. The Bank is committed to integrate social and environmental concerns in its
business operations. The Bank shall continue to have among its objectives, promotion and
growth of national economy and shall continue to be mindful of its social and moral
responsibilities to the customers, shareholders and the society. The Bank is committed to
financing the economic and developmental activities of the nation with concern for human
rights and environment.
In line with the CSR Policy and in accordance with Schedule VII,
section 135 of Companies Act, 2013 the Bank undertook various activities during the FY
2022-23, which had significant impact on the society. These activities, inter-alia,
include:
Eradicating hunger, poverty and malnutrition, promoting health
care including preventive healthcare and sanitation and making available safe drinking
water.
Promoting Education, including special education and employment
enhancing vocational skills and livelihood enhancement projects.
Empowering women, setting up homes and hostels for women and
orphans, setting up old age homes, measures for reducing inequalities faced by socially
and economically backward groups.
Ensuring environmental sustainability, maintaining quality of
soil, air and water.
Rural development activities.
Training to promote nationally recognized sports.
Promoting Financial Literacy.
CSR Expenditure
The Bank has always given top priority to fulfilling its obligations
under the Corporate Social Responsibility. Diversified Projects in the areas of
healthcare, education, sports and sanitation that would benefit the society as a whole are
identified and the Bank wholeheartedly supports such initiatives.
The amount to be spent by the Bank towards CSR for FY 2022-23 as per
Section 135 of the Companies Act, 2013, comes to '1.84 crore. The amount spent by the Bank
this year towards CSR was '1.86 crore. The Bank had also embarked on some major projects
last year in the field of education, healthcare etc. By choosing long term sustainable
projects, the Bank has taken an approach which brings steady and long lasting impact on
the society. The details of the CSR activities of the FY 2022-23 are mentioned in Annexure
'C' to this report.
Web-Link to the CSR Policy
https://www.southindianbank.com/userfiles/file/csr_policy.pdf
FINANCIAL INCLUSION
Financial inclusion refers to efforts to make financial products and
services accessible and affordable to all individuals and businesses, regardless of their
personal net worth or company size. Financial inclusion strives to remove the barriers
that exclude people from participating in the financial sector and using these services to
improve their lives. Financial inclusion is an effort to make every day financial services
available to more of the world's population at a reasonable cost. It aims to ensure that
the poor and marginalised make the best use of their money and attain financial education.
With advances in financial technology and digital transactions, more
and more start-ups are now making financial inclusion simpler to achieve. It is all about
bringing basic banking facilities to the lower income groups at an affordable cost. The
Bank has adopted several financial inclusion initiatives, including appointment of
Business Correspondents and Financial Literacy Counsellors. For expanding the Financial
Inclusion activities, the Bank has 68 Business Correspondents and 19 Financial Literacy
Counsellors as on 31.03.2023, in the States of Kerala and Tamil Nadu. Through corporate
business correspondents, the Bank has on-boarded 6,554 borrowers with total outstanding of
C 27.62 crore in the FY 2022-23 in the agriculture lending, hence reaching out to the
unserved and under served strata of society.
Aadhaar Enabled Payment System (AePS)
Aadhaar Enabled Payment System (AePS) is a payment service, empowering
a bank customer to use Aadhaar as his/her identity to access his/ her respective Aadhaar
enabled bank account and perform basic banking transactions through a Business
Correspondent / POS machine. National Payment Corporation of India (NPCI), an umbrella
organisation for all retail payments is
controlling AePS operations. AePS offers basic banking services such as
Cash Withdrawal, Cash Deposit, Balance Enquiry, Aadhaar to Aadhaar Fund Transfer and Mini
Statement. The Bank has also successfully migrated to Aadhaar Enabled Payment System
(AePS) for performing transactions through Business Correspondents.
Business Correspondent
In an era of heightened competition, thin profit margins and cost
constraints, establishment of conventional bank branches in all locations cannot be a
viable proposition. It is, therefore, imperative to explore the possibilities of other
cost effective delivery mechanisms to reach out to remote locations and satisfy the
financial needs of clientele at an affordable cost. This has evolved the concept of
Business Correspondent (BC) in the banking sector. This is also an efficient and effective
tool for implementation of Financial Inclusion programme of Government of India.
Though there are manifold challenges like credit risk, operational
risk, legal risk, reputational risk, difficulty in assessing the integrity of the BCs,
managing cost on low volume of business, and effective supervision and control of the
activities, there exists the potential for employment generation, creativity and
productivity in rural hinterlands for bringing about a comprehensive economic development
and the resultant benefits to the Bank. Bank's BCs are branded under the name "BANK
MITRA".
The wholly outsourced BC model will complement the Bank's strength to
increase business volume and improve efficiency of operation. The Bank is ensuring that
the Business Correspondent meets the benchmark performance standards at all stages of
delivery of services, without diluting Bank's values and principles, control mechanisms,
business processes or goodwill and reputation.
Financial Literacy Counsellors
Financial Literacy is the ability to understand how money works in our
day to day life and how someone manages it, how he/she invests it and how a person offers
it to others. More specifically, it refers to the set of skills and knowledge that allows
an individual to make informed and effective decisions with their financial resources. As
on 31.03.2023 the Bank has engaged 13 FLCs in different Blocks of Kerala to disseminate
financial literacy to the people. In addition to this, the Bank has also appointed 6 FLCs
in different Districts in Tamil Nadu to emphasize the objectives of Financial Literacy.
Bank's FLCs are branded under the name "SIB JYOTHIS". Efforts are being taken
to make them more efficient, responsive to the needs of the people. A
Board approved policy covering all aspects of Financial Literacy Counsellors has been
formulated, giving due consideration to the revised guidelines on FLCs circulated by RBI.
Pradhan Mantri Jan-Dhan Yojana (PMJDY)
Pradhan Mantri Jan-Dhan Yojana (PMJDY), is conceived as a national
mission on financial inclusion initiated by Honourable Prime Minister on August 15, 2014.
The scheme envisages universal access to banking facilities, with at least one basic
banking account for every household. In line with the directives given by Ministry of
Finance and SLBC, PMJDY scheme was implemented in the Bank since 2014. Pradhan Mantri
Jan-Dhan Yojana (PMJDY) is National Mission for Financial Inclusion to ensure access to
financial services, namely, a basic savings & deposit accounts, remittance, credit,
insurance, pension in an affordable manner. Under the scheme, a basic savings bank deposit
(BSBD) account can be opened in any bank branch or Business Correspondent (Bank Mitra)
outlet, by persons not having any other account.
Atal Pension Yojana (APY)
Atal Pension Yojana (APY), a pension scheme for citizens of India is
focused on the unorganized sector workers. Under the APY, guaranteed minimum pension
ranging from '1,000/- to C 5,000/- per month will be given at the age of 60 years
depending on the contributions by the subscribers. Any Citizen of India can join the APY
scheme.
The prospective applicant may provide Aadhaar and mobile number to the
Bank during registration to facilitate receipt of periodic updates on APY account.
However, Aadhaar is not mandatory for enrollment.
The benefit of minimum pension under Atal Pension Yojana would be
guaranteed by the Government in the sense that if the actual realized returns on the
pension contributions are less than the assumed returns for minimum guaranteed pension,
over the period of contribution, such shortfall shall be funded by the Government. On the
other hand, if the actual returns on the pension contributions are higher than the assumed
returns for minimum guaranteed pension, over the period of contribution, such excess shall
be credited to the subscriber's account, resulting in enhanced scheme benefits to the
subscribers.
Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)
The Pradhan Mantri Jeevan Jyoti Bima Yojana is available to people in
the age group of 18 to 50 years having a
Bank account who give their consent to enable autodebit. Aadhar would
be the primary KYC for the Bank account. The life cover of '2 lakhs shall be for the
one-year period stretching from 1st June to 31st May and will be renewable. The PMJJBY
offers an annual life coverage of '2 lakhs in case of the demise of the policyholder
during the policy term. The policy can be availed at the lowest premium rate of '436 per
annum.
Pradhan Mantri Suraksha Bima Yojana (PMSBY)
Pradhan Mantri Suraksha Bima Yojana (PMSBY) is an accidental insurance
scheme that provides one year of accidental death and disability coverage with an annual
renewal. With the minimum premium rate of '20/- per annum, this policy is most beneficial
to the poor and low- income section of the society. PMSBY covers people aged between 18
years and 70 years with a Bank account for accidental death and full disability benefits
of up to '2 Lakh and for partial disability for '1 Lakh.
GREEN INITIATIVE IN CORPORATE GOVERNANCE.
Dispatch of documents in Electronic Form: As a responsible corporate
citizen, the Bank supports and pursues the 'Green Initiative' of the Ministry of Corporate
Affairs ("MCA"). In conformance with such initiatives and in terms of Rule 18 of
the Companies (Management and Administration) Rules, 2014, the Bank may give notice
through electronic mode including e-mail to those Members who have provided their e-mail
address either to their Depository Participants (DPs) or to the Registrar/ Company.
Pursuant to General circulars dated on December 28,2022 issued by MCA and SEBI Master
Circular dated on July 11, 2023 under the Head 'Relaxation from compliance with certain
provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
in continuation to SEBI circular dated 5th January, 2023, the notice of 95th Annual
general Meeting and the Annual Report 2022-23 will be sent via email to all the
shareholders and no physical copies will be sent via post.
Further, in terms of Regulation 36 of the Listing Regulations, the
listed entity is required to send soft copies of its Annual Report to all those
shareholder(s), who have registered their email address for this purpose. Accordingly, the
documents including the notice and explanatory statement of 95th Annual General Meeting,
Annual Report of the Bank for the financial year 202223 including Audited Financial
Statements, Directors' Report, Auditors' Report etc., for the year ended March 31, 2023,
is sent to the e-mail address registered with their Depository
Participant(DP)/Registrar/Company. The e-mail
addresses indicated in respective DP accounts which will be
periodically downloaded from NSDL/CDSL will be deemed to be their registered e-mail
address for serving notices/documents including those covered under Section 136 of the
Companies Act, 2013. In case a Member, whose e-mail address has changed, fails to update
this new e-mail address, the said documents will be sent to the existing e-mail address
and the said documents will be deemed to have been delivered, in compliance with the
relevant provisions of the Companies Act, 2013, the relevant Rules made thereunder and the
Listing Regulations. Members who have not yet registered their e-mail address are
requested to do so, at the earliest. In case of shares held in electronic form and in case
of any change in the e-mail address, Members are requested to update the same with their
DP and in case of shares held in Physical form, Members are requested to update the same
with the RTA/Company. Security holders may please note that, as allowed by MCA and SEBI
circulars, the Bank will not be sending physical copies of AGM Notice to shareholders and
Annual Report to the security holders unless the same is specifically requested.
Please note that the said documents will also be uploaded on the Bank's
website www.southindianbank.com and copies thereof will be made available for inspection
at the Registered Office of the Bank during 10.00 a.m. to 3.00 p.m. on all working days
except Saturdays, Sundays, Bank Holidays and Public Holidays up to the date of ensuing
AGM. Shareholders have been requested on several occasions to update their e-mail IDs in
their folio/ demat A/c to help accelerate the Bank's migration for paperless compliances.
The Bank seeks your support for the said green initiatives, as it is designed to protect
our fragile environment.
Further, as a part of green initiative by the Bank, all relevant agenda
papers pertaining to the Board/ Committee are being circulated in advance to the Board of
Directors through electronic mode to facilitate easy access of agenda which would provide
sufficient time to the Board for reading and understanding the proposals placed in a
meeting.
ANTI - MONEY LAUNDERING (AML)
Transactions processed through the Core Banking Solution are monitored
for detecting suspicious transactions, using an AML application to comply with the
provisions under Prevention of Money Laundering Act (PMLA). The Bank already has a
Centralized Processing Centre (CPC)
for customer creation with the objective of full KYC compliance and to
use KYC as a fraud prevention tool. The Bank has attached great importance for compliance
of KYC/AML/CFT norms by the customers as per the Reserve Bank of India directive.
FATCA-CRS
The Bank has been registered as a reporting entity under FATCA, under
GIIN No. IIK7HU.99999.SL.356, to comply with the reporting requirement under the
interGovernmental agreement entered between Indian and US Government and the CRS
Multilateral Competent Authority Agreement.
DIRECTORS
The composition of the Board of Directors is governed by the Banking
Regulation Act, 1949, the Companies Act, 2013, SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 and the Code of Conduct on Corporate Governance adopted by
the Bank. The Board comprises of 9 Directors as on the date of this report, with rich
experience and specialized knowledge in various areas of relevance to the Bank, including
Banking, Accountancy, Risk Management, Treasury, Finance, Business Management, Small scale
Industry, Agriculture, Law, Human Resources and Information Technology.
Excluding the MD & CEO, all other members of the Board are
Non-Executive Directors and six Directors out of the total nine Directors are Independent
Directors. Declaration has been obtained from the Independent Directors as required under
the RBI Regulations, SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015 and Companies Act, 2013. The remuneration and other benefits paid to MD & CEO of
the Bank and other Non-Executive and Independent Directors during the financial year
2022-23 are disclosed in Corporate Governance Report. Vide Companies (Appointment and
Qualification of Directors) Fifth Amendment Rules, 2019 an online data Bank for the
independent directors ("Data Bank") has been rolled out by the Indian Institute
of Corporate Affairs, all the Independent Directors of the Bank had registered themselves
in the Data Bank in compliance with the same.
During the 94th Annual General Meeting held on July 12,2022 as
recommended by the Bank the shareholders accorded their approval for:
Re-appointment of Sri. Paul Antony (DIN: 02239492) as a
Non-Executive Director of the Bank liable to
retire by rotation under Section 152 of Companies Act, 2013.
Appointment of Sri. Benny P Thomas (DIN: 09448424) as
non-executive Director of the Bank, liable to retire by rotation under Section 152 of
Companies Act, 2013, who was appointed as an Additional Director pursuant to Section
161(1) of the Companies Act, 2013 on 30th December, 2021 and who holds office up to the
date of the 94th Annual General Meeting.
Revising the remuneration payable to Sri. Murali Ramakrishnan
(DIN: 01028298), Managing Director and CEO of the Bank.
Re-appointment of Sri Salim Gangadharan, (DIN: 06796232) as
Independent Director of the Bank upto November 1, 2023 in compliance with section 149 of
the Companies Act, 2013, not liable to retire by rotation as Non-Executive Independent -
Part time Chairman of the Bank and approval of his remuneration.
Re-appointment of Sri V.J. Kurian, (DIN: 01806859) as
Independent Director of the Bank for a second term as Non-Executive Independent Director
of the Bank, not liable to retire by rotation.
Re-appointment of Sri. Pradeep M Godbole (DIN: 08259944) as
Non-Executive Independent Director of the Bank, not liable to retire by rotation.
Appointment of Smt. Radha Unni (DIN: 03242769) as Independent
Director of the Bank, not liable to retire by rotation.
Sri Parayil George John Tharakan (DIN: 07018289), Nonexecutive
Independent Director of the Bank, retired from the Board of Directors w.e.f. 24th November
2022 upon completion of his eight-year term, as per Section 10A(2A) of the Banking
Regulation Act, 1949.
The Board of Directors has recommended to members:
To re-appoint Sri. Benny P Thomas (DIN: 09448424) as
Non-Executive Director of the Bank, liable to retire by rotation at the 95th AGM, who
retires by rotation under Section 152 of Companies Act, 2013 and being eligible, offers
himself for reappointment.
To re-appoint Sri M George Korah (DIN: 08207827)) as
Non-Executive Independent Director of the Bank, who was appointed by the Board of
Directors on August 31, 2018 and appointed by Shareholders at the 91st AGM held on July
17, 2019 for a period of 5
years, and in respect of whom the Bank has received a notice in
writing, proposing his candidature for the office of Director of the Bank, for a second
term as 'Non-Executive Independent Director' of the Bank, for the purpose of Section 149
of the Companies Act, 2013, to hold office for a period not exceeding three consecutive
years,not liable to retire by rotation.
Necessary information pursuant to SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015, in respect of directors to be appointed,
re-appointed and change in terms of appointment at the ensuing Annual General Meeting are
given in the Annexure to the Notice convening the Annual General Meeting scheduled to be
held on August 24, 2023.
None of the Directors of your Bank are disqualified for being appointed
as Directors, as specified in Section 164 (1), Section 164 (2) and Rule 14(1) of Companies
(Appointment and Qualification of Directors) Rules, 2014.
CHANGE IN KEY MANAGERIAL PERSONNEL
There was no change in Key Managerial Personnel during the financial
year ended March 31, 2023.
On May 31, 2023, Mr. Joby M C, Joint General Manager, Head of
Inspection and Vigilance Department and Head of Internal Audit and Chief of Internal
Vigilance and a Key Managerial Personnel of the Bank has retired from the Bank on
attaining superannuation. The Board of Directors of the Bank has appointed Mr. Nandakumar
G, General Manager as Head of Inspection and Vigilance Department and Head of Internal
Audit and Chief of Internal Vigilance of the Bank w.e.f June 01, 2023.
Composition of Audit Committee
The Audit Committee of the Board is chaired by Sri M George Korah,
(Non-Executive Independent Director), who is a Chartered Accountant. The other members of
the committee are Sri. Pradeep M Godbole (Non-Executive Independent Director), Sri. R A
Sankara Narayanan (NonExecutive Independent Director) and Smt. Radha Unni (Non-Executive
Independent Director). The constitution of the Committee is in compliance with the
regulatory requirements. The terms of reference of the Audit Committee, are in accordance
with the SEBI (LODR) Regulations, 2015, Companies Act, 2013 and RBI guidelines.
Independent Directors
In terms of the definition of Independence of Director as prescribed
under Regulation 16(1) (b) of the SEBI (LODR) Regulations, 2015 and Section 149(6) of
Companies Act, 2013 and based on the confirmation/disclosures received from the Directors,
the following Directors are Independent Directors of the Bank as on the date of this
report
1. Sri.Salim Gangadharan (DIN 06796232)
2. Sri V J Kurian (DIN: 01806859)
3. Sri M George Korah (DIN: 08207827)
4. Sri. R A Sankara Narayanan (DIN: 05230407)
5. Smt. Radha Unni (DIN: 03242769)
6. Sri.Pradeep M Godbole (DIN 08259944)
The Bank has received declaration from all the Independent Directors
that they continue to meet the criteria of independence as provided under the Companies
Act, 2013 (the Act) and SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 and comply with the Code for Independent Directors as specified under
Schedule IV of the Act. In terms of the Companies (Creation and Maintenance of databank of
Independent Directors) Rules, 2019 read with the Companies (Appointment and Qualification
of Directors) Fifth Amendment Rules, 2019, the Independent Directors of the Bank have
enrolled his/ her name in the online databank of Independent Directors maintained by the
Government. Further all the independent directors have either qualified or being eligible
obtained exemption from the online proficiency self-assessment test as per Companies
(Appointment and Qualification of Directors) Rules, 2014.
The Independent Directors have also confirmed that they are not aware
of any circumstance or situation, which exists or may be reasonably anticipated, that
could impair or impact their ability to discharge their duties with an objective
independent judgement and without any external influence. In the opinion of the Board, the
Independent Directors possess the requisite expertise and experience and are the persons
of high integrity and repute. They fulfil the conditions specified in the Act and the
Rules made thereunder and are independent of the Management.
Women Directors
In terms of the provisions of Section 149 of the Companies Act, 2013
and Regulation 17 of the SEBI (LODR) Regulations
2015, the Bank has appointed Smt. Radha Unni (DIN: 03242769) as Woman
Director on the Board of the Bank.
Bank's policy on directors' appointment and remuneration including
criteria for determining qualification, positive attributes, independence of a director
and other matters provided under subsection (3) of Section 178.
The nomination policy of the Bank can be accessed at
https://www.southindianbank.com/userfiles/file/ nomination_policy.pdf
Criteria for appointment as a Director of the Bank:
The Nomination and Remuneration Committee of the Board shall identify
and ascertain the integrity, qualification, expertise and experience of the person who is
considered for being appointed/re-appointed as Director of the Bank and apply due
diligence in compliance with the Banking Regulation Act, 1949, Reserve Bank of India
directives on Fit & Proper Criteria, all other applicable provision of the Companies
Act, 2013, SEBI (LODR) Regulations, 2015 including any amendments from time to time and
Nomination Policy of the Bank.
Criteria for Determining Qualifications, Positive Attributes
a) The professional and personal ethics, integrity and track record.
b) Special knowledge or practical experience in Banking, accountancy,
agriculture and rural economy, co-operation, economics, finance, law, small-scale
industry, Information Technology, Payment & Settlement Systems, Human Resources, Risk
Management, Business Management or any other matter useful to the Banking Company in the
opinion of Reserve Bank of India.
c) Ability to provide insights and practical wisdom based on their
experience and expertise relevant to the Bank's line of business.
d) Details of his/her association with other Companies/ LLPs/ Firms
(including NBFC)
e) Details of substantial interest in other Companies/ LLPs/ Firms
(including NBFC).
f) Details of financial facilities, if any, availed from the Bank.
g) Details of default in the re-payment of loans, availed from the Bank
or any other Bank, if any
h) Commitment to enhancing stockholder value.
i) Ability to develop a good working relationship with members with the
Board and contribute to the working relationship with Senior Management of the Bank.
j) Whether he/she suffers from any of the disqualifications envisaged
under the provisions of Banking Regulation Act, 1949, Companies Act, 2013 and SEBI (LODR)
Regulations, 2015.
k) Any other factors as the Committee may deem fit and in the best
interests of the Bank and its stockholders.
Criteria for determining Independence of a director
The Criteria of Independence of a director is determined based on
conditions as laid down in the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. The
independent director shall at the first meeting of the Board in which he/she participates
as a director and thereafter at the first meeting of the Board in every financial year or
whenever there is any change in the circumstances which may affect his/her status as an
independent director, give a declaration that he/she meets the criteria of Independence.
REMUNERATION POLICY:
The Remuneration Policy for Whole-time Directors/Part- time Chairman,
Non-Executive Directors and Employees of the Bank:
The Bank has a Board approved Compensation Policy which deals with the
Compensation & Benefits of the Whole-time Directors/Part-time Chairman, Non-Executive
Directors and Employees of the Bank
The objectives of the Compensation Policy of the Bank inter-alia
includes, to provide a fair and persistent basis for motivating, inspiring and rewarding
the employees appropriately, according to their jobs/role size, performance,
accomplishments, contribution, skill, aptitude and competence to implement standards on
sound compensation practices and incentives and to provide effective governance of
compensation payable to the WTDs/CEO and other staff, alignment of compensation with
prudent risk taking and effective supervisory oversight. The disclosure requirement of the
remuneration is separately provided in "Disclosure under Basel III norms."
Remuneration of MD & CEO and Material Risk Takers:
The Board approved Compensation Policy deals with the Compensation
& Benefits of the Whole-time Directors/ MD & CEO. The remuneration of the
Whole-time Directors/MD & CEO is recommended by the Nomination & Remuneration
Committee (NRC) to the Board for approval after considering the factors prescribed under
the Compensation Policy. The Compensation Policy factors the guidelines issued by the RBI
from time to time.
The Board considers the recommendations of NRC and approves the
remuneration, with or without modifications, subject to shareholders' and regulatory
approvals. The remuneration payable to Whole-time Directors/MD & CEO is subject to
prior approval of the Reserve Bank of India (RBI). Therefore, the remuneration or any
revision in remuneration to Whole-time Directors/MD & CEO is payable only after
receipt of the approval from RBI.
The compensation paid out to the referred functionaries is divided into
two components:
The fixed compensation is determined based on the relevant factors such
as industry standards, the exposure, skill sets, talent and qualification attained by the
official over his/her career span and adherence to statutory requirements. All the fixed
items of compensation, including the perquisites, will be treated as part of fixed pay.
Perquisites that are reimbursable would also be included in the fixed pay so long as there
are monetary ceilings on these reimbursements. Contributions towards
superannuation/retirement benefits will also be treated as part of fixed pay.
The variable compensation for Whole Time Directors, Managing Director
& Chief Executive Officer and Material Risk Takers is fixed based on organizational
performance (both business-unit and firm-wide) and KPAs set for the official. The
organization's performance is charted based on Performance Scorecard which takes into
account various financial indicators like revenue earned, cost deployed, profit earned,
NPA position and other intangible factors like leadership and employee development. The
Performance Parameters provides a mix of Financial and Non-Financial, Quantitative and
Qualitative Metrics. The variable pay is paid in the form of a mix of cash and share-
linked instruments. While considering/ recommending the variable pay in respect of
Managing Director & CEO,
MRTs and Whole Time Directors, serious supervisory and regulatory
observations (if any) shall be factored.
Risk, Control and Compliance Staff
Members of staff engaged in financial and risk control, including
internal audit, are compensated in a manner that is independent of the business areas they
oversee and commensurate with their key role in the Bank. The total fixed and variable
compensation paid out to the employees in the Risk Control and Compliance Function is
decided independent of business parameters.
Other Categories of the Staff:
For the other employees, the Board, based on the recommendation of the
NRC may devise appropriate compensation structure. The compensation paid to other
employees that include Award Staff, Officers coming under Scale I to IV and executives
coming under Scale V to VII is fixed based on the periodic industry level settlements with
Indian Banks Association. The variable compensation paid to employees is based on the
Performance Linked Incentive Scheme, which has been formulated on the basis of performance
parameters set in Performance Management System.
Limit on Variable pay and Deferred Compensation:
As per the compensation policy of the Bank, the compensation structure
for the whole-time directors/ Chief Executive Officers / Material Risk Takers (MRTs)of the
Bank is divided into Fixed Pay and Perquisites and Variable pay.
Fixed Pay and Perquisites
Based on the recommendations of the Nomination and Remuneration
Committee, and subject to the approval of Reserve Bank of India (for MD & CEO and
Executive Directors), Board shall fix the fixed portion of compensation payable which is
reasonable, taking into account all relevant factors including adherence to statutory
requirements and industry practice.
Variable Pay
In order to have a proper balance between the cash and share-linked
components in the variable pay, the variable pay is to be structured in the form of
share-linked instrument (including Cash-linked Stock Appreciation Rights (CSARs)), or a
mix of cash and share- linked instruments subject to the recommendation of the Nomination
and Remuneration Committee of the Board. Only in cases where the compensation by way of
share- linked instruments is not permitted by law/regulations,
the entire variable pay can be in cash to be exercised. The assessment
of the variable pay will be based on 'Key Performance Indicators' (KPI) achievement of
respective whole-time directors/ Chief Executive Officers / Material Risk Takers (MRTs).
Limit on Variable Pay:
A. For Whole-Time Directors and Chief Executive
Officers
i. In compliance with the RBI Guidelines and other applicable rules and
regulations at least 50%, should be variable and paid on the basis of individual,
business-unit and firm-wide measures that adequately measure performance. The total
variable pay shall be limited to a maximum of 300% of the fixed pay (for the relative
performance measurement period).
ii. In case variable pay is up to 200% of the fixed pay, a minimum of
50% of the variable pay; and in case variable pay is above 200%, a minimum of 67% of the
variable pay should be via noncash instruments.
iii. In the event that an executive is barred by statute or regulation
from grant of share-linked instruments, his/ her variable pay will be capped at 150% of
the fixed pay, but shall not be less than 50% of the fixed pay.
iv. The deterioration in the financial performance of the Bank should
generally lead to a contraction in the total amount of variable compensation, which can
even be reduced to zero.
B. For Material Risk Takers (MRTs)
i. In compliance to the RBI Guidelines and other applicable rules &
regulations 50% of total pay for all MRTs should be variable pay and paid on the basis of
individual, business-unit and firm-wide measures that adequately measure performance.
ii. 50% of the variable pay should be via noncash instruments.
iii. The deterioration in the financial performance of the Bank should
generally lead to a contraction in the total amount of variable compensation, which can
even be reduced to zero.
The Board will from time to time specify the Material
Risk Takers (MRTs).
a. Deferral of Variable Pay
(i) For senior executives, including WTDs, and other employees who are
MRTs, a minimum of 60% of the total variable pay must invariably be under deferral
arrangements. Further, if cash component is part of variable pay, at least 50% of the cash
bonus should also be deferred.
(ii) However, in cases where the cash component of variable pay is
under C 25lakh, deferral requirements is not applicable.
b. Period of Deferral Arrangement
The deferral period should be for a period of three years. This would
be applicable to both the cash and non-cash components of the variable pay arrangements.
c. Vesting:
Deferred remuneration should be spread out over the course of the
deferral period on a pro rata basis as follows:
not more than 33.33 % of the total deferred variable pay should
vest at the end of first year.
Further, not more than 33.33 % of total deferred variable pay
should vest at the end of second year.
Additionally, vesting should not take place more frequently than on a
yearly basis to ensure a proper assessment of risks before the application of ex-post
adjustments.
In case of employee's death or permanent disability, whole of the
deferred variable pay (Cash component) shall immediately vest on the employee's legal
heirs, or the employee, as the case maybe.\
Share-linked Instruments
Such instruments shall be included as a component of variable pay.
Norms for grant of share-linked instruments should be framed by banks in conformity with
relevant statutory provisions and should form part of the Bank's compensation policy. The
details of share-linked instruments granted should also be disclosed in terms of the
disclosure requirements stipulated in these Guidelines. Share-linked instruments should be
fair valued on the date of grant by the Bank using Black-Scholes model in compliance with
the RBI guidelines.
The Variable pay assessment should be considering the following
parameters
The HR Dept. in consultation with CFM Dept. has to recommend
that amount of Variable pool of the Bank each year to the Nomination and Remuneration
Committee.
While recommending the variable Pool HR Dept. should establish
the linkage between the variable pool at the Bank level and the performance of the Bank
vis-a-vis its financials and risk assumed.
Further HR Dept. should also detail the linkage between
performance of various units/ functions/ divisions to performance of variable pool.
There should be a prudent basis for distribution of the overall
variable pool between various units/ functions / divisions including various control and
assurance functions.
Performance thresholds as defined and assessed by HR Dept. to be
attained for being eligible for variable compensation.
The same to be included and form part of the Performance Linked
Incentive scheme.
Malus / Clawback
The deferred compensation should be subject to malus/ clawback
arrangements in the event of subdued or negative financial performance of the Bank and/or
the relevant line of business in any year. The Bank has identified a set of situations
which require the invocation of the malus and clawback clauses that may be applicable as
detailed below:
i) Applying of Malus / Clawback arrangement on entire variable pay on
occurrence of the following Situations:
Identified fraud / misconduct by the executive (whole-time
directors, Chief Executive Officers / Material Risk Takers (MRTs)) pertaining to the
corresponding period for which the clause to be applied.
ii) Applying of Malus / Clawback arrangement on unvested portion of
deferred variable pay on occurrence of the following situation:
Reporting of operating loss or more than 50% fall in operating
profit in any year
iii) Applying of Malus clause on unvested portion of deferred variable
pay on occurrence of the following situation:
Wherever the assessed divergence in Bank's provisioning for
Non-Performing Assets (NPAs) or asset classification exceeds the prescribed threshold for
public disclosure as detailed below: (As referred in RBI circular No. DBR.BP.BC.
No.32/21.04.018/2018-19 dated April 1, 2019, as amended from time to time),
a. the additional provisioning for NPAs assessed by RBI exceeds 10 per
cent of the reported profit before provisions and contingencies for the reference period,
and
b. the additional Gross NPAs identified by RBI exceed 15 per cent of
the published incremental Gross NPAs for the reference period
Further, in such situations, no proposal for increase in variable pay
(for the assessment year) shall be entertained. In case the Bank's post assessment Gross
NPAs are less than 2.0%, these restrictions will apply only if criteria for public
disclosure are triggered either on account of divergence in provisioning (clause (a)) or
both provisioning (clause (a) and asset classification (Clause (b)).
Any other act detrimental to the interest of the Bank including and not
restricted to violation of Code of Conduct, violation of Framework for dealing with
Conflict of Interest, violation of rules and regulations of the Bank, failure to discharge
fiduciary and regulatory duties - and in respect of which the Bank would reserve the right
to institute appropriate civil, criminal or other proceedings at the risks, costs and
consequences of such individuals.
As part of the criteria for the application of malus and clawback, the
following period during which malus and/or clawback can be applied will be 36 months from
application of the clause. covering at least deferral and retention periods (a period of
time after the vesting of instruments which have been awarded as variable pay during which
they cannot be sold or accessed)
In case, the MRT(s) resigns, retires or takes early retirements or has
been terminated, the above provisions of clawback shall apply subject to due process for
recovery of amounts adjudged.
Guaranteed Bonus
Guaranteed bonus is not consistent with sound risk management or the
'pay for performance' principles and should not be part of the compensation plan.
Therefore, guaranteed bonus should only occur in the context of hiring new staff as
joining/sign-on bonus and be limited to the first year. Such bonus will neither be
considered part of fixed pay nor part of variable pay. Further, banks will not grant
severance pay other than accrued benefits (gratuity, pension, etc.) except in cases where
it is mandatory under any statute.
Hedging
The Bank will not provide any facility or funds or permit employees to
insure or hedge their compensation structure to offset the risk alignment effects embedded
in their compensation arrangement. To enforce the same, the Bank will establish
appropriate compliance.
Remuneration of Chairman:
The NRC recommends the remuneration of the nonexecutive Independent
Chairman to the Board which is considered and approved by the Board in the same manner
subject to Shareholders' and regulatory approvals. The NRC, while recommending the
remuneration of the part-time Chairman considers the Function, Role and Responsibilities
of the Chairman and Regulatory guidelines as applicable etc. The remuneration payable to
the Chairman is subject to prior approval of the Reserve Bank of India (RBI). Therefore,
the remuneration or any revision in remuneration of the Chairman is payable only after
receipt of the approval from RBI.
Remuneration of Non-Executive Directors (NEDs):
The NEDs are paid sitting fees for attending each meeting of the Board
of Directors or any committee thereof as approved by the Board, within the permissible
limit prescribed under the Companies Act, 2013, SEBI (LODR) Regulations, 2015 and other
regulatory guidelines, as amended from time to time. The Board while recommending the
change in the sitting fees considers various factors like size and complexity of
organization, comparison with the peer Banks and Regulatory guidelines as applicable etc.
while recommending the change in the sitting fees to the Board.
Policy on Board Diversity:
Pursuant to SEBI (Listing Obligations and Disclosure Requirements),
Regulations, 2015 to ensure compliance with the applicable provisions, the Bank has
devised a policy on Board diversity to ensure adequate diversity in its Board of
Directors. The Bank believes that diversity underpins the successful operation of an
effective Board and embraces diversity as a means of enhancing the business. With a view
to achieve sustainable and balanced development, the Bank sees increasing diversity at the
Board level as an essential element in supporting the attainment of its strategic
objectives. A diverse Board includes and makes good use of differences in the skills,
regional and industry experience, background, race, gender and other qualities of
Directors.
Policy on Board Diversity of the Bank mainly depends on the
qualifications for appointment of Directors of the Bank as contained in the Banking
Regulation Act,1949 and satisfying the Fit and Proper Criteria for directors as per the
regulatory requirement of RBI.
The Bank continuously seeks to enhance the effectiveness of its Board
and to maintain the highest standards of corporate governance and recognizes and embraces
the benefits of diversity in the Board room. Diversity is ensured through consideration of
a number of factors, including but not limited to skills, regional and industry
experience, background and other qualities. In formulating its perspective on diversity,
the Bank also takes into account factors based on its own business model and specific
needs from time to time.
The NRC has the responsibility to lead the process for Board
appointments and for identifying and nominating, candidates for appointment to the Board.
The benefits of diversity continue to influence succession planning and continue to be the
key criteria for the search and nomination of Directors to the Board.
The Board appointments are based on merit and candidates will be
considered against objective criteria, having due regard for the benefits of diversity on
the Board, including gender. The policy of Board Diversity is displayed in Bank's website:
https://www.southindianbank.com/userfiles/file/
rupay/disclosure/policy_on_board_diversity.pdf
Familiarisation Programme
The Bank had conducted various sessions during the financial year to
familiarize the Independent Directors of
the Bank, including various topics on Banking Industry, business model,
Corporate Law, Risk management system and Cyber Security. Further, the Directors are
encouraged to attend the training programmes being organized by various regulators/
bodies/institutions on above matters. The details of such familiarization programmes are
displayed on the weblink of the Bank. https://www.
southindianbank.com/userfiles/file/disclosure_on_
familiarisation_programme_for_independent_directors. pdf
Board Level Performance Evaluation
The Companies Act, 2013 and SEBI (LODR) Regulations, 2015 stipulates
the performance evaluation of the Directors, MD & CEO, Chairman, Board and its
Committees. Considering the said provisions, the Bank has devised the process and the
criteria for the performance evaluation which has been recommended by the Nomination &
Remuneration committee and approved by the Board.
The process for formal annual performance evaluation is as under:
> Committee of Independent Directors at their separate meeting
evaluates the performance of NonIndependent Directors, MD & CEO, Chairman of the Bank
and the Board as a whole.
> The Board evaluates the performance of the Independent Directors,
Non-Executive Directors, Chairman and MD & CEO (excluding the director being
evaluated) and submit its report to the Nomination & Remuneration committee.
> The Board and Nomination & Remuneration Committee evaluates
the fulfilment of the independence criteria as specified in the regulations and their
independence from the management.
> The Board evaluates the performance of Board level committees.
> Nomination & Remuneration Committee evaluates/ reviews the
performance of each Director and recommends the appointment/re-appointment/ continuation
of Directors to the Board. Based on the recommendation of Nomination & Remuneration
Committee, Board will take appropriate action.
The criteria for performance evaluation, inter-alia, include the
following:
Performance Evaluation of Non-Executive Directors, MD & CEO and
Chairman
Participation at Board/Committee Meetings, Managing Relationship,
Knowledge and skill, Personal attributes, Compliance and Corporate Governance; Leadership;
Strategy Formulation, Strategy Execution, Financial Planning/ Performance, Relationships
with the Board, Human Resource Management and Succession Planning, Personal Qualities;
Resources; Conduct of Meetings.
Performance Evaluation of Board
Composition and Diversity; Strategic Foresight, Value Creation, Process
and Procedures, Oversight of the Financial Reporting Process and Internal Controls,
Oversight of Audit Functions, Corporate Governance, Corporate Culture, monitoring of
business activities, Understanding of the business of the Bank and Regulatory environment;
Contribution to effective corporate governance and transparency in the Company's
Operations; Deliberations/ decisions on the Company's strategies, policies, plans and
guidance to the Executive Management.
Performance Evaluation of the Board Level Committees
The performance and effectiveness of the Committee; Frequency and
duration; Spread of talent and diversity in the Committee; Understanding of regulatory
environment and developments; Interaction with the Board.
Outcome of Performance Evaluation
An annual performance evaluation of the Board, Committees of the Board
and the individual members of the Board was conducted in June, 2022 as per the aforesaid
process and the report on the evaluation were presented at the meeting of the NRC and the
Board of Directors. The Directors expressed their satisfaction with the evaluation
process.
The feedback of the Board, post completion of the exercise of
performance evaluation of the Board and Committees of the Board were as under:
Need to focus on strategic ideas than managing micro issues.
Concentrate on advanced technology to go more and more digital.
Suggest to have more meetings in matters where urgent actions
are required.
EMPLOYEE STOCK OPTION SCHEME:
The SIB ESOS 2008 Employee Stock Option Scheme ('the Scheme') provides
for grant of stock options on equity shares of the Bank to employees and Managing Director
&CEO of the Bank. The Scheme is in compliance with Securities and Exchange Board of
India (Share Based Employee Benefits and sweat equity) Regulations, 2021. The Bank
followed Black Scholes model for calculating fair value of option to account for its stock
based employee compensation plans as per the Guidelines for all the options granted till
the accounting period ended 31 March, 2023. The fair value thus arrived were being
recognised as expense beginning with the accounting period for which approval has been
granted as per RBI circular No. RBI/2021- 22/95 DOR.GOV.REC.44/29.67.001/2021-22 dt.
August 30, 2021. Till March 2023, 5,69,80,858 stock options were vested, out of which
2,89,49,199 stock options were exercised by eligible employees. The money realized due to
exercise of the said options was C 42,74,54,572.64 and consequently 2,89,49,199 shares of
C 1/- each have been allotted to the concerned employees/legal heirs.
A Certificate of the Secretarial Auditors pursuant to Regulation 13 of
SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 will be placed to
the AGM for the scrutiny of Shareholders. The total options granted under twelve phases of
SIB ESOS 2008 works out to 2.97% of the paid-up share capital of the Bank as at March 31,
2023. The scheme has generated the intended motivation amongst the staff. There is no
material change in the scheme during the FY 2022-23 and the scheme is in compliance with
the applicable regulations. The scheme was last modified at the AGM held on 18.08.2021 in
line with the new regulations. Statutory disclosures regarding details of the stock
options granted, vested, exercised, forfeited and expired during the year under review is
hosted on the website of the Bank and can be viewed at
https://www.southindianbank.com/content/annual- report-financial-year-2022-to-2023/3978
AUDITORS
a) Statutory Auditors:
The shareholders at its 93rd Annual General Meeting held on August 18,
2021, has appointed M/s. CNK & Associates LLP, Chartered Accountants, Mumbai (Firm
Registration Number: 101961 W/W-100036) and has appointed M/s K Venkatachalam Aiyer &
Co, Chartered Accountants, Kochi (Firm Registration Number 004610S) as the Joint Central
Statutory Auditors of the Bank at its 94th Annual General
Meeting held on July 12, 2022 for a continuous period of 3 years.
Accordingly, the appointment of M/s. CNK & Associates LLP, Chartered Accountants will
be until the conclusion of the 96th Annual General Meeting and appointment of M/s K
Venkatachalam Aiyer & Co, Chartered Accountants will be until the conclusion of the
97th Annual General Meeting of the Bank.
For the year ended March 31, 2023, fees paid/payable to the Joint
Statutory Central Auditors M/s. CNK & Associates LLP Chartered Accountants and M/s K
Venkatachalam Aiyer & Co Chartered Accountants are as follows:
( ' in lakh)
Fee paid# |
Amount |
Limited
Review |
90.00 |
Year end
audit and ICFR |
92.00 |
Tax
Audit, LFAR and other certifications |
18.00 |
Total |
200.00 |
# Excluding out of pocket expenses
There is no qualification or adverse remark in Auditors' Report. There
is no incident of fraud requiring reporting by the Auditors under Section 143(12) of the
Companies Act, 2013.
Secretarial Auditors and Secretarial Audit Report:
Pursuant to Section 204 of the Companies Act, 2013, the Bank had
appointed M/s SVJS & Associates, Practicing Company Secretaries, Kochi as its
Secretarial Auditors to conduct the secretarial audit of the Bank for the FY 202223. The
Bank has provided all assistance and facilities to the Secretarial Auditor for conducting
their audit. The Report of Secretarial Auditor for the FY 2022-23 is annexed to this
report as Annexure D. There are no reservations, adverse remark or disclaimer in the
Secretarial Audit Report. No offence of fraud was reported by the Secretarial Auditor of
the Bank.
Pursuant to circular no. CIR/CFD/CMD1/27/2019 dated February 08, 2019,
issued by SEBI and Regulation 24A of the SEBI (LODR) Regulations, 2015 the Bank has
obtained Secretarial Compliance Report from Practicing Company Secretaries on compliance
of all applicable SEBI Regulations and circulars/ guidelines issued thereunder and the
copy of the Secretarial Compliance Report was submitted with the Stock Exchanges.
INTERNAL CONTROL AND AUDIT/INSPECTION
Internal Control and their Adequacy
The Bank has put in place extensive internal controls and processes to
mitigate operational risks, which includes maker checker authentication of CBS
transactions, centralized processing of opening and modifications of CASA accounts and
loan accounts, centralized sanctioning of loan facilities, etc.
Various Preventive controls viz., Dual custody for cash, gold and other
security items, maintenance of daily control registers for security items,
finger-scan-authentication for processing of transactions in CBS in addition to login
passwords, stringent guidelines on password usage, STP processes between CBS and payment
interface systems for transmission of messages etc. are in place.
As per the requirement of Companies Act, 2013, the Bank has formulated
an Internal Financial Controls framework. Risk and Controls associated with each process
in the Bank are documented under the Internal Financial Controls Framework. Inspection and
Vigilance Department plays a significant role in testing the control effectiveness for
each process under the framework.
The Internal Audit function provides independent assurance to the Board
of Directors and Senior Management on the quality and effectiveness of the Bank's internal
control, risk management and governance systems and processes, thereby helping the Board
and Senior Management to protect the Bank and its reputation.
Audit/Inspection
The Bank has an Inspection & Vigilance department which is
responsible for independently evaluating the adequacy and effectiveness of all internal
controls, risk management systems, governance systems and processes. The Department is
manned by appropriately qualified personnel to handle the Risk Based Internal Audit,
Management Audits, Information Systems Audit, and Special audits including Investigations.
All the internal audits are conducted based on the RBI direction in relation to conducting
risk based internal audit, and concurrent audit of branches and identified critical
processes of the branches.
Head of Internal Audit & Vigilance is directly reporting to MD
& CEO.
Internal inspectors conduct inspection at regular intervals and the
inspection reports are placed to Audit Committee at Executive level (Sub Committee of
Audit Committee of Executives (SACE)/ Audit Committee of Executives - ACE) for review,
which is overseen and controlled by Board Level committee (Audit Committee of Board -
ACB).
Audit of Branches
All the branches are subjected to Risk Based Internal Audit (RBIA).
This audit is conducted at periodic intervals based on the risk perception. All the audits
are conducted based on predefined check points and all the operational areas are covered
under this audit. Credit audit is also conducted as part of Risk Based internal audit
where aggregate credit exposure of a borrower is C 5 crore and above.
In addition to RBIA of branches, the Bank has concurrent audit system,
which covers selected Branches, conducted by qualified Chartered Accountants/retired
officers. The selection of branches for concurrent audit is done in such a way that it
covers branches having substantial advance or deposit, entire specialized Branches such as
'B' Category Branches, Corporate Branches etc., and all poorly rated branches as per the
latest rating awarded.
In addition to the concurrent and risk based internal audits, the
branches are subjected to Surprise Inspection, Flash Inspection, IS Audit, Revenue
Inspection, Self-Audit, Gold Loan Inspection/ Asset Verification and compliance inspection
during the financial year.
Separate monitoring team - Inspection Monitoring Group (IMG) closely
monitors various inspections/audits at the Branches. There are six IMGs who are reporting
to Head of IMG. These Monitoring groups are assigned the task of ensuring the compliance
and closure of the inspection report of the branches. During the course of inspections,
serious issues if any concerning regulatory guidelines, legal requirements and operational
processes are found, these are escalated to the Management for timely action.
All the branch related audit are presently automated through system
where reporting, risk rating, compliance and closure of the reports are done through
software application which provides the Bank with an overall control on various audits
conducted in the branches. Continuous improvements are made to the application to automate
several activities at HO and digitize the records in a single application.
Audit of Departments and critical process
Management Audit of Regional Offices (RO) and Departments are conducted
at periodical intervals based on the risk perception.
In addition to the management audit conducted by inspection department,
all the critical operations such as International Banking Division, Treasury Department,
Credit Department and Centralized Processing Centers, etc., are subjected to concurrent
audit by independent Chartered Accountant firms. All these reports are reviewed by Sub
Committee of Audit Committee of Executives (SACE) and corrective steps are taken to
rectify the lapses/ irregularities, if any, pointed out in such inspections.
Information System Audit of CBS and major applications are conducted by
Internal Audit Department as well as by external audit firm. The IS audit team also
undertakes a general scrutiny of the efficiency of the information system at branch level
and its rating so as to enhance the internal controls.
New product/process whenever introduced in the Bank is reviewed by
Inspection Department and recommendations are made for necessary controls/improvements for
deficiencies / gaps observed in existing internal controls.
Inspection Division also carries out independent evaluation of Bank's
internal financial controls in terms of Companies Act, 2013 and also the adequacy of
internal financial controls with reference to the Financial Statements.
EXPLANATION FOR AUDITOR'S COMMENT IN THE REPORT
The Statutory Auditor's Report for the year 2022-23 does not contain
any qualification
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of Section 129(3) of the Companies
Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014 and other applicable
provisions of the Banking Regulation Act,1949, the Bank has prepared its Consolidated
Financial Statement including its wholly owned subsidiary Company M/s. SIB Operations and
Services Limited, which is forming part of this Annual report. The financial position and
performance of its subsidiary Company is given in Form AOC-1, the statement containing
salient features of the financial statements of the subsidiary Company.
In accordance with third proviso to Section 136(1) of the Companies
Act, 2013, the Annual Report of the Bank, containing therein its Standalone and the
Consolidated Financial Statements has been hosted on its website, (www.
southindianbank.com). Further, as per fourth proviso to the said Section, the Audited
Annual Accounts of the said Subsidiary Company of the Bank, considered as part of the
Consolidated Financial Statements have also been hosted on the Bank's website,
(www.southindianbank.com). The said documents have been hosted on the website of the
Subsidiary Company of the Bank also, in compliance with the said Section. The
documents/details available on the Bank's website (www.southindianbank.com) will also be
available for inspection by any Member at its Registered Office. Further, pursuant to the
provisions of Accounting Standard ('AS') 21, Consolidated Financial Statements notified
under Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies
(Accounts) Rules, 2014 issued by the Ministry of Corporate Affairs, the Consolidated
Financial Statements of the Bank along with its Subsidiary Company for the year ended
March 31, 2023 forms part of the Annual Report.
CORPORATE GOVERNANCE
A separate report detailing Corporate Governance as required under
applicable regulations of the SEBI (LODR) Regulations 2015 and a certificate from M/s SVJS
& Associates Company Secretaries, Secretarial Auditors of the Bank, are annexed to
this Report.
Annual Return/Extracts of Annual Return
Pursuant to sub-section 3(a) of Section 134 and subsection (3) of
Section 92 of the Companies Act, 2013, read with Rule 11 and 12 of the Companies
(Management and Administration) Rules, 2014, copy of Annual Return as at March 31,2023 in
Form No. MGT-7 is hosted on the website of the Bank and can be viewed https://www.
southindianbank.com/content/annual-report-financial- year-2022-to-2023/3978
Business Responsibility and sustainability Reporting (BRSR)
Environmental, Social and Governance (ESG) matters have become
increasingly relevant for companies across the Globe. Being in financial sector, the Bank
has focused on promotion of sustainable and environmentally friendly assets by identifying
and recognising ESG risks viz-a- viz opportunities.
As part of developing a sustainable financing policy and for
implementing ESG benchmarks in lending and also
for addressing issues in Environmental risk management and governance,
the Bank has formulated ESMS policy (for governing Lending standards) and ESG Policy (for
addressing other ESG issues). During FY 2022-23 the Bank has taken following steps in this
regard.
Corporate Social Responsibility Committee of the Board is made
responsible for the overseeing Environmental, Social and Governance (Reporting &
review) activities of the Bank under the ESG framework.
For effective Reporting of BRSR and to review the ESG practices
at the Bank, Board has appointed a Professional agency for assisting Business
Responsibility and Sustainability Reporting.
The Bank has conducted a training programme for the Board of
Directors and Senior Management
Further, in order to pass a message throughout the entire
organization, the Bank has conducted training programme and a clarification session with
stakeholder Departments to ensure that the ESG guidelines are followed in letter and
spirit.
The Bank has introduced a new Term Deposit Product called
"Green Deposit". Green Deposit is a fixed-term deposit for investors looking to
invest their surplus cash reserves in environmentally friendly projects. These deposits
provide investors a platform to fulfil their sustainability goals by investing surplus
cash balances in environmentally beneficial projects. Social Media Campaigns were launched
for popularizing Green Deposit and ESG Mutual Funds.
Being a Bank, a sustainable ESG complied lending policy is a
base for us to ensure that we equip ourselves for a future oriented and sustainable
lending, giving more focus on lending toward projects which are more environmental
friendly. In this regard Board has approved Environmental and Social Management System
(ESMS) policy for focusing on environment friendly lending.
MD & CEO has been authorized as the designated Director for
implementing ESG in the Bank for BRSR reporting.
The Bank has published in its fully dedicated Students Economic
Forum (a monthly magazine published by Bank) on the Topic "Business Responsibility
and Sustainability Reporting, reflecting the subject matter of ESG & BRSR.
The Board has constituted an Executive Level Committee for ESG
implementing in the Bank. Executive Level Committee will be responsible for supervision
and implementation of ESG activities in the Bank.
Human Resources Department has conducted training on "Human
Rights under ESG framework in India" in Bank's E learning platform viz., I-learn, for
familiarizing concept of ESG among all employees.
Tie-up arrangement with authorized E-waste vendors were made for
better e-waste management.
Preventive wellness programs / campaigns / webinars through tie
ups with Hospitals and other organizations has been done by Bank for employees.
The Bank has initiated steps to provide provision for Solar
power generation in New Buildings under construction, wherever possible. In this regard,
the Bank has issued work order for installation of On- Grid Solar Power Plants of 50 kW
each at Platinum Jubilee Building in Ayyanthole and Market Road Building in Ernakulam.
Installed 25 kW Solar Power Plant in Kannur RO Building.
As part of Light Change Project, the Bank has replaced 500
numbers of 2X2 Lights in HO and Annex Buildings to more power saving LED Lights. In
continuation to the same, approval has been given for changing 628 lights in Kakkanad
Administrative Building, Block I, to LED. Almost 50% of the work is completed.
The existing practice of using flex vinyl material for
Signboards has been discontinued. From now on, the new signboards shall be made with ACP
(Aluminium Composite Panel) which is more durable and environment friendly. New
arrangement has been made with vendors providing service on Pan India basis.
As a green initiative, around 350 indoor plant saplings were
distributed among HO and Annex Building staffs as part of the New Year Celebrations.
The Bank has extended financial assistance under CSR for
construction of RO Plant in schools.
As stipulated in Listing Regulations, the Business
Responsibility and sustainability Report describing the
initiatives taken by the Bank from environmental, social
and governance perspective is attached as part of the
Annual Report as Annexure-E.
Dividend Distribution Policy
In accordance with the Regulation 43A of Securities and Exchange Board
of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Bank has
formulated a Dividend Distribution Policy and the Policy is hosted on the website of the
Bank and can be viewed.
( https://www.southindianbank.com/userfiles/file/
dividend%20distribution%20policy_17.pdf)
Subsidiary Companies/Joint Ventures or Associate Companies
As on March 31, 2023, the Bank has one unlisted wholly owned subsidiary
- M/s. SIB Operations and Services Limited, which was incorporated on 28th May, 2021,
M/s SIB Operations and Services Limited is a wholly owned Non-Financial
Subsidiary Company of the South Indian Bank Ltd. The RBI has accorded the final approval
on 25th March, 2021 for setting up the Subsidiary Company and the Company was incorporated
on 28th May 2021 to cater to the operational needs of the South Indian Bank Ltd. Its
authorized Capital as on 31st March, 2023 is '2 crores and the Issued and Paid up Capital
is C 50 lakh . The company is providing exclusive services to the Bank in the operational
areas of Tele calling, Business Development, Data Entry Operations, I.T. Support and other
services permitted by Reserve Bank of India. The Subsidiary Company has reported a profit
of C 22.04 lakhs as on March 31, 2023.
There are no companies which have ceased to be bank's subsidiaries,
joint ventures or associate companies during the Financial year 2022-23.
Mr. M George Korah (DIN: 08207827)), Independent Director of the Bank,
Mr. Murali Ramakrishnan (DIN: 01028298), MD & CEO of the Bank, Mr Thomas Joseph K (DIN
09186452), EVP and Chief Business Officer of the Bank and Mr. Chakkakkal Abraham John
(DIN: 09186451) , Deputy General Manager of the Bank are directors of SIB Operations and
Services Limited.
Except Mr. M George Korah (DIN: 08207827), no other directors in the
Board of SIB Operations and Services Limited were drawing any remuneration / sitting fee
from the subsidiary company. Mr. M George Korah (DIN: 08207827), has received ' 2,00,000/-
as sitting fee for attending the Board meeting of the subsidiary company.
The Board of Directors has formulated a policy for determining
'material' subsidiaries pursuant to the provisions of the Listing Regulations. The same is
displayed on the website of the Bank( https://www.
southindianbank.com/content/policy-for-determining-
material-subsidiaries/781 )
Related Party Transactions
The Board of Directors has formulated a policy on materiality of
Related Party Transactions and also on dealing with Related Party Transactions pursuant to
the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. The same is
displayed on the website of the Bank https://www.southindianbank.com/userfiles/
file/rupay/disclosure/policy%20on%20materiality%20
of%20and%20dealing%20with%20relatedparty%20 transactions.pdf
Since the related party transactions are in the ordinary course of
business and on an arm's length basis and not material AOC2 is not applicable.
Material Changes and Commitment Affecting Financial Position of the
Bank
There are no material changes and commitments, affecting the financial
position of the Bank which has occurred between the end of the financial year of the Bank
i.e. March 31, 2023 and the date of the Directors' report i.e. July 31, 2023.
Significant and material orders passed by Regulators
During the year under review, there are no significant and material
orders passed by the Regulators or Courts or Tribunals impacting the going concern status
and Bank's operations in future.
Maintenance of Cost Records
Being a Banking Company, the Bank is not required to maintain cost
records as per sub-section (1) of Section 148 of the Companies Act, 2013.
Details in respect of frauds reported by auditors
There is no fraud reported by auditors under sub-section (12) of
section 143 of the Companies Act, 2013 other than those which are reportable to the
Central Government.
Compliance to Secretarial Standards
The relevant Secretarial Standards issued by the Institute of Company
Secretaries of India (ICSI) related to the Board Meetings and General Meeting have been
complied with by the Bank.
Strictures and Penalties
During the last three financial years, there were no penalties or
strictures imposed on the Bank by the SEBI or any of the stock exchanges and/or any other
statutory authorities on matters relating to capital market.
Deposits
Being a Banking Company, the disclosures required as per Rule 8(5) (v)
& (vi) of the Companies (Accounts) Rules, 2014, read with Section 73 and 74 of the
Companies Act, 2013 are not applicable to the Bank.
Confirmation with respect to Insolvency and Bankruptcy Code, 2016
Particulars |
Details |
The
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 |
NIL |
The
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.] |
NIL |
Management Discussion and Analysis Report
This has been dealt with in a separate section in the Annual Report.
Particulars of Loans, Guarantees or Investments
Pursuant to Section 186 (11) of the Companies Act, 2013, the provisions
of section 186 of Companies Act, 2013, except subsection (1), do not apply to a loan made,
guarantee given or security provided or investment made by a banking company in the
ordinary course of business.
Directors' Responsibility statement
Pursuant to the requirement under Section 134(5) of the Companies Act,
2013, with respect to the Director's Responsibility Statement, it is hereby confirmed
that:
a) in the preparation of the annual accounts for the financial year
ended March 31, 2023, 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 judgments
and estimates that are reasonable and prudent so as to give a true and
fair view of the state of affairs of the Bank at the end of the financial year 2022-23 and
of the profit 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 and other applicable laws for safe guarding the assets of the Bank and
for preventing and detecting fraud and other irregularities;
d) the Directors had prepared the annual accounts for the financial
year ended on March 31, 2023, on a going concern basis;
e) 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; and
f) the Directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were adequate and operating
effectively.
ACKNOWLEDGEMENTS
The Board of Directors places on record its gratitude to the Reserve
Bank of India, Securities and Exchange Board of India, Government of India, Government of
Kerala and all other State Governments where the Bank operates, other Government and
Regulatory Authorities, including stock exchanges, where the Bank's securities are listed
and correspondent Banks for their strong support and guidance, during the year. The Board
also places on record its gratitude to the Bank's securityholders and customers for their
continued support, patronage and goodwill. The single most important pillar of any
Institution is its personnel, more so in the case of a service entity like a Bank, the
Board acknowledges this fact and thank all of them for their diligence and loyalty towards
the Bank. The Board expresses its sincere appreciation for the dedicated services rendered
by officers and employees of the Bank at all levels.
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