Bandhan Bank Ltd
Chairman Speech
"Against the backdrop of improved economic conditions, your Bank
has demonstrated healthy growth in advances and deposits."
Dr. Anup Kumar Sinha
Non-Executive (Independent) Chairman
Dear Shareholders,
It is my distinct pleasure to present your Bank's Annual Report for the
financial year ended on March 31, 2023. The Bank had set out on a transformation journey
with the aim of delivering superior value and experience to customers in a rapidly
evolving landscape. Underpinned by the outstanding efforts of its team members,
I am proud to say the Bank is succeeding on this agenda, having
overcome the significant challenges thrown by the pandemic right at the outset of this
journey.
Economic Review
Amid considerable uncertainties about economic activities in a large
number of countries - including major economies such as the US, Euro Area and China -
India has emerged as a shining beacon. With its 7.2% GDP growth in FY 22-23,
India had been the fastest growing large economy in the world last
year, a distinction that India looks set to maintain even in the current year. The Indian
government successfully met its FY 22-23 fiscal deficit target of 6.4% of GDP. Other
noteworthy highlights of the fiscal performance include encouraging tax collections and a
focus on capital expenditure. Although goods exports faced challenges due to the
geopolitical situation and rising oil prices, the country's services exports performed
exceptionally well.
The global repercussions of the war led to significant inflation and
interest rate impact worldwide. In India, consumer prices surged to an eight-year high of
7.8% year-on-year in April 2022 and averaged 6.7% (YoY) during FY 22-23. The surge in
inflation and monetary tightening across the globe prompted the Reserve
Bank of India (RBI) to raise its policy repo rate by 250 basis points
during FY 22-23 to 6.5%, which has since been kept unchanged during the current financial
year. Despite policy uncertainties in the global arena, India's macro parameters presently
suggest that risks of further hike in interest rates in the near term is limited.
India has demonstrated prudent macroeconomic management by avoiding
overstretching during the pandemic.
This approach has contributed to stable growth and effective inflation
management. Furthermore, multidimensional policy initiatives over several years, such as
supply-side policy reforms, boost in infrastructure, formalisation of the economy, Direct
Benefit Transfer and the Insolvency and Bankruptcy Code, have enhanced competitiveness,
promoted inclusion and propelled growth.
Sector Review
The sustained policy focus to strengthen the banking sector has yielded
positive outcomes. Reforms implemented by the government and the RBI have also prompted
greater focus on improving asset quality, with the gross nonperforming assets (GNPA) ratio
reaching a ten-year low of 3.9% in March 2023.
Net non-performing asset also improved to 1% in March 2023, a level
last seen in June 2011. Additionally, stress tests confirm that the banks are well-
capitalised and capable of withstanding adverse macroeconomic conditions. The GNPA ratio
is expected to further decline to 3.6% by March 2024.
Driven by the favourable market conditions and the efforts of the
government and the RBI, banks reported healthy profits in the year in review. Among the
various factors boosting banks' strong performance are the post-pandemic economic
normalisation, recovery in credit demand, and a considerable improvement in asset quality.
Credit growth stood at around 15% for the year, the highest growth in over a decade,
driven by MSME credit (14% y/y), housing loans (15%) and personal loans (21%). Even though
India's credit growth has been impressive, negative credit-to-GDP gap, as compared to
advanced and emerging market peers, means that the banking sector needs to continue its
efforts in reaching out to larger populations for the success of the Indian growth story.
The clean-up of bank balance sheets following the RBI's Asset Quality
Review in 2016 has played a vital role in maintaining the banking sector's resilience
despite the pandemic's impact. It has also facilitated credit expansion during the
economic recovery. Notably, the banking sector achieved the lowest cost of provisioning in
more than a decade during FY 22-23.
The Bank's Progress
Against the backdrop of improved economic conditions, your Bank has
demonstrated healthy growth in advances and deposits. The retail segment, including
housing and MSME loans, has been a significant contributor to credit uptake. Additionally,
the Bank's asset
quality has improved significantly over the past year, while
maintaining a healthy CASA ratio that provides a stable source of funds for lending
activities, enhancing overall financial efficiency.
The growth witnessed in housing finance, commercial loans and retail
loans verticals aligns with the Bank's portfolio diversification agenda. The Bank has also
made substantial progress in its IT and digital transformation journey, which brings it
closer to the vision of becoming a leading digital banking institution. This
transformation will empower the Bank to expand its product offerings, extend its reach and
deliver a frictionless banking experience.
During the year, the Bank crossed the significant milestone of three
crore customers. This accomplishment stands as a testament to the trust diligently earned
over the years and reinforces the Bank's unwavering commitment to upholding the highest
standards of ethics and prioritising customer experiences.
Moving ahead, the Bank is actively expanding new capabilities such as
Commercial Vehicle Lending, Loans against Property for Business and Government Business
Operations. These strategic initiatives aim to create a greater business impact and
enhance the range of services available to customers. Furthermore, the Bank is focussed on
geographic diversification and expanding its market reach to connect with a broader
customer base.
Changes to the Board
In the latter part of the year, the Bank welcomed Ratan Kumar Kesh as
its first Executive Director on the Board. With nearly three decades of rich experience,
Ratan brings valuable expertise in operations, including areas such as transformation,
automation, customer experience and quality improvement. His proven leadership in handling
complex functions will undoubtedly contribute to the continued growth and success of the
Bank. We extend a warm welcome to Ratan and eagerly look forward to his contribution in
taking the Bank to new heights.
The Road Ahead
India's economic landscape is showing signs of continued expansion,
with inflationary pressures easing. The country's growth story is fuelled by strong
domestic demand and a thriving services sector. The recent Consumer Confidence Survey
conducted by the RBI reaffirms positive sentiments regarding the current and future
economic conditions among Indian consumers.
Opportunities for growth are also stemming from government initiatives,
including large investments in infrastructure projects, which not only pushes growth
higher immediately but also boosts the long-term growth potential of the economy. Policies
promoting domestic manufacturing, such as Production Linked Incentives (PLIs), are also
expected to contribute to India's long-term economic growth.
For FY 23-24, India's real GDP growth is projected at around 6.5%. This
healthy economic momentum and the improved resilience of the banking system provide
foundation for a strong credit growth trajectory in the coming years. Risks to India's
growth outlook include weak external demand, volatility in global financial markets,
prolonged geopolitical tensions and the potential impact of El Nino on monsoon patterns.
In Conclusion
The Bank is poised to leverage upcoming opportunities and contribute to
our nation's growth aspirations. The focus remains on driving inclusive banking and being
a Bank for all, providing products and services that cater to changing customer needs, and
building enduring relationships on the firm foundation of trust. By continuing on this
path, the Bank is confident in its ability to generate value and pave the way for a better
and stronger future for all stakeholders.
Warm regards,
Dr. Anup Kumar Sinha
Non-Executive (Independent) Chairman
Message from the MD & CEO
"The unwavering commitment to the Bank's vision has propelled it
forward, enabling considerable progress in key areas such as information technology,
digitalisation, and workforce development, among others areas of thrust."
Chandra Shekhar Ghosh
Managing Director & Chief Executive Officer
Dear Shareholders,
Allow me to start by highlighting one major milestone that your Bank
crossed in the period under review - 3 crore customers. This achievement stands as a
testament to the trust the Bank has diligently built over the years, fortifying its
commitment to serving customers with integrity and reliability. In a short span of seven
and a half years, your Bank has been able to place itself in the minds and hearts of its
customers and all other stakeholders.
As I reflect on the past financial year,
I am encouraged by the performance delivered by the Bank. The Bank's
nearterm vision includes its commitment to portfolio, geographic, people and tech
transformations. The unwavering
commitment to the Bank's vision has propelled it forward, enabling
considerable progress in key areas such as information technology, digitalisation, and
workforce development, among other areas of thrust.
Operational Environment
Despite a challenging global geopolitical backdrop, the Indian economy
experienced a robust revival during FY 22-23 as numerous businesses returned to normalcy,
driven by a substantial increase in both business and consumer confidence. The
Government's emphasis on enhancing infrastructure, promoting local manufacturing, and
nurturing a digitally-empowered economy provided tailwinds to the growth trajectory.
Against this backdrop of improved economic conditions and positive
consumer sentiments, there was a notable surge in credit demand, especially in the latter
half of the year. The festive season brought additional joy, not only for the Bank and the
financial services industry, but also for the entire economy, as festive spending was
observed across all segments of society after nearly two years of subdued activity caused
by the pandemic.
The floods in Assam as well as the high inflation experienced in the
first half of the year, however, did pose some challenges. High inflation and rising
interest rates in several other economies triggered sharp hike in interest rate by the
Reserve Bank of India (RBI). Additionally,
the implementation of new regulatory norms in the first quarter
necessitated the revision of risk assessment practices for microfinance disbursal, leading
to muted growth in the microcredit segment during this period.
Performance Review
While the first quarter witnessed a subdued performance from the Bank,
there was significant improvement from the second quarter. For the full year, the total
advances for the Bank registered a growth of 10%, reaching ?1.09 lakh crore as of March
31, 2023.
In line with the portfolio diversification agenda of your Bank, there
was significant progress made. The secured book as a proportion of the total loan book
increased from 36% in FY 21-22 to around 43% in FY 22-23. The retail loan book, which
includes personal loans, gold loans, two-wheeler loans and auto loans, witnessed a massive
growth of 233% year-on-year, albeit on a relatively smaller base. Additionally, the
Commercial Banking vertical, comprising the Financial Institution group (FIG), MMG, and
BBG, recorded an encouraging growth of 72% year-on-year.
The Bank has experienced strong demand for housing loans. Till the end
of Q3 FY 22-23, housing finance segment registered over 28% YoY growth. In the fourth
quarter, the Bank moved the housing finance vertical to the new tech platform that caused
a temporary slump resulting in a 13% YoY growth in the financial year. This disruption was
a one-time event, and the Bank is now back on track in terms of its growth in housing
loans.
The growth witnessed in the housing finance, commercial loans and
retail verticals is a positive development, aligning with the Bank's portfolio
diversification objectives. Around the
time when your Bank embarked on its portfolio diversification drive a
little over three years ago, even before the onset of the pandemic, microfinance group
loans accounted for nearly 60% of the overall loan book. As of the end of FY 22-23, this
share has reduced to 35%, in line with your Bank's strategic pursuit. The proportion of
loans under commercial banking has reached 18.5%. Additionally, other retail assets such
as gold loans, personal loans, and two-wheeler and auto loans have seen their cumulative
share increase from less than 1% to 5% during this period.
Your Bank's total deposits experienced a healthy growth of 12%
year-on-year, outpacing industry growth, and reached ?1.08 lakh crore. It is noteworthy to
mention that the contribution of MFI customers to the total deposit remains at a low 4.3%.
Deposits are driven by trust, and this is another indication of the trust that your Bank
has been able to garner from customers. The Bank's dedicated focus on deposit mobilisation
has led to a 6% year-on-year growth in CASA deposits, which now stand at ?42,455 crore.
The CASA ratio remains healthy at 39.3%. This growth in CASA deposits is primarily driven
by a substantial 17.5% year-on-year increase in current account deposits.
The fourth quarter, the Bank moved the housing finance vertical to the
new tech platform that caused a temporary slump resulting in a 13% YoY growth in the
financial year. This disruption was a one-time event, and the Bank is now back on track in
terms of its growth in housing loans.
With the restoration of people's livelihoods, the Bank has observed a
strong inclination among customers to regularise their accounts, maintain a healthy credit
record and ensure continued access to formal credit. In line with this, the Bank has
achieved an overall collection efficiency (excluding NPA) of 98.5% in the month of March
2023. In the year in review, the Bank also received a sum of ?917 crore from the
government as part of the Credit Guarantee Fund for Micro Units (CGFMU).
In FY 22-23, your Bank has achieved a net profit of ?2,195 crore, a
significant increase from ?126 crore in the previous year. While operating profit
witnessed a decline of 11.5% to ?7,091 crore, it was due to extensive hiring to support
the growth aspirations, distribution expansion and investments in tech infrastructure.
Your Bank's efforts towards tightening underwriting standards and
managing asset quality have yielded positive results. As of March 31, 2023, Gross NPA
stood at 4.9%, showing a sharp improvement from 6.5% a year back. Furthermore, Net NPA
stood at 1.2% as of March 31, 2023, compared to 1.7% in the same period of the previous
year. These figures reflect the Bank's commitment to maintaining a healthy loan portfolio
and managing credit risks effectively.
In terms of geographical diversification, the Bank has made continued
progress in expanding beyond eastern India. Of late, customer base expanded rapidly in
various relatively new geographies, with states like Uttar Pradesh and Bihar now featuring
among our top three markets, along with West Bengal. While your Bank continues to maintain
a strong presence in rural and semi-urban areas, it is also strengthening presence in
metro and tier-1 cities to cater to a broader
customer base, in line with its agenda of being a bank for all. As of
March 31, 2023, the Bank operates a total of 5,999 banking outlets, reflecting an increase
of 360 banking outlets during FY 22-23.
IT & Digital Transformation
The Bank has made strong progress in its IT and digital transformation
journey, driving it towards the goal of becoming one of the frontrunners in digital
banking capabilities. A notable achievement is the growing adoption of digital channels by
our non-micro credit customers, with 94% of their transactions now conducted through
digital mediums, up from 90% in the previous year. Furthermore, the popularity of UPI
transactions through Bandhan Bank has increased, with an impressive 53 crore transactions
processed in the past year. This continued shift towards digital channels underscores the
trust your Bank's customers place in its digital offerings and the Bank's steadfast
commitment to delivering a frictionless banking experience.
In line with the rapid growth in digital adoption, your Bank's online
channels have emerged as a key driver, accounting for 31% of retail deposits. As the Bank
strives for digital excellence, it introduced the pilot phase of Neo+ Digital Savings Bank
accounts. The Bank has also deployed 30,000 biometric-enabled tablets to streamline the
account opening and customer onboarding procedures and strengthen last mile banking. This
transformative initiative has resulted in substantial enhancements in operational
efficiency and customer convenience.
As part of the comprehensive IT transformation strategy, your Bank has
successfully migrated the Housing Finance portfolio to a new Core Banking System (CBS),
integrating the Loan Origination System and Loan Management System. Building on this
achievement, the Bank is now poised to embark on the migration
The Bank's focus on areas such as Commercial Vehicle Lending, Loans
against Property for Business, and Government Business, among others, will contribute to
the top line and bottom line, further strengthening your Bank's position in the industry.
... /
of our other business verticals to the advanced new CBS, in FY 23-24.
The new CBS will empower the Bank to introduce a range of new products
with speed. These innovations will not only enhance the customer experience but also
create additional avenues for customer engagement and deposit growth. These capabilities
will help drive greater customer traction, resulting in more products per customer and
higher life time value.
The Bank continues to prioritise the enhancement of its online presence
and the delivery of exceptional digital banking experiences. Digital Banking solutions are
in an everlasting state of evolution and in the coming financial year, your Bank will
introduce omnichannel internet and mobile banking platforms. This strategic initiative
reinforces the Bank's digital capabilities, allowing it to offer a seamless and integrated
banking experience across various channels for its valued customers.
People Initiatives
Human capital is one of the most important assets for your Bank. The
Bank has always placed significant emphasis on training. I am happy to tell you that over
99% of the Bank's employees received at least one training in the year in review. The
training conducted through online,
app-based and classroom modules totalled 16 lakh man hours.
Performance Appraisals
Your Bank utilises a structured performance review process to identify
talent for vacant roles and facilitate career progression. Additionally, an Internal Job
Posting (IJP) mechanism enables employees to apply for open positions within the Bank. In
the past year, 9,307 employees received grade promotions, while 5,690 employees were
elevated to higher roles based on competency analysis. The Bank has also conducted
thorough succession planning for key departments and is actively addressing identified
gaps through internal hiring.
To keep pace with your Bank's rapid expansion plans, the Bank has
increased manpower by 16% in the year under review. The Bank also focussed on getting on
board young and diverse talent through campus hiring drives. The Bank hired a total of
1,102 employees across levels and locations through this drive. With the tech
transformation currently underway, your Bank will activate stronger productivity
enhancement tools and processes to help them discharge their duties even better.
Business Strategy & Outlook
Your Bank's business strategy is aligned with its vision of sustained
growth with strategic diversification. India today stands at the cusp of an excellent
growth phase, and the Bank is dedicated to partnering with the growth aspirations of our
nation and its people. Our strong granular and retail deposit franchise is a testament of
the trust shown by the customers in the bank.
While maintaining the Bank's strong presence in the East and Bharat
regions, it has been actively expanding its presence across the nation.
Through targeted geographic diversification, deeper market penetration, localised hiring,
and leveraging the Bandhan brand, the Bank aims to establish a dominant position in
driving greater momentum and success.
To unlock significant business impact, the Bank is developing new
capabilities and exploring diverse revenue streams. The Bank's focus on areas such as
Commercial Vehicle Lending, Loans against Property for Business, and Government Business,
among others, will contribute to the top line and bottom line, further strengthening your
Bank's position in the industry.
Driving cross-sell and branch-led sales is a key priority for expanding
the Bank's retail assets and liabilities portfolio.
The Bank is implementing multiple initiatives to maximise the potential
of its branch network, enhancing employee productivity through the effective use of
digital and data analytics.
Your Bank has achieved considerable success in moderating its credit
cost and will continue to work towards getting it to pre-pandemic level of below 2%. We
are confident that with the steps the Bank has taken so far and a strong future business
outlook, we will continue to improve our profitability and deliver on the promises made to
our shareholders.
Recognitions received
As a part of its people transformation agenda, your Bank has been
working to increase employee engagement across levels. To measure the engagement, your
Bank conducted the 'Bandhan Employee Engagement Study' in collaboration with Gallup, the
global leader in employee engagement research. Over 35,000 employees took part in the
survey. I
am happy to inform you that based on the engagement scores recorded in
the survey, your Bank received the 'Gallup Exceptional Workplace Award 2023'. It is
noteworthy that only 57 companies worldwide, spanning various sectors, were honoured with
this award. That is not all, your Bank was also recognised as one of the World's Best
Banks of 2023 by Forbes and Statista. This is a result of your trust in us.
I extend my heartfelt gratitude to all those who have played a part in
your Bank's success. I would like to express my sincere appreciation to the Bank's
customers, whose trust and loyalty have been instrumental in its journey. I also extend my
gratitude to the shareholders for their unwavering support. Last but not least,
I want to acknowledge the exceptional dedication of the Bank's
employees, whose commitment to serving customers is unparalleled.
Thank you all for your continued belief in Bandhan Bank as it
steadfastly pursues its vision to become a world-class financial institution for all.
To unlock significant business impact, the Bank is developing new
capabilities and exploring diverse revenue streams.
The Bank's focus on areas such as Commercial Vehicle Lending, Loans
against Property for Business, and Government Business, among others, will contribute to
the top line and bottom line, further strengthening your Bank's position in the industry.
Warm regards,
Chandra Shekhar Ghosh
Managing Director & Chief Executive Officer
  Â
Bandhan Bank Ltd
Directors Reports
To
The Members,
Your Board of Directors present the Ninth Annual Report on the business
and operations of your Bank, together with the Audited Financial Statement for the
Financial Year ('FY') ended March 31, 2023.
Financial Performance of the Bank
The financial highlights for the FY under review, are presented below:
| Particulars |
For the FY ended |
|
March 31, 2023 |
March 31, 2022 |
| Deposits: |
1,08,069.31 |
96,330.62 |
| - Savings Bank Deposits |
36,038.10 |
34,616.86 |
| - Current Account Deposits |
6,417.05 |
5,462.32 |
| - Term Deposits |
65,614.16 |
56,251.44 |
| Advances (Net): |
1,04,756.77 |
93,974.92 |
| - Cash Credits, Overdrafts and Loans repayable on demand |
22,048.64 |
17,154.78 |
| - Term Loans |
82,708.13 |
76,820.14 |
| Total Assets/Liabilities |
1,55,769.97 |
1,38,995.17 |
| Net Interest Income |
9,259.62 |
8,714.46 |
| Non-Interest Income |
2,468.55 |
2,822.50 |
| Less: Operating Expenses (excluding Depreciation) |
4,494.17 |
3,413.52 |
| Profit before Depreciation, Provisions and Tax |
7,234.00 |
8,123.44 |
| Less: Depreciation |
142.65 |
110.04 |
| Less: Provisions |
4,198.37 |
7,884.78 |
| Profit Before Tax (PBT) |
2,892.98 |
128.62 |
| Less: Provision for Tax |
698.35 |
2.83 |
| Profit After Tax (PAT) |
2,194.64 |
125.79 |
| Balance in Profit & Loss Account brought forward from
previous year |
6,009.94 |
6,171.00 |
| Appropriations: |
|
|
| Transfer to Statutory Reserves |
548.66 |
31.45 |
| Transfer to Statutory Reserve u/s 36(1)(viii) of the
Income-tax Act, 1961 |
169.20 |
42.45 |
| Transfer to Capital Reserve |
1.74 |
16.00 |
| Transfer to Investment Reserve |
- |
25.24 |
| Transfer to Investment Fluctuation Reserve |
31.19 |
10.65 |
| Dividend pertaining to previous year paid during the year |
- |
161.07 |
| Balance carried over to Balance Sheet |
7,453.79 |
6,009.94 |
| EPS (Basic) (in ^) |
13.62 |
0.78 |
| EPS (Diluted) (in ^) |
13.62 |
0.78 |
State of Affairs of the Bank
While your Bank completed seven years of its operation during the FY
under review, it has also achieved three significant milestones i.e. (i) achieved the
total deposits as well as total advances of ?1 lakh crore each; (ii) crossed ?2 lakh crore
of total business; and (iii) acquired three crore customers. The Balance Sheet size of
your Bank has also crossed ?1.5 lakh crore. The Total Liabilities (including capital and
reserves) of your Bank stood at ?1,55,770 crore and the Total Advances (Net) at ?1,04,757
crore.
During the FY under review, your Bank stayed on course with its
strategic priorities of portfolio diversification. As on March 31, 2023, Group loans were
at 35 per cent. of the total asset book, down from 47 per cent. as on March 31, 2022. The
share of housing finance portfolio increased by 100 bps during FY 2022-23 to 25 per cent.
of the total asset book as on March 31, 2023, whereas other retail assets have also grown
to 5 per cent. of the total asset book during FY 2022-23 as compared to 2 per cent. as on
March 31, 2022. Commercial Banking portfolio achieved a share of
35 per cent. of the total asset book during FY 2022-23 as compared to
27 per cent. during the previous year.
With regard to the strategic priority of geographical diversification,
among the new banking outlets opened in the year under review, majority were outside of
the core markets of East and North East India. In terms of business volume for the legacy
micro loans business, while Assam was the second largest market for your Bank for many
years, in the year under review, Uttar Pradesh and Bihar overtook Assam, hinting further
at the desired geographical diversification agenda. During the FY under review, your Bank
has added 360 new banking outlets taking the total count of banking outlets to 5,999 as on
March 31, 2023. Out of the total 5,999 banking outlets, 35 per cent. are in rural, 37 per
cent. in semiurban, 18 per cent. in urban and 10 per cent. in metro locations. The number
of customers has increased from 2.63 crore as on March 31, 2022 to 3 crore as on March 31,
2023. With the expanding network of banking outlets and customers, the total deposits grew
further from ?96,330.62 crore as on March 31, 2022 to ?1,08,069.31 crore as on March 31,
2023 registering a growth of 12.19 per cent. The Current Account and Savings Account
('CASA') deposits have recorded an increase of 5.93 per cent. from ?40,079.18 crore as on
March 31, 2022 to ?42,455.15 crore as on March 31, 2023.
During the FY under review, the total income (net) of your Bank has
increased by 1.66 per cent. to ?11,728.17 crore as against the total income of ?11,536.84
crore for FY 2021-22. The profit after tax ('PAT') stood at ?2,194.64 crore, an increase
of 1,645 per cent. as compared to ?125.79 crore for FY 2021-22. Consequently, Return on
Average Equity ('ROAE') was 11.8 per cent. as against 0.76 per cent. for FY 2021-22 and
Return on Average Asset ('ROAA') was 1.60 per cent. as against 0.11 per cent. for FY
2021-22. Correspondingly, basic as well as diluted earnings per share ('EPS') increased
from ?0.78 to ?13.62 as at the end of FY 2022-23 in comparison to FY 2021-22.
Your Bank continues to focus on financial inclusion by providing
various financial services to the underserved. The Reserve Bank of India ('RBI') has
mandated Priority Sector Lending ('PSL') of a minimum 40 per cent. of advances for all
banks. Your Bank's PSL was ?54,176 crore as on March 31, 2023 as compared to Rs. 56,397
crore as on March 31, 2022. At the end of FY 2022-23, PSL as a proportion of the gross
advances of ?1,08,827.12 crore was 50 per cent.
Highlights of various business segments of your Bank during the FY
under review are mentioned below:
Banking Unit (BU) Business
The Banking Units vertical of your Bank has been serving borrowers at
the bottom of the pyramid with affordable and convenient loans to help them develop into
entrepreneurs and transform their lives. Your Bank's Banking Units business strategy is
guided by its long- held philosophy of financial inclusion and economic empowerment of the
disadvantaged sections of the society. The endeavour of your Bank is to nurture these
entrepreneurs and help them move
up the socio-economic hierarchy. In their movement upwards, your Bank
is by them to support with whichever financial service they may require in the journey.
Your Bank offers a wide array of loans through Banking Unit ('BU')
outlets under Banking Units vertical to benefit small business owners in need of financial
assistance. It also helps in the growth of additional income generation avenues and offers
enhanced opportunities to small entrepreneurs to achieve their business goals. The Bank
operates its Group Loans and Small Business & Agri Loans ('SBAL') business channels
from its BU outlets.
Each BU is linked to a bank branch for operational convenience. BUs are
self-sufficient and empowered to open deposit accounts using TABs and also open loan
accounts after necessary credit checks. The highlight of the BUs' operations is the TABs
that are connected to the Core Banking System ('CBS') through cellular data. Relationship
Officers ('RO') carry these TABs to their group meetings, and the entire instalment
reconciliation for the customer happens through these TABs on real time basis. To ensure
timely and effective support to the BUs in their day-to-day functioning, your Bank has a
structure comprising Circles, Territories, Divisions, Areas and Banking Unit Catchments. A
central operation team maintains oversight of the quality of the operations and adherence
to prevalent guidelines at all times. Your Bank lays significant emphasis on processes and
controls to help maintain uniform and consistent standards in transaction processing and
service delivery, as well as compliance with regulatory and statutory guidelines.
During the FY under review, your Bank opened 138 new BUs pan- India
with a focus on financial inclusion and to enhance portfolio quality by limiting the
number of customers served by a BU. Your Bank's commitment towards financial inclusion is
also reflected in the fact that it offered loans to 23,77,606 new borrowers during the FY
2022-23. The portfolio for Group Loans stood at Rs. 38,059 crore whereas SBAL portfolio
stood at ?18,765 crore at the end of FY 2022-23 as your Bank worked towards bringing
additional measures in credit control in order to improve the quality of portfolio.
Your Bank now has nine loans products under its Group Loans, SBAL and
other categories, which are provided from Banking Unit outlets to cater better to the
varied demands and needs of its customers:
Group loans
1. Srishti Loan: Timely funds to start a new business or grow an
existing one. Loan size is from ?15,000 to ?1,00,000.
2. Subriddhi Loan: Loan amount is up to 50 per cent. of the
disbursement amount of running primary loan. Sanctioned to help customers fulfil their
extra business requirement during their ongoing loan.
3. Suraksha Loan: Loan size is up to ?15,000 and is sanctioned to help
existing customers meet their emergency expenses, e.g.- medical, drinking water and
sanitation.
4. Sushiksha Loan: Loan size is up to ?10,000 and is sanctioned to help
customers meet expenses towards the education of their children.
Small Business and Agri Loans
1. Sahayata Loan: Loan to fund growing business needs of individuals
involved in an array of income generation activities. Loan amount is from ?50,001 to
?3,00,000.
2. Suyog Loan: Loan amount is up to 50 per cent. of the disbursement
amount of running Sahayata loan. Sanctioned to help customers fulfil their additional
short-term business requirement during their ongoing loan.
3. Baazar Loan: With a loan size from ?26,000 to ?1,50,000, this
product is for small entrepreneurs, who have an existing super-saver account with your
Bank. This loan provides financial support to deposit customers for their working capital
needs.
Other loans
1. Micro Home Loan: Your Bank offers Micro Home Loan ranging from
?1,00,000 to ?10,00,000 to existing Banking
Unit Borrowers for construction as well as renovation of their houses
so that their dream of their own house does not remain unfulfilled.
2. Two-wheeler Loan: Your Bank offers two-wheeler loans ranging from
?30,000 to ?1,20,000 to existing Banking Unit Borrowers. It brings them a step closer to
their aspirations.
During the FY under review, your Bank has taken various initiatives:
• During the pandemic and post pandemic restrictions, many of the
customers of your Bank lost their livelihoods, which made them financially vulnerable. To
strengthen the customers, your Bank came up with products specifically designed for these
situations and ensured that the customers get the maximum financial assistance during the
toughest time in their lives. In addition to lending to customers, your Bank is
encouraging them to save in their savings bank accounts and to inculcate healthy financial
habits, so that in any uncertain situation in the future, they remain financially stable.
• Awareness about using digital solutions, like smartphone- based
transactions and use of credit/debit cards for online transactions are still persistent
issues to the customers under the Banking Unit vertical. To overcome these challenges,
your Bank is giving training to make the customers aware about the benefits of digital
payments and various other aspects, such as seeding bank accounts with mobile number and
Aadhaar. Your Bank has also taken initiative by informing the customers to pay through
online transactions.
• Your Bank has been driving the transformation of customers at
the ground level. Your Bank has already started migrating vintage and quality customers to
Small Business and Agri loans from their existing group loans by laying out a strategy to
increase the share of Small Business and Agri loans in overall portfolio of Banking Units
vertical and extending new
product offerings, such as Sahayata Loan, Two-Wheeler Loan, and Micro
Home Loan as per their changing requirements.
• Your Bank has always placed strong emphasis on training and
development to upskill and reskill staff to ensure that they stay relevant to the
fast-changing world across levels and locations. This includes online and classroom
training sessions.
• Your Bank has taken several initiatives to strengthen the credit
assessment process for Group loan and SBAL, and other loans in order to have a better
portfolio. Your Bank has further started initiating deployment of separate Loan
Sanctioning team to manage the end-to-end loan sanctioning process for SBAL loans.
With the advent of Microfinance master circular dated March 14, 2022
(updated on July 25, 2022) issued by the RBI, your Bank has revised its processes and
guidelines in order to align its microfinance loans with the said guidelines to better
cater its customers.
Commercial Banking Small Enterprise Loan ('SEL')
In the current economic scenario, India is a country burgeoning with
small businesses which are regularly in need of short to medium-term funding to maintain
and grow their businesses. The Small Enterprise Loan vertical of your Bank empowers these
businesses to expand their business by extending to them business loans tailored to suit
their needs.
With the COVID pandemic now firmly behind us, the small- enterprise
segment is now expected to grow at a much faster rate than in the recent past, thus making
it all the more essential for your Bank to offer loans to these firms and aid them in
their pursuit of growth and expansion, in turn contributing to the overall betterment of
the country.
In an endeavor to understand its customers better, your Bank's SEL
vertical has constantly taken inputs from borrowers and with the help of these inputs,
updated and added to the catalogue of offered products to remain at par with other leading
banks of the country.
The following products are presently offered under SEL:
• SEL Term Loans (^1.01 lakh to ^10 lakh)
These are term loans with a tenure of one to three years, and they are
aimed towards financing working capital or asset creation needs of small businesses or
other short-term business requirements. These loans range from ?1.01 lakh to ?10 lakh.
• SEL Max Loans (^10.01 lakh to ^25 lakh)
This is similar to SEL Term Loans, but it is targeted towards slightly
larger enterprises in terms of revenue, which might need loans of value higher than ?10
lakh. These loans range from ?10.01 lakh to ?25 lakh.
• SEL Secured Overdraft Loans (^10.01 lakh to ^25 lakh)
This overdraft product has been added to your Bank's SEL product
bouquet during FY 2022-23 with a vision to cater to the MSME borrowers who need working
capital in form of an overdraft and are willing to pledge a security for the loan. The
range for this product is ?10.01 lakh to ?25 lakh and the overdraft limits are subject to
renewal on a yearly basis.
Business Banking Group
Business Banking Group ('BBG') offers loan products at competitive
rates of interest to SME borrowers for meeting their working capital or capital
expenditure requirements, including non-fund- based facilities. The interest rate offered
is correlated with the applicant's profile and credit rating. These are secured loans
generally between ?25 lakh to ?5 crore extended to businesses involved in manufacturing,
trading, and services, extended in the form of secured credit facilities including term
loan, cash credit, overdraft or lease rental discounting or as non-fund-based facilities
like letter of credit or bank guarantee. To promote ease of process, your Bank is in the
advanced stage of deploying the Loan Originating System that automates and manages the
end- to-end steps in the loan process. Also, the cash management for commercial clients
has been launched and implementation of trade services is in the advanced stage. The BBG
fund based Book was at ?535 crore as on March 31, 2023 as against ?297 crore as on March
31, 2022, registering a growth of about 80 per cent. during FY 2022-23.
In line with various government initiatives and regulatory
instructions, Board-approved Credit and related Policies are in place to continue
extending support in the aftermath of the COVID-19 pandemic, in the form of Emergency
Credit Line Guarantee Scheme, Resolution Framework, etc., to the deserving and eligible
borrowers, based on requests.
Commercial - LAP
Your Bank caters to proprietorships, partnerships, private limited
companies, public limited companies (not listed on exchange) and individual business for
loans against property ('LAP'). This is in line with your Bank's overall objective of
increasing the secured lending portfolio. It is quite a competitive segment in the
financial services industry. Your Bank will leverage its 1,400+ bank branches besides
sourcing from the open market. Additionally, your Bank will have a higher level of
engagement with customers by not only building the LAP book but also transitioning the
entire customer relationship to your Bank. This product launched towards the end of FY
under review, your Bank has laid an ambitious plan to scale up and build a quality book by
end of FY 2023-24. As we move along, your Bank will use technology for better turnaround
time which is essential for doing well in this space. Your Bank has a bouquet of programs
to cater to most of the sectors in the market in the LAP space. With hiring of people
underway, your Bank is set to make the most in the FY 2023-24. The focus would be on the
top 30 cities for the LAP product which constitute 85 per cent. of the total LAP market.
The book-size stood at ?53.14 crore, as on March 31, 2023.
Mid-Market Group
Mid-Market Group ('MMG') offers loan products at competitive rates of
interest to majorly medium enterprises and mid corporate
borrowers for meeting their working capital or capital expenditure
requirements, including non-fund-based facilities. The interest rate offered is correlated
with the applicant's profile and credit rating. These are secured loans of generally more
than ?5 crore extended to businesses involved in manufacturing, trading, and services,
extended in the form of secured credit facilities including term loan, cash credit,
overdraft or lease rental discounting or as non-fund-based facilities like letter of
credit or bank guarantee. To promote ease of process, your Bank is in the advanced stage
of deploying the Loan Originating System that automates and manages the end-to-end steps
in the loan process. Also, the cash management for commercial clients have been launched
and implementation of trade services is in the advanced stage. The MMG fund based Book was
at ?3,605 crore as on March 31, 2023 as against ?1,871 crore as on March 31, 2022,
registering a growth of about 93 per cent. during FY 2022-23.
In line with various government initiatives and regulatory
instructions, Board-approved Credit and related Policies are in place to continue
extending support in the aftermath of the COVID-19 pandemic, in the form of Emergency
Credit Line Guarantee Scheme, Resolution Framework, etc., to the deserving and eligible
borrowers, based on requests.
Financial Institution Group
Your Bank considers Institutional Lending to Non-Banking Financial
Companies ('NBFCs')/Housing Finance Companies ('HFCs') and NBFC-Microfinance Institution
('NBFC-MFI'), primarily, for on- lending activities. The NBFC-MFI business includes
lending to Microfinance Institutions ('MFIs'), Societies and Trusts engaged in
microfinance activities. While most of these loans are extended as Term Loans, your Bank
also has credit exposure through Direct Assignments and investment exposures through Pass
Through Certificates ('PTCs') and Non-Convertible Debentures ('NCDs'). The NBFC (including
HFCs) business primarily includes Term Loan product for on-lending purpose, and is also
foraying into working capital loan, Direct Assignments and co-lending activities. The
book-size of this business was at ?5,519.34 crore as on March 31, 2022, which has grown to
?10,386.72 crore as on March 31, 2023. The Institutional book, comprising lending to NBFCs
and MFIs, has grown by 88 per cent. Your Bank has expanded its reach while building Books
through diversified asset class as well as geographies during the Financial Year under
review.
Agribusiness Loans
Providing credit for agricultural activities not only helps increase
production but also empowers farmers, and supports the backbone of the Indian economy- the
agricultural sector. Your Bank recognizes the importance of this sector and offers a wide
range of credit facilities to provide financial support to all participants in the Agri
value-chain system. Currently, your Bank provides KCC loans to borrowers engaged in
farming activities, including animal husbandry, pisciculture etc. with competitive
interest rates and minimal documentation. By doing so, your Bank is making it easier for
farmers to access credit and invest in their farms to increase productivity.
Moreover, your Bank is expanding its reach by offering both fund- based
and non-fund-based facilities to entities involved in agri-ancillary services, such as
food and agri processors, Agri input dealers, etc. Additionally, your Bank provides credit
facilities to support development of agricultural infrastructure.
Housing Finance
Your Bank offers loans for purchase, construction, repair, renovation
and extension of dwelling units to individuals. Loan against Property ('LAP') on
self-occupied residential property and loan against rent receivables on commercial
property are also offered.
Loans are offered to Salaried as well as Self Employed individuals. In
line with the objective to increase financial inclusion, your Bank also offers loans to
New to Credit customers.
During the FY under review, the Housing loan services were extended
from additional 33 Centers taking the presence to 389 Centers across 20 States and 2 Union
Territories.
Your Bank continues to focus on housing finance and has disbursed
?6,129 crore during the FY clocking a growth in disbursement of 17 per cent. Consequently,
the loan book has grown to ?26,577 crore indicating a growth of 12.8 per cent.
While your Bank continues to focus on Affordable Home Loans, a majority
of loans are having a ticket size below ?20 lakh. A major portion of the housing book is
meeting the criteria for Priority Sector lending as the focus area continues to be
Affordable housing. During the FY, your Bank continued a special campaign for higher
ticket loans that was launched last year offering attractive and competitive rates of
interest. The campaign received a very good response.
Your Bank has also started a Direct Sales Agent ('DSA') channel for
sourcing of home loans. The DSA channel has picked up well and the contribution from the
channel has been increasing. Your Bank is committed to the housing business and strives to
increase the penetration in the Affordable as well as higher ticket size segments. With an
objective to improve the servicing to the customers, your Bank is also strengthening the
customer support and is in the process to launch digital journeys for customer onboarding
and online support.
Your Bank offers loans at floating rates linked to an External
Benchmark Rate ('EBR'). Your Bank has adopted the Repo rate announced by the RBI as the
EBR rate. Your Bank also follows the principle of Risk based pricing and loans are offered
based on the individual credit score arrived at based on multiple parameters. Existing
customers who are serving floating rate loans linked to previous benchmark rates are also
offered an option to convert their loans to EBR linked loans.
Retail Asset
With an objective to serve the financing needs of a larger population
and to diversify the risk, your Bank has launched and strengthened several retail asset
products during FY 2022-23. Customers can now avail various loans, like Gold Loans,
Personal Loans, Two-Wheeler Loans, Car Loans and Commercial Vehicle &
Construction Equipment ('CVCE') Loans from the Bank.
• Gold Loan: Gold loan aims at fulfilling urgent monetary needs of
the customers instantly, through its simplified documentation process quick turnaround
time and wide branch network. Gold loans are given for a ticket size ranging from ?10,000
to ?40,00,000 for a tenure up to 3 years with a competitive rate of interest.
• Personal Loan: Your Bank has revamped the personal loan product
and revised the sourcing model. The sourcing is being done by a dedicated sales team,
catering to existing customers and New to Bank customers as well. The Personal Loan
product has started channel partner sourcing from the year 2021 to extend distribution
network in major markets to diversify and expand the portfolio. Personal loans are given
for ticket size from ?50,000 to ?25,00,000 for a tenure up to 5 years at a competitive
rate of interest. Your Bank has been quickly ramping up this book during FY 2022-23. Total
outstanding book stood at ?897 crore as on March 31, 2023.
• Two Wheeler Loans: Your Bank has achieved and maintained a
consistent growth rate and has reached to a sizable customer base with more than 90 per
cent. New to Bank customers. The Two Wheeler loan program was redesigned to provide
financing to existing as well as New to Bank customers for purchase of new Two Wheelers.
Your Bank leveraged on its digital capabilities and using digital means, approved two
wheeler loans in just 5 minutes for more than 90 per cent. of cases. The two wheeler loan
caters to the customer's needs by giving loans starting from ?5,000 to ?5,00,000. Your
Bank redesigned the product as per market standard with introduction of dealer/ channel
based distribution model expanding its geographical footprint.
• Car Loan: Car Loan was launched by your Bank during the FY
2021-22, to meet the customers' aspirations of owning a car. Your Bank designed various
product schemes for loan amounts ranging from ?1,00,000 to ?1 crore, in order to cater to
various customer profiles viz. salaried, self-employed as well as non-individual entities.
With the help of its extensive manufacturer and dealer network, your Bank aims to provide
the best deals to existing as well as new customers. Your Bank has built a sizable book of
new car loans and has also launched new product used car Loan during the second half of FY
2022-23 to cater the larger strata of customers and to increase the profitability of
overall auto loans business.
• CVCE Loan: Road transport plays an important role in freight and
people movement owing to its end-to-end connectivity and flexibility. In light of
increased pace of economic activity, increased focus on manufacturing growth and
e-commerce, CVCE product was launched in this year for self-employed customers &
non-individual entities, looking for a loan from ?1 lakh to ?15 crore. The Bank aims to
provide the best deals to existing as well as new customers, through its existing branch
channel, manufacturers & dealer network.
Branch Banking
Your Bank takes pride in offering a wide range of retail liability
products that cater to its customers' diverse financial needs. Your Bank has a strong
focus on customer service and constantly strives to provide innovative and convenient
banking solutions.
During the FY under review, your Bank's deposit portfolio witnessed
robust growth, with a total deposit base of ?1,08,069 crore as of March 31, 2023. This
represents a growth of 12 per cent. in the overall deposit franchise as compared to
previous FY. While the growth in deposits was primarily driven by an increase in savings
and current account deposits, the contribution from the Affluent Savings business segment
which consists of the flagship products like the Elite and Premium Savings remained
unmatched. This segment alone contributed to an overall SA growth of 15 per cent. as
compared to previous FY. Your Bank also witnessed a steady growth in Term deposits, which
grew by 17 per cent. over previous FY.
Your Bank has implemented various initiatives to ensure that the retail
deposit portfolio remains competitive and meets the evolving needs of customers, with
extra attention to the Affluent segment. Your Bank has leveraged technology to enhance the
customer experience and offer digital payment solutions that are secure and convenient.
Your Bank has also launched targeted marketing campaigns to educate
customers about the benefits of its products and services. In addition, the customer
onboarding process has been streamlined to ensure a seamless experience.
Your Bank's strong network of branches is a key element of the success
and enables it to serve customers effectively. A total of 222 Branches were added during
the FY under review taking your Bank's footmark to 1,411 branches, covering a wide range
of locations across the country. This extensive network ensures that your Bank is able to
reach out to a large number of customers and offer them a range of products and services
that are tailored to their specific needs. The continued investment in expanding the
footprint is a reflection of the commitment to providing high- quality financial services
to customers across the length and breadth of the country.
The launch of "SMART-Android POS" is a testament to the
commitment to providing innovative and customer-centric solutions to merchants. Your Bank
is confident that this product will further strengthen the current account customer base
as a leading player in the POS space and will help to continue delivering value to
customers. Your Bank is confident that the merchants will be excited about the range of
offerings and features that SMART- Android POS brings to the table.
Your Bank will keep leveraging technology to offer new and enhanced
digital solutions that are secure, convenient, and user- friendly.
Your Bank remains committed to providing customers with best- in-class
banking solutions and looks forward to serving them with the same zeal and commitment in
the future.
Third Party Products
Your Bank currently distributes mutual funds, life insurance and
general insurance, including health insurance products. The Financial Year under review
has been a year of collaboration and resurgence. Your Bank continues to demonstrate a
persistent focus on offering a robust and comprehensive product proposition to its
customers. In the General Insurance business, your Bank continued to serve its customers
in their quest towards healthy living by offering them a wide variety of health insurance
solution based product proposition. In the life insurance business, your Bank continues in
its quest of offering a wide bouquet of products to cater to different life cycles and
life stages of its customers. Your Bank has also been working tirelessly to build an
analytics and technology driven business franchisee to offer the best in class insurance
solutions to its customer base. In mutual funds distribution, your Bank continues to focus
on a research driven distribution strategy with a vision of providing its customers the
ease and flexibility while planning for investments. This year your Bank has launched the
distribution of Mutual Funds through its Retail Internet Banking (RIB) platform in its
continuous efforts towards offering customers further convenience and benefits.
Your Bank continues to invest towards building a segment driven,
analytics and research based and technology embedded, product distribution proposition,
across all Third Party Products and continues to seek out opportunities to add new product
suites to serve customers financial needs holistically.
The total mutual fund AUM managed under your Bank's code during FY
under review was ?582.79 crore, earning an income of ?5.14 crore. A total of ?207.21 crore
and ?497.07 crore of general and retail life insurance business, respectively, were
garnered through the retail network during FY 2022-23, earning a fee income of ?26.65
crore and ?153.52 crore, respectively. During FY under review, the life insurance business
through the existing arrangement in all asset verticals amounted to ?1,146.29 crore,
earning an income of ?58.10 crore. Your Bank has also earned ?0.11 crore as commission for
distribution of Atal Pension Yojana, NPS Lite Swavalamban schemes of PFRDA and others
during the FY 2022-23.
Corporate Social Responsibility
Your Bank's core commitment to creating inclusive growth is reflected
in its Corporate Social Responsibility ("CSR") initiatives, which focus on the
empowerment of the marginalised sections of the societies residing in the vicinity of its
operational area. The marginalised communities are confronted with multi-dimensional
vulnerabilities, at the core of which is the challenge to secure sustained livelihoods.
Accordingly, the interventions of your Bank's CSR initiatives are appropriately designed
to build their capabilities for securing sustainable livelihoods.
To address its societal commitments, your Bank has adopted a
comprehensive CSR policy that outlines the CSR programmes of your Bank, which are in line
with Schedule VII to the Companies Act, 2013 (the 'Companies Act'). These programmes are
being undertaken in the vicinity of your Bank's operational areas.
For the seamless implementation and monitoring of the CSR programme,
your Bank has constituted the Corporate Social Responsibility Committee of the Board of
Directors ('CSRCB'), in accordance with the provisions of Section 135 of the Companies Act
read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 ('CSR
Rules'). During the FY under review, the scope of the CSR Committee has been broadened to
oversee the implementation of the Business Responsibility and Sustainability Reporting
('BRSR') related initiatives of the Bank and accordingly, the name of the Committee has
been changed to the Corporate Social Responsibility and Sustainability Committee of the
Board ('CSR&SCB'). The composition of the CSR&SCB is given in the Corporate
Governance Report which forms part of this Report.
During the year under review, your Bank has contributed ?52.93 crore
towards 19 CSR programmes implemented through a Project Implementing Agency ('PIA'). These
CSR programmes were spread across 379 project locations in 63 districts of 8 states of
India, reaching out to 4,08,789 individuals during the FY under review.
In terms of the provisions of Rule 8(3) of the CSR Rules, your Bank
appointed KPMG Assurance and Consulting Services LLP ('KPMG') to carry out an independent
Impact Assessment of its CSR Programmes. Further, in terms of the General Circular No. 14
/2021 dated August 25, 2021, issued by the Ministry of Corporate Affairs, Government of
India, the Impact Assessment Report is available at the Bank's website
https://www.bandhanbank.com/ beyond-banking, and the programme wise summary of the same is
mentioned in the subsequent sections.
The details of CSR programmes undertaken pursuant to the provisions of
the Companies Act and in accordance with the Annual Action Plan, during the FY under
review are given as Annex - 1 and forms part of this Report. The CSR Policy as recommended
by the CSR&SCB and approved by the Board is available on the Bank's website:
https://bandhanbank.com/sites/default/files/2023-01/ CSR-Policy-210123.pdf.
Some of the key programmes of your Bank's CSR initiatives are:
Targeting the Hard-Core Poor Programme
During the year under review, your Bank has contributed Rs. 16.50 crore
(?27.88 crore in FY 2021-22 and ?18.20 crore in FY 2020-21) towards the three projects of
Targeting the Hard-Core Poor ('THP') programme. The programme is designed for ultrapoor
women-headed households, providing them with a range of gainful micro-enterprises in the
form of farm, non-farm and mixed assets, along with handholding support and training on
confidence building, enterprise skills, consumer interaction, marketing and financial
skills. They are also provided with sustenance allowance to meet their daily needs until
they generate substantial income from the provided assets. Within a period of 18-24
months, these ultra-poor women start graduating, uplifting themselves from extreme poverty1
and getting linked to mainstream society2.
During the year under review, 18,000 ultra-poor women were provided
farm, non-farm and mixed assets to sustain their livelihoods. These women belonged to 11
districts of Assam, Jharkhand, Odisha, Uttar Pradesh and West Bengal.
The Impact Assessment Study carried out by KPMG indicated that between
the period of 2017 and 2022, more than 29,000 women were alleviated from below the poverty
line to above the national poverty line (?1,059.42 for rural and ?1,286 for urban areas)
with a significant increase in their business assets and household income having a monthly
income of at least ?4,000 and an average monthly income of ?7,000. Additionally, 29,487
women had improved savings habits and access to safe and secure shelter.
In addition to the above impact assessment study, an independent,
long-term study conducted by the Nobel Laureate Dr Abhijit Banerjee et.al.3,
based on Randomised Control Trials ('RCT') method, found that seven years after the asset
was first distributed, the average income from the farm, non-farm and daily wages of the
treatment group was higher by 286 per cent., 100 per cent. and 25 per cent., respectively,
as compared to the average income of the control group. The study further emphasises that
this higher income was not because of more working hours, but because the income per hour
went up and they diversified their businesses and invested part of the gains from
livestock into other activities.
The study further states that the monthly consumption of those assigned
to the treatment group increased by 25 per cent. as compared to the increase of 12 per
cent. monthly consumption of those assigned to the control group. Further, the amount
deposited in the savings account by the treatment group was more than double as compared
to the control group and there was also an increase in institutional borrowings.
The study highlighted the positive effects across all categories of
outcomes. Compared to non-beneficiaries, the beneficiaries' households of the programme
have more assets, food security is higher, earn more, and are financially better off. The
results for the adult-level indexed variables of the study indicated that the individuals
are healthier, happier, and less stressed. Furthermore, the effects (except for productive
assets) almost always grows over time, suggesting that the programme may have put
beneficiaries' household on a different trajectory.
Bandhan Health Programme
During the FY under review, your Bank has contributed Rs. 12.02 crore
(?18.49 crore in FY 2021-22 and ?15.67 crore in FY 2020-21) towards six health programmes
covering 34 districts in five states of India. The health programmes covered 2,22,042
1 Poverty Line benchmarked according to the Suresh Tendulkar
Committee Poverty Lines per capita monthly expenditure, 2011-12, Niti Aayog, Government of
India
2 India SDG Index Score for Goal 1 - No Poverty; Goal 2 - Zero
Hunger and SGD 5 - Gender Equality
3 Abhijit Banerjee, Esther Duflo, Raghabendra Chattopadhyay and
Jeremy Shaprio. 2016. The Long Term Impacts of a "Graduation" Program: Evidence
from West Bengal. Working Paper, September, 2016. J-PAL, MIT, Cambridge, Massachusetts.
USA.
beneficiaries during the year.
The Impact Assessment study conducted by KPMG indicated that the
programme contributed in the improvement of institutional deliveries increased by 10 per
cent. in phase III project and 2 per cent. in phase IV project. The complete ante-natal
care ('ANC') increased by 4 per cent. in both phase III and phase IV projects whereas the
complete immunisation increased by 10 per cent. in phase III and 21 per cent. in phase IV
projects. The study further estimated that over 3.23 lakh children were covered under the
nutrition initiative between 2017 and 2021. The study also highlights that there has been
a reduction in malnutrition among children below five years of age from 14 per cent. to 4
per cent.
A study conducted by Grameen Foundation and Freedom from Hunger India
Trust from 2015 to 20 184, concluded that there was an increase in the level of
awareness on Mother and Child Health ('MCH') from less than 10 per cent. to greater than
90 per cent. amongst the women who participated in the health awareness programme and the
awareness amongst the adolescent girls on managing menstrual complications increased from
20 per cent. to 80 per cent.
Bandhan Education Programme
Your Bank's education programme provides quality education to the
children belonging to the marginalised section of society in your Bank's catchment area.
The education programme enables the children to improve their learning outcomes,
especially in Science, Technology, Engineering and Mathematics ('STEM') subjects and
increase their retention and classroom engagement. The programme also provides training to
the teachers belonging to the communities, government schools and schools run by the
various charitable trust who are providing free education to transform their pedagogy and
integrated various teaching and learning tools in their lesson plans and track the
comprehensive continuous assessment of each child.
Your Bank contributed ?15.99 crore (?17.01 crore in FY 2021-22 and
?14.80 crore in FY 2020-21) towards the education programme benefiting 62,574 marginalised
children across 43 districts of five states of India.
The Impact Assessment study conducted by KPMG indicated that over 85
per cent. of the parents across the states applauded the good quality of education
provided at Bandhan Education Centre ('BEC'). The respondents highlighted that there had
been an improvement in the academic performance in English and Mathematics of their wards
in formal schools due to the support provided at the BECs. The parents and guardians
shared that the staff at BEC provided them with hand-holding support during the enrolment
of their children in formal schools.
Skill Development Programme
Your Bank's skill development initiatives provide market-linked and
job-ready employable skills to the youths from marginalised sections of the society in
various domains. This initiative not only provides on-job training and job placement
facilitation in the
organised sector but also a follow-up of the placements so that the
youths are settled in their job post-training.
During the year, your Bank contributed ?3.69 crore (?4.79 crore in FY
2021-22 and ?4.89 crore in FY 2020-21) towards the skill development initiatives in 18
districts of five states of India. These PIAs operated 11 skill development centres in
domains like Warehousing and Logistics, Retail and Customer Care, Sales and Marketing,
ITeS and BPO, Refrigeration and Air Conditioning, Computer Accounting, Hardware and
Networking, BFSI, etc.
Overall 22,220 youths have been trained under this programme till date,
of which 75 per cent. were placed with net salaries ranging from ?8,000 to ?15,000 plus
other performance-based allowances and social security benefits like Provident Fund (PF)
and Employee State Insurance (ESI).
The study conducted by KPMG indicated that between 2016 and 2021,
11,191 youths were trained with a placement rate of over 68 per cent. These youths earned
salaried income in the organised sector with an average salary of ?13,265 with an average
increase in the monthly household income by 24 per cent.
Water Conservation
The water conservation initiative aims at water security and
drought-proofing in some of the high moisture-stressed regions of India, thereby providing
a safety net to agriculture and livestock- based livelihoods. These initiatives facilitate
participatory watershed management by empowering the communities to participate in the
planning and implementation of local water resource development. Measures such as
building, reviving and maintaining water-harvesting structures, prioritisation and
judicious use of water for every community member, crop planning and water- efficient
farming, use of drought-resistant varieties, cultivation of high-value crop requiring less
water, etc., create a multiplier effect in drought-proofing and climate change adaptation
measures and higher income generation. The programme has supported the construction of 23
water harvesting structures with a storage capacity of over 1,20,000 kilolitres of water
in two states, which not only provided drinking water to over 1,500 families but also
supported participatory irrigation of various crops and helped in generating an income of
more than ?123 lakh.
Afforestation
Your Bank's afforestation initiatives have contributed towards the
project of establishing a "Bio-shield" to save the mangroves in the Bharuch
district of Gujarat. Mangrove plantation of 67,540 saplings was carried out on 20 Hectares
in a stretch of 1 km of coastline along with plantation of other medical plant species and
fodder species, sequestering over 4,400 tonnes of CO2 annually. The fodder bank
was created to offset the biotic pressure from the mangrove area. The project created
4,629 person-days of employment and benefited 9,123 beneficiaries with additional
income-generating avenues from fodder and medicinal plant harvesting.
4 Alison Burgon Bardsley, Bobbi Gray, Cassie Chandler, and Sabina
Rogers (2018). Maa Aur Shishu Swasthya (MASS) Mother and Child Health Program, 20152018.
Final Project Report. December 2018. Grameen Foundation and Freedom from Hunger India
Trust. https://grameenfoundation.org/documents/ MASS Final Evaluation Report 2018
Final.pdf
Dividend
Pursuant to Regulation 43A of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 ('SEBI LODR'), the Board of Directors of your
Bank has adopted a Dividend Distribution Policy that, inter-alia, balances the objectives
of appropriately rewarding shareholders and retaining capital to maintain a healthy
capital adequacy ratio. In addition to the Dividend Distribution Policy, the dividend
payout ratio of the Bank is guided by the Circulars on dividend issued by RBI, from time
to time. The Policy is available on the Bank's website at https://bandhanbank.com/
sites/default/files/2022-09/Dividend-Distribution-Policy.pdf.
In line with this policy and in recognition of the financial
performance during FY 2022-23, while retaining capital to maintain a healthy capital
adequacy ratio to meet growth requirements, your Directors are pleased to recommend a
dividend of Rs. 1.50 per equity share of ?10 each fully paid-up (15 %) for the financial
year 2022-23, as against no dividend for the financial year 2021-22, for approval by the
shareholders at the 9th Annual General Meeting ('AGM') of the Bank.
Pursuant to the provisions of Income-tax Act, 1961 ('IT Act'),
dividends paid or distributed by the Bank shall be taxable in the hands of the
shareholders and the Bank shall be required to deduct tax at source ('TDS') at the
prescribed rates from the dividend to be paid to Members, subject to the approval of
dividend by the shareholders in the ensuing AGM. Further details are available in the
notice of the 9th AGM of the Bank.
Transfer to Reserves
In line with the RBI regulations, your Bank has transferred an amount
of ?548.66 crore to the statutory reserve during the financial year ended March 31, 2023.
Issuance of Equity Shares & Capital Adequacy Ratio
During the FY under review, your Bank has allotted 70,613 equity shares
of ?10 each fully paid-up pursuant to exercise of stock options by the eligible Employees
of your Bank, aggregating to face value ?7,06,130.
Post allotment of aforesaid equity shares, the issued, subscribed and
paid-up equity share capital of your Bank stood at ?16,10,83,64,800, comprising
1,61,08,36,480 equity shares of ?10 each fully paid-up as on March 31, 2023.
Your Bank has not issued any equity shares with differential voting
rights during the FY under review.
The authorised share capital of the Bank was ?32,00,00,00,000,
comprising 3,20,00,00,000 equity shares of ?10 each, as on March 31, 2023.
Your Bank's capital adequacy ratio ('CAR'), calculated in line with the
RBI Circular on Capital Adequacy Framework, stood at 19.76 per cent. as on March 31, 2023,
well above the minimum regulatory requirements, out of which Tier 1 CAR was 18.70 per
cent. and Tier 2 CAR was 1.06 per cent.
Performance and Financial Position of the Subsidiaries, Associates or
Joint Venture
Your Bank did not have any subsidiary, associate or joint venture
company during the FY 2022-23. Accordingly, no statement is required to be reported in
Form AOC-1.
Awards and Recognitions
Your Bank has received several prestigious awards and recognitions from
various revered institutions during the FY under review, which are as under: -
1. Your Bank was recognised as one of the world's best banks by Forbes
and Statista.
2. Your Bank received the 2023 Gallup Exceptional Workplace Award. The
Bank was among the only 57 organizations worldwide that received this recognition.
3. Your Bank received the IBS Intelligence Global Fintech Award for its
exceptional implementation of corporate internet banking.
4. Your Bank received The Pride of India Brands Award by Exchange for
Media, in recognition of its innovative and excellent products, processes, and marketing
practices.
Rating of Various Debt Instruments
Details of rating of various debt instruments of the Bank as on March
31, 2023 are as under:
| Instruments |
Rating |
Rating Agency |
Amount (^ in Crore) |
| Term Loan from Banks |
[ICRA]AA(Negative) |
ICRA |
80 |
| Certificate of Deposit |
[ICRA]A1+ |
ICRA |
6,000(1) |
|
CRISIL A1+ |
CRISIL |
|
| Non-Convertible |
[ICRA]AA(Negative) |
ICRA |
1,560 (2) |
| Debentures131 |
CRISIL AA/Negative |
CRISIL |
|
1 rating of ICRA is for ?3,000 crore only
2 rating of ICRA is for ?110 crore only
3 transferred from erstwhile Gruh Finance Limited pursuant to the
effectiveness of the Scheme of Amalgamation.
Board of Directors
The composition of the Board of Directors of your Bank ('Board') is
governed by the provisions of the Companies Act, the Banking Regulation Act, 1949 (the 'BR
Act'), the SEBI LODR, other applicable laws and its Articles of Association. At the end of
March 31, 2023, the Board of your Bank had thirteen Directors, out of which nine were
Independent Directors, two were Non-Executive Non-Independent Directors i.e. one Nominee
each of Bandhan Financial Holdings Limited and Caladium Investment Pte. Ltd., and the
Managing Director & CEO, and one Executive Director.
Appointments
Mr. Ratan Kumar Kesh (DIN: 10082714)
The Board of Directors of the Bank, at its meeting held on March 21,
2023, on the basis of the recommendation of the Nomination and Remuneration Committee of
the Bank ('NRC') and as per the approval granted by the RBI vide its letter dated March
20, 2023, had approved the appointment of Mr. Ratan Kumar Kesh
(DIN: 10082714) as the Whole-time Director [Category: Additional
Director], designated as Executive Director ('ED') and Key Managerial Personnel of the
Bank, for a period of three years, liable to retire by rotation, with effect from March
31, 2023, subject to Shareholders approval. Accordingly, approval of the Shareholders of
the Bank has been sought vide Postal Ballot Notice dated May 19, 2023 for appointment of
Mr. Kesh as the Whole-time Director, designated as ED and Key Managerial Personnel, for a
period of three years, with effect from March 31, 2023 up to March 30, 2026, as per the
said approval granted by the RBI.
Mr. Ratan Kumar Kesh, a BE Mechanical from NIT, Durgapur, has more than
28 years of experience in multiple industries including Banking & Finance,
Manufacturing and Service Industry. He is an Advanced Quality Engineer from Quality
Council of Indiana, USA. He possesses a Post Graduate Diploma in Business Management from
NMIMS, Mumbai. He has also completed a Business Leadership Course from IIM, Ahmedabad
& a Strategic Agility Leadership Course from Harvard Business School.
With nearly three decades of stellar experience, Mr. Kesh has a track
record of leading complex operations including transformation, automation, customer
experience, quality improvement and other related functions. He is a hands-on leader who
has helped scale and address operational challenges with ease consistently at reputed
banking organisations in India namely ICICI Bank, HDFC Bank, Yes Bank and Axis Bank.
Re-appointments
Ms. Divya Krishnan (DIN: 09276201)
In terms of the provisions of Section 152 of the Companies Act, Ms.
Divya Krishnan, Non-Executive Non-Independent Director (Nominee of Bandhan Financial
Holdings Limited), being longest in office, shall retire at the ensuing AGM and being
eligible, offers herself for re-appointment.
Mr. Subrata Dutta Gupta (DIN: 08767943) and Mr. Suhail Chander (DIN:
06941577)
Mr. Subrata Dutta Gupta and Mr. Suhail Chander were appointed as
Independent Directors of the Bank, effective March 19, 2021, for a period of three years
each and their respective current terms are expiring on March 18, 2024. Accordingly,
considering the outcome of their performance evaluation, notices received under Section
160 of the Companies Act from member(s) proposing their candidature for the office of
Directors and the recommendations of the NRC, the Board, at its meeting held on May 26,
2023, has approved their re-appointments as Independent Directors of the Bank, not liable
to retire by rotation, for the second term of five years each, effective March 19, 2024,
subject to the approval of Shareholders of the Bank, by way of special resolution(s), at
the ensuing AGM.
The resolution(s) in respect of re-appointment(s) of the Directors, as
aforesaid, have been included in the Notice convening the 9th AGM of the Bank. Brief
profiles of these Directors, together with other requisite disclosures/details, have been
annexed to the said Notice. None of the Directors proposed for re-appointment, will attain
the age of 75 years during the continuation of their tenure
on the Board of the Bank.
Shareholders approved appointments/ re-appointments
During the FY under review, the following appointments/re- appointments
were approved by the Shareholders at the 8th AGM of the Bank held on August 10, 2022:
• Appointment of Ms. Divya Krishnan (DIN: 09276201) as a
Non-Executive Non-Independent Director of the Bank (Nominee of Bandhan Financial Holdings
Limited), liable to retire by rotation, effective May 11, 2022.
• Appointment of Mr. Philip Mathew (DIN: 09638394) as an
Independent Director of the Bank, not liable to retire by rotation, for a period of three
years, effective June 15, 2022.
• Appointment of Dr. Aparajita Mitra (DIN: 09484337) as an
Independent Director of the Bank, not liable to retire by rotation, for a period of three
years, effective July 13, 2022.
• Re-appointment of Dr. Holger Dirk Michaelis (DIN: 07205838),
Nominee Director of Caladium Investment Pte. Ltd., being longest in office and liable to
retire by rotation, retired at the 8th AGM of the Bank, and who, being eligible, had
offered himself for re-appointment.
• Re-appointment of Mr. Narayan Vasudeo Prabhutendulkar (DIN:
00869913) as an Independent Director of the Bank, not liable to retire by rotation, for
the second term of five years, effective May 08, 2023.
• Re-appointment of Mr. Vijay Nautamlal Bhatt (DIN: 00751001) as
an Independent Director of the Bank, not liable to retire by rotation, for the second term
of five years, effective May 08, 2023.
Cessations
During the financial year under review, the following Directors ceased
to hold office of Director:
• Mr. Ranodeb Roy (DIN: 00328764) ceased to be a Non-Executive
Non-Independent Director with effect from May 11, 2022 pursuant to the withdrawal of his
nomination by Bandhan Financial Holdings Limited from the Board of the Bank.
• Mr. Snehomoy Bhattacharya (DIN: 02422012), Independent Director,
completed his second term of four years on the Board of the Bank on July 08, 2022.
Accordingly, he ceased to be the Director of the Bank effective July 09, 2022.
• Ms. Raji Thekedathumadam Subramani Gain (DIN: 07256149),
Independent Director, completed her second term of four years on the Board of the Bank on
August 05, 2022. Accordingly, she ceased to be the Director of the Bank effective August
06, 2022.
Necessary disclosures in this regard have been made to the Stock
Exchanges, the RBI and the Ministry of Corporate Affairs. The Board places on record its
sincere appreciation for the contributions made by Mr. Roy, Mr. Bhattacharya and Ms. Gain
during their tenure as Directors of the Bank.
Key Managerial Personnel
During the financial year under review, Mr. Ratan Kumar Kesh was
appointed as Executive Director and Key Managerial Personnel for a period of three years
effective March 31, 2023. Accordingly, Mr. Chandra Shekhar Ghosh, MD & CEO; Mr. Ratan
Kumar Kesh, Executive Director; Mr. Sunil Samdani, Chief Financial Officer; and Mr.
Indranil Banerjee, Company Secretary of the Bank are the Key Managerial Personnel of the
Bank, as per the provisions of the Companies Act and rules made thereunder.
Meetings of the Board and Board Committees
The Board met fifteen times during the FY under review i.e., on May 11,
2022; May 13, 2022; June 15, 2022; July 13, 2022; July 22, 2022; September 14, 2022;
October 26, 2022; October 28, 2022; December 29, 2022; January 18, 2023; January 20, 2023;
February 23, 2023; February 24, 2023; March 21, 2023 and March 31, 2023. The details of
the Board meetings held during the FY, attendance of Directors at the meetings, and other
details have been provided separately in the Report on Corporate Governance forming part
of this Report.
Your Bank currently has the following nine Board Committees:
1. Audit Committee;
2. Nomination & Remuneration Committee;
3. Stakeholders' Relationship Committee;
4. Risk Management Committee;
5. IT Strategy Committee;
6. Customer Service Committee;
7. Corporate Social Responsibility and Sustainability Committee;
8. Committee of Directors;
9. Special Committee for Monitoring High Value Frauds.
Additionally, meeting(s) of Independent Directors, without the
attendance of non-independent directors and members of management, were also held during
the FY under review. The details of such meeting(s) have been provided separately in the
Report on Corporate Governance forming part of this Report.
The details with respect to the composition, terms of reference,
numbers of meetings held, attendance of members, etc., of these Board Committees are
provided in the Report on Corporate Governance forming part of this Report, enclosed as
Annex - 4.
Declaration from Independent Directors
The Bank has received necessary declarations from all the Independent
Directors under Section 149(7) of the Companies Act and Regulation 25(8) of the SEBI LODR
that they meet the criteria of independence laid down under Section 149(6) of the
Companies Act read with allied Rules, and Regulation 16(1)(b) of the SEBI LODR,
respectively. The Board has reviewed the disclosures of independence submitted by the
Independent Directors and is of the opinion that the Independent Directors of the Bank
fulfil the conditions specified in the Companies Act and the SEBI LODR, and are
independent of the management. In the opinion of the
Board, all the Independent Directors possess requisite expertise,
experience, integrity and proficiency as required under the applicable laws and policies
of the Bank.
Familiarisation Programmes for Independent Directors
The details of the familiarisation programme(s) for the Independent
Directors of the Bank have been provided separately in the Report on Corporate Governance
forming part of this Report.
Board Evaluation
Pursuant to recommendation of the NRC, the Board has framed the
'Performance Evaluation Policy for the Board, Committees, NonIndependent / Whole Time
Directors and Independent Directors' (the 'Board PE Policy'), in accordance with the
relevant provisions of the Companies Act, the SEBI LODR and SEBI Guidance Note on Board
Evaluation. In terms of the Board PE Policy, performance evaluation of the Board and its
Committees, Chairman and individual Directors are done on various parameters. Parameters
for the Board include various aspects, such as, structure, meetings, appointments, agenda,
discussions, roles and responsibilities, evaluation of risks, strategy, governance and
compliance, conflict of interest, etc.
Parameters for Board Committees include various aspects, such as,
mandate and composition, effectiveness, meetings, agenda, minutes, discussion and dissent,
independence, etc.
Parameters for the Directors include various aspects, such as,
knowledge and competency, integrity, functioning, commitment, contribution, attendance,
initiative, teamwork, communication, corporate governance, updates, etc., and in case of
Independent Directors, additional parameters include fulfilment of the independence
criteria and their independence from the management.
The evaluation process has been carried out electronically. The Board
of Directors has done the evaluation of Independent Directors, excluding the Independent
Director being evaluated. Similarly, Independent Directors have done the evaluation of the
Board as a whole, Non-Executive Chairman and Non-Independent Directors, including the MD
& CEO. The Chairmen of Board Committees have done performance evaluation of their
respective Committees. Thereafter, the report on performance evaluation of Directors,
excluding NRC members, and the Chairman was submitted to the NRC, whereas the report on
performance evaluation of the Board as a whole, Board Committees and Directors who were
NRC members was submitted to the Board for necessary action. The NRC, after considering
the performance evaluation report of Directors, excluding NRC members, made its
recommendations to the Board for continuation / reappointment of Directors. Thereafter,
the Board considered the recommendations of the NRC, and report on the performance
evaluation of the NRC members, the Board as a whole and the Board Committees. The Board
evaluation has provided some valuable inputs for optimising the roles and
responsibilities, quality, quantity and timeliness of flow of information between the
Bank's management and the Board.
The Board of Directors of the Bank is satisfied with the outcome of the
performance evaluation process. They were of the view that the Directors have been
discharging their roles and responsibilities as expected by the Board and as required
under the applicable regulatory provisions. The Board continues to be duly constituted
representing various expertise, skill sets, knowledge and qualification required for the
banking business. There was no observation during the performance evaluation of the
previous years; and so is the case with the current year.
Appointment of Directors
Appointment of Directors on the Board is guided by the provisions of
the BR Act and the guidelines/ circulars issued by the RBI, from time to time, the
Companies Act and the SEBI LODR. In view of these provisions, your Bank has adopted a
'Policy on Appointment and Fit & Proper Criteria for Directors'. In terms of this
Policy, while appointing directors, the NRC / Board considers fit and proper criteria,
various skill sets, professional knowledge, practical experience, integrity, gender
diversity and additionally, status of independence in case of Independent Directors. The
details of the same have been included in the Report on Corporate Governance forming part
of this Report. The Policy on Appointment and Fit & Proper Criteria for Directors is
reviewed on annual basis and accordingly the Policy was reviewed by the Board on the
recommendations of the NRC without any changes. The Policy is available on the Bank's
website at: https://bandhanbank.com/
sites/default/files/2022-09/Policy-on-Appointment-and%20Fit-
and-Proper-Criteria-for-Directors.pdf.
Remuneration Policy
Your Bank has formulated and adopted a comprehensive 'Compensation
Policy' for its Directors, Key Managerial Personnel and Employees, in terms of Section 178
of the Companies Act, read with the relevant Rules made thereunder, Regulation 19 of the
SEBI LODR and the guidelines /circulars issued by the RBI, in this regard, from time to
time. The details of the same have been included in the Report on Corporate Governance
forming part of this Report. The Compensation Policy is reviewed on annual basis and
accordingly, the Policy was reviewed by the Board on the recommendation of the NRC to
align with the regulatory requirements. The updated Compensation Policy of your Bank is
available on the Bank's website at: https://bandhanbank.com/
sites/default/files/2023-04/Compensation-Policy-050423.pdf.
Employees Remuneration
As on March 31, 2023, your Bank had 69,702 employees. The statement
containing particulars of employees as required under Section 197(12) of the Companies Act
read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, is appended separately as Annex - 2(a) and forms part of this
Report. The ratio of the remuneration of each Director to the median remuneration of the
employees of your Bank and other details in terms of Section 197(12) of the Companies Act
read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, are also forming part of this Report as Annex - 2(b).
Employee Stock Options
Your Bank has instituted Employees Stock Option Scheme ('ESOP'), i.e.,
Bandhan Bank Employee Stock Option Plan Series 1 ('ESOP Scheme') to enable its employees
to participate in your Bank's future growth and financial success. Your Bank provides its
employees with a platform for participating in important decision making and instilling
long-term commitment towards the future growth of the Bank by way of rewarding them
through stock options. ESOP Scheme of your Bank is in compliance with the provisions of
the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ('SEBI
SBEBSE') and no change has been made therein during the financial year under review. The
ESOP Scheme is administrated by the NRC. In terms of the ESOP Scheme, the Options would
vest not earlier than one year and not later than four years from the date of grant as
decided by the NRC /Board. The Options granted shall be equally vested over four years.
The exercise period shall be a maximum of five years from the date of the respective
vesting of Options. Since your Bank has been allotting fresh equity shares upon exercise
of Options, the source of the shares is of primary issuance.
In terms of the Compensation Policy of your Bank and the Shareholders'
approved ESOP Scheme, fresh grants have been made during the financial year under review
to the eligible employees. Except the MD & CEO, none of the Directors was issued the
stock options during the financial year under review. The information pertaining to the
ESOP Scheme as prescribed under the SEBI SBEBSE are available on the website of the Bank
at https://bandhanbank.com/annual-reports.
Further, as required under the SEBI SBEBSE, a certificate from the
Secretarial Auditor of the Bank certifying that your Bank has implemented the ESOP Scheme
in accordance with the applicable provisions of the SEBI SBEBSE and resolution(s) passed
by Shareholders, will be made available electronically during the AGM.
Deposits
Being a banking company, the disclosures required as per Rule 8(5)(v)
& (vi) of the Companies (Accounts) Rules, 2014, read with Sections 73 and 74 of the
Companies Act, are not applicable to your Bank. The details of the deposits received and
accepted by your Bank, as a banking company, are enumerated in the Financial Statement for
the FY ended March 31, 2023, forming part of this Annual Report for FY 2022-23.
Internal Financial Controls, Audit and Compliance
Your Bank has an Internal Audit Department ('IAD') and a Compliance
Department ('CD'), which independently carry out evaluation of the adequacy of all
internal controls. These departments ensure that operating and business units adhere to
the laid down internal processes and procedures as well as to the regulatory/statutory and
legal requirements.
The Compliance Function is one of the key elements in your Bank's
corporate governance structure. The compliance starts from the top, and the Board &
the Senior Management play an important
role in driving the compliance culture. Your Bank remains committed to
adhere to the highest standards of compliance vis-avis regulatory prescriptions and
internal guidelines. Your Bank has a robust Compliance Policy, outlining the compliance
philosophy, and roles and responsibilities of the CD.
The CD assists the Board and Top/Senior Management in managing the
compliance risk of your Bank. The CD ensures that overall business of your Bank is
conducted in strict adherence to the guidelines issued by the RBI and other regulators,
various statutory provisions, standards and codes prescribed by FEDAI, FIMMDA, etc. by
evaluating the products / processes, guiding business departments on the various
regulatory guidelines with a special emphasis on better understanding of the perspective.
It closely works with operational risk and internal audit functions and monitors various
activities of your Bank with more emphasis on active risk management.
As the focal point of contact with the RBI and other regulatory
entities, the CD evaluates the adequacy of internal controls and examines any systemic
correction that is required, based on its analysis and interpretation of regulatory
guidelines and deviations observed during monitoring and testing. Your Bank has a robust
Anti Money Laundering ('AML') framework and tools to manage the AML risk. It periodically
apprises the Audit Committee of the Board ('ACB'), the Board and the Top/Senior Management
on compliance levels, based on the changes in the external regulatory environment. The CD
submits the compliance report to the ACB at regular intervals providing the compliance
status with the laws/ rules and regulations applicable to the Bank.
The IAD independently carries out audit of various functions in the
Bank, primarily to assess the effectiveness of internal control in critical systems and
processes, and compliance with regulatory guidelines. The Bank has put in place
appropriate preventive and detective controls including segregation of duty, dual
controls, monitoring processes, checking of audit trails, supervisory reviews, etc., to
mitigate the various risks emanating from banking business. IAD further ensures that
independent checks and balances are in place, and that laid down policies and procedures
are followed and also recommends improvements in operational processes and systems
proactively.
To maintain the independence of these departments, the performance
evaluation of the Chief Compliance Officer ('CCO') and the Chief Audit Executive ('CAE')
is carried out by the ACB.
Considering the internal financial controls, audit and compliance
systems of the Bank, and the work performed by the auditors, including the audit of
internal financial controls over financial reporting by the statutory auditors and the
reviews performed by management under the supervision of the ACB, the Board of Directors
is of the opinion that the internal financial controls established and maintained by the
Bank are adequate.
Related Party Transactions
During the year under review, there were no materially significant
transactions with related parties, which could lead to a potential conflict of interest
between the Bank and these parties. Prior- approval of the ACB is sought for all the
related party transactions. Further, prior omnibus approval is also obtained from the ACB
for the related party transactions, which are of repetitive nature as well as for the
normal banking transactions which cannot be foreseen. The quarterly update on the details
of transactions with the related parties, are placed before the ACB. The Related Party
Transactions that were entered, during the FY under review, were on an arm's length basis
and were in the ordinary course of business, pursuant to the approval of the ACB. In terms
of the amended definition of Related Party under the SEBI LODR, the promoter and member of
promoter group are considered as Related Parties with effect from April 01, 2022.
Accordingly, in terms of the provisions of Regulation 23 of the SEBI LODR, the approval of
Shareholders were obtained at 8th AGM of the Bank for material related party transactions
with the promoter entities i.e. Bandhan Financial Holdings Limited, Bandhan Financial
Services Limited, Financial Inclusion Trust and North East Financial Inclusion Trust for
the FY 2022-23 and upto 9th AGM of the Bank for banking transactions at arm's length and
in ordinary course of banking business of the Bank. The proposal for material related
party transactions for FY 2023-24 and upto 10th AGM of the Bank is being submitted before
the shareholders at 9th AGM for their approval.
There were no Related Party Transactions required to be reported in
Form AOC-2. However, necessary disclosure as required under the Accounting Standards (AS
18) read with RBI's Master Direction No.: RBI/DOR/2021-22/83
DOR.ACC.REC.No.45/21.04.018/2021- 22 dated August 30, 2021, as may be updated from time to
time, has been made in the note no. 18.11 to the Annual Financial Statement for the FY
2022-23. Your Bank has a Policy on dealing with Related Party Transactions, which is
reviewed on annual basis and accordingly the Policy was reviewed by the Board on the
recommendation of the ACB without any changes. The Policy is available on the Bank's
website: https://bandhanbank.com/
sites/default/files/2022-09/Policy-on-Dealing-with-Related-Party- Transactions.pdf.
Particulars of Loans, Guarantees or Investments
In terms of the provisions of Section 186(11) of the Companies Act, the
provisions of Section 186 of the Companies Act, except sub-section (1) thereof, do not
apply to any loan made, any guarantee given, security provided, or any investment made by
a banking company in the ordinary course of its business. However, the particulars of
investments made by the Bank are disclosed in the Financial Statement for the FY 2022-23,
as per the applicable provisions of the BR Act.
Whistle Blower Policy/Vigil Mechanism
Your Bank has adopted the Board approved 'Policy on Vigilance and
Whistle Blower Mechanism', as required under Section 177 of the Companies Act, Regulation
22 of the SEBI LODR and applicable circulars issued by the RBI. During the financial year
under review, as part of annual review process, the Board on the basis of recommendation
of the ACB, segregated the Policy into two Policies i.e. Vigilance Policy and Whistle
Blower Policy. The Whistle Blower Policy aims at putting in place a Detailed Protected
Mechanism based on the directions of RBI ('Protected Disclosures Scheme for Private Sector
and Foreign Banks') and also provide
an avenue to raise concerns on Ethical, Legal or Regulatory violations
and promptly addressing them while assuring the confidentiality and protection of the
Whistle Blower against any form of retaliation. The complaints / disclosures under the
Scheme covers the areas such as corruption / malpractices, misuse of office, criminal
offences, suspected / actual fraud, failure to comply with existing rules and regulations,
where such acts result in financial loss / operational risk, loss of reputation, etc.
which may be detrimental to the interest of the Bank, its depositors and the public.
Your Bank promotes and makes available at all times, a Clean, Open and
Transparent workplace, wherein business transaction, professionalism and productivity are
seen as hallmarks of business practice. Your Bank is also committed to conduct all its
business operations and transactions by maintaining highest ethical, moral and legal
standards.
Your Bank encourages its employees, all stakeholders and members of
general public, who have concerns about suspected misconduct, to come forward and express
these concerns without fear of retaliation or unfair treatment. The Whistle Blower Policy
provides adequate safeguards against the victimisation of the Directors and employees who
avail this mechanism and ensures that the personnel get direct access to the Chairman of
the ACB. None of the Bank's personnel has been denied access to the ACB. The said Policies
are available on the Bank's website at
https://bandhanbank.com/pdfViewerJS/index.html#../sites/
default/files/2022-11/Whistle_Blower_Policy_291122.pdf and
https://bandhanbank.com/sites/default/files/2022-11/Vigilance_ Policy_291122.pdf.
Significant and Material Orders passed by Regulators or Courts or
Tribunals
During FY 2022-23, no significant or material orders were passed by any
Regulators or Courts or Tribunals against your Bank impacting its going concern status and
operations in future. For other details, please refer to note no. 18.8(A) to the annual
financial statement for the FY 2022-23.
Statutory Auditors and their Report
In terms of the 'Guidelines for Appointment of Statutory Central
Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and
NBFCs (including HFCs)' dated April 27, 2021 ('RBI Guidelines on Auditors') issued by the
RBI, banks shall appoint the Statutory Auditors for a continuous period of three years,
subject to the firms satisfying the eligibility norms each year and the approval of the
RBI on an annual basis. Further, in terms of the RBI Guidelines on Auditors and the Bank's
Policy for Appointment of Statutory Auditors, your Bank is required to appoint two
Statutory Auditors. Accordingly, the Members of the Bank at the 7th AGM held on August 06,
2021 had approved the appointment of M M Nissim & Co LLP, Chartered Accountants (ICAI
Firm Registration No. 107122W/W100672), as the Joint Statutory Auditors of the Bank for a
period of three years, to hold office from the conclusion of the 7th AGM until the
conclusion of the 10th AGM of the Bank to be held in 2024. Further, the Members of the
Bank at the 8th AGM held on August 10, 2022 had approved the appointment of M/s. Singhi
& Co., Chartered Accountants (ICAI
Firm Registration No. 302049E), as the Joint Statutory Auditors of the
Bank for a period of three years, to hold office from the conclusion of the 8th AGM until
the conclusion of the 11th AGM of the Bank to be held in 2025.
The Independent Auditor's Report, given by the Joint Statutory Auditors
on the financial statement of the Bank for the financial year ended March 31, 2023, forms
part of this Annual Report. There has been no qualification, reservation, adverse remark
or disclaimer given by the Auditors in their Report. Also, no offence of fraud was
reported by the Joint Statutory Auditors of the Bank under Section 143(12) of the
Companies Act.
Secretarial Auditor and its Report
Pursuant to the provisions of Section 204 of the Companies Act and
Regulation 24A(1) of the SEBI LODR, the Board had appointed CS Hansraj Jaria, Practising
Company Secretary (FCS No.: 7703, C.P. No.: 19394), as the Secretarial Auditor to conduct
Secretarial Audit of the Bank for FY 2022-23. Accordingly, the Secretarial Audit Report
for FY 2022-23 is enclosed to this Report as Annex - 3. There is no qualification,
reservation, adverse remark or disclaimer in the Secretarial Audit Report. Further, no
offence of fraud was reported by the Secretarial Auditor of the Bank under Section 143(12)
of the Companies Act.
Cost Records
In terms of the provisions of Section 148(1) of the Companies Act read
with Rule 3 of the Companies (Cost Records and Audit) Rules, 2014, your Bank is not
required to maintain cost records and accordingly, is not required to undergo cost audit.
Corporate Governance
Corporate Governance is based on the principles of conducting business
with integrity, fairness and being transparent in all transactions, making necessary
disclosures. Decisions are made in compliance with the laws of the land, with full
accountability and responsibility towards the stakeholders, and a commitment to conducting
all business in an ethical manner. Your Bank is committed to achieving the highest
standards of Corporate Governance and adhering to the Corporate Governance requirements
set by the regulators. A separate section on Corporate Governance standards followed by
your Bank and the relevant disclosures, as stipulated under the SEBI LODR, the Companies
Act and rules made thereunder, is enclosed to this Report as Annex - 4.
A Certificate from CS Anjan Kumar Roy, Practising Company Secretary
(C.P. No. 4557), regarding compliance with the conditions of Corporate Governance, as
stipulated in the SEBI LODR, is annexed to the Report on Corporate Governance, which forms
part of this Report.
Annual Return
Pursuant to the provisions of Section 92(3) read with Section 134(3)(a)
of the Companies Act, the draft Annual Return of the Bank, in Form No. MGT-7, as on March
31, 2023, is available on your Bank's website at https://bandhanbank.com/annual-reports.
Further, the final Annual Return of the Bank, as on March 31, 2023, will be available on
your Bank's website at the said link, upon filing of the same with the Registrar of
Companies under Section 92(4) of the Companies Act.
Management Discussion & Analysis
The Management Discussion & Analysis Report for the FY 2022-23, as
prescribed under the SEBI LODR, forms part of this Report, and is enclosed as Annex - 5.
Business Responsibility and Sustainability Report
In terms of the provisions of Regulation 34(2)(f) of the SEBI LODR read
with the SEBI's circular dated May 10, 2021, the Business Responsibility and
Sustainability Report ('BRSR') of your Bank providing its performance against the nine
principles of the 'National Guidelines on Responsible Business Conduct' (NGBRCs) forms
part of this Report, and is enclosed as Annex - 6.
Integrated Reporting
Your Bank has prepared an Integrated Report based on the principles
enunciated by the International Integrated Reporting Council, which has been hosted on the
website of your Bank and can be accessed at https://www.bandhanbank.com/annual- reports.
The report provides information including financial and non-financial parameters, which
would enable the members to make well informed decisions and have a better understanding
of your Bank's performance. It also deals with various aspects such as organisational
strategy, governance framework, performance and prospects of value creation, based on the
six forms of capital viz. financial capital, manufactured capital, intellectual capital,
human capital, social and relationship capital, and natural capital.
Compliance with Secretarial Standards
The Board of Directors affirms that your Bank has complied with the
applicable provisions of the Secretarial Standards issued by the Institute of Company
Secretaries of India, viz., SS-1 relating to Meetings of the Board and its Committees; and
SS-2 relating to General Meetings.
Information under the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013
Your Bank has adopted zero tolerance towards any action on the part of
any of its employees, which may fall under the ambit of 'sexual harassment' at workplace
and is fully committed to uphold and maintain the dignity of every woman constituent
associated with your Bank. It takes all necessary measures to ensure a harassment free
workplace and has instituted an Internal Committee for redressal of complaints and to
prevent/ prohibit sexual harassment, in compliance with the guidelines enumerated in the
Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
At the beginning of the FY under review, two complaints were pending and during the FY,
thirteen complaints were received, out of which twelve complaints had been closed during
the FY. Three complaints were pending at the end of the FY, which have since been closed.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
In our endeavour to achieve aggressive goals to reduce carbon
footprints, the conservation of energy has been integrated with the vision of the
organisation and its operations. Your Bank has made it mandatory to use BEE Standard
Energy Efficient equipment and promote Energy Efficient Building Design in line with
Energy
Conservation Building Code ('ECBC') in the upcoming projects. Some of
the steps undertaken by your Bank towards conservation of energy are as under:
• Smart building systems to achieve the highest level of
efficiency;
• At banking outlets, the focus is on insulation on walls and
roof, optimum window wall ratio, premises shape and orientation, and re-engineering and
retrofit of equipment;
• Tracking of energy consumptions at all levels and comparing with
the best international benchmarks;
• Incorporation of smart meters for energy use monitoring and
engagement with key stakeholders, at regular intervals, to drive energy conservation in
the organisation culture;
• Inclusion of the latest technologies in air-conditioning and
inductive equipment in terms of variable drives and improved IKW (Consumption per Ton) in
HVAC;
• Lighting: Incorporation of 100 per cent. LED for lighting,
daylight harvesting, timed illumination of signage through central monitoring system.
Natural daylight utilization is encouraged in your Bank premises;
• Daily operations and usage: Conservation through basic hygiene
practices on energy usage through occupancy sensors, zoning of electrical circuits and
master switches for premises. In the recent past, the Bank has put up three mega currency
chests with five star energy ratings;
• Water Conservation: Ground water recharge facilities through
rain water harvesting in upcoming projects, volume flow controls at each sink point, water
recycling through STPs.
The details on the Information Technology used by your Bank in its
operations have been provided under the section on 'Information Technology at the Bank' in
this Report.
The foreign exchange loss of the Bank was ?248.76 lakh {including the
net gains/ (losses) arising in all exchanges/derivatives transactions} whereas the foreign
exchange outgo was ?567.29 lakh during the Financial Year 2022-23.
Human Resource Management
Your Bank has rapidly adapted to the new norms post-COVID and started
to build the business and gain momentum in its growth journey. Your Bank has continued its
endeavor towards improving employee productivity, wellness, creating new genre-spanning
learning modules, and providing a forum for employee feedback. Your Bank continued
emphasizing the growth of branches and verticals in order to achieve better penetration
and reach out to every potential consumer market. A strong, collaborative, and empathetic
leadership model is at the heart of your Bank's strategy. Your Bank values its people and
the contributions they make, which have ensured its success.
Your Bank knows that employees need a sense of purpose and an
environment that supports productivity, creativity, and empowerment. This is why engaging
with employees and measuring that engagement is so important. Your Bank engaged a global
agency - Gallup, to conduct an employee survey and has given the
opportunity to more than 40.000 employees to voice their opinion. Your Bank is intending
to create a workplace of choice that offers a highly engaging working environment.
Your Bank has achieved below key milestones towards building a great
workplace with human centric approach:
• Competency based grade promotion process to nurture talent and
to elevate employee. 9,307 employees promoted during FY 2022-23;
• 5,690 employees were identified for role elevation during FY
2022-23 in the Bank to extend opportunity to internal talent;
• Continued adopting digitization for an enhanced employee
experience by Introducing portals like Bandhan Express.
• Revamped the Retail Asset Model and on-boarding more than 1,229
manpower during FY 2022-23. Your Bank has opened 31 Retail Asset centers across the
Country.
• Through the Campus Hiring program, your Bank created a young
talent base. During FY 2022-23, your Bank covered 154 Campus across country hiring 1,102
Fresh talent from premier colleges.
Your Bank's workforce has grown by 4.3X over the course of more than 7
years, creating a diverse mix of employee, building culture of values-driven growth,
professionalism, and ethical governance. The essential cornerstone of the Bandhan Bank
approach to resilience is a devoted and engaged team.
Our human resources management strategy is centred on creating a
supportive, interesting, and collaborative workplace while continuing to be
customer-centric, performance-driven, and future- ready. Your Bank has received the
"Gallup Exceptional Workplace Award" in recognition of its efforts in the area
of human resources. We rank among the most prestigious companies that are genuinely
altering how people perceive work and life as an award winner.
Employees' Learning and Development:
Both staff retention and performance improvement depend on employees'
growth and learning. Your Bank's training programs have evolved to upskill and prepare all
employees for the future. During FY 2022-23, more than 99 per cent. of the workforce
received at least one training through 12 learning centers, Bandhan EDGE (the online
platform), and external learning initiatives taken up by your Bank. More than 16 lakh
hours of training were imparted last year to your Bank's workforce at an average of 21.7
hours per employee.
Your Bank has a robust and comprehensive learning and development
program consisting of various internal training modules and a comprehensive learning
management system (LMS) platform used to deliver key e-learning programs to its employees.
Some of the program initiatives are as below:
• The development programs for leadership teams are conducted by
the Bank in alliance with several premier and reputable institutions.
• Promoting Culture of Ethics and Good Governance: By creating a
culture that encourages employees to act ethically; A total of 83 senior management
employees participated in the comprehensive Banking Ethics Program in FY2022-23.
• Programs on Regulatory Compliance: A number of learning measures
are implemented to improve employees' understanding of KYC and AML/CFT, and compliance.
All new hires are required to complete mandatory training modules covering the Code of
Conduct, Information Security, KYC-AML- CFT, and other important and sensitive
compliance-related topics.
• Management Development Programs: Management development programs
and leadership development programs are done internally and externally to build managerial
and leadership skills.
Risk Management
Your Bank operates an Integrated Risk Management Framework to manage
the risks inherent to the financial services industry as it aims to create maximum value
for shareholders, clients, employees and communities. Your Bank's view of risks is
dynamic, reflecting the pace of change in the financial services industry.
The framework ensures that the tools and capability are in place to
facilitate risk management and decision-making across the organisation. Risk appetite,
supported by a robust set of principles, policies and practices, defines the levels of
tolerance for a variety of risks and provides a structured approach to risk-taking within
agreed boundaries.
All Bank colleagues share ownership of the way the risk is managed,
working together to make sure business activities and policies are consistent with risk
appetite.
Risk Appetite
Risk appetite defines the levels and types of risk that are acceptable,
within risk capacity, in order to achieve strategic objectives and business plans. The
Risk profile, as a part of Risk Appetite Framework, links the goals and priorities to risk
management in a way that guides and empowers staff to serve customers well and achieve
financial targets providing a holistic representation of all risks that it holds at a
point in time, in the form of a dashboard.
Risk Culture
In your Bank, the target culture across is one in which risk is part of
the way employees work and think. The desired risk culture behaviours are aligned to your
Bank's core values forming an effective basis for risk culture since these are used for
performance management, recruitment and development.
The Board and Senior Management sets the "tone at the top"
and has a trickle-down effect on all employees. Thus, it supports a strong culture, which
is defined by your Bank's expectations, thereby guiding how employees conduct themselves,
work with colleagues, and make decisions. Your Bank has a well-defined Whistle Blower
Policy in place.
Stress Testing
Your Bank's Stress testing includes Scenario testing, which examines
the impact of a hypothetical future state to define changes in risk factors as also
Sensitivity testing, which examines the impact of an incremental change to one or more
risk factors. Your Bank also carried out reverse stress testing, in order to identify
circumstances that may lead to specific, defined outcomes.
Internal Capital Adequacy Assessment Process ('ICAAP')
Your Bank carries out an internal assessment of material risks (ICAAP)
annually to enable an evaluation of the amount, type and distribution of capital required
to cover these risks. The ICAAP consists of a point-in-time assessment of exposures and
risks at the end of the financial year, together with a forward-looking stress capital
assessment. The examination of capital requirements under normal economic and adverse
market conditions enables your Bank to determine whether its projected business
performance meets internal and regulatory capital requirements.
Risk Management Framework
The Board of Directors has the overall responsibility for your Bank's
Risk Management, including culture and governance framework. The Risk Management Committee
of the Board ('RMCB') assists the Board in discharging these responsibilities effectively.
The RMCB annually reviews and approves the risk management framework.
Your Bank continues to enhance its risk management programmes,
including the non-financial risk management, in accordance with industry's best practices
and regulatory guidelines.
Major Risks
Your Bank's risk management approach is to ensure that major risks and
emerging risks, as they evolve, are identified, managed, and incorporated into its
existing risk management assessment, measurement, monitoring and escalation processes.
These practices ensure that a forward-looking risk assessment is maintained by the
management in the course of business development and as part of the execution of ongoing
risk oversight responsibilities. Senior management and the Board discuss top and emerging
risks on a regular basis.
Asset/Liability Management (ALM)
Your Bank actively assesses ALM Risk, which involves evaluating,
monitoring and managing interest rate risk, market risk, liquidity and funding, which
potentially can have a significant earnings impact.
Your Bank has always maintained healthy Liquidity ratios; Liquidity
Coverage Ratio ('LCR'), much above the regulatory minimum LCR requirement by having
significant HQLA ('High Quality Liquid Assets') as also the Net Stable Funding Ratio
('NSFR'), which is measured as the proportion of long-term assets that are funded by
stable sources.
Climate-related Financial Risks
Your Bank is presently having provision in its Credit Policy to support
green financing and considering proposals from such segments to encourage green financing.
Your Bank has further strengthened its Stress Testing Policy with the addition of various
scenarios related to Climate risks.
Credit Risk
Your Bank balances the risk and return by setting certain objectives,
e.g., ensuring credit quality is not compromised for growth; mitigating
credit risk in transactions, relationships and portfolios; using its credit risk rating
and scoring systems or other approved credit risk assessment or rating methodologies,
policies and tools; pricing appropriately for the credit risk taken; detecting and
preventing inappropriate credit risk through effective systems and controls; applying
consistent credit risk exposure measurements; ongoing credit risk monitoring and
administration; and avoiding activities that are inconsistent with its values, code of
conduct or policies.
Information Security and Cyber Risks
Cybersecurity risk is a priority for your Bank, and it continues to
develop and enhance its controls, processes and systems in order to protect its networks,
computers, software and data from attack, damage or unauthorized access. Your Bank is also
proactively involved in industry cybersecurity efforts and working with other parties,
including its third-party service providers and governmental agencies, to continue to
enhance defenses and improve resiliency to cybersecurity threats.
Your Bank has not experienced any material loss relating to these or
other types of cyber-attacks. Your Bank has its own independent 24x7 C-SOC (Cyber Security
Operations Centre) for a state-of-art centralized and consolidated cybersecurity incident
prevention, security event monitoring, detection, and response, capabilities take into
account proactive monitoring and management capabilities with sophisticated tools for
detection, quick response, and backed by data and tools for sound analytics. Your Bank is
also ISO 27001:2013 certified, for its information security management.
Operational Risk
Your Bank actively manages the Operational risk, which is the risk
resulting from inadequate or failed internal processes, people and systems, or external
events.
Your Bank has also put in place robust Fraud Risk, Outsourcing Risk and
Legal Risk Frameworks within its Operational Risk Management.
Market Risk
Your Bank actively manages Market risk, which is the risk of possible
economic loss from adverse changes in market risk factors, such as, interest rates, credit
spreads, foreign exchange rates, equity and commodity prices, and the risk of possible
loss due to counterparty exposure. This applies to implied volatility risk, basis risk,
and market liquidity risk.
Regulatory Risk
Your Bank recognizes the utmost importance of regulatory risk and keeps
a close watch on the developments in the regulatory environment and analyses its expected
impact on your Bank's businesses and strategy.
Reputational Risk
Your Bank's reputation is rooted in the perception of its stakeholders,
and the trust and loyalty they place in it is core to its purpose as a financial services
organization. Your Bank is fully aware of the importance of reputational risk, and has put
reputation as one of the anchors (along with earning, capital and liquidity) for
finalising its risk appetite and has a Reputation Risk Dashboard as part of Enterprise
Risk Dashboard, which is reviewed by the Board at quarterly intervals. Your Bank's
Reputational Risk Management Framework consists of integrated parameters, which may
influence various stakeholders. Your Bank is also measuring and tracking the idiosyncratic
risks related to stock price movement, as also social as well as traditional media
sentiments, complaints, regulatory action, etc. on a periodic basis.
Strategic & Business Risk
Your Bank is monitoring the Strategic Risk by tracking your Bank's
competitive environment as well as any emerging risks, which may derail the overall
Strategic pursuit so that suitable risk mitigation measures are timely taken.
Your Bank has a robust Business Risk Management Framework in place,
which involves monitoring actionable metrics, including various financial indicators, as
well as your Bank's competitive position in the industry.
Information Technology at the Bank
Information Technology has been one of the key driving factors for the
growth journey of your Bank. In view of the same, your Bank has undertaken a technology
transformation journey with an overall objective to leverage cutting edge technology as a
differentiator in this rapidly changing competitive financial services landscape. Few
major initiatives taken during the FY 2022-23 are mentioned below:
• Application transformation journey has been undertaken, led by
implementation of Oracle FlexCube as CBS.
• Other important critical applications which are under the
purview of transformation includes:
i. Treasury
ii. Loan Origination System (LOS)
iii. Retail Internet Banking (RIB) and Mobile Banking (MB)
iv. Corporate Internet Banking (CIB)
v. Debit Card Management System (DCMS)
vi. Third Party Products (TPP)
vii. Document Management System (DMS)
viii. Cash Management Services (CMS)
ix. Enterprise Data Lake (EDL) to cater to MIS reports
• The Housing Finance solution has been migrated to Oracle
FlexCube.
Your Bank has taken the following initiatives on IT Infrastructure as a
part of the transformation journey:
• Your Bank has already built its Data Center ('DC'), Disaster
Recovery ('DR') Center and Near DR ('NDR') sites. These have been reviewed by one of the
Big 4 Firms, appointed by your Bank.
• IT Infrastructure capacity has been adequately enhanced keeping
in view of the business growth of your Bank for the next 2-3 years' period.
• Your Bank has deployed its own Network Access Control (NAC)
centre for a better monitoring, network management and to enhance the end-point security.
• Your Bank has entered into enterprise agreement with its
principle vendors for use of its licenses at enterprise scale to ensure scalability and
faster expansion of business.
• All Bank branches have been enabled with adequate capacity
(primary & secondary) links for seamless customer experience.
• Your Bank has deployed high-end back-up and storage systems for
ensuring high availability and security of data.
Material Changes and Commitment Affecting Financial Position of the
Bank
There were no material changes and commitments, affecting the financial
position of the Bank, which have occurred between the end of the Financial Year of the
Bank, i.e., March 31, 2023, to which the financial statement relate, and the date of this
Board's Report.
Directors' Responsibility Statement
Pursuant to the provisions of Section 134(3)(c) read with Section
134(5) of the Companies Act, the Directors hereby confirm that:
i. In the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to material
departures, if any;
ii. We have 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 Bank's state of affairs as on March 31, 2023, and of its
profit for the FY ended on that date;
iii. We have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the Companies Act for
safeguarding the assets of the Bank and for preventing and detecting fraud and other
irregularities;
iv. We have prepared the annual accounts on a going concern basis;
v. We have laid down internal financial controls to be followed by the
Bank and that such internal financial controls are adequate and are operating effectively;
and
vi. We have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems are adequate and operating
effectively.
Acknowledgements and Appreciations
The Board of Directors of your Bank extends its gratitude for the
invaluable support and guidance received from the Reserve Bank of India, other government
and regulatory authorities, and financial institutions. The Board also thanks the
correspondent banks for their cooperation and help. The Board acknowledges the support of
its shareholders, and also places on record its sincere thanks to its valued clients and
customers for their patronage.
The Board also expresses its deep sense of appreciation to all the
employees for displaying their strong work ethics, excellence at
work, professionalism, teamwork, commitment and initiative, which has
led to the Bank making good progress. Your Board will continue to strive for improvements
as your Bank continues on its journey towards achieving its objectives.
|
For and on behalf of the Board of Directors |
|
Bandhan Bank Limited |
|
Anup Kumar Sinha |
| Place: Kolkata |
Non-Executive (Independent) Chairman |
| Date: May 26, 2023 |
(DIN: 08249893) |
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