Bandhan Bank Ltd
Directors Reports
To
The Members,
Your Board of Directors present the Eighth Annual Report on the
business and operations of your Bank, together with the Audited Financial Statements for
the Financial Year ('FY') ended March 31, 2022.
Financial Performance of the Bank
The financial highlights for the FY under review, are presented below:
(Figures in Rs crore)
| Particulars |
For the FY ended |
|
March 31, 2022 |
March 31, 2021 |
| Deposits: |
96,330.62 |
77,972.22 |
| - Savings Bank Deposits |
34,616.86 |
29,260.32 |
| - Current Account Deposits |
5,462.32 |
4,566.99 |
| - Term Deposits |
56,251.44 |
44,144.91 |
| Advances (Net): |
93,974.92 |
81,612.88 |
| - Cash Credits, Overdrafts and Loans repayable on demand |
2,330.21 |
2,395.82 |
| - Term Loans |
91,644.71 |
79,217.06 |
| Total Assets/Liabilities |
1,38,866.55 |
1,15,016.17 |
| Net Interest Income |
8,714.02 |
7,563.35 |
| Non-Interest Income |
2,822.82 |
2,022.25 |
| Less: Operating Expenses (excluding Depreciation) |
3,413.40 |
2,713.81 |
| Profit before Depreciation, Provisions and Tax |
8,123.44 |
6,871.79 |
| Less: Depreciation |
110.04 |
103.06 |
| Less: Provisions |
7,884.78 |
3,820.07 |
| Profit Before Tax (PBT) |
128.62 |
2,948.66 |
| Less: Provision for Tax |
2.83 |
743.20 |
| Profit After Tax (PAT) |
125.79 |
2,205.46 |
| Balance in Profit & Loss Account brought forward from
previous year |
6,171.00 |
4,758.71 |
| Appropriations: |
|
|
| Transfer to Statutory Reserves |
31.45 |
551.37 |
| Transfer to Statutory Reserve u/s 36(1)(viii) of the
Income-tax Act, 1961 |
42.45 |
74.37 |
| Transfer to Capital Reserve |
16.00 |
84.64 |
| Transfer to Investment Reserve |
25.24 |
- |
| Transfer to Investment Fluctuation Reserve |
10.65 |
82.79 |
| Dividend pertaining to previous year paid during the year |
161.07 |
- |
| Balance carried over to Balance Sheet |
6,009.94 |
6,171.00 |
| EPS (Basic) (in Rs) |
0.78 |
13.70 |
| EPS (Diluted) (in Rs) |
0.78 |
13.69 |
State of Affairs of the Bank
Within six years of its operation, the balance sheet size of your Bank
had crossed a landmark of Rs 1 lakh crore and continued to grow further during the year
under review. The Total Liabilities (including capital and reserves) of your Bank stood at
Rs 1,38,866.55 crore and the Total Advances (Net) at Rs 93,974.92 crore whereas banking
outlets increased to 5,639 as on March 31, 2022. During the FY under review, the number of
banking outlets that have been added to the network is 329. Out of the total 5,639 banking
outlets, 35 per cent. are in rural, 37 per cent. in semi-urban, 18 per cent. in urban and
10 per cent. in metro locations. The number of customers has increased from 2.30 crore as
on March 31, 2021 to 2.63 crore as on March 31, 2022. With the expanding network of
banking outlets and customers, the total deposits grew further from Rs 77,972.22 crore as
on March 31, 2021 to Rs 96,330.62 crore as on March 31, 2022 registering a climb of 23.55
per cent. The Current Account and Savings Account ('CASA') deposits have seen an
increase of 18.48 per cent. from Rs 33,827.31 crore as on March 31, 2021 to Rs 40,079.18
crore as on March 31, 2022.
During the FY under review, the total income (net) of your Bank has
increased by 20.36 per cent. to Rs 11,536.84 crore as against the total income of Rs
9,585.61 crore for FY 2020-21. However, during the FY, your Bank has made additional
provisions on NPA accounts resulting from elevated risk observed in certain geographies
and the potential impact of the COVID-19 pandemic on certain loan portfolios. These
provisions held by the Bank are based on the information available at the time of approval
of accounts and are in excess of the RBI prescribed norms. Due to this, the profit after
tax ('PAT') for the financial year under review stood at Rs 125.79 crore, a decline
of 94.30 per cent. as compared to Rs 2,205.46 crore for FY 2020- 21. Consequently, Return
on Average Equity ('ROAE') was 0.76 per cent. for FY 2021-22 as against 13.24 per
cent. for FY 2020-21 and Return on Average Asset ('ROAA') was 0.11 per cent. for FY
2021- 22 as against 2.13 per cent. for FY 2020-21. Correspondingly, basic earnings per
share ('EPS') decreased from Rs 13.70 to Rs 0.78 whereas diluted EPS decreased from
Rs 13.69 to Rs 0.78 as at the end of FY 2021-22 in comparison to FY 2020-21. However, due
to various initiatives taken by the Government to support the economy and easing out of
the impact of pandemic on the lives of customers, your Bank has seen the best ever
quarterly performance during the quarter ended March 31, 2022 backed by robust all round
operating performance and lower credit costs. Given the strong recovery and stable
operating environment, your Bank is confident of further improving its performances during
next fiscal as well.
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. During FY 202122, your Bank's PSL was Rs 56,397.10 crore as on March 31,
2022 as compared to Rs 74,369.51 crore (net of IBPC of Rs 2,124.13 crore) as on March 31,
2021. At the end of FY 2021-22, PSL as a proportion of the gross advances of Rs 98,790.70
crore was 57 per cent.
COVID-19 Pandemic
FY 2021-22 started with the second wave of COVID-19 pandemic, which was
more severe and infectious, affecting lives of people and resulted in restriction in
movements due to lockdowns in various parts of the country. This affected the economic
activities considerably, especially the lower income population and businesses requiring
physical movement. With the aggressive vaccination drive by the Government and various
other measures to contain the spreading of infection, the impact of the pandemic started
to recede in the second half of the FY. The Government of India ('GoI') and the
Reserve Bank of India ('RBI') continued with its measures to minimize the adverse
economic impact on business caused by this pandemic.
Your Bank had diligently abided by the advisories issued by the GoI,
State Governments and various statutory and regulatory authorities, from time to time.
While enforcing the social distancing protocols and keeping the safety of employees in
mind, banking outlets and offices of the Bank operated in accordance with the
guidelines/directions issued by various statutory, regulatory and local authorities.
Your Bank continued to leverage its technology wherein the employees
were benefitted through availing work from home facilities. Your Bank managed to run its
operations smoothly across all its banking outlets. At all times during the COVID-19
pandemic, your Bank had managed to keep its services open to customers. Your Bank has
engaged with its customers through digital channels and contact centres with the objective
of catering to their banking needs, as well as enquiring about their well-being during
these extraordinarily difficult times.
Your Bank continues to take multiple measures to ensure a safe
environment for its employees and customers, such as:
• Regular sanitisation of the branches, ATMs, currency notes,
temperature checks at premises.
• Maintaining social distancing norms through effective floor
management.
• Touch-base with all existing customers and enquiring about their
well-being.
• Adopting new digital initiatives from time to time.
• Community outreach initiatives.
• Vaccination drive for employees, through tie-ups with hospitals,
based across regions and at Head Office.
Your Bank has implemented necessary packages rolled out by RBI for its
different segments of customers to provide the financial assistance, which are enumerated
hereinbelow under different heads.
Emerging Entrepreneur Business ('EEB')
The EEB 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 EEB strategy is guided by its
long-held philosophy of financial inclusion and economic empowerment of the disadvantaged
sections of the society.
Your Bank offers a wide array of loans through Banking Units ('BU') under
EEB 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.
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. Your
Bank's 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, the 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 FY 2021-22, your Bank opened 287 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 162,581 new borrowers during FY 2021-22.
The growth of 6.9 per cent. in the aggregated EEB asset portfolio from Rs 58,346.34 crore
to Rs 62,399.08 crore during 202122, is another indicator of its commitment.
Your Bank now has EEB loans in 11 categories to cater better to the
varied demands of the customers:
EEB loan (Group loans)
1. Suchana Loan: Timely funds to start a new business or grow an
existing one. Loan size is from Rs 1,000 to Rs 25,000. However, this product has since
been discontinued.
2. Srishti Loan: Loan to scale up home-based business. Loan size
is from Rs 26,000 to Rs 1,50,000.
3. 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.
4. Samadhaan Loan: Loan from Rs 5,000 to Rs 15,000 to support
existing EEB borrowers by providing liquidity support to their businesses during pandemic.
5. Suraksha Loan: Loan size is up to Rs 15,000 and is sanctioned
to help existing customers meet their emergency expenses, e.g.- medical, drinking water
and sanitation.
6. Sushiksha Loan: Loan size is up to Rs 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
existing EEB customers. Loan amount is from Rs 51,000 to Rs 2,00,000.
2. Samriddhi Loan: Loan to fund growing business needs of
existing EEB customers. Loan size is from Rs 75,000 to Rs 3,00,000. However, this product
has since been discontinued.
3. Micro Baazar Loan: With a loan size from Rs 26,000 to Rs
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.
4. Micro Home Loan: Your Bank offers Micro Home Loan ranging
from Rs 1,00,000 to Rs 10,00,000 to existing EEB borrowers for construction as well as
renovation of their houses so that their dream of their own house does not remain
unfulfilled.
5. Two-wheeler Loan: Your Bank offers two-wheeler loans ranging
from Rs 30,000 to Rs 1,20,000 to existing EEB borrowers. It brings them a step closer to
their aspirations.
During the FY 2021-22, your Bank has taken various initiatives:
• As per COVID protocols to maintain social distancing norms
during the COVID-19 pandemic and resulting restrictions, your Bank has split the groups to
reduce the number of group members.
• Your Bank conducted awareness programmes to educate customers
about the COVID-19 pandemic and needs of COVID Vaccination.
• Your Bank has also given them support to overcome the
irregularity and distress caused by the pandemic and assured them that their Bank is
always with them in any situation.
• Your Bank has initiated a vaccination drive for its employees
and ensured that all employees are vaccinated.
Awareness about using digital solutions, like smartphone based
transactions and use of credit/debit cards for online transactions is still a persistent
issue to the customers of your Bank under the EEB 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.
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.
Your Bank has been driving the transformation of customers at the
ground level. Your Bank has already started migrating vintage and quality customers to
individual loans from their existing group loans by laying out a strategy to increase the
share of individual business loans in EEB overall portfolio and extending new product
offerings, such as Sahayata Loan, Two-Wheeler Loan, Micro Home Loan as per their changing
requirements.
Branch Banking
Your Bank witnessed an overall retail deposit growth of 21 per cent.
YoY to Rs 74,441 crore during FY 2021-22, and the overall deposit growth of over 24 per
cent. YoY to Rs 96,331 crore. Your Bank also witnessed an overall CASA growth of 18.48 per
cent. YoY to Rs 40,079 crore.
The contribution from the Affluent Savings business segment, which
consists of the flagship products, like, the Elite and Premium Savings, remained
unmatched. This segment contributed to an overall Saving Accounts ('SA') growth of 33
per cent. YoY.
The liabilities proposition of your Bank achieved significant breadth
and scale which enabled the Bank to have a competitive edge and deliver the best in class
customer experience, and the same is evident from the growth in its Liabilities franchise.
Moreover, to strengthen the current account ('CA') customer
base, your Bank has launched 3 variants under its Current Account product offering viz.,
"Biz-Deluxe", which is designed to cater to the banking and financial
needs of customers, like traders, distributors and wholesalers; "Biz-Pro"
designed to cater to the self-employed professionals and "Start-up" for
addressing the unique banking requirements of entrepreneurs.
Your Bank also introduced Cash@POS facility, which permits cash
withdrawal at POS and SoftPOS services, which enables the merchant to accept
digital payments using a smartphone.
A total of 42 branches were added during the FY, taking your Bank's
footmark to 1,189 branches. Despite challenging circumstances during FY 2021-22, your
Bank's branches remained open throughout the lockdown period and your Bank has also
introduced offsite ATMs as a pilot project at five of its major locations, viz.,
Ahmedabad, Salt lake Sector-V, Urbana- Kasba, Shillong and Bhubaneswar, for providing
prompt assistance to the customers.
During FY 2021-22, your Bank overcame all the challenging business
conditions and offered customers expedient ways to transact, access their savings and
current accounts, fixed deposits, make digital payments and grow their wealth.
Commercial Banking
RBI announced the introduction of the 'COVID-19 Regulatory Package' on
March 27, 2020 in the wake of disruptions due to COVID-19 pandemic and consequent asset
classification and provisioning norms. As part of the COVID-19 Regulatory Package,
National Credit Guarantee Trust Company ('NCGTC') introduced operating guidelines
on Emergency Credit Line Guarantee Scheme ('ECLGS 1.0') on June 02, 2020. RBI
issued subsequent additions/ modifications, clarifications and extensions in respect of
the Regulatory Packages during FY 2021-22. The COVID-19 Regulatory Package was included in
the Board approved policy of the Bank, with a suitable enabling clause to accommodate any
further regulatory instructions on the COVID-19 Package.
NCGTC issued introduction of ECLGS 3.0, modification in ECLGS 2.0 along
with extension of all three schemes (ECLGS 1.0, 2.0 & 3.0) until June 30, 2021, vide
updated operating guidelines dated April 16, 2021. Further, introduction of ECLGS 4.0 and
modifications in ECLGS 3.0 were communicated vide updated operating guidelines dated June
07, 2021, along with extension of all four schemes (ECLGS 1.0, 2.0, 3.0 & 4.0) till
September 30, 2021. The last updated operating guidelines on ECLGS was issued by NCGTC on
October 20, 2021, including continuation of existing schemes (ECLGS 1.0, 2.0, 3.0 &
4.0) and introduction of separate extension schemes under ECLGS 1.0, 2.0 & 3.0, valid
till March 31, 2022. As per latest guidelines, utilisation/disbursement under select
schemes/facilities stands extended until June 30, 2022.
The following are the brief details of various schemes under ECLGS,
valid until March 31, 2022:
> ECLGS 1.0 refers to the scheme for providing 100 per cent.
guarantee to member lending institutions, extending eligible credit facility in the form
of additional working capital term loan to its borrowers up to 20 per cent. of their total
fund based credit outstanding (max. Rs 50 crore) across all lending institutions, as on
February 29, 2020. All borrower accounts classified as NPA or SMA-2 as on February 29,
2020 shall not be eligible. The tenor of loans shall be four years from the date of first
disbursement. A Moratorium period of one year on the principal amount for the fund based
portion shall be provided to borrowers under the scheme during which interest shall be
payable. The principal shall be repaid in 36 instalments (three years) after the
moratorium period is over.
> ECLGS 1.0 (Extension) refers to the scheme for providing
additional support to existing borrowers of ECLGS 1.0 or new borrowers eligible under
ECLGS 1.0 based on revised reference date of March 31, 2021. All borrower accounts
classified as NPA or SMA-2 as on March 31, 2021 shall not be eligible. The funding can be
in the form of additional working capital term loan facility upto 30 per cent. of their
total credit outstanding (fund based only, net of support received under ECLGS 1.0) up to
Rs 50 crore as on February 29, 2020 or March 31, 2021, whichever is higher. The tenor of
loans shall be five years from the date of first disbursement. Moratorium period of two
years shall be provided to borrowers for the fund based portion. The principal shall be
repaid in 36 instalments (three years) after the moratorium period is over.
> ECLGS 2.0 refers to the scheme for providing 100 per cent.
guarantee to member lending institutions, extending eligible credit facilities in the form
of working capital term loan and/ or non-fund based facility or a mix of the two, to its
borrowers in the 26 sectors identified by the Kamath Committee on Resolution Framework
vide its report dated September 04, 2020 and the Healthcare sector, upto 20 per cent. of
their total credit outstanding (fund based only) not exceeding Rs 500 crore across all
lending institutions, as on February 29, 2020. All borrower accounts classified as NPA or
SMA-2 as on February 29, 2020 shall not be eligible. The tenor of facilities shall be five
years from the date of first disbursement of fund based facility or first date of
utilization of non-fund based facility, whichever is earlier. Moratorium period of one
year on the principal amount for the fund based portion shall be provided to borrowers
under the scheme during which interest shall be payable. The principal shall be repaid in
48 instalments (four years) after the moratorium period is over. To be eligible for
guarantee cover of the sanctioned nonfund based facility, first utilization must happen on
or before June 30, 2022.
> ECLGS 2.0 (Extension) refers to the scheme for providing
additional support to existing borrowers of ECLGS 2.0 or new borrowers eligible under
ECLGS 2.0 based on revised reference date of March 31, 2021. All borrower accounts
classified as NPA or SMA-2 as on March 31, 2021 shall not be eligible. The funding can be
in the form of additional working capital term loan facility and / or non-fund based
facility or a mix of the two, upto 30 per cent. of their total credit outstanding (fund
based only, net of support received under ECLGS 2.0) not exceeding Rs 500 crore as on
February 29, 2020 or March 31, 2021, whichever is higher. The tenor of facilities shall be
six years from the date of first disbursement of fund based facility or first date of
utilization of non-fund based facility, whichever is earlier. A Moratorium period of two
years shall be provided to borrowers for the fund based portion. The principal shall be
repaid in 48 instalments (four years) after the moratorium period is over. To be eligible
for guarantee cover of the sanctioned non-fund based facility, first utilization must
happen on or before June 30, 2022.
> ECLGS 3.0 refers to the scheme for providing 100 per cent.
guarantee to member lending institutions, extending eligible credit facility in the form
of working capital term loan to its
borrowers in the Hospitality (hotels, restaurants, marriage halls,
canteens, etc.), Travel & Tourism, Leisure & Sporting and Civil Aviation
(scheduled and non-scheduled airlines, chartered flight operators, air ambulances,
airports and ground handling units) sectors, upto 40 per cent. of their total credit
outstanding (fund based only) across all lending institutions, subject to a cap of Rs 200
crore per borrower. All borrower accounts classified as NPA or SMA-2 as on February 29,
2020 shall not be eligible. The tenor of facilities shall be six years from the date of
first disbursement. A Moratorium period of two years on the principal amount for the fund
based portion shall be provided to borrowers under the scheme during which interest shall
be payable. The principal shall be repaid in 48 instalments (four years) after the
moratorium period is over.
> ECLGS 3.0 (Extension) refers to the scheme for providing
additional support to existing borrowers of ECLGS 3.0 or new borrowers eligible under
ECLGS 3.0 based on revised reference date of March 31, 2021. All borrower accounts
classified as NPA or SMA-2 as on March 31, 2021 shall not be eligible. The funding can be
in the form of additional working capital term loan facility, upto incremental credit
eligibility based on outstanding of February 29, 2020 or March 31, 2021, whichever is
higher. The tenor of facilities shall be six years from the date of first disbursement.
Moratorium period of two years shall be provided to borrowers for the fund based portion.
The principal shall be repaid in 48 instalments (four years) after the moratorium period
is over.
> ECLGS 4.0 refers to the scheme for providing 100 per cent.
guarantee to member lending institutions, extending eligible credit facility upto Rs 2
Crore, in the form of fund based (term loan) or non-fund based (LC for import of capital
goods) facility to existing hospitals/nursing homes/clinics/ medical colleges/units
engaged in manufacturing of liquid oxygen, oxygen cylinders, etc., for setting up on-site
oxygen producing plants. All borrower accounts classified NPA as on February 29, 2020
shall not be eligible. The tenor of facilities shall be for a maximum of six years from
the date of first disbursement of fund based facility or first date of utilization of
non-fund based facility, whichever is earlier. Moratorium period of six months on the
principal amount for the fund based portion shall be provided to borrowers under the
scheme, during which interest shall be payable. The principal shall be repaid in 54
instalments (four and half years) after the moratorium period is over. Last date of
disbursement under fund based facility and utilization of LC under nonfund facility shall
be June 30, 2022.
RBI also issued Resolution Framework 2.0 dated May 05, 2021 for
resolution of COVID-19 pandemic related stress of Micro, Small and Medium Enterprises (MSMEs).
Further, RBI issued subsequent instruction on the said framework on June 04, 2021. The
framework is an extension of existing resolution framework introduced by RBI on August 06,
2020, in view of continued need to support viable MSME entities on the fallout of COVID-19
pandemic. As per the framework, eligible borrowers with aggregate exposure, including
non-fund based facilities, of all lending institutions shall not exceed Rs 50 Crore as on
March 31, 2021. The borrower should be classified as a MSME as on March 31, 2021 in terms
of the Gazette Notification S.O. 2119 (E) dated June 26, 2020. The borrowing entity shall
be GST-registered (other than exempted MSMEs as on March 31, 2021) on the date of
implementation of restructuring. The borrower's account should be a 'standard asset' as on
March 31, 2021, and not restructured in terms of earlier applicable MSME restructuring
circulars issued by RBI.
In line with the Board-approved Credit and related Policies, your Bank
extended support (ECLGS, Resolution Framework 2.0, etc.) to the deserving and eligible
borrowers based on requests.
In order to ensure inclusive book growth along with effective portfolio
monitoring, the SME Segment under Commercial Banking was further categorised into two
groups, i.e., one with borrower exposures upto Rs 5 Crore and the other with exposures
above Rs 5 Crore, each led by independent Heads.
Small Enterprise Loan (SEL)
Small businesses regularly need support in the form of short-to- medium
term funding. Small Enterprise Loan ('SEL') vertical of your Bank empowers small
entrepreneurs by extending them business loans so as to enable them grow their businesses.
The pandemic has been an extremely difficult time for small businesses,
which impacted their cash flows owing to lockdowns, reduced business hours and market
demand.
Your Bank ensured its team worked relentlessly and flexibly to serve
the customers by working in line with their requirements and guiding them to overcome
their challenges.
Together we learnt that hard times can be overcome if we collaborate,
handhold and be empathetic towards our customers by understanding their needs. Your Bank
understands SEL vertical is now more agile and raring to grow with positivity and hard
work, with close customer connect and bringing on new products offering based on the
market feedback we have received.
The following products are presently offered under SEL:
• SEL Term Loans (Rs 1 lakh to Rs 10 lakh)
These loans with tenure of one to four years are towards business
requirements pertaining to working capital or asset creation for business or other
short-term business requirements. These loans range from Rs 1 lakh to Rs 10 lakh.
• SEL MAX Loan
Businesses can avail this loan for meeting requirements pertaining to
working capital or asset creation for business or other short-term business requirements.
The tenure of this loan is from one year to four years. This loan is from Rs 10 lakh to Rs
25 lakh.
NBFC Lending
Your Bank considers Institutional Lending to Non-Banking Financial
Companies ('NBFCs')/Housing Finance Companies ('HFCs') and NBFC-MFIs,
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 NonConvertible Debentures ('NCDs'). The NBFC
(including Housing
Finance Company) 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 was at Rs 2,690.74 crores as on March 31, 2021, which
has grown to Rs 4,998.84 crores (including TLTRO of Rs 238 crores) as on March 31, 2022.
The Institutional book, comprising lending to NBFCs and MFIs, has grown by 86 per cent.
Your Bank has expanded its reach while building Books through diversified asset class as
well as geographies during the FY under review.
Housing Finance
Your Bank offers loans for the purchase, construction, repairs and
renovation of dwelling units. Loan against property ('LAP'), as well as loans
against rent receivables, are also offered against selfoccupied residential/commercial
property. In line with your Bank's objective of increasing financial inclusion, Home Loans
and LAP loans are offered to Salaried as well as Self-Employed customers, including New to
Bank ('NTB') customers.
Post amalgamation of erstwhile GRUH Finance Limited with the Bank, your
Bank has expanded its scope of housing activities and has, additionally, started offering
home loan products from more than 160 bank branches across the nation. Your Bank continues
to focus on the affordable housing segment and has tied-up with various Government
projects as well as projects in the private sector in the Affordable Housing segment.
Consequently, a majority of the housing loans are also eligible under the PSL category.
During the FY under review, your Bank had launched a special campaign
"Jeet Hi Lenge Baazi Ab Hum" with a very competitive rate of interest and has
received good response.
As on March 31, 2022, your Bank had a total Housing and LAP exposure of
Rs 23,560.12 crore, constituting 24 per cent. of the total assets.
Retail Asset
With an objective to serve the financing needs of a larger population
and to maximize the profits by diversifying the risk, your Bank has launched and
strengthened several retail asset products during FY 2021-22. Customers can now avail
various loans, like gold loans, personal loans, two-wheeler loans and car loans from the
Bank.
• Gold loan aims at fulfilling urgent monetary needs with ease
of access, simplified documentation process and quick turnaround time. Gold loans are
given from a ticket size of Rs 10,000 to Rs 25,00,000.
• Personal Loan: Your Bank has revamped the product and
changed the model of sourcing by a dedicated sales team, catering to existing customers
and to start sourcing for 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 Rs 50,000 to Rs 15,00,000 for tenure up to 5 years at a competitive rate of
interest. Your Bank has been quickly ramping up this book during FY 2021-22.
• Two Wheeler Loans: Erstwhile Two Wheeler Loans were sourced
by Bank Branches for existing customers only. Your Bank redesigned the product as per
market standard with introduction of dealer/ channel based distribution model. The
objective of the program is to provide financing to existing as well as New to Bank
customers for purchase of new Two Wheelers. Your Bank leveraged on the digital
capabilities and using digital means, approves 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 Rs 5,000 to Rs 5,00,000.
• Car Loan was launched by your Bank during the Q2 of FY
2021-22, to meet the customers' aspirations of owning a car. Your Bank designed various
product schemes for loan amounts ranging from Rs 50,000 to Rs 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.
Third Party Products
Your Bank currently distributes mutual funds, life insurance, general
insurance, including health insurance products, and co- branded credit cards. The FY under
review has been a year of transformation and emergence. Your Bank continues to have
unabated focus on offering a robust and comprehensive retail health insurance solution
based product proposition for the retail customers who bank with us. To strengthen the
product suite being offered, your Bank has tied up with a leading Health Insurance player
during the course of the year. In the life insurance business, your Bank has further
enhanced the product proposition offering by adding a third partner for distributing
retail insurance through its branches. In addition, your Bank has added Unit Linked
Insurance Products ('ULIPs') in the product basket being offered for solicitation.
In mutual funds distribution, your Bank has started the distribution of funds in the New
Fund Offer ('NFO') stage with a vision of providing its customers additional
flexibility while planning for investments. Your Bank continues to invest towards building
a research and technology driven 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
2021-22 was Rs 527.07 crore, earning an income of Rs 3.74 crore. A total of Rs 166.04
crore and Rs 439.60 crore of general and retail life insurance business, respectively, was
garnered through the retail network during FY 2021-22, earning a fee income of Rs 19.76
crore and Rs 128.19 crore, respectively. During FY 2021-22, the life insurance business
through the existing arrangement in all asset verticals amounted to Rs 1,298.55 crore,
earning an income of Rs 61.50 crore. Your Bank has distributed the co-branded credit cards
and earned Rs 0.06 crore as commission during FY 2021- 22. Your Bank has also earned Rs
0.32 crore as commission for distribution of Atal Pension Yojana, NPS Lite Swavalamban
schemes of PFRDA and others during the FY 2021-22.
Corporate Social Responsibility
Your Bank's core commitment to creating an inclusive growth is
reflected in its Corporate Social Responsibility ('CSR') initiatives, which focuses
on the empowerment of the marginalised sections of the society. To address its societal
commitments, your Bank
has adopted a comprehensive CSR Policy that outlines the CSR
programmes, 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 CSR 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'), as
amended. The composition of the CSR Committee is given in the Report on Corporate
Governance as well as Annual Report on CSR forming part of the Board's Report.
The marginalised communities residing in the vicinity of your Bank's
operational areas are confronted with multidimensional and inter alia, 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.
Your Bank continued to engage itself with the marginalised sections of
the society for inclusive growth. Your Bank has contributed Rs 78.43 crore towards 23 CSR
programmes implemented through 10 Project Implementing Agencies ('PIAs'). The CSR
programmes were spread across 671 project locations in 71 districts of 13 states in India,
reaching out to 2,76,262 individuals during the FY under review, thereby taking the total
outreach to 20,74,603 individuals.
In terms with the provisions of Rule 8 of the CSR Rules, your Bank
appointed KPMG Assurance and Consulting Services LLP ('KPMG') to carry out an
independent Impact Assessment of the CSR Programmes of your Bank. In terms with provisions
of para no. 9.6 of the General Circular No. 14 /2021 dated August 25, 2021, issued by the
Ministry of Corporate Affairs, the Impact Assessment Report by KPMG on the CSR programmes
of your Bank, is available at the Bank's website https://bandhanbank.com/beyond-banking,
and the programme wise summary of the same is mentioned in the subsequent sections.
The details of CSR activities/projects undertaken during the financial
year are provided in the Annual Report on CSR forming part of the Board's Report as Annex
- 1. During the year under review, the CSR Policy was suitably amended to align it
with the recent amendments to the provisions relating to CSR under the Companies Act and
CSR Rules, which was duly recommended by the CSR Committee and approved by the Board. The
updated CSR Policy is available on your Bank's website at:
https://bandhanbank.com/pdfViewerJS/index.html#../sites/default/files/2021-07/CSR-Policy-2021_1.pdf
Some of the key programmes of your Bank's CSR initiatives are:
Targeting the Hardcore Poor Programme
During the FY under review, your Bank has contributed Rs 27.88 crore
(Rs 18.20 crore in FY 2020-21) towards Targeting the Hardcore Poor ('THP')
programme of Bandhan Konnagar, an organization registered under the Societies of West
Bengal Registration Act XXVI of 1961, Implementing Agency. The programme is designed for
the ultra-poor women-headed households, providing them with a range of gainful
micro-enterprises (in the form of farm, non-farm and mixed assets, non-cash), 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 till they start generating substantial income from the
assets provided. In a period of 18 to 24 months, these ultra-poor women start graduating,
uplifting themselves from extreme poverty1 and get linked to mainstream society2.
During the FY under review, 27,600 ultra-poor women were provided
farm-based, non-farm and mixed assets to sustain their livelihoods. These women belonged
to 18 districts of Assam, Jharkhand, Madhya Pradesh, Odisha and West Bengal.
An Impact Assessment Study carried out by KPMG indicated that more than
29,000 women were alleviated from below poverty line to above the national poverty line
(Rs 1,059.42 for rural and Rs 1,286 for urban areas) with a significant increase in their
business assets and household income, having a monthly income of at least Rs 4,000 and
average of Rs 7,456 per month. Additionally, 29,487 women had improved savings habits and
access to safe and secure shelter.
Further, a long term study done by the Nobel Laureate Dr. Abhijit
Banerjee et.al.,3 based on Randomised Control Trials ('RCT') method, suggests that
in seven years after the assets were first distributed, livestock revenue, income from
non-agricultural entrepreneurial activities and daily wage income was 286 per cent., 100
per cent. and 25 per cent., respectively, higher in the treatment group as compared to the
control group mean, and it 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 monthly consumption of those assigned to treatment increased by 25
per cent., as compared to the consumption of those assigned to control, which increased by
12 per cent., and the amount deposited in the savings account by the beneficiaries was
more than double as compared to the control group. There was also an increase in formal
borrowings.
The study highlights 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, more earnings, 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.
Health, Nutrition, Drinking Water and Sanitation
During the FY under review, your Bank has contributed Rs 18.49 Crore
(Rs 15.67 crore in FY 2020-21) towards seven health programmes of five PIAs, covering 35
districts in nine states of India. The health programmes of the PIAs supported by your
Bank covered 88,019 beneficiaries during the year.
1 Poverty Line benchmarked according to the Suresh Tendulkar's
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
Health
Your Bank contributed towards creating health and hygiene- related
awareness and behaviour change through a network of 4,518 village-level female health
volunteers, known as "Swasthiya Sahayikas", who reached out to 2,16,918 pregnant
women and lactating mothers. The Swasthiya Sahayikas held 38,266 health awareness forums.
These sessions were attended by 7,71,600 female participants belonging to the reproductive
age group. The Swasthiya Sahayikas and the Health organisers made 14,81,310 home visits to
follow-up on the health status of pregnant women, lactating mothers and children below
five years, and have taken 2,278 women for institutional deliveries during ante-natal
check-ups ('ANC') and other health check-ups.
The Swasthiya Sahayikas of the health programme inducted menstrual
hygiene behaviour change communication amongst the women, especially, the adolescent girls
and infant care behaviours to the pregnant women and lactating mothers. They provided
sanitary pads during door-to-door visits and have also started to supply infant diapers,
soaps, hand sanitizers, moisturisers, etc.
These efforts resulted in improving the institutional deliveries to
90.25 per cent., (compared to the national average of 78.90 per cent.4) and complete ANC
to 91 per cent. (compared to the national average of 51.20 per cent.4).
An Impact Assessment study conducted by KPMG indicated that the
programme contributed in the improvement by 2 per cent. to 10 per cent. for Institutional
deliveries ranging between 94 per cent. to 98 per cent., improved by 4 per cent. for
complete ANC ranging between 94 per cent. to 97 per cent., and an improvement by 10 per
cent. to 21 per cent. for immunisation ranging between 98 per cent. to 99 per cent.
A study conducted by Grameen Foundation and Freedom from Hunger India
Trust from 2015 to 20 185, concluded that the programme has a visible positive impact
amongst the participants of the health awareness programme, on the level of awareness and
health-related behavior, between baseline from lower than 10 per cent. to end-line with
more than 90 per cent. of women know about Mother and Child Health ('MCH') and from
20 per cent. to 80 per cent. of adolescent girls managing menstrual complications.
Healthcare
Apart from the public health programme, during the FY under review,
76,945 patients were provided treatment for various diseases, like cataracts,
hypertension, diabetes, cough and cold, etc., in three districts of three states of India
through the PIAs, taking the total to 2,47,602 patients being treated.
Nutrition
During the FY under review, 2,75,922 children under the age of five
years were enrolled in the nutrition initiatives of the Bandhan Health Programme. Out of
these, 2,100 children were identified with severe acute malnutrition ('SAM') and
were supported for nutrition rehabilitation, whereas, 11,607 children under the age of
five were found with moderate acute malnutrition ('MAM') and were provided with
nutritional supplements, including support for a nutritional garden. 94 per cent. of the
children over 24 months completed their primary immunization and 83.25 per cent. (National
Average 54.90 per cent.4) of children from 0-6 months were exclusively breastfed.
To provide round the year nutrition support, 27,444 households were
provided planting materials of fruits and vegetables for setting-up their nutrition
gardens. These nutrition gardens helped families, especially, women and children, to
consume pesticide-free fresh fruits and vegetables round the year. This initiative has
helped in reducing the protein-energy malnutrition ('PEM') amongst the children who
are less than five years of age and is evident from the fact that the wasting of children
under-five has gone down to 9 per cent. (as against the national average of 35.7 per
cent.4). The awareness regarding a balanced and adequate diet during pregnancy, coupled
with the availability of fruits and vegetables from the nutrition garden, resulted in
reducing the low birth weight incidences to a mere 2 per cent. of the live births, as
compared to the national average of 18.2 per cent.4 live births being under 2.5 kg.
An Impact Assessment Study conducted by KPMG estimated that there has
been reduction in malnutrition among children below five years of age from 14 per cent. to
4 per cent.
Drinking Water
During the FY under review, 62 community-level reverse osmosis water
treatment plants were operational, which provided 29,577 kiloliters of purified safe
drinking water to 33,749 households.
Sanitation
Your Bank has contributed towards developing the community-led
sanitation and school sanitation programme of two PIAs, covering three districts in three
states of India. The initiatives helped in improving the sanitation infrastructure of 502
households, 19 government schools, which included separate toilets for Boys and Girls,
using child-friendly engineering, RO drinking water stations, mid-day meal platform with
shades, dishwashing stations, roof rainwater harvesting system, etc. The programme induced
behaviour change amongst the school teachers and children through classroom sessions and
demonstrations regarding sanitation and personal hygiene, including hand-washing using
soaps after using toilets, before and after a meal, before holding infants, after
arriving, after playing outdoors, after playing with animals, after coughing, sneezing or
blowing nose, cleaning toilets, flushing toilets after use, using sanitary pads for
menstrual hygiene, etc. The programme also supported monitoring of the operation and
maintenance of the facilities created.
Education
Your Bank's education programme provides quality education to the
children belonging to the marginalised sections of the society in your Bank's catchment
area(s). The education programme enables the children to improve their learning outcomes,
especially in Science, Technology, English 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 Rs 17.01 crore (Rs 14.80 crore in FY 202021)
towards the education programme of three PIAs, benefiting 67,575 marginalised children in
33 districts of six states of India.
An Impact Assessment study conducted by KPMG indicated that according
to the situational assessment conducted by Asian Institute for Sustainable Development ('AISD')
in 2021, it was 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. The report
further indicated that the prolonged closures due to the COVID-19 pandemic had affected
the learning capabilities of the students.
Support to Person with Disabilities
In line with the commitment to inclusive growth, your Bank has
contributed Rs 38.25 Lakh (Rs 38.85 Lakh in FY 2020-21) to the initiatives of three PIAs,
who are dedicated to providing equal opportunities and a conducive environment to persons
with disabilities ('PwD'). During the FY under review, the initiatives have
supported 270 PwDs in three districts of three states of India taking the total to 1,332
PwDs supported through these initiatives.
Skill Development
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 on the placements so that the
youths are settled in their job post-training.
During the FY under review, your Bank contributed Rs 4.79 core (Rs 4.89
crore in FY 2020-21) towards the skill development initiatives of two PIAs in 16 districts
of six states of India. These PIAs operated 16 training 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,
Tailoring, Mason, Electrical, GDA (Nursing), Manual Metal Arc Welding, Fitter Fabrication,
etc.
During the FY under review, 3,738 youths were trained, of which more
than 75 per cent. were placed with net salary ranging from Rs 8,000 to Rs 15,000 plus
other performance-based allowances and social security benefits, like, Provident Fund ('PF')
and Employee State Insurance ('ESI').
An Impact Assessment study conducted by KPMG indicated that between
2016 to 2021, 11,478 youth were trained with a placement rate of over 68 per cent. These
youth earned salaried income in organised sector, with average salary of Rs 13,591.
Water Conservation
The water conservation initiative aims at water security and
drought-proofing to some of the high moisture stressed regions of India, thereby providing
a safety net to agriculture and livestock- based livelihoods. The 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 waterharvesting 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., creates 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 120,000
kiloliters 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 Rs 123 Lakh.
Afforestation
Your Bank's afforestation initiatives have contributed towards the
project on establishing "Bio-shield" to save the mangroves in the Bharuch
district of Gujarat. Mangrove plantation of 67,540 saplings, carried out in 20 Hectares in
a stretch of 1 kilometer of coastline, was done 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 plants harvesting.
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/pdfViewerJS/index.html#../sites/default/files/2021-07/Dividend_Distribution_Policy.pdf
In order to conserve capital, the Board of Directors has not proposed
any dividend (Previous Year Rs 1 per share) for the financial year ended March 31, 2022.
Transfer to Reserves
In line with the RBI regulations, your Bank has transferred an amount
of Rs 31.45 crore to the statutory reserve during the financial year ended March 31, 2022.
Issuance of Equity Shares & Capital Adequacy Ratio
During the FY under review, your Bank has allotted 1,66,666 equity
shares of Rs 10 each fully paid-up pursuant to exercise of stock options by the eligible
Employees of your Bank, aggregating to Rs 16,66,660.
Post allotment of aforesaid equity shares, the issued, subscribed and
paid-up share capital of your Bank stood at Rs 16,10,76,58,670, comprising 1,61,07,65,867
equity shares of Rs 10 each fully paid-up as on March 31, 2022.
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 Rs 32,00,00,00,000,
comprising 3,20,00,00,000 equity shares of Rs 10 each, as on March 31, 2022.
Your Bank's capital adequacy ratio ('CAR'), calculated in line
with the RBI Circular on Capital Adequacy Framework, stood at 20.10 per cent. as on March
31, 2022, well above the minimum regulatory requirements of 10.875 per cent., out of which
Tier 1 CAR was 18.89 per cent. and Tier 2 CAR was 1.21 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 2021-22. Accordingly, no statement is required to be reported in
Form AOC-1.
Awards and Recognitions
Over the years, your Bank has received multiple prestigious awards from
respected institutions. During the FY under review, your Bank has been bestowed with the 'Best
Growth Performance- Banks' award by Dun & Bradstreet as part of Dun &
Bradstreet's Corporate Awards for India's Top 500 Companies 2021.
Rating of Various Debt Instruments
Details of rating of various debt instruments of the Bank as on March
31, 2022 are as under:
| Instruments |
Rating |
Rating Agency |
Amount (^ in Cr.) |
| Term Loan from Banks |
[ICRA]AA(Negative) |
ICRA |
80 |
| Certificate of Deposit |
[ICRA]A1+ |
ICRA |
6,000(1) |
|
CRISIL A1+ |
CRISIL |
|
| Non-Convertible Debentures? |
[ICRA]AA(Negative) |
ICRA |
2,052.50 ? |
|
CRISIL AA/Negative |
CRISIL |
|
| Fixed Deposits Programme? |
FAAA / Negative |
CRISIL |
1,600 |
(1) rating of ICRA is for Rs 3000 crore only
(2) rating of ICRA is for Rs 196.40 crore only
(3) transferred from erstwhile Gruh Finance Limited pursuant to the
effectiveness of the Scheme of Amalgamation.
During the FY 2021-22, your Bank has fully repaid the Subordinated Tier
II Non-Convertible Debentures amounting to Rs 160 crore listed on BSE Limited on its
maturity, to the Debenture holder. Accordingly, ICRA Ltd and CARE Ratings Ltd have
withdrawn its rating of Subordinated Tier II Non-Convertible Debentures. CRISIL Ratings
Ltd has also withdrawn Subordinated Debt amounting to Rs 35 crore, as there was no
outstanding amount due against the Subordinated Debt.
Board of Directors
The composition of the Board of Directors of the 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 the Articles of Association of
your Bank. At the end of March 31, 2022, the Board of your Bank had twelve Directors, out
of which nine were Independent Directors, two were Non-Executive Non-Independent
Directors, including one Nominee Director of Caladium Investment Pte. Ltd, and the
Managing Director and CEO.
Appointments
Ms. Divya Krishnan (DIN: 09276201)
The Board of Directors of the Bank, at its meeting held on May 11,
2022, on the basis of the recommendations of the Nomination and Remuneration Committee of
the Bank ('NRC'), has approved the appointment of Ms. Divya Krishnan (DIN:
09276201) as an Additional Non-Executive Non-Independent Director [Nominee of Bandhan
Financial Holdings Limited ('BFHL' or 'NOFHC'), promoter of the Bank] on the
Board of the Bank, with effect from May 11, 2022, in place of Mr. Ranodeb Roy (DIN:
00328764), erstwhile Nonexecutive Non-Independent Director of the Bank. Ms. Krishnan shall
hold office of additional director up to the date of the ensuing Annual General Meeting ('AGM')
or upto three months from the date of her appointment, whichever is earlier. Further, the
NRC and the Board have recommended the appointment of Ms. Divya Krishnan as a
Non-executive Non-Independent (Nominee) Director of the Bank, liable to retire by
rotation, to the Shareholders for their approval at the ensuing AGM.
Ms. Divya Krishnan is a finance and investment banking professional and
currently a visiting faculty at Ashoka University. Ms. Krishnan was formerly a Chief
Investment Officer ('CIO') and Head of Investment at SBI Mutual Fund. Prior to
becoming CIO, Ms. Krishnan worked as a fund manager at SBI Funds. Post her voluntary exit
from SBI in 2001, Ms. Krishnan has served as a consultant to a number of leading
non-profits and NGOs. She worked closely with non-profit institutions, catalysing growth
through impactful programs.
Mr. Philip Mathew (DIN: 09638394)
Pursuant to the recommendations of the NRC, the Board approved the
appointment of Mr. Philip Mathew (DIN: 09638394) as an Additional Director (Independent)
of the Bank, effective June 15, 2022, after ascertaining his fit and proper status and
independence from the management of your Bank. Pursuant to the provisions of Section 161
of the Companies Act, read with Regulation 17(1C) of the SEBI LODR, he will continue to
hold office as an Additional Director of the Bank, up to the date of the ensuing AGM or
upto three months from the date of his appointment, whichever is earlier. Your Bank has
received a notice in writing from a member proposing his candidature as Director on the
Board of the Bank. Further, the NRC and the Board have also recommended his appointment as
an Independent Director, not liable to retire by rotation, to the Shareholders at the
ensuing AGM, for a period of three years, effective June 15, 2022.
Mr. Mathew, a HR practitioner, has almost 30 years of work experience.
He left HDFC Bank as the Chief People Officer in 2018 after his association of around 16
years. During his tenure at HDFC Bank, he was involved in various HR related initiatives
such as successful transition to a cloud-based enterprise-wide HR application, amongst the
first to adopt the new governance and risk management standards set by Compensation
Guidelines by RBI, recognition as 'Best Employer' in the BT Survey in 2016, etc. His
experience as a HR practitioner spans across organisations involved in manufacturing and
financial services. His career journey has been through the entire landscape of HR with
significant depth. He was Plant HR In charge at Rallis India Ltd and Marico Industries
Ltd, Project Lead for roll-out of new PMS at ANZ Grindlays Bank, a brief corporate stint
at Colgate-Palmolive before becoming Head HR at Sharekhan.com and thereafter, moved to
HDFC Bank in 2002.
Dr. Aparajita Mitra (DIN: 09484337)
Pursuant to the recommendations of the NRC, the Board approved the
appointment of Dr. Aparajita Mitra (DIN: 09484337) as an Additional Director (Independent)
of the Bank, effective July 13, 2022, after ascertaining her fit and proper status and
independence from the management of your Bank. Pursuant to the provisions of Section 161
of the Companies Act, read with Regulation 17(1C) of the SEBI LODR, she will continue to
hold office as an Additional Director of the Bank, up to the date of the ensuing AGM or
upto three months from the date of her appointment, whichever is earlier. Your Bank has
received a notice in writing from a member proposing her candidature as Director on the
Board of the Bank. Further, the NRC and the Board have also recommended her appointment as
an Independent Director, not liable to retire by rotation, to the Shareholders at the
ensuing AGM, for a period of three years, effective July 13, 2022.
Dr. Aparajita Mitra, a Doctorate in Agriculture (Dept. of Plant
Molecular and cellular Biology, Bose Institute), has extensive experience and expertise of
more than three decades in the field of agricultural sciences. She has done extensive
research and published articles in the field of commercial micropropagation of
Horticulture/tree and medicinal species, DNA extraction and sequencing, DNA fingerprinting
(plants), gel electrophoresis, protein and isozyme analysis, etc. Dr. Mitra is a recipient
of the CSIR Fellowship and the 'Women Scientist Award' from the Department of Science and
Technology, Government of India, 2005 for the project "Identification of Disease
Resistant Genetic Markers in Bamboo Spp." She has also guided various postgraduate
students from well-known universities on their projects in the domain of Plant Tissue
culture part. She has been associated with various organizations.
Re-appointments
Dr. Holger Dirk Michaelis (DIN: 07205838)
In terms of the provisions of Section 152 of the Companies Act, Dr.
Holger Dirk Michaelis, Nominee Director of Caladium Investment Pte. Ltd. on the Board of
the Bank, being longest in office, shall retire at ensuing AGM and being eligible, has
offered himself for re-appointment.
Mr. Narayan Vasudeo Prabhutendulkar (DIN: 00869913) and Mr. Vijay
Nautamlal Bhatt (DIN: 00751001)
Mr. Narayan Vasudeo Prabhutendulkar and Mr. Vijay Nautamlal Bhatt were
appointed as Independent Directors of the Bank, effective May 08, 2020, for a period of
three years each and their respective current terms are expiring on May 07, 2023.
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
June 15, 2022, has approved their re-appointment as Independent Directors of the Bank, not
liable to retire by rotation, for the second term of five years each, effective May 08,
2023, subject to the approval of Shareholders of the Bank, by way of special resolutions,
at the ensuing AGM.
The resolution(s) in respect of appointments and re-appointments of the
Directors, as aforesaid, have been included in the Notice convening the 8th 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 as
proposed for appointment / re-appointment will cross 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 7th AGM of the Bank held on August 06, 2021:
• Appointment of Mr. Suhail Chander (DIN: 06941577) as an
Independent Director of the Bank, not liable to retire by rotation, for a period of three
years, effective March 19, 2021.
• Appointment of Mr. Subrata Dutta Gupta (DIN: 08767943) as an
Independent Director of the Bank, not liable to retire by rotation, for a period of three
years, effective March 19, 2021.
• 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 7th AGM of the Bank, and who, being eligible, had offered himself for
reappointment, was duly re-appointed.
• Re-appointment of Dr. A. S. Ramasastri (DIN: 06916673) as an
Independent Director of the Bank, not liable to retire by rotation, for the second term of
five years, effective August 08, 2021.
• Re-appointment of Dr. Anup Kumar Sinha (DIN: 08249893) as an
Independent Director and Non-Executive Chairman of the Bank, not liable to retire by
rotation, for the second term from January 07, 2022 up to July 04, 2026, i.e., up to the
date of his attaining the age of 75 years. RBI approved tenure as Non-Executive Chairman
is upto January 06, 2025.
• Re-appointment of Mr. Santanu Mukherjee (DIN: 07716452) as an
Independent Director of the Bank, not liable to retire by rotation, for the second term of
five years, effective January 07, 2022.
• Re-appointment of Mr. Chandra Shekhar Ghosh (DIN: 00342477), MD
& CEO of the Bank, for a period of three years, effective July 10, 2021, not liable to
retire by rotation.
Cessations
During the FY under review, none of the Directors on the Board of the
Bank ceased to hold office.
The Board of Directors of the Bank, at its meeting held on May 11,
2022, has taken on record, the cessation of Mr. Ranodeb Roy (DIN: 00328764) as
Non-executive Non-Independent Director of the Bank, pursuant to withdrawal of his
nomination by NOFHC from the Board of the Bank. Accordingly, Mr. Ranodeb Roy ceases to be
a Non-Executive Non-Independent Director of the Bank, with effect from May 11, 2022.
Further, Mr. Snehomoy Bhattacharya, Independent Director of the Bank,
completed his second term of four years as an Independent Director on the Board of the
Bank on July 08, 2022. Accordingly, Mr. Bhattacharya ceased to be the Director of the Bank
effective July 09, 2022.
Necessary disclosures in this regard have been made to the Stock
Exchanges, RBI and the Ministry of Corporate Affairs. The Board places on record its
sincere appreciation for the contributions made by Mr. Roy and Mr. Bhattacharya during
their tenure as Directors of the Bank.
Key Managerial Personnel
Mr. Chandra Shekhar Ghosh, MD & CEO; 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. Further, during the FY under review, the Board, at its meeting held on
June 25, 2021, while approving the re-appointment of Mr. Ghosh as the MD & CEO of the
Bank, had also approved his re-appointment as Key Managerial Personnel of the Bank, for a
period of three years, effective July 10, 2021, pursuant to the provisions of Section 203
of the Companies Act.
Meetings of the Board and Board Committees
The Board met fourteen times during the FY 2021- 22, on April 12, 2021;
May 06, 2021; May 08, 2021; June 25, 2021; July 30, 2021; September 29, 2021; October 26,
2021; October 29, 2021; January 13, 2022; January 21, 2022; February 11, 2022; February
19, 2022; February 24, 2022; and February 25, 2022. 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 the Board's
Report, enclosed as Annex 4.
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 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 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 the Board's Report.
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 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 are disclosed in the Report on Corporate Governance forming part of
the Board's 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 NonIndependent Directors, including the MD
& CEO. The respective Chairmen of Board Committees have done performance evaluation of
their respective Committees. Thereafter, the report on performance evaluation of
Directors, excluding NRC members, and 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 /
re-appointment 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 the Board's Report. The Policy on Appointment and Fit & Proper Criteria for
Directors was reviewed and suitably amended, by the Board on the recommendations of the
NRC, to align it with the regulatory/ statutory changes. The updated Policy is available
on the Bank's website at: https://bandhanbank.com/pdfViewerJS/index.
html#../sites/default/files/2022-03/Policy-on-Appointment-and-
Fit-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 the Board's Report. The Compensation Policy was suitably amended, by the
Board on the recommendations of the NRC, to include the provision of payment of fixed
remuneration to the Non-Executive Directors excluding the Chairman of your Bank, in terms
of the RBI Circular dated April 26, 2021. The updated Compensation Policy of your Bank is
available on the Bank's website at:
https://bandhanbank.com/pdfViewerJS/index.html#../sites/default/files/2022-02/Compensation_Policy_2022.pdf.
Employees Remuneration
As on March 31, 2022, your Bank had 60,211 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, are appended separately as Annex - 2(a) and forms part of
the Board's 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 forming part of the Board's 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 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 SEBI
SBEBSE is available on the website of the Bank at https://bandhanbank.com/annual-reports.
Further, as required under 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 at 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 Statements
for the FY ended March 31, 2022, forming part of this Annual Report.
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 and
Senior Management play an important role in driving the compliance culture. Your Bank
remains committed to adhere to the highest standards of compliance vis-a-vis 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 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 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 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 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 processes and compliance
with regulatory guidelines. The Bank has put in place extensive 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 independent checks and balances, and adherence to
laid down policies and procedures of your Bank 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
There were no materially significant transactions with related parties
during the FY 2021-22, which could lead to a potential conflict of interest between your
Bank and these parties. Prior omnibus approval is 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, pursuant to the omnibus approval, 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. Further, there are 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/2021-22/83DOR.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 statements for the FY 2021-22.
Your Bank has a Policy on dealing with Related Party Transactions, which was suitably
amended, by the Board on the recommendations of the ACB, to align it with the changes made
in the SEBI LODR. The updated Policy is available on the Bank's website: https://
bandhanbank.com/pdfViewerJS/index.html#../sites/default/files/2022-04/Related_Party_Transaction_Policy_0.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 Statements for the FY 2021-22,
forming part of this Annual Report, 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. This Policy aims to
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. Your Bank is 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.
This Policy aims at putting in place a detailed Protected Disclosure
Mechanism based on RBI directions ('Protected Disclosures Scheme for Private Sector and
Foreign Banks') and in compliance with the provisions of Whistle Blowing / Vigil Mechanism
under the Companies Act, read with the Companies (Meetings of Board and its Powers) Rules,
2014, and the SEBI LODR.
Significant and Material Orders passed by Regulators or Courts or
Tribunals
During FY 2021-22, 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. However, during the FY 2021-22, the Reserve Bank of India, vide its
order dated July 06, 2021, in exercise of the powers conferred under Section 47A(l)(c)
read with Section 46(4)(i) of the Banking Regulation Act, 1949, had imposed a penalty of
Rs 1 Crore on the Bank, on account of contravention of directions contained in Circulars
on "Lending to Non-Banking Financial Companies (NBFCs)" and "Bank Finance
to Non-Banking Financial Companies (NBFCs)". Your Bank has enhanced its review and
monitoring mechanism to avoid such incidents in future.
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') issued by 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 RBI on an
annual basis. Further, in terms of the RBI Guidelines 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. M. M. Nissim & Co. LLP is
holding the office of Statutory Auditors along with Deloitte Haskins & Sells,
Chartered Accountants (ICAI Firm Registration Number 117365W), who will hold office till
the conclusion of 8th AGM.
Therefore, the Bank is required to appoint one more audit firm to act
as a Joint Statutory Auditor of the Bank in place of retiring auditors, Deloitte Haskins
& Sells. Accordingly, on the basis of recommendation of the ACB, the Board of
Directors has recommended the appointment of M/s. Singhi & Co., Chartered Accountants
(ICAI Firm Registration No. 302049E), as 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, for the approval of the shareholders at the
ensuing AGM, subject to approval of RBI on an annual basis. Approval of RBI has already
been received for appointment of M M Nissim & Co. LLP, Chartered Accountants (FRN
107122W/ W100672) and M/s. Singhi & Co, Chartered Accountants (FRN 302049E) as the
Joint Statutory Auditors of the Bank for the year 2022-23 for their second year and first
year, respectively.
The Report, given by the Joint Statutory Auditors on the financial
statements of the Bank for the financial year ended March 31, 2022, 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 has appointed CS Anjan Kumar Roy, Practising
Company Secretary (FCS No.: F5684, C.P. No.: 4557), as the Secretarial Auditor to conduct
Secretarial Audit of the Bank for FY 2021-22. Accordingly, the Secretarial Audit Report
for FY 2021-22 is enclosed to the Board's Report as Annex - 3. There are no
qualifications, reservations, adverse remarks or disclaimers in the Secretarial Audit
Report. However, the Secretarial Auditor has made an observation in its report that
"The Reserve Bank of India, vide its order dated July 06, 2021, has imposed a penalty
of Rs 1 crore on the Bank, in exercise of its powers conferred under section 47A(1)(c)
read with section 46(4)(i) of the Banking Regulation Act, 1949, on account of
contravention of the directions contained in circulars on 'Lending to Non-Banking
Financial Companies (NBFCs)' and 'Bank Finance to NBFCs'." This has also been
mentioned under the para 'Significant and Material Orders passed by Regulators or Courts
or Tribunals'. Further, no offence or 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 the Board's Report as Annex - 4.
A Certificate from CS Anjan Kumar Roy, Practising Company Secretary
(C.P. No. 4557), confirming compliance by your Bank to the conditions of Corporate
Governance as stipulated under SEBI LODR, is annexed to the Report on Corporate
Governance, which forms part of the Board's 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, 2022, 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, 2022, 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 and Analysis
The Management Discussion and Analysis Report for the FY 202122, as
prescribed under the SEBI LODR, forms part of the Board's Report, and is enclosed as Annex
- 5.
Business Responsibility Report
In terms of the provisions of SEBI LODR, a Business Responsibility
Report describing the initiatives taken by your Bank from an environmental, social and
governance perspective, forms part of the Board's 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, three complaints were pending and during the FY,
13 complaints were received, out of which 14 complaints had been closed during the FY. Two
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 ('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 buildings;
• Daily operations and usage - Conservation through basic
hygiene practices on energy usage through occupancy sensors, zoning of electrical circuits
and master switches for premises;
• 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 earnings of the Bank was Rs 62.38 lakh (including
the net gains arising in all exchanges/derivatives transactions) whereas the foreign
exchange outgo was of Rs599.26 lakh during the Financial Year 2021-22.
Human Resource Management
Amidst the tumultuous pandemic phase, your Bank has focused in rapidly
adapting the new normal to ensure business continuity in these uncertain times. It has
been consistently focused towards adapting Digitization, new e-learning modules across
genre and specifically emphasized on its expansion of Branches and Verticals for better
penetration across the Country reaching out to every prospective customer. It has set an
exemplary example of "Human Empathy" providing COVID-CARE support and work from
home facilities for its fellow employees.
During FY 2021-22, your Bank has increased the manpower strength by 22
per cent. from 49,445 in FY2020-21 to 60,211. Your Bank has Pan India network of 1,189
Retail Bank Branches, 4,252 Banking Units and 198 Home Loan Centers. Since inception of
your Bank, the manpower has increased by 224 per cent. and your Bank has added 124 per
cent. new branches since 2015.
Your Bank understands human motivation and dedicated efforts to achieve
the desired goal. Your Bank is intended towards creating a workplace of Resilience, where
employees can Re-learn and Reimagine to excel and overcome this phase of turmoil. To
provide a platform towards learning and self -growth, your Bank has promoted an aligned
architecture as:
• Your Bank has adapted to digital connectivity to connect with
talents across the globe with the online mode of interview via MS Team to restrain
physical interaction in this pandemic era.
• Competency based grade promotion process to nurture talent and
to elevate employee motivation. 14,003 employees promoted during FY 2021-22.
• Succession planning for roles across the Bank. 5,115 employees
identified for role elevation during FY 2021-22 in the Bank based on Competency analysis.
• Adaptation towards Digitization for an enhanced employee
experience. Introduction of LOS process in Retail Assets, portals like Bandhan Express has
also been improvised.
• Revamping the Retail Asset Model, on-boarding more than 1,100
manpower during FY 2021-22 across regions compared to 60 manpower during FY 2020-21. Your
Bank proposed 48 Retail Asset centers across the Country to be made Operational.
• Conducting both offline and online mode of Campus Hire creating
an energetic talent base. During FY 2021-22, your Bank has covered almost 56 Campus across
country hiring 389 Fresh talent recruits across Tiers.
• To nurture and empower the next generation of bankers, your Bank
has partnered with Bandhan School of Development Management ('BSDM'), who has
obtained affiliation of Maulana Abdul Kalam Azad University of Technology ('MAKAUT') -
West Bengal, to offer a Post Graduate Diploma in Banking and Finance. Over 9 Batches
Conducted and 603 participants placed across 19 states. Batch X, XI comprising 106
students to be on-boarded by July' 2022. Batch XII comprising 69 students have been
initiated in February, 2022.
• Your Bank continued extending empathetic support towards staff,
providing HOMECARE facilities towards COVID-19 affected employees. Your Bank has extended
support towards 2,146 staffs during FY 2021-22. Besides, it also provided in house COVID
vaccination for employees based across regions and at Head Office.
• Empaneled with Organizations like Gallup for a focused emphasis
on Employee Survey to further improvise employee experience with your Bank.
Over the journey of more than 6 years, your Bank has strengthened its
workforce by 3.2X resulting in an exciting blend of the old and new, in a culture of
values-driven growth, professionalism, and ethical governance. A committed and dedicated
workforce is the fundamental base towards strengthening the Bandhan Bank approach towards
resilience. Our Human Resources Management strategy is focused in emphasizing a
supportive, engaging & collaborative work environment, remaining customer-centric,
performance driven and absolutely future ready.
Risk Management
Your Bank is in the business of managing the risks inherent to the
financial services industry as it aims to create maximum value for shareholders, clients,
employees and communities. The ability to manage risk is a core competency of a bank, and
is supported by strong risk conduct and risk-aware culture. Your Bank's view of risks is
dynamic, reflecting the pace of change in the financial services industry.
Integrated Risk Management Framework
Your Bank operates an Integrated Risk Management Framework, which is
centered on the embedding of a strong risk culture. 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. The methodology for setting, governing and embedding risk appetite has been
further enhanced with the introduction of Long Term Risk Appetite with the aim of
increasing alignment with strategic planning and external threat assessments.
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. It
links the goals and priorities to risk management in a way that guides and empowers staff
to serve customers well and achieve financial targets.
The risk appetite framework, which is approved annually by the Board,
bolsters effective risk management by promoting sound risk-taking through a structured
approach, within agreed boundaries. It also ensures that emerging risks and risk-taking
activities, which would be out of appetite, are identified, assessed, escalated and
addressed in a timely manner.
Your Bank's risk profile is a holistic representation of all risks that
it holds at a point in time, in the form of a dashboard. Your Bank monitors its risk
profile, and the Board quarterly reviews reports and analysis concerning its risk profile.
Risk Culture
In your Bank, risk culture is at the centre of both the risk management
framework and risk management practice. 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, therefore, 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" by
supporting a strong culture, defined by the Bank's expectations, that guides how employees
conduct themselves, work with colleagues, and make decisions. Employees are strongly
encouraged and expected to speak up as and when they see something that could cause harm
to any stakeholder of the Bank, risking its reputation. This is because risk management is
everyone's responsibility, all employees are expected to challenge risk decisions when
appropriate and to escalate their concerns when they have not been addressed
appropriately. Your Bank has a well-defined Whistle Blower Policy in place.
Conduct Risk
Conduct risk is the risk of inappropriate, unethical, or unlawful
behaviour on the part of employees or individuals acting on behalf of the Bank or from
deliberate or unintentional business actions or business practices that may be detrimental
in the interest of the Bank, its customer or market. Your Bank has, since its inception,
considered conduct risk as a very important parameter and critical for robust Internal
Control Environment. The Risk Management Committee of the Board ('RMCB') reviews
the conduct risk components as part of your Bank's risk culture.
Risk Identification and Measurement
In your Bank, the risk identification and measurement within the risk
management process comprise:
• Regular assessment of the overall risk profile, incorporating
market developments and trends, as well as external and internal factors.
• Monitoring of the risks associated with lending and credit
exposures.
• Assessment of trading and non-trading portfolios.
• Review of potential risks in new business activities and
processes.
• Analysis of potential risks in any complex and unusual business
transactions.
Risk Treatment and Mitigation
Risk treatment and mitigation is an important aspect of ensuring that
risk profile remains within risk appetite. Your Bank's risk mitigation strategies are
discussed and agreed with the businesses.
When evaluating possible strategies, costs and benefits, residual risks
(risks that are retained) and secondary risks (those that are due to risk mitigation
actions) are considered.
Stress Testing
Stress testing is a key risk management tool and a fundamental
component of your Bank's approach to capital management. It is used to quantify and
evaluate the potential impact of specified changes to risk factors on the financial
strength of the Bank, including its capital.
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. These are reviewed and agreed by senior management through senior
committees, including the Executive Risk Committees, the Board Risk Committee (i.e., RMCB)
and the Board.
Your Bank has also started to carry out Reverse stress testing, in
order to identify circumstances that may lead to specific, defined outcomes.
Internal Capital Adequacy Assessment Process ('ICAAP')
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. The examination of capital
requirements under adverse economic and market conditions is assessed through stress
testing. Your Bank carries out an internal assessment of material risks annually to enable
an evaluation of the amount, type and distribution of capital required to cover these
risks. This is referred to as the ICAAP. The ICAAP consists of a point-in-time assessment
of exposures and risks at the end of the FY, together with a forward-looking stress
capital assessment. The ICAAP is approved by the Board and submitted to the RBI.
Risk Management Framework
Your Bank's Risk Management Framework sets forth the core principles on
how the Bank seeks to manage and govern its risk. Many Bank policies and documents anchor
to the risk management framework's core principles.
The Board of Directors has the overall responsibility for your Bank's
Risk Management, including culture and governance framework. The RMCB assists the Board in
discharging these responsibilities, effectively. The RMCB annually reviews and approves
the risk management framework.
Your Bank's utmost priority is to strengthen by building the right risk
and control infrastructure. 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. The Board assesses management's performance, provides credible
challenges, and holds management accountable for maintaining an effective risk management
programme and for adhering to risk management expectations.
The RMCB also oversees the Risk Management Department ('RMD')
and the performance of the Chief Risk Officer ('CRO'), who reports functionally to
the RMCB and administratively to the MD & CEO.
In addition, the CRO has the authority to escalate risks and issues
directly to the RMCB.
Major Risks and Emerging Risks
An important component of 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 forwardlooking risk assessment is
maintained by 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.
Operational Risk
Operational risk is the risk resulting from inadequate or failed
internal processes, people and systems, or external events.
Your Bank is committed to providing uninterrupted service to its
customers and therefore, to ensure business resilience and continuity of the various
operational units, a Business Continuity Management Framework has been put in place with
the objective to recover critical activities and systems within defined timelines; the
safety of people and its assets; communicate with stakeholders during an emergency; manage
reputation risk, etc.
Your Bank has also initiated model-based approach for measurement of
Operational Risk VaR.
Your Bank has also in place, robust Fraud Risk, Outsourcing Risk and
Legal Risk Frameworks within its Operational Risk Management.
Regulatory Risk
Your Bank recognizes the increased importance of regulatory risk. It
keeps a close watch on the developments in the regulatory environment and analyses the
expected impact of new regulatory guidelines on your Bank's businesses and strategy. Your
Bank also reviews the trend of regulatory observations for identifying the pattern of
observations, major risk areas and emerging risk to keep the risk under control. Your Bank
has done a comprehensive analysis of the Regulator's supervisory observations over the
years to increase the robustness of its regulatory compliance.
Information Security and Cyber Risks
Information security and cyber risks remain as major risks, not only
for the financial services sector, but for other industries worldwide. Your Bank is also
subject to heightened risks in the form of cyber-attacks, data breaches, cyber extortion
and similar compromises, due to the increase in size and scale in nature of operations as
also clients' use of personal devices as the Bank has little or no control over the safety
of these devices. As the volume and sophistication of cyber-attacks continue to increase,
the resulting implications could include business interruptions, service disruptions,
financial loss, theft of intellectual property and confidential information, litigation,
enhanced regulatory attention and penalties, and reputational damage.
Your Bank has not experienced any material loss relating to these or
other types of cyber-attacks. Cybersecurity risk is a priority for your Bank, and we
continue to develop and enhance our controls, processes and systems in order to protect
our networks, computers, software and data from attack, damage or unauthorised access.
Your Bank is also proactively involved in industry cybersecurity efforts and working with
other parties, including our third-party service providers and governmental agencies, to
continue to enhance defences and improve resiliency to cybersecurity threats.
Your Bank has set-up 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 to take into
account proactive monitoring and management capabilities with sophisticated tools for
detection, quick response and backed by data and tools for sound analytics.
Credit Risk
Your Bank defines credit risk as the risk of loss associated with a
borrower or counterparty default (failure to meet obligations in accordance with agreed
upon terms). Credit risk exists with many of our assets and exposures, such as, debt
security holdings and loans.
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 our 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 our values, code of conduct or policies.
Climate-related Financial Risks
Climate-related financial risks refer to the potential risks that may
arise from climate change or from efforts to mitigate climate change, their related
impacts and their economic and financial consequences. These risks are, typically,
classified as physical and transition risks. Physical impacts include the potential
economic costs and financial losses resulting from the increasing severity and frequency
of extreme climate-change related events, and longer- term progressive shifts in the
climate whereas transition impacts relate to the process of adjusting to a low-carbon
economy. Your Bank has identified the Physical Risk in the Bank's certain portion of its
advance book, which is prone to natural calamities, such as, flood and cyclone. 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's
Liability Risks arising from people, businesses seeking compensation for losses suffered
from physical, or transition risks, e.g., floods, pollution, etc., is minimal as your
Bank's major loan exposure is into retail and micro finance segment and limited portfolio
is under large segment.
Market Risk
Market risk 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. Value-
at-risk ('VaR') is a statistical risk measure used to estimate the potential loss
from adverse moves in the financial markets. Your Bank uses VaR metrics complemented with
sensitivity analysis and stress testing in measuring and monitoring market risk. Treasury
Mid-office, under the Risk Management function, aggregates and monitors all exposures to
ensure risk measures are within its established risk appetite.
Asset/Liability Management
Asset/Liability Management involves evaluating, monitoring and managing
interest rate risk, market risk, liquidity and funding. Interest rate risk, which
potentially can have a significant earnings impact, arises because assets and liabilities
may mature or reprice at different times, assets and liabilities may reprice at the same
time but by different amounts, short-term and long-term market interest rates may change
by different amounts, the remaining maturity of various assets or liabilities may shorten
or lengthen as interest rates or interest rates may also have a direct or indirect effect
on loan demand, collateral values, credit losses, mortgage origination volume, etc. Your
Bank assesses interest rate risk by comparing outcomes under various net interest income
simulations using many interest rate scenarios that differ in the direction of interest
rate changes, the degree of change over time, the speed of change and the projected shape
of the yield curve. The objective of effective liquidity management is to ensure that the
Bank can meet customer loan requests, customer deposit maturities/withdrawals and other
cash commitments efficiently under both normal operating conditions and under periods of
Bank-specific and/or market stress. To achieve this objective, the Board establishes
liquidity guidelines that require sufficient asset- based liquidity to cover potential
funding requirements and to avoid over-dependence on volatile, less reliable funding
markets. 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.
Strategic Risk
Strategic risk is the risk that the enterprise or particular business
areas will make inappropriate strategic choices, or will be unable to successfully
implement selected strategies or achieve the expected. Your Bank is monitoring the
strategic risk by tracking the continuous validity of the assumptions made in forming the
strategic plan and their alignment with the macro-economic environment as also the status
of your Bank's strategy plans vis-avis achievements. Your Bank has conducted a mid-term
risk review of its five-year strategic plan during the year under review and the Board has
directed for the required directional changes.
Business Risk
Business risk is the possibility a company will have lower than
anticipated profits or experience a loss rather than taking a profit. Your Bank has a
robust Business Risk Management Framework in place, which cascades the Bank's risk
appetite statement into actionable metrics, including various financial indicators, as
well as the Bank's competitive position in the industry, which helps the Board to monitor
the same.
Reputational Risk
Your Bank's reputation is rooted in the perception of its stakeholders,
and the trust and loyalty they place in us is core to our 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 has started measuring the idiosyncratic risks
related to stock price movement, as also social as well as traditional media sentiments,
complaints, regulatory action, etc.
Information Technology at the Bank
Information Technology has been a pivotal role player in the promising
journey of your Bank. Few major initiatives taken during the FY 2021-22 are mentioned
below:
• Application portfolio rationalization to enter banking
enterprise landscape is underway.
• Started migrating data and functionalities from old Core Banking
Solution ('CBS') to modern high scalable and reliable Core Banking Platform.
• Migration of Aadhaar number to a secured Aadhaar vault.
• Migration of Home Loan application from existing legacy system
to modern resilient architecture.
• ISO 20022 based domain model standardization for all Banking
APIs through a scalable and resilient API Gateway.
• In process of introducing assisted intelligence, while detecting
early warning, using Artifical Intelligence ('AI').
• Replacing a series of applications, including Card Management
Systems, Treasury System, Cash Management Solution, etc., to a modern, scalable, high
available and resilient solution.
IT Infra related enhancements:
• Your Bank has set up its own Data Center ('DC') and
Disaster Recovery ('DR') Center and Near DR ('NDR') site with state-
of-the-art technology to ensure Zero Data loss of sensitive banking information.
• Built resilient back-up and replication technology to have data
backup in Primary DC as well as in DR site.
• Setting-up high performance, advanced, state-of-the-art
technology for Server/Storage/Network/Virtualization for smooth transformation to a new
CBS.
• The security of the DC has been strengthened by deploying the
controlling solutions, like, Database Access Monitoring ('DAM'), Mobile Device
Management ('MDM').
• In order to facilitate undisrupted support and service, advanced
Work from Home ('WFH') solution has been implemented.
• Privileged Access Management ('PIM') has been implemented
to ensure that administrators have only the necessary levels of access to execute their
jobs. This enabled secured access and better control on user management.
• ID Access Management ('IDAM') has been implemented to
provide a common platform for access and identity management information to help employees
to use common passwords for all applications which will be used under IDAM solution.
• Your Bank has set-up a Network Operating Centre ('NOC')
in its premises to manage and monitor the Branch and DC links.
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 has occurred between the end of the FY of the Bank, i.e.,
March 31, 2022, to which the financial statements 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, 2022, 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 in
today's challenging environment. Further, the Board extends its special thanks for the
unmatched efforts put in by the employees of the Bank, during these testing times caused
due to the ongoing COVID-19 pandemic, to provide uninterrupted services to the customers
and is deeply grateful and has immense respect for everyone who risked their life and
safety to fight this pandemic, and deeply regrets the loss of life. Your Board will
continue to strive for improvements as your Bank continues on its unique journey towards
financial inclusion.
|
For and on behalf of the Board of Directors |
|
Bandhan Bank Limited |
|
Anup Kumar Sinha |
| Place: Kolkata |
Non-Executive (Independent) Chairman |
| Date: July 13, 2022 |
(DIN: 08249893) |
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