Chairman’s Insight

Dear Shareholders,

I am glad to present to you the Annual Report for the financial year 2021-22. After an unprecedented period of pandemic and lockdowns, this year has been a year of recovery and growth - a year of bounce back.

In the recent report by RBI on Currency & Finance dated 29th April, 2022, RBI has stressed on ‘Revive and Reconstruct’ as it proposes a blue print of reforms around seven wheels of economic progress viz. aggregate demand; aggregate supply; institutions, intermediaries and markets; macroeconomic stability and policy coordination; productivity and technological progress; structural change; and sustainability. Sustained efforts have been seen from the Government to boost growth as it lays thrust on capital expenditure as also other measures like push to digitization. In short, the wheels of growth have started moving or running once again. The growth momentum has no doubt encountered hurdles in the form of intermittent variants of the pandemic, geopolitical conflicts, rising commodity prices and interest rates globally, global spillovers and domestic inflationary pressures. The overall outlook for FY 2021-22 however remained positive for the economy, the banking sector at large and your Bank in particular.

As per the data released by the Reserve Bank of India, credit growth by Scheduled Commercial Banks during FY 2021-22 stood at 9.6%. Your Bank’s credit portfolio, after subdued growth over the past 2-3 years has grown at 9.38% during FY 2021-22 in line with the banking sector growth. The Retail Banking segment has grown by 9.04% while Wholesale Banking business has seen a rise of 10.03% during the year under review. The growth momentum has been seen in the Wholesale segment after five flat years and is a reflection of the greenshoots in the economy. This performance is expected to continue in the coming years.

The performance this year has been good with improvement across all parameters. Non – Performing Assets (NPAs) have especially shown good improvement, as gross NPAs reduced from 4.58% as on 31st March, 2021 to 3.86% as on 31st March, 2022 while net NPAs reduced from 1.04% as on 31st March, 2021 to 0.65% as on 31st March, 2022. The Provision Coverage Ratio (PCR) has crossed 80%. Besides, the business growth is ably supported by improved margins, which is reflected in the Net Interest Margin (NIM) increasing from 2.14% as on 31st March, 2021 to 2.47% as on 31st March 2022. Capital adequacy is also sound at 13.94% as on 31st March, 2022.

A noteworthy feature of the top-line growth this year is that the credit off-take has improved taking the Credit Deposit (CD) ratio to 66.95% as on 31st March, 2022 from 64.23% earlier. Credit growth has been broad-based with both Wholesale as well as Retail segments posting sound growth numbers. The Bank undertook several reforms during the year in order to spur credit growth, especially the Wholesale segment, which is reflected in the higher credit growth. These include conducting daily meetings of the Wholesale Banking Credit Committee so as to reduce the Turn-Around-Time (TAT) for sanctions, upward revision in delegation of powers, introduction of Single Point of Contact (SPOC) at each SME centre and adaption of structured teaser mechanism to speed up on sanctions and adding new connections.

On the deposits front also, CASA deposits which are relatively more stable deposits have grown by around 9%. We are thus assured about the growth momentum of the Bank, especially post the pandemic uncertainties.

However, we cannot afford to be complacent and have been internally at the Board level as well as at the Management level - undertaking a lot of brainstorming to etch out a sustainable growth plan for the coming years. Recently, we organized a Conclave wherein a two-way communication was undertaken between the Board and the Top Management with the actual customer facing personnel viz. various SME heads, Zonal heads and the Branch Managers. During the said interaction, each and every aspect of the financial performance during the financial year was discussed, with specific emphasis on the finer aspects of business which need due care and attention going forward. I am elated to inform that recently RBI has approved our request to open 25 new branches under the Annual Business Plan for FY 2022-23. Under this Branch Expansion Plan, the Bank will be adding 12 branches in Mumbai , 3 in Navi Mumbai, 2 in Thane and 8 in Pune, helping the Bank undertake organic growth. The focus is thus to grow in terms of number of branches as well as number of relationships.

Your Bank also offers Retail commercial loans upto ₹ 10 crore under which we extend credit to small businessmen under tailor-made schemes. There are around 6,000 borrowers in this segment, of which total 1,000 borrowers have facilities in the range of ₹ 1 crore to ₹ 10 crore. A determined effort has been undertaken in the past 4-5 years to focus on this hitherto neglected segment of small size borrowers. The segment was therefore opened up to all branches instead of the six SMEs. The results of this endeavour started fructifying the second year onwards and the exposure to this segment has grown to around ₹ 2,500 crore. These are accounts which have huge potential for growth. These commercial units if nurtured today can blossom into full-fledged SME accounts tomorrow and will thus contribute to the Wholesale Banking business of the Bank in coming years. Even if onefourth of these businesses prosper (which is a very conservative estimate), this will add substantially to the Wholesale business of the Bank. We therefore need to focus on these Retail commercial borrowers of ₹ 1 crore and above through a dedicated endeavor. I am therefore happy to announce MISSION SAMRIDDHI, under which we will seek an active dialogue with these borrowers, partner with them taking care of their credit as well as business needs, extend appropriate guidance to them to grow their businesses and support them with adequate credit at each level of growth. In other words we will be handholding these borrowers who are our future SME clientele, thereby ensuring mutual prosperity in coming years.

All these business plans have been analysed threadbare with key entities contributing to business viz. Retail Banking, Wholesale Banking, all the support departments and Branch Managers. The starting point for this spurt in business growth is in doubling the number of relationships, which is our topmost priority.

The catalyst for business growth is the connect that the Bank shares with its clientele. We believe that personal interactions are essential for building trust, encouraging strong relationships and consequently long-term business. We have therefore organized Customer Meets beginning with Nasik & Pune and to be organized at all key centres throughout India to engage in an active dialogue with our customers. This will be an ongoing process throughout the year in order to reinforce the relationships, postpandemic. We have a Customer Relationship and Experience (CRE) Cell which undertakes direct interactions with customers. Recently, we have also opened a Depositors’ Engagement Cell which seeks to rejuvenate the connect with our Term Depositors who have been with the Bank for almost decades. Through many such endeavors, we attempt to interact with customers regularly, understand their requirements and resolve queries, if any.

We are also taking sustained efforts to re-engage with customers in cases where accounts have become inoperative. If an account remains inoperative for 10 years, the money has to be transferred to Deposit Education and Awareness Fund (DEAF) in line with the Reserve Bank of India guidelines. In order to protect our depositors from any inconvenience in claiming their funds in such a scenario, we are trying to reconnect with such depositors.

During the year under review, we have implemented new Core Banking Solutions (CBS) by shifting to Finacle, the CBS offered by M/s Edge Verve Systems Ltd. - a wholly-owned subsidiary of Infosys Ltd. After initial teething problems, the system is now stabilizing and in coming days, we will be able to fully leverage on the inherent functionalities and capabilities of Finacle.

For new-age customers, we continue to challenge our own digital product offerings and keep updating our bouquet of offerings of digital products, be it Tab Banking, Internet Banking, Bank on WhatsApp or any other digital product. Today, digital transactions constitute more than 80% of the overall transactions of your Bank. The efforts of your Bank on the digital /technological front have been recognized by the Indian Banks’ Association which has awarded your Bank with the ‘Best Technology Bank of the Year’ for the sixth consecutive year.

The Information Security Department (ISD) ensures that the technological and digital advancements are aptly supported by cyber security measures. Your Bank bagged the prestigious winner’s award for the second year in a row for ‘Best IT Risk Management and Cyber Security Initiatives’ in the Co-operative Banks’ category at the 17th Indian Banks’ Association Technology Awards 2021. Your Bank also bagged jury special award for “Cyber Security Awareness” in Business category by not only competing with co-operative banks, but also with other banks under Private / Public Sector. This award was conferred by another prestigious organisation - Data Security Council of India (DSCI) in their DSCI Excellence Awards 2021.

To top it all, your Bank has been recognized by Forbes in its Global Survey of World’s Best Banks for the third year in a row. This is indeed a proud moment for us as we strive to deliver the best services to our customers, as always.

This year’s performance clearly demonstrates that your Bank is not only growing strongly but is also becoming a more sturdy organisation that has the capacity to withstand the vagaries of economic cycles. This is evident from the improved indicators of Provision Coverage Ratio and quality of our credit portfolio.

On behalf of our Board of Directors, the Top Management Team and the Employees, I thank each one of you for your trust and ongoing support and assure to serve you with utmost dedication, as always.

Best Regards,

Gautam E. Thakur