The Board of Directors of the Bank have pleasure in presenting the Twenty-fourth Annual
Report covering business and operations of the Bank, together with the Audited Financial
Statements for the year ended March 31, 2018.
The 3nancial performance for the year ended March 31, 2018 is summarized as under:
(Rs in crores)
||As on March 31, 2018
||As on March 31, 2017
|Operating Pro3t (before Depreciation and Provisions and Contingencies)
During the year under review, despite the disruption in growth rate in the Indian
economy and a persistently challenging macroeconomic environment, the Bank improved its
business, with Deposits growing by 19.80% and Advances by 28.19% over the previous year.
The Bank continued to focus on increasing earnings from its core banking business,
strengthening the fee income streams, and maintaining control on operating costs.
Operating Profit (before Depreciation and Provisions and Contingencies) rose by 21.73%
to Rs 6,867.75 crores, as compared to Rs 5,641.71 crores in the previous year.
The Net Profit of the Bank, after considering all expenses and necessary Provisions and
Contingencies, was higher by 25.74% at Rs 3,605.99 crores, as against Rs 2,867.89 crores
in the previous year.
The Directors recommend appropriation of Profit as under:
(Rs in crores)
|Operating Profit before Depreciation and Provisions and Contingencies
|Less: Depreciation on Fixed Assets
|Less: Provisions and Contingencies inclusive of Income Tax
|Profit Brought Forward
|Amount available for Appropriation
|Transfer to Statutory Reserve
|Transfer to Capital Reserve
|Dividend (including Tax on Dividend)
|(23rd Annual General Meeting of members held on July 26, 2017 approved the payment of
Dividend for the year 2016-17 for the Equity Shares outstanding as on that date.)
|Deduction during the year
|Balance carried over to Balance Sheet
The Earning Per Share (EPS) of the Bank rose to Rs 60.19 during the year 2017-18, from
Rs 48.06 in the previous year.
In view of the overall improvement in performance as well as the need to conserve
Capital for continued growth, the Directors recommend Dividend of Rs 7.50 per Equity Share
of Rs 10 each for the year ended March 31, 2018. (Dividend for the year 2016-17 was Rs
6.00 per Equity Share of Rs 10 each).
Considering the Equity Shares outstanding as at March 31, 2018, the total amount of
dividend payable including Taxes to be borne by the Bank amounts to Rs 542.70 crores. In
accordance with the revised AS 4 Contingencies and events occurring after the
Balance Sheet Date', this amount is not accounted as liabilities as at March 31, 2018.
Financial Performance and State of A3airs of the Bank
The year under review was the 3rst year of the new Triennial Planning Cycle of the
Bank, (Planning Cycle 4, for Financial Years 2017-20) with the theme of "Digitize to
Di3erentiate, Diversify and Create Domain Leadership (4D)" with a strategy to gain
Market Share with Profitability'.
Backed by improved volumes, the Total Income of the Bank for the year under review grew
by 18.59% to Rs 22,030.85 crores from Rs 18,577.16 crores.
The healthy rise in Profitability was the result of growth in Net Interest Income (NII)
as well as Non-Interest Income. Net Interest Income improved by 23.67% to Rs 7,497.45
crores from Rs 6,062.60 crores while Non-Interest Income rose to Rs 4,750.10 crores from
Rs 4,171.49 crores, registering growth of 13.87%.
Core Fee Income such as commission, exchange, loan processing and account management
fees, fees on Investment Banking and distribution of third-party products, and earnings
from foreign exchange business grew by 19.73% to Rs 4,176.75 crores from Rs 3,488.59
crores earned during the previous year.
Yield on Advances dropped to 11.21% during the year, as against 11.71% in the previous
year, while the Cost of Deposits fell to 5.98% from 6.41% in the previous year. The Bank
was able to maintain its Net Interest Margin at the same level as of previous year at
The Bank expanded its branch network steadily to reach 1,400 branches, as against 1,200
branches at the beginning of the year. Revenue per employee during the year improved
signi3cantly to Rs 48 lakhs.
The Net Non-Performing Assets ratio of the Bank stands at 0.51% in current year. The
Provisioning Coverage Ratio (PCR) stands at 56.26% as compared to 58.39% in the previous
The year under review witnessed a number of signi3cant events, some of which are listed
On April 18, 2017, the Bank issued Basel III-compliant Additional Tier 1 Bonds
(AT1/ PDI) for Rs 1,000 crores, in addition to Rs 1,000 crores mobilized during March
On October 14, 2017, the Board of Directors of the Bank and the Board of
Directors of Bharat Financial Inclusion Limited
(BFIL) (formerly known as SKS Micro3nance Limited) approved Amalgamation of BFIL with
the Bank through a Composite Scheme of Arrangement. The Competition Commission of India
has granted approval to the proposed Scheme, and the RBI has accorded their "No
Objection" for the Amalgamation.
In this regard, as on date of this report:
The Scheme has no adverse remarks' in the Observation Letters from the
Securities and Exchange Board of India (SEBI) /
National Stock Exchange of India Limited vide letter dated June 1, 2018 and BSE Limited
vide letter dated June 4, 2018. O RBI vide letter dated June 8, 2018 conveyed their
approval for incorporating of the Wholly-Owned-Subsidiary to act as
Business Correspondent of the Bank as part of Bank's Amalgamation with BFIL.
The Scheme is awaiting, approval from the respective Shareholders and Creditors
of the Bank and BFIL, the National Company Law Tribunal (NCLT), and is subject to
compliance with the conditions speci3ed by RBI.
_ Equity Shares of the Bank have been included in the bellwether 30 Member BSE
Sensex Index. They have been part of Nifty 50, the bellwether index of NSE since April
_ RBI have granted approval on April 3, 2018 for the proposed acquisition of
IL&FS Securities Services Limited, the securities services arm of IL&FS, as a
Wholly-Owned Subsidiary of the Bank. This transaction is conditional on de3nitive
agreements and other regulatory approvals.
Performance of Subsidiary and Associate Company
The Bank does not have a subsidiary.
IndusInd Marketing and Financial Services Private Limited (IMFS) is an Associate
Company of the Bank and is engaged in the business of providing manpower services.
Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 8 of Companies
(Accounts) Rules, 2014, the Bank has drawn up a Consolidated Financial Statement including
the Financial Statement of its Associate Company, which also forms a part of this Annual
During FY 2017-18, IMFS earned Revenue of Rs 243.09 crores as against Revenue of Rs
217.21 crores in the previous year. IMFS earned Profit of Rs 0.44 crores in FY 2017-18.
Statement containing the salient features of the 3nancial position of the Associate
Company in Form AOC-1 is enclosed as Annexure' to the Financial Statements.
The Paid-Up Equity Capital of the Bank as at March 31, 2018 consisted of 60, 02,23,187
Equity Shares of Rs 10/- each.
During the year under review, the Bank allotted 20,74,482 Equity Shares of Rs 10/- each
pursuant to Exercise of Options under its Employees Stock Option Scheme, 2007.
The Bank has not issued any Equity Shares with Di3erential Voting Rights.
On April 18, 2017, the Bank allotted, on Private Placement basis, 10,000 Rated, Listed,
Non-Convertible, Perpetual, Subordinated & Unsecured Basel III-compliant Additional
Tier I Bonds ("AT1") in the nature of Debentures of Face Value of Rs 10,00,000
(Rupees Ten lakhs each) for cash at par amounting to Rs 1,000 crores.
In compliance with Regulation 53 of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015, the names of the Debenture Trustees with their contact
details are given below:
|Name of Debenture Trustees
||: Catalyst Trusteeship Limited (formerly GDA Trusteeship Ltd.)
||: GDA House, Plot No. 85, Bhusari Colony
||(Right), Kothrud, Pune 411 038, Maharashtra, India.
|Name of Debenture Trustees
||: Beacon Trusteeship Limited
||: Prabhat Kunj, Prabhat Colony 3, Santracruz (East), Mumbai 400 055
Tier II Capital
The Bank did not issue any Tier II Capital instruments during the year. As on March 31,
2018, the value of outstanding Tier II Capital instruments is Nil.
The Bank is a banking company governed by the Banking Regulation Act, 1949, and as
such, the provisions in the Companies Act relating to acceptance of Public Deposits are
The Bank continues to be adequately capitalized. The Capital Adequacy Ratio of the
Bank, calculated under the Basel III Capital Regulations mandated by RBI, is set out
||March 31, 2018
||March 31, 2017
|i) Capital Adequacy Ratio (CRAR)
|ii) CRAR- Common Equity Tier 1 Capital
|iii) CRAR- Tier 1 Capital
|iv) CRAR- Tier 2 Capital
|Infra Bond program
|Additional Tier I Bond program
|Certi3cates of Deposit
|Senior Bonds program
||India Ratings and Research
|Additional Tier I Bond program
||India Ratings and Research
|Short Term Debt instruments
||India Ratings and Research
The Bank's Board comprised eight Directors as on March 31, 2018, viz., Mr. R.
Seshasayee, Non-Executive Part-time Chairman, 3ve Independent Directors, Mr. Yashodhan M.
Kale, Non-Executive Non-Independent Director, and Mr. Romesh Sobti, Managing Director
(a) Non-Executive Independent Directors
All Independent Directors have given Declarations that they meet the criteria of
independence as laid down under subsection (6) of Section 149 of the Companies Act, 2013.
In compliance with Regulation 16 of SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, the Declarations were placed before the Board of Directors in their
meeting held on April 19, 2018, and based on the Declarations, the following Non-Executive
Directors continue to be identi3ed as Independent Directors as on March 31, 2018: (i) Mrs.
Kanchan Chitale (ii) Mr. T. Anantha Narayanan (iii) Mr. Ranbir Singh Butola (iv) Mr.
Shanker Annaswamy (v) Dr. T. T. Ram Mohan
(b) Woman Director
In terms of the provisions of Section 149 of the Companies Act, 2013, read with Rule 3
of the Companies (Appointment and Quali3cation of Directors) Rules, 2014, and Regulation
17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, speci3ed
companies are required to have at least one Woman Director in their Board.
Mrs. Kanchan Chitale (DIN: 00007267), who joined the Board on October 18, 2011,
is an Independent Woman Director in the Board, and Chairs some important Committees.
(c) Chairman of the Board
Mr. R. Seshasayee, (DIN: 00047985) has been Non-Executive Part-time Chairman of
the Bank since July 24, 2007. Shareholders of the Bank had, in the 23rd AGM held on July
26, 2017, approved the re-appointment of Mr. R. Seshasayee as Non-Executive Part-time
Chairman for a period of 2 years.
RBI have conveyed approval for the re-appointment of Mr. R. Seshasayee as a
Non-Executive Part-time Chairman for a period of 2 years, i.e., up to July 24, 2019.
(d) Managing Director & CEO
Mr. Romesh Sobti, (DIN: 00031034) has been Managing Director & CEO of the
Bank since February 1, 2008.
Shareholders of the Bank had, in the 21st AGM held on August 17, 2015, approved the
re-appointment of Mr. Romesh Sobti as the Managing Director & CEO for a period of
three years with e3ect from February 1, 2015.
Reserve Bank of India have conveyed their approval for re-appointment of Mr. Romesh
Sobti up to March 23, 2020.
(e) Details of Directors seeking Appointment / Re-appointment / Directors retiring by
rotation at the forthcoming AGM
Mr. Yashodhan M. Kale (DIN: 00013782), completed his tenure in the Board on
November 3, 2017. Reserve Bank of India have, vide their letter dated December 20, 2017,
conveyed approval for continuance of Mr. Yashodhan M. Kale in the Board upto April 15,
The Board of Directors had, in their meeting held on January 11, 2018, accordingly
approved the appointment of Mr. Yashodhan M. Kale as Additional Director' in the
category of Non-Executive Non-Independent Director' in the Board. Approval of the
shareholders is being requested for the appointment of Mr. Yashodhan M. Kale as Director
in the Board of the Bank.
Mr. Romesh Sobti (DIN: 00031034) has been the Managing Director & CEO of the
Bank since February 1, 2008. Shareholders of the Bank had, in the 21st AGM held on August
17, 2015, approved the re-appointment of Mr. Romesh Sobti as the Managing Director &
CEO for a period of three years with e3ect from February 1, 2015.
The Nomination & Remuneration Committee of the Board had recommended to the Board
of Directors the reappointment of Mr. Romesh Sobti as Managing Director & CEO with
e3ect from February 1, 2018.
Reserve Bank of India have, vide their letter dated January 16, 2018, conveyed their
approval for the re-appointment of Mr. Romesh Sobti as Managing Director & CEO'
from February 1, 2018 until March 23, 2020.
Approval of the shareholders is being requested for re-appointment of Mr. Romesh Sobti
as Managing Director & CEO of the Bank upto March 23, 2020.
Retirement by Rotation
Section 152 (6) of the Companies Act, 2013 provides that not less than two-thirds of
the total number of directors of a public company shall be liable to retire by rotation,
and that one-third of such directors as are liable to retire by rotation shall retire from
o3ce at every Annual General Meeting (AGM) of the company.
In accordance with the provisions of the Companies Act, 2013, out of the
Non-Independent Directors, Mr. R. Seshasayee (DIN: 00047985), Non-Executive Part-time
Chairman of the Bank, being longest in O3ce, retires by rotation, and being eligible,
o3ers himself for re-appointment at the AGM.
Approval of the shareholders is being requested for re-appointment of Mr. R. Seshasayee
as Non-Executive Part-time Chairman of the Bank.
As required under Regulation 36(3) of the Listing Regulations, particulars of the
Directors seeking appointment, reappointment, and retirement by rotation are given in the
Explanatory Statement and attached to the Notice of the forthcoming AGM.
None of the Directors have been disquali3ed from being appointed as Director',
pursuant to Section 164 of the Companies Act, 2013.
(f) Cessation of Director
Mr. Vijay Vaid, (DIN: 00219709), who had been a member of the Board as
Non-Executive Independent Director' since October 18, 2011, ceased to hold o3ce with
e3ect from February 3, 2018.
The Directors wish to place on record their appreciation for the valuable contributions
made by Mr. Vijay Vaid towards the deliberations in the Board Meetings during his tenure
as Director of the Bank.
Board and Committee Meetings
During the year, ten meetings of the Board and ten meetings of the Audit Committee were
held, the details of which are given in the Corporate Governance Report, which forms an
integral part of this Report.
The Board has constituted the Audit Committee with Mr. T. Anantha Narayanan as Chairman
and Mrs. Kanchan Chitale, Mr. Ranbir Singh Butola, Mr. Shanker Annaswamy and Mr. Yashodhan
M. Kale as Members. There have not been any instances during the year when recommendations
of the Audit Committee were not accepted by the Board.
Details of the composition of the Board and all its Committees and of the Meetings held
and attendance of the Directors at such Meetings are provided in the Corporate Governance
Report. The intervening gap between the Meetings was within the period prescribed under
the Companies Act, 2013 and the Listing Regulations.
Performance Evaluation of the Board
Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, the
Nomination & Remuneration Committee of the Board had laid down the criteria for
Performance Evaluation of the Board as a whole, Committees of the Board, Directors
individually, and of the Chairman, as well as the process of evaluation.
The Bank has aligned its Board Evaluation Framework in line with the Guidance Note on
Board Evaluation issued by SEBI, under their Circular dated January 5, 2017.
The Board of Directors have carried out the annual evaluation of the performance of the
Board as a whole, Individual Directors including Independent Directors, Non-Independent
Directors, the Managing Director & CEO and the Chairman and the Committees of the
The performance of the Board as a whole, Committees of the Board, Directors
individually, and of the Chairman has been evaluated / reviewed by the Nomination &
Remuneration Committee, Committee of Independent Directors and by the Board of Directors
in their meetings held on May 8, 2018.
The Statement indicating the manner in which the evaluation exercise was conducted is
included in the Report on Corporate Governance, which forms an integral part of this
System for Internal Financial Controls and its Adequacy
The Bank operates in a fully computerised environment, with a Core Banking Solution,
supported by diverse application platforms for handling special businesses, such as,
Treasury, Trade Finance, Credit Cards, Retail Loans, etc. The process of recording of
transactions in each of the application platforms is subject to various forms of controls
such as in-built system checks, Maker Checker authorisations, independent
post-transaction reviews, etc. The Financial Statements are prepared based on computer
system outputs. The responsibility of preparation of Financial Statements is entrusted to
a dedicated unit which is completely independent of business, risk, audit or other
functions. This unit does not originate accounting entries except for limited matters such
as Share Capital, Taxes and Transfers to Reserves. The Bank has implemented adequate
procedures and internal controls which provide reasonable assurance regarding reliability
of 3nancial reporting and preparation of Financial Statements, and that such internal
3nancial controls were adequate and were operating e3ectively during the year.
Conservation of energy and technology absorption and foreign exchange earnings and
Conservation of Energy:
Considering the nature of its activities as an entity in the Financial Services sector,
the Bank has voluntarily taken steps towards conservation of energy and details of which
are furnished in Principle 6 of Section E of the Business Responsibility Report.
The Bank has made optimum use of Information Technology in its operations. Details
pertaining to Technology Absorption have been explained in the Management and Discussion
Analysis Report, which forms an integral part of the Annual Report.
Foreign Exchange Earnings and Outgo:
The provisions relating to 134(3)(m) of the Companies Act, 2013, on particulars
relating to Foreign Exchange Earnings and Outgo are not applicable to a Banking company,
and as such no Disclosure is being made in this regard.
The Bank has an Enterprise-wide Risk Management (ERM) framework in place. The Risk
Management Department covers Credit Risk, Market Risk, Assets-Liabilities Management
(ALM), Operational Risk and Information Security Risk across all verticals, independent of
Risk Management functions in the Bank have been aligned with best industry practices,
supported by advanced risk measurement and analytical systems which enable proactive risk
management and monitoring. Risk Management is continually enhanced in line with changes in
operating environment and regulations.
The Bank has a comprehensive framework of Risk Management Policies which specify the
risk appetite, risk measurement methodologies, and monitoring and control measures for the
respective business segments. The policies have been designed keeping risk appetite as the
central objective, and business strategies have been aligned to risk policies.
The Bank has set up a Board-level Committee, viz., Risk Management Committee' to
examine risk policies and procedures developed by the Bank and monitor adherence to risk
parameters and prudential limits set for di3erent portfolios / products / segments.
Details of Risk Management Models and Frameworks implemented by the Bank are mentioned
under Management Discussion and Analysis'.
Vigil Mechanism / Whistle Blower Policy
The Bank has in place the "Whistle Blower Policy" since 2009.
The said Policy is in compliance with RBI Guidelines, provisions of the Companies Act,
2013, and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Vigil Mechanism at the Bank requires submission of Quarterly Reviews before the Audit
Committee of the Board, and placing of Annual Reviews before the Audit Committee and the
Board of Directors.
The Policy also incorporates suggestions of the Protected Disclosure Scheme for Private
Sector and Foreign Banks, instituted by Reserve Bank of India.
The Board of Directors of the Bank have constituted a Board-level Committee, viz., the
Vigilance Committee, which conducts overview of cases of vigilance nature arising out of
actions of the employees of the Bank. The Committee meets at least twice a year.
The Bank has been awarded the Certi3cate of Commitment' by Central Vigilance
The Bank's Whistle Blower Policy is in synchrony with all statutory and regulatory
guidelines on Vigil Mechanism.
Further details about the Vigil Mechanism are furnished in the Report on Corporate
Governance, and the current Whistle Blower Policy of the Bank is available on the Bank's
website at the under-mentioned link:
M/s Price Waterhouse Chartered Accountants LLP, (PW), Mumbai (Firm Registration No.
012754N / N500016), Statutory Auditors of the Bank have Audited the accounts of the Bank
for the Financial Year 2017-18 and will retire at the conclusion of this Annual General
M/s Price Waterhouse Chartered Accountants LLP have been associated with the Bank as
Statutory Auditors for the past three years.
Independent Auditors' Report
M/s Price Waterhouse Chartered Accountants LLP, Statutory Auditors of the Bank, have
audited the accounts of the Bank for the year 2017-18 and their Report is annexed.
Pursuant to Section 143(3)(i) of the Companies Act, 2013, the Statutory Auditors have also
reported on the adequacy and operating e3ectiveness of internal 3nancial controls system
over 3nancial reporting, which has been enclosed as Annexure A' to the Independent
Significant Audit observations, if any, and corrective actions taken by the Management
are presented to the Audit Committee of the Board from time to time.
There are no quali3cations, reservations or adverse remarks or disclaimers made in the
In terms of Section 204 of the Companies Act, 2013 and the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, the Bank has appointed M/s Bhandari
& Associates, Company Secretaries in Practice, to undertake Secretarial Audit of the
Bank for the FY 2017-18. The Secretarial Audit Report submitted by M/s Bhandari &
Associates is furnished at Annexure I, and forms an integral part of this Report.
The Secretarial Audit Report submitted by Bhandari & Associates for FY 2017-18 does
not contain any qualification, reservation or adverse remark.
The information on conservation of energy, technology absorption and foreign exchange
earnings and outgo pursuant to Section 134(3)(m) of the Companies Act, 2013 read with the
Rule 8(3) of the Companies (Accounts) Rules, 2014, is given in the Management Discussion
and Analysis Report. Also, the other Statutory Information / Disclosures required to be
given under the Banking Regulation Act, 1949 and the Companies Act, 2013, as applicable to
the Bank, have been laid out in the Schedules / Notes attached and form part of the
Balance Sheet and the Profit and Loss Account.
Details pursuant to remuneration of Directors and Employees in terms of Section 197
(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 including the Companies (Appointment and
Remuneration of Managerial Personnel) Amendment Rules, 2016, are given at Annexure II and
form an integral part of this Report.
The information relating to employees required to be furnished under the Companies Act,
2013 and the Rules made thereunder is given under the head Particulars of Employees'
later in this Report.
Employees Stock Option Scheme
The Bank had instituted the Employee Stock Option Scheme (ESOS-2007) to enable its
employees, including Whole-time Directors, to participate in the future growth of the
Bank. Under the Scheme, Options can be granted, which upon exercise from time to time
could give rise to the issuance of a number of shares up to 7% of the issued Equity
Capital of the Bank. The eligibility and number of Options to be granted to an employee is
determined on the basis of criteria laid down in the Scheme and is approved by the
Compensation Committee of the Board of Directors.
An aggregate of 4,16,33,300 Options, comprising 6.94% of the Bank's Equity Capital,
have been granted under the Scheme. Statutory disclosures as required by SEBI (Share Based
Employee Bene3ts) Regulations, 2014 are given at Annexure III, and form an integral
part of this Report.
The Annual Certi3cate on compliance with SEBI (Share Based Employee Bene3ts)
Regulations, 2014, issued by Statutory Auditors of the Bank is being placed before Members
in the ensuing AGM.
The Employees Stock Option Plan is administered by the Compensation Committee of the
Disclosure on compliance with Secretarial Standards
The Directors have devised proper systems to ensure compliance with the provisions of
all applicable Secretarial Standards and that such systems are adequate and operating
Directors' Responsibility Statement
To the best of their knowledge and belief and according to the information and
explanations obtained by them, the Directors make the following statement in terms of
Section 134(3)(c) and 134(5) of the Companies Act, 2013:
(a) that in the preparation of the Annual Accounts for the Financial Year ended March
31, 2018, the applicable Accounting Standards have been followed along with proper
explanation relating to material departures, if any;
(b) that such accounting policies as mentioned in the Notes to the Financial Statements
have been selected and applied consistently and that judgments and estimates have been
made that are reasonable and prudent so as to give a true and fair view of the state of
a3airs of the Bank as at March 31, 2018 and of the Profit of the Bank for the year ended
on that date;
(c) that proper and sufficient care has been taken for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act, 2013 for
safeguarding the assets of the Bank and for preventing and detecting frauds and other
(d) that the Annual Financial Statements have been prepared on a going concern'
(e) that proper internal 3nancial controls were in place and that the 3nancial controls
were adequate and operating e3ectively; and
(f) that systems to ensure compliance with the provisions of all applicable laws were
in place and were adequate and operating e3ectively.
Extract of Annual Return
The details forming part of the extract of the Annual Return in Form MGT-9, as required
under Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management
and Administration) Rules, 2014, are included in this Report as Annexure IV and
form an integral part of the Annual Report.
Particulars of Employees
The Bank had 25,284 employees on its rolls as on March 31, 2018.
59 employees who had been employed throughout the year were in receipt of remuneration
of Rs 1.02 crores per annum or more, and only 1 employee employed for part of the year was
in receipt of remuneration of Rs 8.50 lakhs per month or more. The information containing
particulars of employees pursuant to Section 197 of the Companies Act, 2013 read with Rule
5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
forms part of this Report. However, the above Annexure is not being sent along with this
Annual Report to the Members of the Bank in line with the provision of Section 136 of the
Companies Act, 2013. Members who are interested in obtaining the particulars may please
write to the Company Secretary at the Secretarial and Investor Services O3ce of the Bank.
The aforesaid Annexure is also available for inspection by Members at the Registered O3ce
of the Bank up to the date of this Annual General Meeting during business hours on working
None of the employees hold (by himself or along with his spouse and dependent children)
more than two percent of the Equity Shares of the Bank.
Policy on Remuneration to Non-Executive Directors
Until the Financial Year 2015-16, all Non-Executive Directors, including the
Non-Executive Part-time Chairman, received remuneration only by way of Sitting Fees for
attending the meetings of the Board and of various Board Committees.
In line with the guidelines contained in RBI Circular dated June 1, 2015 on
compensation of Non-Executive Directors of Private Sector Banks, the Board of Directors,
on the basis of the recommendations of the Human Resource & Remuneration Committee
(since re-named as Nomination & Remuneration Committee'), in their meeting held
on May 12, 2016, approved the payment of remuneration of Rs 25 lakhs per annum with e3ect
from April 1, 2016 to Mr. R. Seshasayee, Non-Executive Part-time Chairman (subject to
approval of Reserve Bank of India, which has since been received) and to the Non-Executive
Directors (other than the Non-Executive Part-time Chairman) in the form of Profit-related
Commission of Rs 10 lakhs per annum for each Director, in such manner as may be decided by
the Board of Directors.
Shareholders had, in the 22nd Annual General Meeting of the Bank held on July 1, 2016,
accorded their approval for payment of the above-mentioned remuneration in the form of
Profit-related Commission to the Non-Executive Directors, including to the Non-Executive
Part-time Chairman, for FY 2016-17. The Non-Executive Directors, including the
Non-Executive Part-time Chairman, accordingly received remuneration in the form of
Profit-related Commission, in addition to Sitting Fees for attending meetings of the Board
and of various Board Committees.
No Stock Options were granted to the Non-Executive Directors.
During FY 2016-17, the Board of Directors have, on the recommendations of the HR &
Remuneration Committee (since re-named as Nomination and Remuneration Committee')
formulated the Policy on Remuneration to Non-Executive Directors', including the
Non-Executive Part-time Chairman.
During the Financial Year 2017-18, the Board reviewed the Policy on Remuneration
to Non-Executive Directors'. The Policy is hosted on the Bank's website at the link given
below: http://www.indusind.com/important-links/other-useful-information.html The Board of
Directors have also formulated a Policy in relation to Key Management Personnel and Senior
Management personnel of the Bank. The said Policy is given under Disclosure on
Remuneration' at Note No. 12.6 of the Notes in Schedule 18 to the Financial Statements,
which forms an integral part of this Annual Report.
Details on compensation to Whole-time Directors are given under the Report on Corporate
Governance, that forms an integral part of this Report.
Particulars of Loans, Guarantees or Investments outstanding
Section 186(11) of the Companies Act, 2013 mandates that the provisions of Section 186
of the Companies Act, 2013, except sub-section (1), do not apply to a loan made, guarantee
given or security provided by a banking company in the ordinary course of business. The
particulars of loans made, guarantees given and investments made by the Bank are disclosed
in the Financial Statements as per the applicable provisions of the Banking Regulation
Particulars of Contracts or Arrangements with Related Parties
All transactions entered with Related Parties' during the year under review were
on arm's length basis' and in the ordinary course of business' and therefore
do not attract the provisions of Section 188 of the Companies Act, 2013.
Further, there are no materially Significant Related Party Transactions during the year
with any of the Related Parties, viz., Promoters, Directors and Key Management Personnel
and other related entities including IMFS, an Associate Company, which may have potential
con3ict with the interest of the Bank at large.
In view of the above, the disclosure under Form AOC-2 is not applicable to the Bank.
The Policy on Related Party Transactions as approved by the Board of Directors is
hosted on the Bank's website at the below given link:
Consolidated Financial Statements
In accordance with Section 129(3) of the Act, Consolidated Financial Statement of
IndusInd Bank Limited (the Bank') and IndusInd Marketing and Financial Services
Private Limited ("the Associate") has been prepared and is included in the
In terms of AS 23, the Bank has prepared the Consolidated Financial Statements for the
year ended March 31, 2018, wherein the Standalone Financial Statements of the Bank as of
that date are consolidated with that of IMFS, an associate in which the Bank has a 30%
stake, by adopting Equity Method'.
Indian Accounting Standards (Ind AS)
The Reserve Bank of India (RBI) issued Circular No. DBR.BP.BC.No.76/21.07.001/2015-16
on February 11, 2016, requiring scheduled commercial banks to comply with the Indian
Accounting Standards (Ind AS) for accounting periods beginning from April 1, 2018 onwards,
with comparatives for periods ending on or after March 31, 2018.
RBI, on April 5, 2018, through announcement in its 3rst Monetary Policy Statement for
FY 2018-19, deferred Ind AS implementation for the scheduled commercial banks (excluding
RRBs) by one year such that the implementation of Ind AS would begin from April 1, 2019
onwards, with comparatives for the year beginning April 1, 2018.
Pursuant to the RBI Circular dated February 11, 2016, the Bank formed a Steering
Committee, comprising members from cross-functional areas, for the purpose of reviewing
and monitoring the progress of implementation. The Bank set up a Working Group under the
guidance of the Steering Committee to conduct Gap Assessment to identify the di3erences
between the current accounting framework and Ind AS, including the identi3cation of the
accounting policy options provided under Ind AS 101, First Time Adoption. Besides
augmenting skilled resources within the Financial Reporting team, the Bank also engaged
the services of leading professionals with international experience to assist in the
project. Training programs were organized for the team members in the Business, Credit and
Finance Teams. The Bank is in the process of identifying the changes required to be made
to its systems and processes and is evaluating technology solutions.
The Audit Committee of the Bank's Board of Directors oversees the progress of the Ind
AS implementation process. Some of the areas of Significant accounting impact pursuant to
the application of Ind AS are summarized below:
(a) Accounting impact on account of application of Ind AS at the date of transition,
i.e. April 1, 2018 will be recognized in equity or other components of equity. (b) The
classi3cation and measurement of 3nancial assets will be driven by the Bank's business
model for managing those assets and the characteristics of the contractual cash 3ows of
the assets. All 3nancial assets will be classi3ed as subsequently measured at amortised
cost, Fair Value through Other Comprehensive Income (FVOCI) or Fair Value through Profit
or Loss (FVTPL). (c) Financial Instruments would be derecognised on transfer of
Significant risks and rewards, and not based on the legal form of the arrangement.
(d) Interest will be recognised in the Income Statement using the e3ective interest
method and any directly attributable fees and costs would be considered to be an
adjustment to the e3ective interest rate. (e) All Derivatives would be required to be
fair-valued and recognised on the Bank's Balance Sheet. (f) Expense for Stock Options will
be recognised in the Statement of Profit and Loss based on the Fair Value of the Options.
(g) Impairment requirements for 3nancial assets carried at amortised cost or at fair value
through other comprehensive income, including certain o3 Balance Sheet items are based on
an Expected Credit Loss (ECL) model. The Bank will be required to recognise either a
12-months' or lifetime ECL, depending on whether there has been a Significant increase in
Credit Risk since initial recognition. This will be Significantly different from the
current methodology for calculating the provision for Standard Assets and Non-Performing
Assets (NPAs). The Bank has developed models for computation of ECL and is testing the
In addition to the above, as per Reserve Bank of India directions, the Bank submitted
Standalone proforma Ind AS 3nancial statements along with other computations to the RBI
for the half-year ended September 30, 2016 in FY 2016-17 and for the quarter ended June
30, 2017 in FY 2017-18, as required.
Corporate Social Responsibility
In line with its CSR focus areas, the Bank has committed to various long term community
development projects that have a large positive impact. Consistent with the requirements
of Section 135 of the Companies Act, 2013 and CSR Rules 2014, the Bank has set up a
Board-level CSR Committee to review the CSR initiatives. The Committee is headed by Mrs.
Kanchan Chitale as the Chairperson, Mr. Yashodhan M. Kale (inducted in the Committee on
March 26, 2018) and Mr. Romesh Sobti as Members. Mr. Vijay Vaid ceased to be a Member, on
his retirement from the Board on February 3, 2018.
The composition of the CSR Committee is in accordance with Section 135 of the Companies
The Bank's CSR Policy and strategy direct and govern the Bank's activities in focus
areas, namely, Environmental Sustainability, Rural Development and Inclusiveness,
Preventive Healthcare and other areas of special interest that include Education, Sports
In FY 2017-18, in line with the agenda on digitization, the Bank pledged support to the
PM's initiative of digitizing Rural India by reaching out to 2 lakh candidates across 275
districts in 11 Indian states of Haryana, Punjab, Rajasthan, Madhya Pradesh, Maharashtra,
Gujarat, Jharkhand, Chhattisgarh, West Bengal, Odisha and Uttar Pradesh. The Bank has also
initiated a 3agship solid waste segregation and management programme in partnership with
the Government of Uttarakhand. Adding on to the two on-going 3agship sports projects
namely the Para-Champions and the Blind Cricket Programme, the Bank introduced the
IndusInd Girl Power Programme in FY 2017-18 that supports woman athletes across Judo,
Boxing and Wrestling to represent India in reputed sports tournaments.
During the year under review, the Bank has also introduced a unique project involving
the rehabilitation and skill development of women rescued from tra3cking in Bihar.
The CSR Initiatives / Projects undertaken by the Bank are in accordance with Schedule
VII of the Companies Act, 2013.
Companies, on the basis of criteria prescribed under Section 135 of the Act, are
required to spend at least Two per cent of their Average Net Profits made during the three
immediately preceding 3nancial years, in pursuance of their Corporate Social
Responsibility Policy. Accordingly, the Bank spent Rs 20.47 crores towards various CSR
activities speci3ed in Schedule VII of the Companies Act, 2013. The programmes are of
large scale and hence the absorption of funds is milestone-linked for larger impact.
The Bank also recognises and addresses environmental issues like climate change and
global warming and measures its carbon footprint. The Bank currently features in the
A' list of the CDP, a platform that is widely referred by global Investors. The Bank
is also a front-runner, investing in on-site solar energy solutions and LEED-Certi3ed
green buildings. While these investments have not been considered as part of our reported
spend this year, it has had substantial impact on the environment, in line with global
targets of the UN Sustainable Development Goals.
The Report on CSR activities undertaken by the Bank is set out at Annexure V and
forms an integral part of this Report. Details of the CSR Policy and initiatives adopted
by the Bank on CSR are available on Bank's website at the link given below:
Business Responsibility Report (BRR)
The Securities & Exchange Board of India have, vide their Circular dated December
22, 2015, mandated Top 500 Listed entities to include the Business Responsibility
Report' (BRR) as part of the Annual Report, describing the initiatives taken by the listed
entity from an environmental, social and governance perspective, in the format as speci3ed
In view of the above and in compliance with Regulation 34(2) of the Listing
Regulations, BRR of the Bank has been furnished at Annexure VI and forms an
integral part of this Report.
Corporate Governance is essentially a set of standards, systems, and procedures aimed
at e3ective, honest, transparent, and responsible management of a company within the
applicable statutory and regulatory structures.
The Bank has adopted the industry best practices of Corporate Governance and aims to
continue banking on the highest principles of governance and ethics. At IndusInd,
Corporate Governance is more than just adherence to the statutory and regulatory
requirements. It is equally about focusing on voluntary practices that underlie the
highest levels of transparency. The Governance framework is driven by the objective of
enhancing long-term stakeholder value, without compromising on Ethical Standards and
Corporate Social Responsibilities.
The Bank's guiding principles are also articulated through its Code of Business Conduct
and various initiatives taken to maintain transparency by communicating with the
Shareholders on developments in the Bank. The Bank has also set up various subCommittees
of the Board to bring in more e3cacy and transparency in its working.
The Bank continues to focus on better, complete and timely disclosures to the Stock
Exchanges for dissemination to the Stakeholders.
Further complete disclosures regarding Corporate Governance are provided in the
Corporate Governance Report, which forms an integral part of this Annual Report.
Certificate from M/s Bhandari & Associates, Practising Company Secretaries
con3rming compliance with the conditions of Corporate Governance stipulated under Schedule
V of the Listing Regulations is attached as Annexure VII and forms part of this
Management Discussion and Analysis Report
The Management Discussion and Analysis Report, as prescribed under Regulation 34(2) of
the Listing Regulations, forms part of the Annual Report.
Significant and Material Orders passed by the Regulators or Courts
There are no Significant and material Orders passed by the Regulators / Courts that
would impact the going concern' status of the Bank and its futures operations.
Awards and Accolades
During the year under review, the Bank has received many awards and accolades for
excellence in managing IT Risk, Marketing and Communications, CSR Initiatives, Safety and
Security, Best Data Quality and Information Technology and for Innovations, etc.
Mr. Romesh Sobti, Managing Director & CEO, was awarded as the Best Banker' at
the BW Businessworld Magna Awards 2017. He was3also bestowed with3the prestigious Business
Today's Best CEO Award'.
Brief details of various awards are covered in the initial pages and in the Management
Discussion and Analysis Report which forms an integral part of this Annual Report.
Certain statements in the Directors' Report' and in the Management
Discussion and Analysis' describing the Bank's objectives, estimates and expectations may
be forward-looking statements' within the meaning of applicable Securities Laws and
Regulations. Actual results could di3er substantially from those expressed or implied.
Important factors that could make a di3erence include economic conditions in the domestic
and overseas markets, changes in Laws / Regulations, and other incidental factors.
Material events that have happened after the Balance Sheet date
No material changes and commitments a3ecting the 3nancial position of the Bank have
occurred between the end of the 3nancial year of the company to which the Financial
Statements relate and the date of this Report.
Policy on Prevention, Prohibition and Redressal of Sexual Harassment at Workplace
The Bank has zero tolerance for sexual harassment at workplace and has adopted a Policy
on Prevention, Prohibition and Redressal of Sexual Harassment of Women at the Workplace,
in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013 and the Rules made thereunder.
The Policy aims to provide protection to women employees at the workplace and prevent
and redress complaints of sexual harassment and for matters connected or incidental
thereto, with the objective of providing a safe working environment. The Bank has also
constituted Internal Complaints Committees, to enquire into the complaints of sexual
harassment and recommend appropriate action.
The Bank has received 7 complaints alleging sexual harassment at workplace during the
3nancial year 2017-18. The status of the same is as under.
|No. of cases received during the year
||No. of cases closed during the year
||No. of cases pending for investigation at the end of the year
The Directors are grateful to the shareholders for the trust and con3dence reposed by
them in the Bank.
The Directors are also grateful to the Reserve Bank of India, the Ministry of Corporate
A3airs, Securities and Exchange Board of India, Insurance Regulatory and Development
Authority, and the Stock Exchanges for the guidance and support extended by them to the
The Board expresses its deep sense of appreciation to all employees for their excellent
performance, strong work ethic, and untiring commitment, which qualities have contributed
to the Bank's continued progress in a challenging environment. The Board thanks its valued
customers for their patronage, and looks forward to the growing of this mutually
supportive relationship in future.
||For and on behalf of the Board of Directors
|Date : June 22, 2018