½©¸ˆÅ ˆÅú ¢£œ¸¸½’Ädrop.ndtv.com/profit/gl/CompanyReports/132134-D-201603.pdf · 2016. 11. 17. · (`.3025.08 crore) which included provision of ` 1563.70 crore on

41

Directors’ Report¢›¸™½©¸ˆÅ¸½¿ ˆÅú ¢£œ¸¸½’Ä

¢›¸™½©¸ˆÅ ˆÅú ¢£œ¸¸½’ÄDirectors’ Report

Performance Highlights

• Total Business (Deposit+Advances) stood at` 9,57,808 crore.

• Gross Profit andNet Profitwere` 8816 crore and` (5396) crorerespectively.

• Capital Adequacy Ratio (CAR)asperBaselIIIstoodat13.17%.

• Retail Credit stoodat`50,850 croreconstituting 18% ofyourBank’sGrossDomesticCreditinFY16.

• MSME Credit stood at ` 54,990 crore constituting20% ofyourBank’sGrossDomesticCreditinFY16.

• Net Interest Margin (NIM) in global operationswas2.05% and in domestic operations at 2.60% duringFY16.

• While Gross NPAs to Gross Advances stoodat 9.99%, Net NPAs to Net Advances wereat5.06%.

• Net Worth ason31.03.2016wasat`30,586 crore.

• Book Value per share at`132.74 ason31.03.2016.

• Business per Employeewas`1680 lac.

Capital Adequacy Ratio (CAR)

YourBank’sCapital Adequacy Ratio (CAR) under Basel IIIwascomfortableat13.17%ason31stMarch2016.Tier1ratiowasat10.79%andCommonEquityTier1(CET-1)wasat10.29%underBaselIIIframework.

YourBank’sNetWorthason31stMarch2016was`30,586 crorecomprisingpaid-upequitycapitalof`462 croreandreserves (excluding revaluation reserves, FCTR & Net ofIntangibleassets)of`30,123 crore.

Provisions towards Retirement and Other Benefits

During the year FY16, your Bankmade provision towardscontribution to gratuity (`.20.56 crore), pension funds(`.3025.08crore)whichincludedprovisionof`1563.70croreon account of shifting ofmortality table from LICI 1994-96to IALM 2006-08, leave encashment (` 259.37 crore) andadditionalretirementbenefits(` 87.23crore).Totalprovisionsunder these four categories amounted to ` 3392.24 croreduringtheyearFY16.TotalcorpusavailablewithyourBank

Your Directors have pleasure in presenting the One Hundred and Eighth Annual Report of your Bank with the audited Balance Sheet, Profit & Loss Account and the Report on Business and Operations for the year ended March 31, 2016 (FY16).

attheendofMarch2016undertheseheadswas:` 1346.55crore(gratuity),` 11947.17crore(pension funds),` 881.23crore (leave encashment) and ` 375.96 crore (additionalretirementbenefit).

Dividend

Bankisnoteligibletopaydividendforthefinancialyear2015-16onaccountofnotmeetingtheeligibilitycriteriastipulatedbyReserveBankofIndiaforthispurpose.

Management Discussion and Analysis

IndianEconomicOverviewandOutlookforFY17

India’smacroeconomic stability has improved substantiallyduetofiscalprudence,lowerinflation,lowercurrentaccountdeficit, and robust foreign exchange reserves. As per theadvancedestimatesofCSO,therealGDP(2011-12prices)for2015-16stoodat7.6%andtheGrossValueAdded(GVA)atbasicconstantprices(2011-12)stoodat7.3%in2015-16.Thisgrowthwasachieveddespitesubduedglobaldemandandtwoconsecutivebelow-normalmonsoonsthatimpactedfarmoutput.

While theagriculturesector isexpected togrowat1.1% in2015-16,thegrowthinservicessectorhasmoderatedslightlyto9.2%.Theindustrialsector isestimatedtogrowby7.3%in2015-16.Theindexofindustrialproduction(IIP)forApril-March2015-16wasat2.4%.

Key Financial Ratios

Particulars FY16 FY15

ReturnonAverageAssets(ROAA)(%)

(0.78) 0.49

AverageCostofFunds 5.08 5.23

AverageYield(%) 7.09 7.53

AverageInterestEarningAssets(` crore)

6,21,234.89 5,70,592.45

AverageInterestBearingLiabilities(` crore)

6,16,002.63 5,69,190.46

NetInterestMargin(%) 2.05 2.31

Cost-IncomeRatio(%) 50.30 43.63

BookValueperShare(` ) 132.74* 166.83*

EPS(` ) (23.89)* 15.83*

*post split of face value of the share to ` 2/-

42

2015 - 2016¨¸¸¢«¸ÄˆÅ ¢£œ¸¸½’Ä Annual Report

Themajorachievementin2015-16hasbeensharpdeclineininflationdrivenbyanumberoffactorssuchassharpdeclinein crude oil prices, RBI formally targeting inflation, astutefoodsupplymanagementandminimalincreaseinminimumsupportpricesandslowdowninChina.TheCPIhasrangedbetween5-6%duringtheyearandWPIstoodat(-)0.91%.Theoverall inflation remainedwithin the targets setby theRBI.Theexportscontinuedtocontractfor15consecutivemonthsandimportsalsoremainedsubduedduetosloweconomicrecoveryinthedomesticeconomyanddeclineinoilprices.Thecurrentaccountdeficitremainedat1.3%inQ3,FY16asagainst1.5%inQ3,FY15.Thebuoyantinwardremittances,lower oil prices and significant FDIswhich jumped around40%resultedinhigherforeignexchangereservesaboveUS$350billion.Fiscaldeficitretainedat3.9%(RevisedEstimates)for2015-16and3.5%(BudgetEstimates)for2016-17.

Theyearwitnessedthecontinuationofthereformmeasures.Thereformsaimedatdebottleneckingtheeconomy,removingstructuralconstraints,promotingindustryandenterpriseviaMake-in-Indiainitiativeandtheattendantmeasurestoimprovethe ease of doing business, improving delivery throughdirect benefit transfer and deepening of banking servicesand liberalising foreign direct investment policy in varioussectorsweretakenforwardthisyear.ThenewinitiativeslikePublic Sector Banks’ Revamp Plan (Indradhanush), UDAY(Ujwal DISCOM Assurance Yojana) for ensuring financialturnaround of the ailing power distribution companies,Start-upIndiafortappingbuddingentrepreneurialpotential,the PradhanMantri Fasal Bima Yojana for crop insurance,add to theongoing reformmeasures. ThePAHAL schemeof transferring LPG subsidies via DBT reduced leakagesby 24 per cent. As announced in the Union Budget, thebankruptcy law was passed in the Parliament. Also, theannouncement of Smart Cities, Housing for all by 2022,Make in India and stand up/start-up initiatives are positivedevelopments frombankingperspective. Theefforts of thegovernment to improve the ease of doing business wouldfacilitate the growth imperatives. Though Indian economyhasemergedasoneofthefastestgrowinglargeeconomiesin theworld, theexternal risks togrowthsuchassubdued

global growth; slowdown and rebalancing in China’seconomy; increased volatility in financial markets; and,gradualtighteninginthemonetarypolicyintheUnitedStatesremain.

Recent Developments in Indian Banking and Outlook forFY17

The RBI effected a shift in its monetary policy stance onJanuary15,2015witha reduction in reporateby25basispoints (bps) to 7.75 per cent and followed it up with acumulativereductionof125bpsto6.50percenttillrecently.Correspondingly,thebankseffectedacutintheirBaserates,though, the pace of decline in Base Rate was lower thanthatof thepolicybenchmark rate.The limited transmissionof monetary policy became a cause of concern for theRBI.Given the limited transmissionofpolicy rates, theRBIintroducedMarginalCostofFundsbasedLendingRate.Withthischange,thetransmissionofpolicyratesintothelendingratesofbankswouldimprove.

The performance of the scheduled commercial banks(SCBs)during2015-16 remainedsubdueddue tosluggishdeposit & credit growth and asset quality concerns. Thedeposit growth was 9.7% and the credit growth remainedat10.7%.

Gyan Sangam 2.0 was held at Gurgaon in the first weekof March 2016 to review the progress made on therecommendationsofGyanSangam-I.DeliberationswereheldwithtopmanagementofPublicSectorBanksonRestructuring/Mergersandacquisitions,NPAmanagementandrecovery,technology,digitalandfinancialinclusion,creditgrowthandriskmanagement.UnderProject Indradhanush, a rangeofmeasureswereannouncedforimprovingtheperformanceofPSBsincludingthecapitalisationofPSBstotheextentof` 70,000croretill2019.TheBankBoardBureauhasstartedfunctioningwef1stApril,2016,whichaimsat improvingthegovernance of Public Sector Banks (PSBs) and formulateappropriatestrategiesfortheirgrowth.TheBureauwillalsorecommend for selection of heads of Public Sector BanksandFinancial Institutions andhelpBanks in capital raisingplans.

Business Performance

ResourceMobilizationandCreditExpansion

During the year, your Bank made strategic shift in itsapproachtowardsbusinessbymovingtoaveragebusinessconcept.Theallocationofbusinesstargetsaswellasreviewof performance of all operating units is done on the basisofaveragebusinessfigures(basedondailyaverage).GivenbelowarethedetailsofyourBank’smajorachievementsonbusinessfrontduringFY16.

43


Total AverageDeposits of your Bank rose from ` 5,34,470croreto` 5,78,317crore,postingagrowthof8.20%overthepreviousyear.Ofthis,AverageSavingsBankDepositsgrewby12.71%from` 94,705croreto` 1,06,739crore.Theshareoflowcostdeposits(Current+Savings)orCASAdepositsinTotal(Domestic+Overseas)DepositsasonMar’16wasat26.36%and inDomesticDepositsat33.57%asagainst26.39%and33.01%respectivelylastyear.ShareofaverageCASA (domestic) to total average deposits of your Bank,increasedfrom29.31%asonMarch2015to29.43%asonMarch2016.YourBankcontinues toshedbulkpreferentialratetermdepositsinfavourofretailtermdeposits.Domesticretailtermdepositsratioimprovedto73.96%ason31.03.2016from62.79%lastyear.

ShriP.S.Jayakumar,MD&CEO,addressingthemediaoneveofannoucementofFinancialResultsforFY2015-16andQ4:FY2015–16,fortheyearended31stMarch2016.

Your Bank’s Total Average Advances expanded by 5.69%duringFY16ledby6.43%expansioninDomesticAdvancesand 4.24% expansion in Overseas Advances. Bank has

Composition of Funds – Global

Particulars(` crore)

EndMarch2015 AverageFiguresMarch2015


GrowthonAverageFigures

(%)

Deposits 6,17,560 5,34,470 5,74,038 5,78,317 8.20

-Domestic 4,14,278 3,61,917 3,94,844 4,03,503 11.49

-Overseas 2,03,282 1,72,553 1,79,194 1,74,814 1.31

Borrowings 35,264 - 33,471 - -

Global Advances*

Particulars(` crore)



GrowthonAverageFigures

(%)Advances 4,28,065 3,83,313 3,83,770 4,05,126 5.69-Domestic 2,91,870 2,53,788 2,63,268 2,70,108 6.43-Overseas 1,36,195 1,29,525 1,20,502 1,35,018 4.24

*WhileendofyearnumbersareNetAdvances,averagefiguresareofGrossAdvances

focusedonre-balancingofitsloanbookafterthoroughreviewoftheportfoliowithacalibratedshifttoassetsgrowthwhereitcanimproveitsearningsandshareofoverallbusinesswithcustomers.

Operating Performance(`crore)

Particulars EndMarch2015

EndMarch2016

Growth(%)

NetInterestIncome 13,187 12,740 -3.39%

OtherIncome 4,402 4,999 13.56%

TotalRevenue 17,589 17,739 0.85%

OperatingExpenses

7,674 8,923 16.28%

OperatingProfit 9,915 8,816 -11.08%

ProvisionsNPAs 3,998 13,766 244.32%

OtherProvisions 497 1,748 251.71%

ProvisionsforTax 2,022 (1,303) -

TotalProvisions 6,517 14,211 118.06%

NetProfit 3,398 (5,396) -

Net Interest Income of your Bank decreased by 3.39% onaccount of significant increase in non-performing assetswhich led to interest reversals and cessation of interestincome of such assets. However Total Revenue increasedby0.85%ledby13.56%increaseinotherincome.Operatingexpenses, including employee cost increased by 16.28%.OperatingProfitof theBankat`8,816crorewas lowerby11.08%.

Duringtheyear,theBankmadeProvisionsof`14,211croreagainst ` 6,517 crore in FY 15. These provisions included`13,766croretowardsNPAsandotherprovisionsof`1748

44


crore. Provisions onNPAswere higher than the regulatoryrequirements by ` 2,954 crore to improve the provisioncoverage ratio to 60.09% against stressed assets and tostrengthen the balance sheet. Other provisions included`1,564croreprovidedonaccountofpensionliabilityarisingon account ofmoving tomortality table from LICI 1994-96to IALMof 2006-08. YourBank hasprovided for all knownliabilitiestoensurethatallfocuswouldbetoimproveearningsgoingforward.Onaccountofallthesefactors,Bankpostednet lossof`5,396croreagainstnetprofitof`3,398crorelastyear.

Large & Mid Corporate Credit

Bankcaterstotheneedsofcorporatecreditmainlythrough10CorporateFinancialServicebranchesand17MidCorporatebranches.-82-newcorporaterelationshipswereestablishedduring the year. In view of challenging market conditionsprevailing, your Bank adopted cautious approach coupledwith proper due diligence towards taking fresh exposures.Bank initiated following measures to ensure consistentgrowthoflargeandmid-corporatecreditwithquality:

• Monitoringofundrawnexposure toachieveoptimumlevelofcapitalconservation;

• IntroductionofRAROCapproach toexamine the riskadjustedreturnofanasset;

• Initiatedprocessofbuildingateamofsectoralexpertise;• Established“RealEstateDesk”toexclusivelydealwith

CREproposals;• Settingupmarketintelligencecellinviewofincreasing

numberofRedFlaggedAccounts;

DomesticForeignBusiness(DFB)divisionunderCorporateBankingBusiness vertical supportsAuthorisedDealer (AD)branchestodealwithForexBusiness.

MSMECredit

MSME is a vital sector to the nation’s economy andBanksupportscredittothissectorthrough54SMELoanfactoriesandwidenetworkofbranches.MSMEadvancesofofyourBankwere` 54,990croreasonMarch2016.Theadvancesof ` 29,861 crore to Micro Enterprises for FY16 to totalMSEcreditof` 55,535croreasofprecedingyearstoodat53.70%inFY16.TheMSMEadvancesason31stMarch,2016contributed19.58%tothegrossdomesticadvancesofyourBank.TheadvancestoMicro&Smallenterpriseswereatthelevelof`49,571crore.

PrimeMinisterMudraYojana(PMMY)waslaunchedbyGovtofIndiaon08.04.2015andyourBankisparticipatingactivelyinthesaidscheme.Bankhasachieved24%YOYgrowthinnumber of accounts under Micro Enterprises category asagainst10%achievementduring thesameperiodpreviousyear.

YourBankhassetupBarodaMicroEnterprise(BME)Cells,concept under which these exclusive cells cater to MicroEnterprises.Bankhas90suchcellsestablishedacross thecountry.

Retail Credit

RetailcreditofyourBankisdispensedthrough66RetailLoanFactories(RLFs)andwidenetworkofbranches.Duringtheyear, Bank initiated the process of re-designing RLFs intoSpecializedMortgageStores(SMS)toundertakeSalesandMarketingactivitiesofmortgage loansandcentralizationofprocessing of retail loans through Centralized ProcessingCentres. Bank also undertook simplification of applicationformsforretailloans,revampedonlinehomeloanapplicationsystem with instant ‘In principle sanction’ and initiatedempanelmentofdirectsellingagents.

ShriB.B.Joshi,ExecutiveDirector,addressingatPrimeMinisterMudraSchememegacamporganizedbyZonaloffice,Baroda.

YourBank’sRetailLoanBookconsistsof fivekeyproductsviz.HomeLoan,AutoLoan,EducationLoan,TradersLoanandMortgageLoan,whichconstituted83.12%oftotalRetailLoansasonMarch2016.HomeLoansgrewby`2427crore(10.77%)reachinga levelof`24968croreasofMarch,16.Totaldisbursementsof`6632croreweremadeduring thefinancialyearended31stMarch2016asagainst` 6335croreduringthesameperiodlastyear.AutoLoansgrewby`268crore(6.45%)reachingalevelof`4428croreasofMarch,16. Fresh disbursement of auto loans were ` 1773 croreduring the financial year ended 31st March 2016. BarodaTradersloans,BarodaMortgageLoansandEducationLoanswereatalevelof`8836crore,`1914croreand`2123crorerespectively.TheotherretailloanproductsincludedBarodaPersonalLoanandothermiscellaneousproductsviz.DoctorsLoan, Loan against Government securities etc. Total RetailLoansstoodat` 50,850croreason31stMarch,2016andconstituted18.82%oftheBank’sdomesticadvances.

Duringtheyear,yourBankundertookreviewandredesigningofvariousretailloanproductsandriskbasedpricingofloanslinkedtocreditbureauscore.

45


Rural and Agricultural Lending

TheBankhasalwaysbeenafrontrunnerintheareaofPrioritySectorandAgriculture lending. It hasbeenharnessing thepotentialoftheruralmarketthroughitswidenetworkof1,964ruralbranchesand1,425semi-urbanbranches.DuringFY16,yourBankhasopened95newbranchesinruralandsemi-urbanareas.

YourBankistheConvenerofStateLevelBanker’sCommittee(SLBC) in the states ofUttar Pradesh andRajasthan. YourBankshoulderstheLeadBankResponsibilityin48districtsofIndiacomprisingof14inGujarat,12inRajasthan,15inUttarPradesh,2eachinUttarakhand,MadhyaPradeshandBiharand1inDelhi.

Priority Sector Advances of your Bank increased from` 1,03,342.67croreasonMarch2015 to`1,13,121.13croreas onMarch 2016 and formed 37.05%of the AdjustedNetBankCredit(ANBC).TheDirectAgricultureadvancesofyourBankincreasedto` 28,094.12crorewithanabsolutegrowthof̀ 1483.20crore(5.57%)duringtheyear.Thetotalagricultureadvances (excl.RIDF)ofyourBankhasgrownby` 4085.67crore and reached` 36822.21 crore as at end-March 2016.TheTotalAgriculturalAdvanceswereat14.76%ofANBC.

Under its flagship agriculture loan product “Baroda KisanCreditCard”,yourBank issuedasmanyas2.29 lacCreditCardsduringthefinancialyear.BarodaKisanRuPayCard,anATMenabledsmartcard,hasbeenissuedto9.32lacfarmersfortheirconvenience.YourBankfinancedasmanyas303436newfarmersduringFY16grantingthemloansworth` 5302crore.Asapartofitsmicrofinanceinitiatives,yourBankcreditlinked15170SelfHelpGroupsbygrantingloansamountingto` 163.27croreduringFY16.

Key Initiatives

YourBankintroducedvariousinitiatives/strategiestoharnesstheemergingopportunities in ruralandagriculture lending.Someofthekeyinitiativesarementionedbelow:

1. Toaddnewfarmerstoourfold,yourBankconductedtwospecialcampaignsviz.‘JODENKISAN’duringtheKharif and Rabi seasons under which 1.17 lacs newfarmerswereaddedandweregrantedloansof`2,640crores.

2. Your Bank has identified 482 thrust Branches acrossIndia to boost Agriculture lending. These branchescontributed33.01%ofthetotalAgricultureoutstandingoftheBankasat31stMarch2016.

3. Your Bank formulated various tailor made area-specific schemes to the needs of the local farmingcommunity, with concessions in rate of interest &charges etc. Thirteen such schemes were approvedandimplementedduringtheyear.

4. YourBank has 49BarodaSwarojgar VikasSansthan(BSVS),[BarodaR-SETICenters],acrossIndiatraining

the youth and imparting them knowledge and skillsrequired for taking up self-employment ventures.DuringFY16,38274youthbeneficiariesweretrainedatthesecentres.

YouthbeingtrainnedandempoweredbyBarodaSwarojgarVikas

Sansthan(BSVS),[BarodaR-SETICenters].

5. YourBankhasestablished51FinancialLiteracyCentres(FLCs) across India, christened as “SARATHEE” toimpartfinancialliteracyandcreditcounsellingservicestotheneedytohelpthemavailfinancialservicesfromthe Banking system and also to provide counsellingservicestothoseunderfinancialdistress.

Advances to SC/ST Communities during FY16

The outstanding advances granted by your Bank to SC/ST communities have been growing year after year. Theoutstandingadvancesgrantedtothesebeneficiarieswentupfrom` 4997croreasonMarch,2015to` 5,298croreasatend-March,2016.SC/STcommunitiesaccountedforashareof21.95%inthetotaladvancesgrantedtoweakersectionsbytheBank.Furthermore,aspecialthrustislaidbyyourBankin financing SC/ST under various government sponsoredschemesnamelyNationalRuralLivelihoodMission (NRLM)etc.

BarodaSwarojgarVikasSansthans(BSVS)givepreferenceto SC/ST candidates while selecting the trainees. So far,thesecentreshave trained14,304youthsunder theSC/STcategory.

Performance of RRBs Sponsored by your Bank

Your Bank has sponsored three Regional Rural Banks(RRBs) in three states viz. Baroda Uttar Pradesh GraminBank,BarodaRajasthanKshetriyaGraminBank,andBarodaGujarat Gramin Bank. The aggregate business of thesethreeRRBsroseto` 42,640.52croreasofMarch,2016from` 37,440.67 crore as on March, 2015,registering a growthof 13.89%.The threeRRBs togetherpostedaNetProfit of` 185.41croreduringFY16asagainst` 327.20croreearnedduringFY15.Thedecline inprofit isdue to thepaymentofarrears on account of 10th Bipartite settlement. The “NetWorth”oftheseRRBsputtogetherimprovedfrom` 1851.02

46


croreason31.03.2015to` 2036.43croreon31.03.2016and“ReservesandSurplus” from` 1394.12crore to` 1579.53crore.

Financial Inclusion (FI)

Financial Inclusionaimstoprovideeasyaccesstofinancialservices to all sections of the societywho are deprived ofit so far at affordable cost thereby bringing them into themainstreamofsociety.FinancialInclusionactivitiesarebeingimplemented by the Bank since inception through variousGovernments sponsored programs, lending to the poorestofthepoor,lendingtotheminoritycommunities,lendingtoSC/ST, lending to priority sectors, etc. Bank has approveddisaggregatedFinancialInclusionPlanforall21526serviceareavillagesofourBank.

Models used by your Bank for FI

Your Bank has adopted following models for providingbanking services under financial inclusion viz. Informationand Communication Technology (ICT) based BusinessCorrespondentsmodels likePOSbasedBCModel;KIOSKBCModelandBrickandMortarbranch.

Urban Financial Inclusion

The rural inhabitants have largely remained the focus ofourfinancialinclusioneffortssincealargeproportionofourvillagesarestillunbanked.Besides,peoplelivinginruralandfar flung areas, urban poor who are largelymigrants fromvillagestourbanareastillhavenoaccesstoformalfinancialproducts and services like savings, credit, remittance andinsurance,forcingthemtodependonunscrupulousinformalsourcestomeettheirpersonal,health,andlivelihood-relatedneeds.Manyofthosearenormallymigrantlabors,hawkers,slum dwellers from rural areas that generally leave theirvillagesforlivelihood.Inordertocoverthemunderfinancialinclusion,theGovernmentofIndiahascompletedfirstphaseof Jan Dhan Yojana campaign in all states to bring thesevulnerablegroupsundermainstreamfinancialsystem.YourBank has deployed 4530 urban BCs at various locationsacrossthecountry.

Product/ServicesofferedatourBCPointsareBasicSavingsBankDepositAccountwithin-builtODfacility,InstantAccountOpening, E-KYC Account Opening,CashWithdrawal, CashDeposit&Fundtransfer,depositinCurrenta/c,CashCredita/c,ODa/candLoana/c,TermDeposit&RecurringDepositAccount, Enrollment for Micro Insurance – PMJJBY andPMSBY,AadhaarSeedingandMobileseeding.

Highlights of Performance under Financial Inclusion for the year 2015-16

• AlltargetsofDisaggregatedFIP–2016weresurpassedinDecember2014itself.

• Bank surpassed annual Basic Saving Bank DepositAccount opening and Amount target for financialyear2015-16,achievementwas220.18%&196.23%respectively.

• Thebalanceoutstanding in the “BasicSavingsBankDepositAccount”oftheBankisaround` 4925croreasagainstatargetof` 2510croreforFY16.

• Surpassed urbanward coverage targets for financialyear2015-16(achievement596.05%).

• Surpassed annual target for BC appointment for FY2015-16 by appointing 11,131 BCs against target of5503(achievement202.27%).

• SurpassedannualtargetfornumberoftransactionsandamountoftransactionsinFIaccountsopenedthroughBC for FY16 (achievement 403.02% & 1145.41%respectively)

• Surpassedannual target forODamountdisbursed inBSBDAaccountforfinancialyear2015-16by848.83%.

Promoting Financial Literacy

ThedesiredobjectiveofFinancialInclusioncanbeachievedonlywhenenoughdemandforbankingservicesisgeneratedfrom the targeted group of population. In order to invokeresponses amongst villagers, it requires financial literacyonvariousbankingfacilitiesand itsbenefitsparticularly thebenefits of savings habit, Aadhaar seeding, maintainingminimum balance, eligibility for availing Overdraft, useandsafekeepingofRuPaycardsand itspin,USSD facility,eligibilityofavailingaccidental&lifeinsurance,lodgmentofclaimunderinsurance,microinsuranceproducts,pensions,benefitsofKCC,GCC,promptrepayment,availabilityofotherretailandSMEloanstothem.Financialliteracywouldbethekey tosuccessof financial inclusion initiativesof theBank.YourBank’slinkbranchesandBCsareorganizingFinancialLiteracycampaignregularlybyconductingmeetingsintheirserviceareavillagesandschools.

CustomereducationandawarenesscampbyBank&ReserveBankofIndiaatFaizabadRegion

The Bank has also taken the following major initiativestowardsfinancialliteracyinruralpartofthecountry.

1. Baroda Swarojgar Vikas Sansthan (Baroda RSETI)is a trust formed by the Bank way back in 2003 forundertaking skill building activities for unemployedrural youth and providing hand holding support to

47


them till their settlement in their venture. Bank hasestablished49suchcentersalloverthecountry.Theyhaveconducted1401trainingprogrammesduringtheFY16inwhich38,274candidatesweretrained.Outofthese, 20,679 candidates established their businessventuressuccessfully.

2. Fifty one Financial Literacy & Credit CounsellingCentres(FLCCs)“SAARTHEE”areoperationalacrossthecountry.

3. Mobile Micro Finance Loan Factory has beenestablishedwithavisiontoprovidecreditandbankingfacilities to SHGs at their doorstep under the SHG –Banklinkageprogram,ensuringhasslefreeandpromptcreditdeliverywithinmaximumof4days&hasslefreecredittotheSHGs.

4. “BYST-BoB Entrepreneurship DevelopmentProgramme” (BYST) provides end-to-end support todisadvantaged young dynamic micro-entrepreneursin the form of Loans, Business Mentors, Training,Networking&Marketing.

Pradhan Mantri Jan Dhan Yojana (PMJDY)

PMJDYisacomprehensivefinancial inclusionplanwhereintheambitof financial inclusion isenlarged tomake itmoremeaningful. PMJDY is a National Mission for FinancialInclusion.Everyhouseholdhavingbankaccountwouldgainaccesstobankingandcreditfacilities.Thiswillenablethemtosecuretheirsavingsinabettermannerandalsotocomeout from the habit of raising funds from informal sources.Asa firststep,everypersonwhoopenstheaccountunderPMJDYwillgetaRuPaydebitcardandwouldbeeligiblefor` 1,00,000/- accident insurance cover. After six months ofsatisfactoryconductofaccount,theywouldbeabletogetanoverdraftfacilityupto` 5000/-.Further,theaccountholderswhoopenedaccountbetween15.08.2014to31.01.2015willgetadditionalterminsuranceof̀ 30,000/-fromLIC.FinancialLiteracyisanotherimportantaspectofPMJDY.

FurtherGovernmentofIndialaunchedJanSurakshaYojanaon9thMay2015whereby lowpremium insuranceproductslike Pradhan Mantri Jeevan Jyoti Bima Yojana, PradhanMantriSurakshaBimaYojanaandpensionproductlikeAtalPensionYojanawereintroduced.

Initiatives under PMJDY:

• Your Bank has been allotted 6829 SSAs by SLBCscovering 22,055 villages and 3023 wards across thecountry. Survey has been completed in all allocatedSSAsandwards.Accordinglytherearetotal88,91,696householdsinBank’sservicearea.IthasbeenBank’sendeavor to provide banking services to each andevery household in the service area.Bank has since

saturated all households in service area by openingatleastoneaccountperhousehold.

Bankhasopened1.25croreaccountswithadepositof` 2500croreandissued1.18croreRuPaydebitcards.

• YourBankisorganizingcampsperiodicallyforopeningof accounts, conducting financial literacy sessions,distributionoffinancialliteracymaterials,distributionofpassbooksandRuPayDebitcards,etc.

• Launched a scheme for engaging Retired BankOfficers,ASHAworkers,Anganwadiworkers,fairpriceshopownersetcasBank’sDirectBCs.Brancheshavebeen advised to identify and recommendperformingSHGsandrefertoCorporateBCsforappointment.

• LaunchednewproductsatourBCpoints like Instantaccount opening, Aadhaar Seeding, interoperableRuPay Card Based transactions, deposit in CurrentAccount, CC accounts, loan accounts, RecurringDepositandFixedDeposit.

• ImplementedautomationofOverdraftFacility throughATM and SMS to PMJDY customers. The PMJDYcustomerscanavailoverdraftwithoutevenvisitingthebranch.

• EnabledAlternateDeliveryChannelslikeATM,InternetBanking, SMS and BC points for Aadhaar Seeding.BankhasalsoenabledenrollmentofMicroinsuranceschemessuchasPMSBY&PMJJBYthroughinternetbanking,SMSandatBCpoints.

• e-KYChasbeenimplementedatthebranchesaswellasBCpointsforopeningofAadhaarbasedaccounts.

• BankhasrolledoutAadhaarEnabledPaymentSystem(AEPS)facilityatBCPoints.

• Bankhas rolledout InteroperableRuPay cardbasedtransactionfacilityatBCPoints

• Bank has implemented Unstructured SupplementaryServiceData (USSD) forcarryingoutmobilebankingtransactions on ordinary mobiles. Facilities availableunderUSSDarebalanceenquiry,moneytransfer,ministatement,knowingAadhaarlinkbanka/c.

• Adopted 3266 schools across India for impartingFinancialLiteracytoSchoolChildren.RegularFinancialLiteracy Sessions/Camps/chaupals are conductedby branches in schools, villages along with BC.Standardized Financial Literacy materials such ascomicbooklet,audiovisualinvernacularlanguageforspreadingfinancialliteracyhavebeenlaunched.

• Bank has implementedModel Village concept by allRuralandSemiUrbanbrancheswiththesoleobjective

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of achieving 100% Aadhaar Seeding 100% mobileseeding, 100% coverage under PMSBY, PMJJBY &APY, 100% funding of zero balance accounts, 100%overdraft to eligible customers, 100% credit linkage,100%NPAfreeandskillingofvillagers.

• Introduced special incentive scheme for BCs formobilizingdepositsandfollowup&recoveryinsmallloana/csincludingNPA&PWOaccounts.

• StandardizedFinancialLiteracymaterialsuchascomicbooklet,audiovisualhasbeensuppliedtoalloperatingunitsforspreadingfinancialliteracy.

In-housetrainingandcertificationprogramforBCs.

• JointworkshopsofbranchheadsandBCstoincreasecoordinationandresolvefieldlevelissues.

Pradhan Mantri Jan Suraksha Yojana

1. PradhanMantriJeevanJyotiBimaYojana

• TheschemewillbeaoneyearcoverTermLifeInsuranceScheme,renewablefromyeartoyear,offeringlifeinsurancecoverfordeathduetoanyreason.

• AllsavingsBankaccountholdersintheage18to50yearsinparticipatingbankswillbeentitledtojoin.

• ` 2lakhsispayableonasubscriber’sdeathduetoany reason.Thepremiumpayable is` 330/-perannumpersubscriber.

• YourBankhastie-uparrangementwithIndiaFirstLifeInsuranceCompanyLtdforthisscheme.

2. PradhanMantriSurakshaBimaYojana

• ` 2 lakhs ispayableonasubscriber’sdeathordisabilityduetoaccident.Thepremiumpayableis` 12/-perannumpersubscriber.

• AllsavingsBankaccountholders in theage18to70yearsinparticipatingBankswillbeentitledtojoin.IncaseofmultiplesavingBankaccountsheldbyan individual inoneordifferentBanks,thepersonwouldbeeligibletojointheschemethroughonesavingsbankaccountonly.

• YourBankhastie-uparrangementwithNationalInsuranceCompanyLtdforthisscheme.

Performance of your Bank under PMJJBY and PMSBY as on 31.03.2016 is as under:

• NoofPoliciesenrolledunderPMJJBY–14.42lacs

• NoofPoliciesenrolledunderPMSBY–40.24lacs

• TotalInsurancePoliciesenrolled–54.66lacs

International Operations

Your Bank has been keeping continuous watch on theemerging trends in the International banking scenario andadapteditselftothechangingenvironment.Bankhadtakenreview of assets at overseas centres and moving towardscalibratedre-balancingofportfoliotoimprovemargins.Thishasledtoconsciousdegrowthinthebusinesslevels.

BankofBaroda(Uganda)Ltd.Celebrated63rdFoundationDayon 18thDecember, 2015.Dr. A.V. S. RameshChandra,HighCommissionerofIndiatoUgandawastheChiefGuest.

International Presence

Bank’sinternationalpresencecovers-24-countriesthroughits-106-branches/officesasunder:

Bank’sOverseasBranches/Offices 60

Bank’sRepresentativeOffice 1

BranchesofBank’sOverseasSubsidiaries 45

TOTAL 106

During theyear,yourBankhas furtherspread itspresenceinAfricabyopening twonewbranchesof its subsidiary inKenya.

TheBankalsohasfollowingJointVentures/Associates:

1. IndoZambiaBankLtd.,Zambiahaving-27-branches

2. India InternationalBank (Malaysia)Bhd.,Malaysia -1-branch

The international business of your Bank continued tosupportsignificantlytothetotalbusinessoftheBank.Ason31.03.2016, the International business contributed 31.3%of Global Business. Of the total International loan-book,47.92%comprisedofBuyer’sCredit/BP/BDportfoliowheretheexposureisontheBanks.22.03%oftheexposureistoIndiarelatedcorporatesbywayofECB/SyndicatedLoans.Exposuretonon-Indianentitiesbywayofsyndicatedloansisat4.30%andremaining25.75%exposureisbywayoflocalcredit.

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UK Subsidiary

YourBankisplanningtocarveoutRetailbusinessinUKintheformofa100%ownedsubsidiary,whichwillgiveboosttotheretailbusinessoftheBankaswellascomplywiththelocalregulatoryguidelines.

Treasury Operations

YourBankoperatesitsTreasuryoperationsfromStateofArtDealing Room at its corporate Office in Mumbai. Treasuryhandles domestic treasury operations and is a prominentplayer in various markets e.g. Foreign Exchange, Interestrates, Fixed Income, Money Market, Derivative, Equity,Currency and Interest Rate Futures and other alternateassetclasses.Bank isofferingvariousservices like interestrateswaps,currencyswaps,andcurrencyoptions, forwardcontracts through advanced dealing systems and throughAuthorized branches dealing in Foreign exchange acrossIndia.

Your Bank has been able to capitalize on the opportunityofferedbyhigheryields in the firsthalfof theyearandhasadded bonds to the portfolio. Bank managed its portfolioefficientlyandmaintainedaverageyieldonSLR investmentas on 31.03.2016 at 8.01%. During FY 2016, your Bank’srealizedprofitonSaleof InvestmentandForeignexchangeearningsare` 1,162croreand` 612crorerespectivelyandearned` 12,144croreasInterest/Discount.

Bank’s Treasury mid-office monitors market exposuresand limits fixed by the Bank on real time basis. The Riskmanagement parameters, including Value-at Risk (VAR)areused tomeasuremarket riskonallportfolios.TheVARnumbersareregularlybacktestedforevaluatingthestrengthofthemodel.Stresstestingisdoneonvariousinvestmentsandcurrencypositions.

Government Business

GovernmentBusiness forms an important part of businessstrategyofyourBank.ItistheAccreditedBankertoMinistryofHealth&FamilyWelfare(MHFW)andnewlyformedMinistryofAyush.YourBankhasbeenauthorisedtocollectcontributionandadministrativechargesonbehalfofEPFO(Employees’Provident FundOrganization). Bank has received approvalfromIRCTC(IndianRailwayCatering&TourismCorporation)forDebitCardintegration,implementationofwhichisunderprogress.YourBankundertookspecialeffortsformobilizationof PPF accounts during FY16 and opened 91,370 newPPF accounts. Your Bank has been adjudged as the BestPerforming Bank among Public Sector Banks (2nd Rank)by PFRDA by opening 155589 Atal Pension Yojana(APY)accounts during FY16. This has been possible due toconcertedeffortsputinbyallbranchesoftheBank.Duringthe year, yourBankconductedworkshopsonGovernment&PSUBusiness,covering850staffmembersand150BCs/BFs/VLEsat15locations.

YourBankparticipatedinDigitalIndiainitiativeofGovernmentofIndia.YourBankisoneofthefiveBanksassociatedwithGovernmentofIndia’sprestigiouse-Bizportal,whichwouldlaunch about 50 services along with major state services.Digital Life Certificate (DLC) is successfully automated.Digitizing the whole process of securing life certificateswillbebeneficial toallpensioners.YourBank isoneof theAuthorizedBank to undertakeGoods&Service Tax (GST)collectionwhichislikelytobeimplementedshortly.WorkonDigitalization of Pension Payment Order (e-PPO) is underprogressforspeedierpensionprocessinganddisbursement.YourBankisbeingintegratedforonlinepaymentofMHFW(MinistryofHealth&FamilyWelfare)andDBT(DirectBenefitTransfer)withPFMS(PublicFinancialManagementSystem).Your Bank is integrated for online receipt of MHFW withBharatKoshportal(Nontaxrevenuereceipts).

YourBankstartedprovidinge-stampingfacilityintheStateofPunjabin-03-branchesintheinitialphase.YourBankstartedthe pilot project of E-panjiyan (a web enabled standalonesystem used for stamping and registration of documentsdevelopedbyDepartmentofRegistration&Stamps,MadhyaPradesh)in-03-branchesintheStateofMadhyaPradesh.

Your Bank has implemented Sukanya Samriddhi Yojana,asmalldepositscheme forgirlchild, launchedbyGovt.ofIndiaw.e.f.27.05.2015.SovereignGoldBond,2015andGoldMonetization Scheme, 2015 were launched on 05.11.2015with a view to reduce country’s gold import as well asmobilizing idlegoldheldbyhouseholds and institutions inthe country for putting the gold into productive use. YourBankoperationalisedSovereignGoldBondschemeinallthebranchesinIndiatocanvassmaximumapplications.

Wealth Management Services

YourBankhasrealisedgrowingaspirationofcustomersforearning higher returns and security through mutual fundand insurance respectively.Bank is inWealthManagementServicessince2004andMutualfund,LifeInsurance,NonLifeInsuranceproductsarebeingdistributed to thecustomers.YourBankcrossedthemarkof1,10,000newSIPsinFY16,firsttimeeverresultinginincreasedcustomerparticipation.Your Bank has also covered 1.71 Lacs lives in addition tocoverage under PMJJBY policies. Initiatives/ StrategiesadoptedduringFY16are:

1. BankcreatedaseparateverticalforWealthManagementServicesandclubbeditwithMarketingtoputfocusontheimportanceofWealthManagementServices.

2. Team at Corporate Level is strengthened by placingWealthManagementspecialistsandproductmanagershavebeenidentifiedforstrategicandmonitoringrole.

3. Bank initiated special focused campaign for MutualFundsandLifeInsuranceforcanvassingbusiness.

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ShriMayankKMehta,ExecutiveDirector,felicitatesShriPrabhatAgarwal,ZonalHead,EUPZone,atBarodaPioneerMutualFundeventorganisedatLucknow.

4. Bank has run pilot at 55 branches and conductedtraining/ refresher courses for broadening the visioninprevalent scenarioof “CertifiedOfficers” to sourceMutual Fund and Insurance business. Your Banklooked it as a model for enhancement in customerbondingand feegenerationbyputtingextra focus todrawthemileage.

5. Bank identified 1350 thrust branches for establishingWealth Management Service desk and “CertifiedPersons/Officers “for distribution ofMutual Fund andInsuranceshavebeenattachedatthesebranches.

6. Process initiated for inducting 2 Standalone HealthInsurer and 2 General Insurance Cos after openarchitectureclause.

7. Bank is also in process of implementing integratedWealthManagement Solution to put all Mutual FundandInsurancerelatedinformationatoneplatform.

NPA Management

FY16 was a challenging year for the banking industry intermsofstressinassetqualityonaccountofvariousmacro-economicandotherfactors.Freshslippageswereat6.38%oftheopeningStandardAdvancesofyourBank.Inviewofhighslippages,theratioofGrossNPAtoGrossAdvanceswasat9.99%ason31stMarch2016andtheratioofNetNPAtoNetAdvanceswas5.06%.Duringtheyear,Bankprovided̀ 13,766croretowardsNPAprovisions(lastyear`3,998crore).Theseprovisions were higher than the regulatory requirementsby`2,954croreto improvetheprovisioncoverageagainststressed assets and strengthen the balance sheet. TheProvision Coverage Ratio was at 60.09% duringMarch 16includingPrudential/TechnicallyWrittenOffadvances.

Your Bank has developed a comprehensive structure forrecovery and creditmonitoring across different levels. TheNodalOfficerateachDRTcentrehasbeenassignedtheroleoffollow-upof legalcasesondailybasissoastominimizethedelayinobtainingdecreesandexecutionandmaximizerecoveries.ForrecoveriesinallDRTSuitfiledNPAaccounts,

the assets charged to the Bank are now sold throughe-auction to get fair market value. In addition, RecoveryAgents forassisting in takingpossessionofassets&otherpre/postsaleactivitiesandConsultantshavebeenappointedto liaisewithOfficial Liquidators (OL) to get the recoveriesrealizedbyOLs.ThemaximumparticipationinNationalLokAdalatsisensuredtoexpediterecoveryinsuitfiled&nonsuitfiledNPAa/cs.RecoveryCampswere regularly conductedbyyourBank’sbranchestorecover&reducelongpendingcasesandexpediterecoveriesinsmallaccounts.

YourBankcontinuedemphasison follow-upmechanismtoeffect recovery inNPAaccounts.ThesystemofmonitoringoflargevalueNPAaccountsof` 1croreandabovedirectlyfromcorporateofficebywayofvideoconferencingwiththeRegionandZonehaveensuredproactiveactionbybranches,advocates,recoveryagentsetc.TheactionunderSARFAESIActatvariouslevelsarealsomonitoredbyBank’sCorporateOffice.

YourBank continued its emphasis on sectorwise follow-upmechanismtorecoverNPAsasunder:

Large and Mid Corporate accounts

1. EngagingreputedseniorAdvocates/LawfirmsforhighvaluecasesandFraudmatters;

2. Distribution of High value NPA & PNPA accountsamongstTopManagementforearlyresolution;

3. MonitoringofhighvalueaccountsbyTopManagementteamheadedbyMD&CEOandEDs;

4. 3 General Managers from Corporate Office havebeenallocatedZones tomonitorNPAandWrittenoffaccountsononetoonebasis.

MSME Banking

1. Enriching data mining to identify delinquency in thebucketof0-90days;

2. Early detection of problem accounts, initiation ofindependent title re-verification, fresh valuation ofproperties and tracing uncharged assets in SMA-2accounts;

3. Vigorous monitoring & follow up in small bucketaccountsPanIndiabytheofficersengagedinrecovery;

4. Engaging dedicated team at ZO/RO/Branch level forRecoveryandMonitoringtherunrateondailybasis.

Retail Lending

1. Leveraging Technology for Collection and Recovery,engaging150telecallers;

2. Seizingofvehicles;

3. Enhancedpowertobranchesforcompromise;

4. Private treaty, early resolution incentive for RecoveryAgents;

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5. Issuanceofsoftreminders;

6. IncreaseinSMSalerts;

7. OutsourcingHardBucketscollectionthroughFOS;

8. Establishment of Collection centre for FOS at major100centersisunderprocess.

Rural Agriculture

1. Optimum utilizations of BCs for recovery in NPAaccounts;

2. Incentive scheme (SANKALP9) for recovery of smallNPAaccounts.

BankwasawardedasFirstRunnerupfor“BestFinancialInclusionInitiative”inthecategoryofLargeBanksbyIBAduringBankingTechnologyAwards2016atMumbai.

Pre delinquency Monitoring

• War room is established at Corporate level forcollection/monitoringofaccountsabove` 5.00lacsto` 1.00CrsinSMEandRetailloanAccounts;

• Team of 10-12 officers in each Region (Total 800Officers)isworkingdedicatedly for followup for timelycollectioninallRetailandSMEloanaccountstocontroldelinquency.

Suit filed Accounts

• Nodal Officers for DRTs closely monitor each caseandensuretogettheRecoveryCertificateinshortestperiod. In RC execution, theNodalOfficer to ensurethatRCexecutionprocess is started,as soonas theRC is issued by DRT. The Nodal Officer monitorstimelycomplianceoftheissuesraisedinDRTbybasebranchesandconcernedAdvocates.

CashrecoveryinNPAaccountsduringFY16stoodat` 1481croreand theupgradationstoodat` 533.87crore.

The asset classification wise breakup of advancesportfolioofyourBankisasunder-

(` incrore)AssetCategory(Gross) 31stMarch

201631stMarch2015

Standard 3,64,996 4,21,019

(` incrore)AssetCategory(Gross) 31stMarch

201631stMarch2015

GrossNPA 40,521 16,261Total 4,05,517 4,37,280GrossNPAcomprisingof:Sub-Standard 11,569 4,368Doubtful 25,766 10,383Loss 3,186 1,510TotalGrossNPA 40,521 16,261

Credit MonitoringCredit monitoring is one of the most important toolsfor ensuring asset quality. Your Bank has the system ofmonitoring of advance accounts at various levels (Branch/Region/ZoneandCorporate)topreventslippagesandtotaketimelycorrectiveactionstoimproveassetquality.AseparatedepartmentforCreditMonitoringfunctionsattheCorporatelevel,headedbyaGeneralManager,andoneattheRegionalandZonal level,started functioningsinceSeptember2008.The Slippage Prevention Task Force (SPTF) formed at allZonalandRegionalOfficesintermsoftheBank’sDomesticLoan Policy was activated for the purpose of arrestingslippagesandalsofor initiatingnecessarycorrectiveactionplanatanearlystageinatimeboundmanner.TheprimaryobjectivesandfunctionsoftheCreditMonitoringDepartmentattheCorporatelevelareasunder:• Identification of weakness/Potential default/incipient

sickness in the advance accounts at an early stageand initiating suitable and timely corrective actionsfor preventing impairment in advance accounts /deteriorationincreditqualityoftheborrowalaccounts;

• BasedontheRBIguidelinesforRevitalizingDistressedAssets, accounts with incipient stress are identifiedunder Special Mention Accounts (SMA) categoriesof SMA0, SMA1 and SMA2. All SMA2 accounts arefollowedupfortheformationoftheJointLendersForumandoptionstoresolvestressunderCorrectiveActionPlanareexploredbywayofRectification,RestructuringandRecovery;

• PreventionofslippagesintheAssetClassificationandrelegationinCreditRatingsthroughvigorousfollowup;

• Identification of suitable cases for restructuring/StrategicDebtRestructuringaswellasfurtherfinancingin deserving and genuine cases with matchingcontributionfromtheborrower;

• Takingnecessarysteps/regular followup, forreviewofaccountsandcomplianceoftermsandconditions,therebyimprovingthequalityofcreditportfolio;

• Monitoring progress of accounts under Board forIndustrialandFinancialReconstruction(BIFR);

• Your Bank has a mechanism of identifying the RedFlagged Accounts ( RFA) based on Early WarningSignals(EWS)aspertheRBIguidelinesonframeworkfordealingwithloanfraudsandreportingtheaccounts

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onCRILCplatform.FurtherinvestigationintosuchRFAaremadetoclassifytheaccountasfraudorotherwise.

Monthly Monitoring of Advances accounts

On-lineweb-basedsoftwarehasbeendevelopedbytheBankforMonthlyMonitoringReports(MMR)inrespectofadvanceaccountswithFundandNon-FundBased(FB+NFB)exposureof` 10croreandabovewaslaunchedinJanuary2013andisbeingupgradedfromtimetotime.BasedontheMMRs,thefollowupactionsaretakenforensuringexpeditiousreviewofaccounts, rectificationof irregularities, complianceof terms

andconditionsinhighvalueadvanceaccountsforimprovingthequalityofyourBank’screditportfolio.

Restructuring of Advances Accounts

In order to improve asset quality, your Bank scans thestressedadvanceportfolioonacontinuousbasis, industry-wiseaswellasborrower-wisesoastoinitiatesuitableactionbywayofrestructuringbasedontheviabilityoftheproject/activity.Duringthefinancialyear2015-16,theBankundertookrestructuringofvariousadvancesaccountsasperthetablegivenbelow.

Restructuring of Advance Accounts (Global) – 2015-16

(` crore)Particulars CDRMechanism SME Others TotalStandardAdvances

Restructured

No.ofBorrowers 19 564 583AmountOutstanding 227 108 975 1,310

Sub-standardAdvances

Restructured

No.ofBorrowers 1 58 332 391AmountOutstanding 72 16 57 146

Doubtful

AdvancesRestructured

No.ofBorrowers 1 41 200 242AmountOutstanding 1,031 60 404 1,495

Total No.ofBorrowers 2 118 1,096 1,216AmountOutstanding 1,331 185 1,436 2,953

Information Technology (IT)

YourBankhasundertakena totalend-to-endbusinessandITstrategyprojectcoveringyourBank’sdomestic,overseasandsubsidiaryoperations.

• YourBankhasbuiltthebestoftechnologyinfrastructureby implementing a state-of-the-art Data Centreconforming to Uptime Institute Tier-3 standard andalsoaDisasterRecoverySiteindifferentseismiczonewith redundancy built in every single point of failureto ensure uninterrupted banking service delivery tocustomers;

• InadditiontotheDisasterRecoveryCentre,yourBankhas also implemented the Near Disaster RecoveryCentre to ensure Near Zero Data Loss as part of itsBusiness Continuity Planning and Disaster Recoverystrategy;

• Your Bank continued to optimise its technologyinitiatives like Windows Server virtualization, andbackupconsolidationasgreen initiativesandalso toimproveDataCentreoperationalefficiency.Applicationvirtualization, Automatic StorageManagement (ASM)& Real Application Clusters (RAC) Implementation,Bandwidthup-gradation,provisionofbackuplink,useof new technology based on MPLS (Multi ProtocolLabelSwitching)forimprovinguptimeandondemandupgradearesomeofthemajorinitiatives;

• Your Bank has been undertaking regular capacityplanning, upgrade and refresh to support growingdemand of business at various service deliverychannels;

• Your Bank has implemented EnterpriseManagementSystemandmoduleshavebeendeployedtoeffectivelymanageandmonitorBank’sgrowingITinfrastructure;

• YourBankhasdeployedcentralizedITarchitecturetoprovide the Core Banking Solution (CBS) and otherapplicationplatformtoallitsdomesticbranchesand23overseasterritories,providingeaseofmanagement&monitoringandoptimizationofresources.YourBank’sRegional Rural Banks (RRBs) are also on the CBSPlatformwithdeliverychannels;

• You Bank has initiated the upgradation of CoreBankingSolution(CBS)toFinacle10.xande-bankingupgradationto11.x.

Digital Banking Initiatives

Internet Banking - BARODA CONNECT

YourBankcontinuedtoaddmorefacilitiesunderitsInternetBanking (BarodaConnect) channels.DuringFY16,BarodaConnecthasbeenenrichedwithmultiplefeaturestoprovideeaseofuseandbettercontrolforthecustomers.Stepstakeninthisregardare:

• Introductionof facility forSelfRegistration forBarodaConnectusingDebitcardforRetailcustomers.Usingthis new feature, all retail customers, who have notregistered for Baroda Connect, can do so withoutvisitingthebranch;

• AfacilityforSelfRegenerationofTransactionpasswordfor Baroda Connect has been introduced for RetailCustomers by which the retail customer can resettheirtransactionpasswordbyusingdebitcardincasetheyhaveforgottenthepassword/expiryofpassword/

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passwordgettingdisabledduetowrongattempts;

• FacilityforselfretrievalofUserIDwhereinthecustomercan himself get the User ID on registered email idwithoutvisiting thebranchorcontacting theTollFreenumber;

• Customers can now link their PPF account to theirBaroda Connect portal. The customers can view theaccountstatementandmakecreditstothisaccount.

• Customerscannowregister forPradhanMantriBimaYojanausingBarodaConnect;

• Customershavealsobeenprovidedoptionforlinking/delinking account facility using which customer canchoose account, he wants to get displayed whilemakingpayments;

• CustomerscannowgiverequestforAdhaarSeedingintheirbankaccounts;

• FacilityisprovidedforinvestinginMonthlyIncomePlan,Regular Income Plan, Baroda MahaUtsav Deposit,Baroda Double Dhamaka Deposit Scheme, BarodaTaxSaving-RIRD,BarodaTaxSaving-MIP,BarodaTaxSaving–QIPandShortDepositORD.

Mobile Banking – BARODA M-CONNECT & IMPS

MobileBankingapplicationhasbeencompletelyrevampedin your Bank to attract the new generation and techsavvycustomersbyenhancing its lookand feel,user-friendlinessandexperience.TheMobileBankingplatformasanalternatedelivery channel offers many features and facilities tocustomers, viz. iconbaseduser interface,balanceenquiry,ministatement,fundtransfer,stoppayment,chequestatus,etc. Mobile banking application is made available in alli-Phones,Blackberry,Android,Windowsdevices.ImmediatePaymentServices(IMPS)areimplementedcoveringPersontoAccount (P2A),Merchant Payments (P2M) andAadhaarbased remittance (P2U).On theMobileplatform,otherkeyfacilities likeMobile banking registration through CBS andnetbanking, IMPSthroughbranches,M-passbook forNREcustomers, DTH recharge functionality etc. are added tomobilebanking.

Baroda Non-Stop Lobby

Baroda Non-Stop Lobby comprises of five self servicemachines viz. Cash Recycler, ATM, Multi Function Kiosk,PassbookPrinterandDigitalSignageSystem forproviding24x7bankingservices.Thelobbieshaveincreasedvisibility

and are receiving encouraging response from customersaswellasstaffmembers.ThenumberofBarodaNon-Stoplobbiesincreasedfrom-151-asofMarch2015to-252-asofMarch2016.

Baroda Express - 24X7 Lobby

“BarodaExpress–24X7”lobbyisa leanversionofBarodaNon-Stop lobby for smaller centres by expanding existingATMcabinswithminorchangesintheinteriorandprovidingadditionalservicesbyinstallingCashRecyclerandPassbookPrinter in addition to ATM. Baroda Express Lobby startedfunctioning from September 2015. Bank has -451- BarodaExpress-24x7lobbiesasofMarch2016.

ShriB.B.Joshi,ExecutiveDirector,InauguratingtheE-LobbyinSayajigunjBranch,Baroda.ShriBharatkumarD.DangarDirector,isalsoseen.

Contact Centre

Contact Centre is providing most of the banking servicesthrough telephone channel. All customers or members ofgeneralpublic/customercanconnectwithContactCentrebydialingtheTollFreeNumber1800223344or18001024455fromanywhereinthecountry.

A dedicated Toll free no. 1800 102 77 88 is provided forPradhanMantriJanDhanYojana(PMJDY)andotherFinancialInclusioncustomers.Services throughContactCentresareavailablethroughouttheyearwithoutanyholiday.

ContactCentresarecurrentlyprovidingfollowingservices:

• AccountEnquiry–Balanceenquiry,transactionsdetailsetc;

• Cheque Services – Stop payment, Cheque bookrequest,enquiryetc;

• Debit Card Services – Helpdesk, Hot-listing,RegenerationofPIN,ReissuanceofCard,Complaintoffailedtransactionsetc;

• InternetBanking–Helpdesk,Handholding,Activationofpassword,Regenerationofpassword,complaintonfailedtransactionsetc;

• MobileBanking–Helpdesk,handholdingetc;

• GeneralEnquiry–Productsandservices,Branch/ATMlocation, interest rates information, lead creation forproductqueriesetc;

• Most of these services are also available through

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Interactive Voice Response (IVR) 24X7. Servicesthrough agents are available during 6 AM to 10 PM(exceptDebitCardHotlisting,Webchat&NRIhelpdeskwhichareavailable24X7).

SMS Banking

For customers who desire to avail only information basedbanking services, your Bank has introduced SMS bankingforbalanceenquiry,ministatement,Chequestatusfromtheregisteredmobile number. This is a very simple and easytouseproduct thatacustomercanstartusingwithoutanyregistrationprocess.

Baroda E Gateway – Internet Payment Gateway

Bank owns entire set up to provide electronic paymentplatform of its merchant’s business by enabling paymentcollectionusingcreditcard/debitcard&Netbanking.Bankis having tie-up with payment aggregators viz. BillDesk,CitrusPaymentSolutionsPvt. Ltd. andPayTm to offerNetBanking of major Banks as additional payment option tocustomers.YourBankisalsointheprocessofupgradingIPGinfrastructurewithmorerobustandfeaturesoastoofferrichexperiencetoourmerchants.

Self Service Pass Book Printer (SSPBP)

SelfServicePassBookPrinterisanautomatedkioskwherecustomer can print Pass Book on their own. SSPBP kioskrecognizes the account details from the magnetic stripplacedonthePassBook,throughthesedetailskioskfetchestheaccounttransactionandprintsitonPassBook.Customercanusethisfacility24x7fromtheSSPBPmachineinstalledinElobby/ATM.

ATM

Duringtheyear,yourBankinstalled945additionalATMstoprovideuninterruptedbasicbankingfacilitytothecustomersat convenient places across India and replaced 206 ATMswhichwereolderthan7years.Morethan50ATMshavebeenredeployedatmoreconvenientlocationsforthecustomers.Ason31.03.2016,BankhasATMnetworkof8975ATMs.

Duringtheyear,mobilebankingregistrationthroughATMonNFSnetworkhasbeenimplemented.GujaratUrjaBillpaymentfacility is provided throughATM.OverDraft request facilitythrough ATM for PMJDY customers have been provided.Cashwithdrawal throughMicro ATM for Bank’s customersincludingourRRBcustomersandotherBankcustomers isimplemented.RupayEMVimplementation forallourRRBs,LeadcapturethroughATM, BillpaymentthroughMFKusingcard and PIN, Multi language receipt printing in ATM andCashRecyclerwasenabled.CardlessdepositfacilityinCashRecycler, Rupay cash at POS,Mudra cardswas launchedforthecustomers.OnlineBarodaConnectusercreationandpasswordresetusingdebitcardandPIN, OTPforregistrationofRupay,Visa,Mastere-comtransaction,VisaContact lessdebitcardlaunchedforDomesticandNewZealandterritory.AlldebitcardproductsaremigratedtoEMVcards,ESQATMmonitoringsolutiontoenabletheBanktominimizetheATMdowntimeandservethecustomerbetter.FirstuseonPOSenabled for Rupay cards,PIN at POSmademandatory for

international transactions,Debit cardblocking throughSMSandbranch,VisaEMVforOMANterritoryimplemented.

Cash Recyclers:-

Your Bank launched its first Cash Recycler on 20th July,2014.Bankhasdeployed1135CashRecyclers/BNAsason31.03.2016.CashRecyclerisenabledtoacceptcashaswellasdispensecashapartfrombalanceenquiry,ministatementand PIN change facilities. Cash recyclers are very popularwith retailaswellasbusinesscustomersgiven theeaseofoperation and 24x7 availability. All successful transactionsare immediately credited or debited in real time andcustomers are issued an acknowledgment slip confirmingthetransaction.Nearly1.6lacstransactionsaretakingplaceeverydayinCashRecyclers.

Payment Systems

• All branches of your Bank are enabled for interbankremittancesthroughRTGSandNEFT.TheRTGSandNEFT have also been interfaced with your Bank’sinternetbankingportal.TheStraightthroughProcessing(STP)ofRTGSandNEFThavebeenimplementedfortheBank aswell asRRBs.RTGS&NEFT have alsobeenimplementedinUgandaterritory.YourBankhassuccessfully processed 782 lacs NEFT transactionsand74.07lacsRTGStransactionsduringFY16.

• The SWIFT facility is provided at Foreign ExchangeAuthorized Branches in India as also in 22 overseasterritories.Anewinterface‘XMM’ismadeavailabletoallFOREXbranches in Indiaandalso in22overseasterritoriesfortransmissionofswiftmessageswithAnti-money Laundering check. The Payment MessagingSolution (PMS) is implemented in 22 overseasterritories & all authorized branches in India. PMSfacilitatesvalidationandformattingofSWIFTmessagesgeneratedfromCBSasperSWIFTstandards,andalsogoesthroughAMLcheck.

• DuringFY16,underChequeTruncationSystem(CTS),your Bank has migrated additional MICR centers torespectiveCTSgridcentersofWesternGrid(Mumbai),NorthernGrid(Delhi)andSouthernGrid(Chennai).

• National Automated Clearing House (NACH) isimplementedforbothdebitandcredittransactions.

Other Customer Centric initiatives

YourBankhasimplementedContactlessVISA/MasterCardsforDomesticOperationsCustomers,Card toCardTransferfor ONUS and NPCI network, FI switch and ATM switchintegration.YourBankhasimplementedEMVimplementationat New Zealand, Oman and Mauritius. Your Bank hasimplementedfacilitytoaccesse-fillingaccountoftheIncomeTaxDepartment throughInternetBankingportal.YourBankhas implemented Statement of more than 6 months ine-Banking and User induced limit set in E-Banking. YourBankhasprovidedValueAddedservicesonMulti functionKiosk and implemented online transaction password resetwithDebitCardandpin.YourBankhasimplementedonlineaccount opening for NRE domestic customers and onlineremittancetoNREcustomers.

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Information Security

ArobustInformationSecurityManagementSystemhasbeenimplementedtoprotecttheexistingtechnologysetupagainstsecuritythreat.AComprehensiveAuditbyExternalAgenciesis being successfully carriedout by yourBank for itsDataCentre/Disaster Recovery centre Infrastructure. BiometricAuthenticationisintroducedforCBSLoginatBranches.

Your Bank has a Security Operation Centre (SOC) forenhanced IT security. Your Bank’s Data Centre as well asDisasterRecoveryCentrearerecertifiedandupgradedtoISO/IEC 27001:2013 certification. Your Bank has ImplementedFraud Management Solution for Internet Banking, ATM &POS.InordertoenhancesecurityandconfidenceinInternetBanking,yourBankintroducedFraudManagementSolution,including two factor authentications in India and thirteenOverseas territoriesbyenablingMobileApp (ARCOT)OTP,PULLOTPandSMSOTP.YourBankisregularlyconductingVAPT (Vulnerability assessment & Penetration Testing) ofexternalfacingapplicationsviz.Ebanking,mailmessaging,CMS,IPGetc.

YourBankhasenabledaFraudRiskManagementsystemforday-to-daymonitoringofsuspicioustransactionsatbranchesforprotectingtheinterestsofcustomers.Whilecyber-attackshave becomemore unpredictable and electronic paymentsystemsvulnerable tonewtypesofmisuse, it is imperativethatBanksintroducecertainminimumchecksandbalancesto minimise the impact of such attacks to arrest/minimisethedamage.Forthis,yourBankhasimplementedfollowingadditionalsecuritymeasures:

• Your Bank has implemented the RBI mandates aspart of Risk Mitigation measures for card presenttransactions.

• Allnewdebitandcreditcardsareissuedfordomesticusage only unless international usage is specificallysoughtbythecustomer.

• YourBankhasenabledPINatPOS.

• YourBankhasenabledDigitalsignaturesinCorporateInternet Banking for login and transactions providingadditionalsecuritytocorporatecustomers.

Back Office Operations

Regional Back Offices and City Back Offices

Your Bank is having 13 Regional Back Offices (RBOs) atpresent.YourBankhasoneRBOineachzoneforprocessingofCASAaccountopening formsand issueofPersonalizedchequebooks.More than5,281branchesofyourBankason 31.03.2016 are linked for centralized account openingprocessthroughRBOsandissuanceofPersonalizedchequebooks.YourBankishavingall22erstwhileServiceBranchesfunctioningasCityBackOfficeand62MainbranchesdoingclearingactivityandECScovering3030branchesatpresentfor processing of inward and outward cheques throughclearing. During the year under review, 100%migration toCTS (ChequeTruncationSystem)clearinghas takenplacein Southern Grid and also at all the 20 MICR (MagneticInk Character Recognition) locations of the Western Grid.

Also,CTSclearinghasbeen implemented inNorthernGridconsistingof 21MICRcenters.CTSclearing is functioninginallthe3Grids viz.,Southern,WesternandNorthernGridssmoothly.

Cash Management & Currency Chest

Your Bank has initiated steps to launch the Door StepBankingServicesfromandatthedoorstepofcustomersoftheBankonPanIndiabasis.ThiswillgiveaboosttoBank’sCurrentDepositPortfolio.BankhasprovidedNSMsinallthebranchesandChests tocomplywith thecleannotepolicyofRBI.4newcurrencychests (DumDum,Karnal,Patan&Nipaniya)havebeenopenedduringthefinancialyear.NowyourBankhas-91-CurrencyChests.

Marketing

DuringFY16,yourBankfocusedonpromotionofBrandaswell as various products and services through a variety ofmarketing initiatives. Marketing initiatives involved effectiveutilizationofdifferentmediavehiclessuchasPrint,Electronic(TV / Radio), Digital and Out of Home (OOH) for Above-The-Line (ATL) activities as well as to support the Below-The-Line(BTL)activitiesundertakenattheZonal/Regionallevel.

Your Bank launched its presence on Social Media viz;Facebook & Twitter on 1st January of this calendar year.Your Bank appreciates the importance of social mediaas a platform to connect with individual customer acrossdemographicsandgeographies.YourBankalsohasplanstousesocialmediaforconductingajudiciousmixofproductpromotion and customer education campaigns to gainfullyengagewith customers andevolve the relationships.Bankreceivedpositiveresponsepostthelaunchbyengagingwithdesiredtargetaudiences.

ShriP.S.Jayakumar,MD&CEOlaunchingBank’spresence inSocialMedia.ShriB.B.Joshi,ExecutiveDirectorandothertopexecutivesarealsoseen.

BankundertookdifferentcampaignsinFebruaryandMarchwith each campaign being designed to serve differentobjectivee.g.onlinebrandbuilding,awarenesswithdefinedtarget segments, business acquisition, promote AlternateDeliveryChannelstoreducecostofbankingtransactionetc.Coupleofcampaignsareelaboratedbelow:

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#OneInALeap

#OneInALeapwasasocialmediacontestthatwasconductedonFacebookandTwitteron29thFeb2016.Theobjectivewastocapitalizeon theLeapDayof theYearandenhance thebrand visibility in the digital space and engage the targetgroup on a single day event. #OneInALeap successfullyincreasedawarenessamongdesired target segments.Thedaily post volumes around this campaign are the recordhighestforasingledaysinceoursocialmediapresence.

BarodaSMS(Mortgagelinked)

Baroda SpecialisedMortgage Store (SMS) Campaign wasexecutedwiththedualobjectiveofBrand&Productawarenessfor newly launched One Stop Store - Baroda SpecialisedMortgageStore(SMS)Branchandbusinessacquisitionvialead generation for the branch through targeted mediumsfocusingonlyMumbai.Inashortdurationof15days,morethan300leadsweregeneratedforprocessing,sanctionanddisbursements.

Your Bank also undertook various product promotioncampaigns amongst target audience through advertisingacrossdifferentgeographies.Besidesfocusingonprovidinginformation on various products and services, AlternateDelivery Channels (ADCs) were aggressively promoted.FurtherspecialcustomersegmentswerealsotargetedsuchasspecialofferingsforMSMEs,Rural&Agrisegment,NRIsetc.throughjudicioususeofvariousmediachannelsonpanIndiabasis.

In order to augment the Brand connect with its diversestakeholders,yourBankalsoparticipated invariouseventssuchasFICCI-IBABankingConference2015,MINTAnnualBanking Conclave 2016, Dun & Bradstreet – Top BFSICompanies 2016, Standard Chartered Mumbai Marathon2016,India–SouthAfricaCricketSeries2015amongmanyotherstherebyincreasingvisibilityandBrandrecallvalue.

Branch Network of the Bank

Ason31.03.2016,branchnetworkoftheBankwasasunder:

NumberofBranches

%ShareinTotal

Domestic:AreaClassificationMetro 1008 18.91Urban 933 17.50Semi-urban 1425 26.74Rural 1964 36.85Total 5330 100.00Overseas(IncludingBranchesofsubsidiariesandoneRepresentativeoffice)

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Corporate Social Responsibility (CSR)

Bank of Baroda, has a long legacy and tradition ofcontributingactivelytothesocialandeconomicdevelopmentofthecommunitiesthroughvariousdevelopmentalactivities.Education,health,humanwelfareandothersocialactivitiesareBank’smainfocusareas.Initscontinuedeffortstomake

adifferencetothesocietyatlarge,YourBankintensifieditseffortsfurther inthisdirectionduringFY2015-16.Bankhassanctionedasumof` 1940.21lacstodifferentorganizationsengaged in various community development and socio-economicwelfareactivitiesforthebenefitofweakersection,ruralmassandothers.

DonationtoDayaRehabilitationTrust,Vadagara,KozhikodeKeralapurchaseofAmbulance

SomeoftheinitiativesinthedomainofCSRundertakenbyYourBankareasfollows:

Baroda Swarojgar Vikas Sansthan (Baroda R-SETI)

YourBankhasestablished49BSVS(BarodaR-SETI) insixstatesofthecountry,outofwhich45areinourleaddistrictsand4areinnon-leaddistrictsforgeneratingselfemploymentof Rural and Semi Urban youth through skill developmenttraining. It reflects your Bank’s commitment towards thecause of poverty alleviation through self employment. Tillnow, our BSVSs have conducted 9188 programmes andtrained2,63,378youth,outofwhich1,59,731havealreadysecuredeitheremploymentorsetuptheirownventure.Thesettlementratioisat60.19%.

Financial Literacy & Credit Counselling Centres (FLCC)

YourBankhasalsoestablished51FLCCs ineight statesofthecountryforprovidingfinancialcounselingservicesandtoeducatethepeopleinruralandurbanareatovariousfinancialproductsandservicesavailablefromtheformalfinancialsector.These centers also take up activities that promote financialliteracy,awarenessaboutbankingservices,financialplanningandameliorationofdebt-relateddistressofanindividual.

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Risk Management

Toensure sustainablegrowth, yourBankhasdevelopedasoundriskmanagementframeworksothattherisksassumedby the Bank are properly assessed and monitored. YourBank’sBoardhasputinplacearobustEnterprise-wideRiskManagementarchitecturesothattherisksremainwithintheriskappetitedefinedbytheBoard.SpecificcommitteesoftheBoardhavebeenconstituted to facilitate focusedoversighton various risks. The Board has also constituted a RiskManagementCommitteeofBoardwhichoversees the interlinkages between different type of risks. Policies approvedfromtimetotimebytheBoardofDirectorsorcommitteesoftheBoardformthegoverningframeworkforeachtypeofrisk.The business activities are undertaken within these policyframeworks.Abriefoutlineofthemechanismforidentifying,evaluating and managing various risks within Bank is asfollows:-

Asset Liability Management

YourBank’sAsset LiabilityManagement (ALM) is aimedatstrategic planning, implementation, and control processesthataffect thevolume,mix,maturity, ratesensitivity,qualityandliquidityoftheBank’sassetsandliabilities.AssetLiabilityManagement Committee (ALCO), which comprises ofGeneralManagersandExecutiveDirectorsandisheadedbytheManagingDirector&CEO,ensuresthattheriskprofileoftheBankintermsofLiquidityandInterestRateriskiswithintherisktolerancelimitssetbytheBoard.

LiquidityRiskistheinabilitytomeetexpectedandunexpectedcash and collateral obligation at reasonable cost. In yourBank, the liquidity risk ismeasuredandmonitored throughFlow approach and Stock approach and other prudentialstipulationsasperthelatestguidelinesoftheReserveBankofIndia.YourBankhasimplementedBaselIIIFrameworkonLiquidityStandards–LiquidityCoverageRatio(LCR),LiquidityRisk Monitoring Tools and LCR Disclosure Standards.The LCR standard aims to ensure that Banksmaintain anadequatelevelofunencumberedHighQualityLiquidAssetsthatcanbeconverted intocash tomeet liquidityneeds fora30calendardaytimehorizonunderasignificantlysevereliquiditystressscenariospecifiedbytheRBI.YourBankhasalwaysbeenwellabovethestipulated levelofLCRonsolobasisaswellasonconsolidatedbasis.

Interest Rate risk arises due to mismatch between ratesensitive assets and liabilitieswhich adversely impacts theearnings of theBankwith the change in rate of interest inthemarket.FormeasurementandmonitoringofInterestraterisk,bothTraditionalGapandDurationGapapproachesarefollowed.Theshort-term impactof interest ratemovementsonNIMisworkedout through“EarningsatRisk”approachtaking into consideration Yield curve risk, Basis risk andEmbedded Options Risk. The long-term impact of interestratemovements onMarket Value of Equity is alsoworkedout throughDurationGapapproach.Advanced techniquessuchasstress testingof liquidity riskbywayofsimulation,sensitivityandscenarioanalysisareusedatregularintervalsandtestedagainstthecontingencyfundingplan.

Your Bank’s comprehensive contingency funding planhasbeen formalized to foresee andmitigate liquidity crisisboth for temporary and long-range liquidity disruptions.With a powerful suite of analytical and reporting tools, anefficient liquidity and interest rate risk management hasbeen facilitated, enabling strategic decision-making andgeneratingalertsagainstpotentialdeviations.

Credit Risk

Creditriskisdefinedasthepossibilityoflossesassociatedwithdiminutioninthecreditqualityofborrowersorcounterparties.InaBank’sportfolio, lossesstemfromoutrightdefaultduetoinabilityorunwillingnessofacustomerorcounterpartytomeetcommitmentsinrelationtolending,trading,settlementand other financial transactions. Alternatively, losses resultfrom reduction in portfolio value arising from actual orperceiveddeteriorationincreditquality.

Credit risk is managed in your Bank through a wellestablishedBoardapprovedframeworkthatsetsoutpolicies,proceduresandreportingwhichareinlinewithinternationalbestpractices.Adequateattentionisgiventosegregatetheactivities of policy framers with risk takers. Your Bank hasa well structured credit approval process, which functionswithinthedefinedBoardapprovedcreditpolicy.

Credit Risk Rating in your Bank involves a method ofsystematicallyclassifyingcreditproposalsaccordingtotheirqualityandinherentriskcharacteristics.RatingisanimportantsinglepointindicatorofcreditqualitytotheBankasalsotoother stakeholders (viz. regulators, analysts, auditors etc.).YourBankhasadoptedarobustwebbasedtwodimensionalcredit rating system which consists of borrower rating aswellasfacilityratingandisnamedasBankofBarodaRiskAssessment Module (BOBRAM). This BOBRAM systemwhichisinplacesince2007,assessesfourtypesofrisks(viz.IndustryRisk,BusinessRisk,FinancialRiskandManagementQualityRisk)pertainingtothecharacteristicsofaborrower.While the first dimension, the borrower rating signifies thelikelihood of default, the second dimension facility ratingindicates the likely loss, incase theborrowerdefaults,andisexpressed in termsof LossGivenDefault (LGD).Facilityratingdependsontypeofcollateralofferedanditscoverage.The combined rating of the borrower is arrived at by thecombination of these two dimensions depicting expectedloss.

Over the years, yourBank hasgainedgood experience ininternal rating and has thus built up data on credit ratingmigration.ThisrobustplatformhasenabledyourBanktogetanapprovalofregulatorforaparallelrununderFoundationInternalRatingBased(FIRB)approachofCreditRiskunderBaselIIrulesfrom31stMarch,2013.UndertheIRBapproachthebanksareallowedtodeveloptheirownempiricalmodeltoquantifyrequiredcapitalforcreditrisk.IRBimplementationwillmakeyourBankmorerisksensitiveandwouldbenefittheBankwith improved riskmanagement systems and strongriskassessmentprocesses,andpossiblyreducedcreditriskcapitalrequirements.

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YourBank’sCorporateResearchCellpreparesindustryreportstudiesthroughindustryexpertstoassesstheriskprevalentinindustrieswheretheBankhassizableexposureandalsofortheidentificationofsunriseindustries.Tomanageimprudentconcentration, your Bank has also put in place prudentialcapsacrossindustries,sectorsandborrowers.ThePortfolioReviewCellcarriesoutdetailedstudiesonsectoralexposure,creditconcentration,ratingsdistributionandmigration,andchartsoutcreditstrategyoftheBankbasedonthesestudies.

YourBankhasalso implemented theRiskAdjustedReturnon Capital (RAROC) Framework for all credit exposures.RAROC is defined as the ratio of risk adjusted return tocapitalemployed.ImplementationofRAROCwillfacilitateustoevaluatewhetherthecreditriskassetgeneratesadequateprofittoaddeconomicvaluetoshareholders’funds.

Market Risk

MarketRiskimpliestheriskoflossofearningsoreconomicvalueduetoadversechangesinmarketratesorprices.Thechange in economic value of different market products islargelyafunctionofchangeininterestrates,exchangerates,economicgrowth,businessconfidenceetc.YourBankhasclearlyarticulatedpoliciestocontrolandmonitoritstreasuryfunctions. Thesepolicies comprisemanagement practices,procedures, prudential risk limits, reviewmechanisms andreportingsystems.Thesepoliciesare reviewed regularly inline with changes in financial and market conditions. TheInterestraterisk inyourBank ismeasuredthroughInterestRateSensitivityGapReportsandEarningatRisk.Furthermore,yourBankcalculatesduration,modifiedduration,PV01,ValueatRiskforitsinvestmentportfolioconsistingoffixedincomesecuritiesondailybasis. Itmonitors theshort-term Interestraterisk fromtheNII (Net Interest Income)perspectiveandlong-term interest rate risk from the EVE (Economic ValueofEquity)perspective.Moreover, thestress testingof fixedinterestinvestmentportfoliothroughsensitivityanalysisandequities through scenario analysis is regularly conductedin your Bank. The foreign exchange risk and equity pricerisk ismonitored tooandmeasured throughdailymarkingto market, stop loss limits, VaR limits, portfolio size limits, IGL, AGL etc. The Value at Risk for the treasury positionsiscalculated throughhistoricalsimulationmethod fora tendaysholdingperiod,at99.0%confidencelevel.

Operational Risk

OperationalRiskisdefined(asperBCBSandRBI)astheriskoflossresultingfrominadequateorfailedinternalprocesses,peopleandsystemsor fromexternal events. This includeslegal risk but excludes strategic and reputational risks.OperationalRisk is integral part ofBank’s all activities andbusiness. Hence, it is required to bemanagedwith activeengagement.

Operational RiskManagement Committee (ORMC) of yourBankhastheresponsibilityofcontrollingtheoperationalrisklossessothattheydonotcausematerialimpacttotheBank’sfunctioning. The robust management of operational risk isreflected from theeffectivenessof thecontrolenvironment.TheBankhasinitiatedmeasurestomodifytheprocessesandinstallnewsystemstoimprovethecontrolenvironment.Roll

outofkeyRiskIndicatorsprogramme,RiskControlandSelfAssessmentProgrammeandRootcauseanalysisduringthecurrentyearwillfurtherstrengthenthecontrolenvironment.

YourBank isoneof thepromotersand initialequitycapitalsubscribers to Cordex India Private Limited, which will bea consortiumofOperationalRisk loss data in India for thebankingindustry.

Basel III Implementation

The Basel III capital regulations have been implementedby Indian Banks with effect from April 1, 2013. Thisimplementation requires enhanced quality and quantity ofcapital on one side andmore elaborate disclosure on theother.ForaugmentingandimprovingCoreCapitalofBank,newmeasuresfortheinclusionofFCTR,DTAandRevaluationReserveshavebeenintroducedbyRBIinMarch2016.AlsofromMarch2016onwardsBankwillstartmaintainingCCBinphasedmannerandwillreach2.5%aspertheregulator.TheBank is fullyequipped tocomplywithall regulatorynormswithreasonablecushionovertheminimumregulatorycapitalrequirements.

Risk Based supervision (RBS)

The Department of Banking Supervision (DBS) at RBI hasadopted a Risk Based Supervisory (RBS) approach forReviewofSupervisoryProcessesofCommercialBanks.TheRBS frameworkhasbeennamedas“SupervisoryProgramforAssessmentofRiskandCapital(SPARC)”andoneofitsimportantcomponents/toolsemployedintheprocessisthe“IntegratedRiskandImpactScoring(IRISc)”Model.RBSisdrivenbyOffsiteaswellasOnsitesupervisionwhichrequiresaBanktoputinplacerobustsystemsfordatacollectionandcompilationprocessandreporting.RBSwasrolledoutinyourBank in 2012-13 supervisory cycle. SPARC is risk focusedandintendedtoincreasetheeffectivenessofthesupervisoryprocess.ThetwomajorareasofassessmentunderSPARCareRiskandCapitalAssessment.TheriskassessmentforaBankcoverstheinherentrisks,risksduetogapsincontrolsfor the inherent risks, risksdue togaps in theGovernance&Oversight as also the culture anddegree of complianceto regulatory requirements. These assessments togetherdeterminetheAggregateRiskforaBank.TheAggregateRiskandCapitalAvailabletogetherdeterminetheRiskofFailureScore(RoFS)foraBank.

YourBankhassuccessfullycompletedthethirdcycleunderSPARCandisnowwellpositionedtoembarkonthefourthsupervisorycycleof2015-16.

Internal Control Systems

AuditCommitteeoftheBoardoverseesoverallInternalAuditfunction of the Bank. The committee guides in developingeffectiveinternalaudit,concurrentaudit,ISAuditandallotherinspection & audit functions of the Bank. The committeemonitorsthefunctioningoftheAuditCommitteeofExecutivesand inspection / audit department in the Bank. Your Bankhas a Central Internal Audit Division (CIAD) that examinesthe adherence to systems, policies and procedures of theBank.Theguidelinesreceivedonvarious issuesof internalcontrol from Reserve Bank of India, Government of India,

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BoardandAuditCommitteeoftheBoardhavebecomepartof the InternalControlSystem for better riskmanagement.With rising business levels year after year, Central InternalAuditDivisionisconstantlyaimingtocurbtheinherentrisksthrough effective control mechanism so as to safeguardBank’sinterest.CIADoperatesthroughthirteenZonalInternalAuditDivisionstocarryoutauditofbranches/officesaspertheperiodicitydecidedbytheAuditCommitteeoftheBoard.AllthebranchesoftheBankarecoveredunderRiskBasedInternalAudit(RBIA).Outof4455branchesinspectedduring2015-16, 3671 branches (82.40%) were in Low Risk, 694branches (15.58%)were inMediumRisk and 90 branches(2.02%)wereinHighRiskcategory.

Bankisundertakinganexerciseforrevampingofsystemandprocesses focusingoncentralizationof activitiesbyuseoftechnology, imaging solutions and digitization. The wholegamutofauditapproachwillundergoachangewithextensiveuseof technology,analytics,samplingandadvancedauditmethodology. Bank proposes to engage a KnowledgePartneroutofleadingAuditfirmstoassistinputtinginplaceanefficientauditmechanismanditsimplementation.

Operations and Services

Customer-Centric initiatives

YourBank ishighly responsive to thecustomerneedsandbelieves that technology, products, processes and humanresourcesmustbeleveragedfordeliveringsuperiorbankingexperience to its customers. To further enhance customerservicedeliveryandcustomerredressal, ‘CustomerServiceDepartment’ during the yearwas strengthened. Your Bankhas taken several measures to improve the customerserviceatitsbranchesandatthesametime,strengthenthecustomercomplaintredressalmachineryforfastdisposalofcomplaints.

During the year, an online Customer Satisfaction Survey2015–2016waslaunchedfrom08.06.2015to30.09.2015bysendingemails tocustomers toknowabout their feedbacksoastotakeremedialmeasures.Thefindingsofthesurveyandsuggestedactionpointstoaddressthedeficiencieswereconsideredandnecessaryactionstaken.

Efforts to improve Customer Service at Branches

In yourBank, the feedback on quality of customer serviceatbranchesisobtainedthroughtheBranchLevelCustomerService Committeemeetings that are held everymonth inwhichcustomersfromvariouscrosssectionsofthesocietyincluding senior citizens and pensioners are invited. Thesuggestions/views generated during the meetings arecollated so as to examine the feasibility to implement thesuggestionsforimprovingservicequality.

YourBankis focusedtowardsprovidingexcellentcustomerservice throughalldeliverychannelsandhasbeenmakingcontinuous efforts for enhancing the level of customersatisfactionby leveragingtechnologytoprovidee-productsandalternativedeliverychannelse.g.ATM/Debitcards,POS,Internet Banking, Mobile Banking, etc., best suited to thediverseneedsofvariouscustomersegments.

Customer Service Committee of the Board

Your Bank has a Sub-Committee of Board for Customer

ServicewhichisheadedbyyourBanks’ManagingDirector&CEOwiththefollowingmembersason31stMarch2016:

1. ShriP.S.Jayakumar,ManagingDirector&CEO

2. ShriBBJoshi,ExecutiveDirector

3. ShriM.K.Mehta,ExecutiveDirector

4. ShriPremKumarMakkar,Director

5. ShriBharatKumarD.Dangar,Director

This Sub-Committee addresses the issues relating to theformulationofpoliciesandassessmentof theircompliancewhichbringsaboutconsistentimprovementinthequalityofcustomerservice. Italsomonitorsthestatusof thenumberofdeceasedclaimspendingforsettlementbeyond15dayspertaining to depositors/locker hirers/depositors of safecustodyarticles,andreviewsthestatusofimplementationofawardspassedbytheBankingOmbudsman

Standing Committee on Customer Service

Your Bank has also set up a Standing Committee onProcedures andPerformanceAudit onCustomerServices,comprisingofthreeeminentpublicpersonalitiesasmembersalong with all the Executive Directors and four GeneralManagersofyourBank.ThisCommitteeoverseestimelyandeffective compliance of the RBI instructions on CustomerService and also reviews the practices and proceduresprevalentinyourBankandtakesnecessarycorrectivestepsonanongoingbasis.

ThesuggestionsemanatingfromtheBranchLevelCustomerService Committee meetings are obtained by your Bank’sHead Office on quarterly basis and placed before theStandingCommittee onProcedure andPerformanceAuditon Customer Services. The feedback of the committeemeetingsisthenputuptotheCustomerServiceCommitteeoftheBoardofDirectors.

Customer-Centric initiatives and Redressal of Complaints

Your Bank has a Board approved Policy on CustomerGrievance Redressal and the same is placed on theBank’swebsite.YourBank isalsohavingawell structuredCustomerGrievanceRedressalMechanism,duetowhichtheoutstandingcomplaintshavealsocomedownsignificantly.TheGeneralManager,Operations&Services,isdesignatedas Principal NodalOfficer for customer complaints in yourBank.Moreover, all Zonal Heads and Regional Heads aredesignatedasNodalOfficersfortheirrespectiveZonesandRegions.Further,thenamesofallNodalOfficersalongwiththeir contact numbers are displayed in all the branches ofyourBank.AquarterlyreviewnoteoncustomerserviceandgrievancesisplacedbeforetheBoardofDirectorscomprisingbreakupandpositionofthecustomers’grievancesreceivedbyyourBank.

Your Bank is also focused on Root Cause Analysis of thecomplaints and suitable remedial measures includingupdation of the systems, procedures & sensitization ofemployees for enhanced customer service. Your Bankis having a web based online complaint registration andredressal portal named as Standardized Public GrievanceRedressSystem (SPGRS).An icon is placedon thehomepage of your Bank’s website, through which your Bank’s

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customersaswellasnoncustomerscanlodgetheircomplaintonline.Thesystemgeneratestrackeridfortrackingthestatusofthegrievancesinfuture.Italsofacilitatesthecomplainantforuploadingcomplaintinpdfortxtformatuptoadocumentsizeof500kb.Moreover,thecomplainantscanre-opentheircomplaintswithin15daysofitsredressal,ifnotsatisfiedwiththe resolution and the same complaint is escalated to thenexthigherauthority/functionalheadfornecessaryactionattheirend.SPGRSalsohasafacilitytocapturesuggestions/feedbacks.

IntermsofRBIdirectives,yourBankhasappointedaChiefCustomer Service Officer (Internal Ombudsman - CCSO)w.e.f. 29.01.2016.AsdirectedbyRBI, yourBankescalatesthose complaint cases to CCSO where Bank decides toreject a complaint and / or decides to provide only partialrelieftothecomplainant.

Compliance of Banking codes and Standard Board of India(BCSBI)

YourBankisamemberoftheBankingCodesandStandardsBoard of India (BCSBI) and has adopted the “Code ofCommitment to the Customers” and the “Code of Bank’sCommitmenttoMICROandSmallEnterprises”prescribedbytheBCSBI.ThesehavebeenplacedonyourBank’swebsiteandalsomadeavailabletocustomersatthebranches.

KYC/AMLCompliance

YourBankhaswelldefinedKYC-AML-CFTPolicy,which isthefoundationonwhichtheBank’s“implementationofKYCnorms,AMLstandards,CFTmeasuresandobligationoftheBank under Prevention of Money Laundering Act (PMLA)2002”isbased.

ThemajorhighlightsofKYC-AML-CFTimplementationacrossyourBankareasunder:

• The Bank electronically generates Cash TransactionReports(CTRs)forsubmissiontoFinancialIntelligenceUnit-India(FIU-IND)

• The “AML Solution” for generating system-basedalertson thebasisof transactions in theaccountsofthecustomersisinplace.Thescopehasbeenfurtherwidenedwithadditionofmorealertdefinitionsasperrecommendations of IBA working group. Your Bankhas a designated Director for overall compliance ofKYC-AML-CFTguidelines.

• CentralTransactionMonitoringUnit(CTMU)hasstartedfunctioningfrom18.02.2016atyourBank’sHeadOfficefor exclusively monitoring of the transactions/ alertsgeneratedinAMLSolutionandfilingofSTRs,iffoundsuspicious.

• ThereisascrutinyteamfordetectionandsubmissionofSuspiciousTransactionReports(STRs)totheFinancialIntelligenceUnit-India(FIU-IND).

• System-basedRiskCategorization(fromAMLangle)ofBank’scustomers’accountshasbeendonehalfyearlyi.e.inJulyandJanuary.

• The Bank files Counterfeit Currency Reports (CCRs)and Non Profit Organizations Transaction Reports

(NTRs)toFIU-IND,NewDelhieverymonth.YourBankgenerates Cross BorderWire Transfer Reports everymonththroughelectronicmodeforsubmissiontoFIU-IND,NewDelhi

• TheBankisintheprocessofallottingUniqueCustomerIdentificationCode(UCIC)toallitsexistingcustomersaspertheRBIguidelines.

• Online verification of PAN from NSDL has beenoperationalised as a major step to tackle moneylaunderingactivities.

• CBS system has been modified suitably so as notto accept cash deposits of ` 50,000/- and above inabsenceofPAN/FormNo.60/61.

• YourBankhasimplementedAadhaarbasede-KYCincollaborationwithUIDAI.Real-timecheckingofnamesfromUNSCR list is available inall thebranchesasasteptowardsCFT.

• Online scanning of the customer’s name with thenames of the individuals/ entities included in theupdatedALQaida/TalibanSanctionslistoranyotherBlacklistissuedbyGovt.Authorities,whileopeningofaccountsandgeneratestheAMLAlertsonpredefinedcriteria.

• Your Bank has successfully participated in Pilot RunofCentralKYCRegistryandcompletedtheprocessofinclusionoftheCKYCmandatoryfieldsintheAccountOpeningFormandmappedtheCKYCcodeswiththecodesinourCBSsystem.

For achieving full KYC compliance, following measures are taken by the Bank:

• Acomprehensive listofKYCdocuments isuploadedonyourBank’swebsite (www.bankofbaroda.com) fo

Documents

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