Untitled-1 [] Report 2017-18.pdfNear Eenadu office, Seethammadhara Visakhapatnam Tel 0891-2713942, Fax 0891-2746341 [email protected] Parvathipuram Vizianagaram Dist. 1435-27-112,

We don't find customers for our products. We find products to our customers.

2 7-181

2.25%Return on Assets

27.75%Cost to Income

1.36%Gross NPAs reduced from 1.69%

15.59%CRAR

Rs 750.50 Cr.Operating Profit

Rs 503.01 Cr.Net Profit

Rs 2252.82 CrNet Worth

we are with you!

th13 Annual Report 2017-18

Empowering Rural Lives

Chairman

With Best Compliments from

V. Narasi Reddy

Andhra Pradesh Grameena Vikas BankHead Office, Warangal - 506 001

0101

What's inside

1. Vision, Mission & Values 03

2. Letter of Transmittal 04

3. Geographical Area & Regional Offices 05

4. Board of Directors 06

5. Executives Team 07

6. Heads of Departments & Regional Mangers 08

7. Our Mentors 09

8. Our Regulators & Supervisors 10

9. Highlights 2017-18 11

10. Chairman's Message 12

11. Key Performance Indicators 14

12. Awards 18

13. Board of Directors Report 21

14. Auditor's Report 69

15. Balance Sheet, Profit & Loss 71 Account and Schedules

S.No. Particulars Page No.

02

we are with you!Annual Report 2017-18

Vision, Mission and Values

Respect to Systems and Procedures /

Good Governance / Transparency /

Service with compassion / Ethics / Team

work and People Focus.

VIsIOnBe the preferred Bank of Rural India for

development and transformation.

we are with you!

MIssIOnBe a financial heart, providing Sustainable

livelihood to rural population through

Innovative Financial and Technology

solutions.

VALuEs


03

Andhra Pradesh Grameena Vikas BankHead Office : Warangal

Date: 30.06.2018

The Secretary,

Ministry of Finance, Dept. of Financial Services

Banking Division, Government of India

Jeevan Deep Buildings, Parliament Street,

New Delhi-110001

Dear Sir,

In accordance with the provisions of Section 20 of the Regional Rural Banks Act 1976, I forward herewith the following documents.

st stA Report of Board of Directors as to the Bank's working and its activities during the period 1 April 2017 to 31 March 2018.

stA copy of the audited Balance Sheet and Profit and Loss Account for the year ended 31 March 2018.stA copy of the Auditor's report in relation to the Bank's accounts for the period 1 April 2017 to

st31 March 2018.

Letter of Transmittal

Yours faithfully,

(V. Narasi Reddy)Chairman


04

SrikakulamSaraswathi Complex, Baker sahed petaSrikakulam 532001, Tel 08942-221041, Fax 08942-221040

[email protected]

Vizianagaram8-12-64/1, Beside Himagiri Theatre,Vizianagaram 535002, Tel 08922-273956, Fax 08922-274221

[email protected]

Visakhapatnam52-14-77/1, APHSC Building,Near Eenadu office, SeethammadharaVisakhapatnam Tel 0891-2713942, Fax 0891-2746341

[email protected]

ParvathipuramVizianagaram Dist. 1435-27-112, Ist Floor, By Pass Road, Opp. Sai Ram CollegeTel : [email protected]

Regions in Telangana State

KhammamWyra Road, Khammam 507001Tel 08742-226816, Fax 08742-228972

[email protected]

NalgondaRamgiri, Nalgonda 508001Tel 08682-229943, Fax 08682-229945

[email protected]

WarangalABK Mall,Ramnagar, HanamkondaWarangal 506001Tel 0870-2577884Fax 0870-2568010

[email protected]

Mahabubnagar8-3-3/5/F, MettugaddaMahabubnagar 509001Tel 08542-242861Fax 08542-242862

[email protected]

SangareddyOpp. Inspection Bunglow, Sangareddy 502001Tel 08455-276263Fax 08455-276603

[email protected]

AshoknagarRamachandrapuram MandalDist. Sangareddy 502032Tel 040-20040773Fax 040-23020238

[email protected]

BhadrachalamTemple Road, Bhadrachalam 507111 Dist. Kothagudum.Tel 08743-231492Fax 08743-231020

[email protected]

Regions in Andhra Pradesh

Geographical Area & Regional Offices


05

Board of Directors

Shri V. Narasi ReddyChairman

(General Manager on deputation from State Bank of India)

Nominees of Central Government under Section 9 (1) (a) of the Regional Rural Bank's Act, 1976

Nominee of Reserve Bank of India under Section 9 (1) (b) of the Regional Rural Bank's Act 1976

Shri M S Harishankar Asst. General Manager,

, Reserve Bank of India, HyderabadFIDD

Nominee of NABARD under section 9 (1) (c) of the Regional Rural Bank's Act, 1976.

Shri V.S. Gupta, Deputy General ManagerNABARD, TSRO, Hyderabad

Nominees of State Bank of India under Section 9 (1) (d) of the Regional Rural Bank's Act, 1976

Shri Kasi SrinivasDeputy General Manager (FI&MF) State Bank of India, LHO, Hyderabad

Shri S. GanesanGeneral Manager (RRBs), State Bank of India, Corporate

Centre, Mumbai

Nominees of State Government under Section 9 (1) (e) of Regional Rural Bank's Act, 1976

Ms. K. Amrapali, IASCollector & Dist. Magistrate,

Warangal(urban)

Vacant

Sri KVV Satyanarayana, IRASSpecial Secretary to Govt. (B&IF)

Finance Department, GOAP, Amaravathi.

Vacant


06

Executive Team

Shri V. Narasi ReddyChairman

Shri T.V. Krishna ReddyGeneral Manager -II

Shri M. SatyanarayanaGeneral Manager-I

Shri G. NagarajuGeneral Manager - III

Shri K. RavikiranGeneral Manager - IV


07

Heads of Departments

Regional Managers

Sri TVV PrabhakarChief Manager, Accounts

Sri A S SarmaChief Manager, P&D

Sri K Vinod ReddyChief Manager Per & HR

Sri P. Murali Mohan RaoChief Manager V&DP

On Deputation from SBI

Sri P. Purnachandra RaoAGM (I&A)

Sri S.L.N. PrasadAGM (Credit & RRM)

Sri K. Amarender ReddyChief Manager, SLC

Sri L Sudheer ReddyRM, Vizianagaram

Sri M.B T ReddyAGM (FIC)

Sri Ch RamuluRM, Khammam

Sri P. RajuRM, Mahabubnagar

Sri BRV Manoj KumarAGM & RM, Ashoknagar

Sri D.VishwaprasadAGM & RM, Warangal

Sri B Srinivasa MurthyRM, Srikakulam

Sri D Rama Rao RM, Parvathipuram

Sri G. Sreedhar ReddyChief Manager, IT

Sri M Manohar ReddyRM, Bhadrachalam

Sri V. Raghunath ReddyAGM & RM, Nalgonda

Sri Mallempati RaviAGM & RM, Sangareddy

Sri P. SuryanarayanaRM, Visakhapatnam


08

Our Mentors

Shri Dinesh KharaManaging DirectorState Bank of India

Corporate Centre, Mumbai

Shri Ravi Nandan SahayChief General Manager (A &S),

State Bank of IndiaCorporate Centre, Mumbai


Shri Rajnish KumarChairman

State Bank of India Corporate Centre, Mumbai

09

Our Regulators & Supervisors

Shri R. SubramanianRegional Director

RBI, RO, Hyderabad

Dr.P.RadhakrishnanChief General Manager,

NABARD, TSRO, Hyderabad

Shri K. Suresh KumarChief General Manager,

NABARD, RO, HyderabadAP


10

Total Business of the Bank has reached a level of Rs 28650.33 crores with a growth of Rs 3463.22 cr @ 13.75%.

Deposits at Rs. 14333.63 Crore increased by Rs 1515.05 Crore at 11.82% from Rs 12818.58 Crore.

The share of CASA has increased to 42.15% from 41.05%

Advances at Rs.14316.70 Crore increased by Rs 1948.16 Crore at 15.75% from Rs.12368.53 Crore.

Net profit at Rs. 503.01 Cr @ 42.90 % (Rs 351.99 Crore 57.51%)

Gross NPAs reduced to Rs 195.64 Crore (1.36%) as on 31.3.2018 from Rs 209.74 Crore (1.69%).

Net NPAs reduced to Rs.28.03 Cr (0.20%) from Rs.87.57 Cr (0.72%).

Provision Coverage Ratio increased to 85.67% from 58.27%

Cost of deposits decreased to 6.30% as on 31.3.18 from 6.89%.

Business per Branch Rs.37.30 cr (Rs 32.80 Cr)

Business per Employee Rs 9.07 cr (Rs 8.45 Cr)

Net Profit per Employee Rs 15.92 Lakh (Rs 11.81 Lakh)

Net worth increased to Rs.2252.82 Cr as on 31.3.18 from Rs.1749.81 Cr as on 31.3.17 @ 28.75%.

Reserves increased to Rs. 2158.74 Cr as on 31.3.18 from Rs.1655.72 Cr as on 31.3.17 @ 30.38%.

Return on Assets improved to 2.25% as on 31.3.18 from 1.82%.

Return on Equity improved to 22.33% as on 31.3.18 from 20.12%.

Yield on advances marginally declined to 11.44% as on 31.3.18 from 11.90%.

Cost to Income Ratio (Expenses Ratio) has considerably come down to 27.75% from 35.03%.

NII was up by 30.10%. It increased to Rs 848.19 Crore in 2017-18 from Rs 651.93 Crore.

NIM improved to 4.15% as on 31.3.18 from 3.86%.

Capital Adequacy Ratio at 15.59% as on 31.3.18 up by 10.96% vis-à-vis 14.05% as on 31.3.2017.

Other Income grew by 50.86% to reach a level of Rs 297.49 Crore from Rs 197.19 Cr.

Credit to Agriculture at Rs.9666.29 Cr (Rs 8403.85 Cr) at a growth rate of 15.02% (Rs.1262.44 Cr)

Disbursed Rs 7234.04 Crore to agriculture ( Rs 6687.77 Cr.)

No. of Agriculture borrowers increased to 1027206 from previous FY's level of 975289.

SHGs increased to 194776 from previous FY's number of 189884.

SHG Loan o/s rose by 12.68 % to reach Rs 5584.02 crore ( Rs 4955.71 Cr)

Implemented: UPI, IMPS, BHIM, Mobile Banking Application (Android, Windows, Apple stores), *99# Services for feature

phones, Internet banking Facility, Deployment of POS machines to merchants, Missed call Banking, E-KYC account opening

Installed Desktop ATMs at branch premises

Enabled Aadhar & Mobile seeding facility at Bank Mitra points

Awards:

o ASSOCHAM:

a) Winner in Best Agricultural Bank category and Runner up in best Social Bank category.

b) 5th SMEs excellence award 2017 for "Micro Lending (Rural Sector)".

o NABARD: Honourable Finance Minister Shri Arun Jaitly presented an Award for best performance

in SHG Financing on the occasion of NABARD's 36th foundation day in New Delhi and Silver Jubilee of SHG-Banking

Linkage.

o GOI : Award from Government of India for Best performance in "SHG bank linkage" 2016-17

o PFRDA: Makers of Excellence Award for Best performance in Atal Pension Yojana ( APY )

o Ministry of Rural Development presented National Award for Best Performance in SHG Linkages 2017-18(NRLM National

Rural Livelihood Mission) on 11.5.2017

o SKOCH - Our Bank has bagged the Skoch Order of Merit Award under Business Leadership category.

Highlights 2017-18

Note : (Figures in brackets pertain to previous FY)


11

Chairman’s Message

V. Narasi ReddyChairman


12

I feel honoured to present the Annual Report for the Financial Year 2017-18, for the fourth consecutive time. Five important things that we achieved or sustained this year also have put our Bank where we are today. They are, profitability, efficiency parameters, strengthening and streamlining the systems and procedures, Business growth and IT Initiatives.

For the second consecutive year, the Bank has exhibited its efficiency levels by posting a Net Profit of Rs.503.01 Crore up by 42.90% over previous year level of Rs.351.99 Crore. The Net Profit figures registered by our Bank over the last two years, have been the highest among all RRBs in the Country and these landmarks have never been touched by any RRB so far. The important factor contributing to the profitability is curtailing controllable expenditure. The expenses ratio has come down from Rs.35.03% to 27.75% during the year under report. This is the least among all RRBs sponsored by SBI. By conducting the income audit, income leakages have been plugged. Another important source of income is Treasury operations which yielded a profit of Rs.71 crore as against Rs.50 Crore last year. Cost of deposits has been reduced to 6.30% from 6.89%, by increasing the CASA deposits by 14.83% (Rs.780.44 Cr). Our Return on Assets surged to 2.25% as on 31.3.18 from 1.82% which means all assets that we created are yielding effectively. Return on Equity improved to 22.33% as on 31.3.18 from 20.12%.

The Reserves increased by Rs 503.01 Crore at 30.38% from Rs 1655.72 Cr as on 31.03.17 to Rs 2158.74 Cr as on 31.03.18. Net worth of the Bank stood at Rs 2252.82 Crore with a growth of Rs 503.01 Crore (28.75%) over

previous FY's figure of Rs 1749.81 Crore. This is the highest across all RRBs in the country. Capital Adequacy Ratio at 15.59 as on 31.3.18 up by 10.96% vis-à-vis 14.05% as on 31.3.2017.

Our constant focus on ratios and efficiency parameters such as cost of deposits, cost of borrowings, yield on advances and investments, expenses ratio, asset quality and reduction of NPAs have culminated into where we stand today in terms of profitability. Every aspect in maintaining asset quality right from making day to day MIS to initiating legal action, has been in detail deliberated at all levels of administration and operations and appropriate measures initiated, which led to pruning the NPAs to the barest minimum. This has brought down the Gross NPAs to Rs 195.64 Crore (1.36%) as on 31.3.2018 from Rs 209.74 Crore (1.69%). With this continuous and consistent focus on the fundamentals and efficiency parameters, the margins have been maintained.

The key to efficiency is to enhance the perception of Risk Management. During the year, the Bank introduced a tool of monitoring mechanism based on Risk Indicators on some of the key areas of Banking viz., Gross NPAs, KYC Compliance, Time barred debts, Missing documents, Loan mix, Inspecting rating, e-VVR Checking, BCGA Debit entries etc., to prompt corrective action . Depending on the periodicity and tolerance levels, each Key Area flashes alerts

Yours sincerely,

(V. Narasi Reddy)

Chairman


13

indicating potential problems or warranting immediate action. This is made available to all levels of Managers for understanding the gravity of the situation and act as warranted.

During the year, the Bank's Board has reviewed all the Policies and put in place for meticulous adherence. All these policies have been drafted duly incorporating the guidelines / instructions / policy framework of GOI / RBI / NABARD / Sponsor Bank. The operations of the Bank in all crucial areas are governed by these policies.

The role of IT has been instrumental in our strategies and our Bank has put in place a number MIS reports. Business of banking depends on effective monitoring and monitoring depends on MIS. Apart from regular business, there are number of areas such as data purification, NPAs, KYC compliance, FIC operations, Mobile Banking activation, aadhar seeding, which require close follow up for achieving the desired levels. This has been facilitated by effective MIS. This is one of the contributing factors for our success both in business and efficiency parameters.

For most RRBs, the toughest struggle is to come out of an image that their working style is archaic. We dedicated this year to connect our potential to the strengthening of internal processes, administration, empowerment and enlightening the concept of rights and responsibilities in day to day functioning and operations. We have been going through a major transformation over a period of some years in terms of work force. While younger generation come with a lot of dynamism, inexperience is a critical element that the Bank has been dealing with. The Bank has a task to pass through that critical mass stage of the workforce, assuming the leadership role and respecting and adhering to the laid down internal processes and systems and procedures.

Systems and administration are important. If the system is followed in letter and spirit and if proper administration is ensured from top to bottom, results automatically follow. Sensitisation of officials at all levels has been taken up on a top priority basis as to respond to the calls received from top level administration as well as to place demand on the lower level administration for required support. Various workshops and meetings have been conducted to highlight the cadre at all level to understand the true meaning of empowerment. One has to exercise the powers vested with the position to ensure smooth

flow of the process of administration. Everybody has been made to understand their obligations and their rights. Key Responsibility Areas of workforce at all levels, have been prepared and circulated for effective functioning. The Bank has made efforts to drill the concept of Role play into the minds of staff so that the innocents are not dragged into trouble.

The Financial year has been intense in building the leadership at all levels. We threw ourselves into the process of building a strong system and conducting an effective administration to achieve something that is not ordinary.

During the year, control of our RRB has shifted from State Bank of India, Local Head Office, Hyderabad to A&S Department of State Bank of India, Corporate Centre, Mumbai. The composition of Directors from Sponsor Bank on the Board also has changed accordingly. I wholeheartedly thank the Managing Director Shri Dinesh Khara, the Chief General Manager Shri Ravi Nandan Sahay and Shri S. Ganesan, General Manager (RRBs) for their timely guidance and support, without which the performance of our Bank would not have been what it turned out to be.

I also thank each and every member of staff for their support and cooperation all along this journey, taking on the challenges and giving their best to the Organisation.

Last but not the least, my gratitude goes to around one crore customers of our Bank for reposing confidence in our Bank and giving us the opportunity of serving them.

Indicators 2015-16 2016-17 2017-18

A KEY PERFORMANCE INDICATORS

1 No. of Districts covered 8 22 22

2 No. of branches 751 768 768

a) Rural 531 494 494

b) Semi urban 156 181 181

c) Urban 49 52 52

d) Metropolitan 15 41 41

Ultra-Small Branches 488 488 488

3 Total Staff (excluding Sponsor Bank Staff) 2951 3012 3160

of which, Officers 1765 1821 1925

4 Deposits 102021153 128185762 143336293

Growth % 23.21 25.65 11.82

5 Borrowings outstanding 37337981 56208413 80412059

6 Gross Loans & Advances outstanding 106017675 123685318 143166957

Growth % 16.94 16.67 15.75

of 6 above, loans to Priority Sector 91912049 110580800 131227119

of 6 above, loans to Non Target Groups 15767667 13104500 11939837

of 6 above, loans to SC/ST 19308609 25973900 32116955

of 6 above, loans to SF/MF/AL 56544544 67230826 87126238

of 6 above, loans to Minorities 5516810 5187400 8420724

7 CD Ratio 103.92 96.49 99.88

8 Investments Outstanding 51960779 84864493 114273690

SLR Investments Outstanding 22886427 43432477 57638582

Non-SLR Investment Outstanding 29074352 41432016 56635108

B AVERAGE

9 Average Deposits 91112765 115515029 13347790

Growth % 23.30 26.78 15.55

10 Average Borrowings 41665867 45458048 5764651

Growth % 58.74 9.10 26.81

11 Average Gross Loans And Advances 94881573 110060777 129871031

Growth 18.33 16.00 18.00

12 Average Investments 49375579 58850454 74664481

Growth % 50.93 19.19 26.87

Average SLR investments 22503871 30843910 48841624

as % to average deposits 24.70 26.70 58.35

Average Non-SLR Investments 26871708 28006544 25822857

as % to Average deposits 29.49 24.24 -7.80

13 Average working funds 158988248 192895148 223950016

Key Performance IndicatorsRs. in 000's


14

Indicators 2015-16 2016-17 2017-18

Rs. in 000's

C LOANS ISSUED DURING THE YEAR

14 Loans issued during the year 78679981 99600988 106919716

Growth % 25.21 26.59 7.34

of 14 above, loans to Priority Sector 71366527 83310200 92757898

of 14 above, loans to Non-target Groups 23077341 16290788 14161818

of 14 above, SC/ST 1926191 16076269 21244947

D PRODUCTIVITY (based on total Business)

15 Per Branch 277016 327957 373051

Per Staff 70498 84520 90666

E RECOVERY PERFORMANCE

16 TOTAL

Demand 77776039 102622694 115545127

Recovery 64303445 87597449 100949732

Over dues 13472594 15025245 14595395

Recovery % 82.68 85.36 87.37 (June position)

17 FARM SECTOR

Demand 37592669 40200604 49736937

Recovery 30211300 37943901 46449980

Over dues 7381369 2256703 3286957

Recovery % 80.36 94.39 93.39

(June position)

18 NON-FARM SECTOR

Demand 40183370 62422090 65808190

Recovery 34092144 49653548 54499751

Over dues 6091226 12768542 11308439

Recovery % 84.84 79.54 82.82 (June position)

F ASSETS CLASSIFICATION

19 (a) Standard 103497691 121587921 141210532

(b) Sub-Standard 776023 366930 262674

(c) Doubtful 1736300 1716141 1520235

(d) Loss 7661 14326 173516

Total 106017675 123685318 143166957

Standard Assets as % to Gross Loans & Advances out standings 97.62 98.31 98.64

G PROFITABILITY ANALYSIS

20 Interest paid on

a) Deposits 6946094 7963182 8414939

b) Borrowings 2739088 3126205 3372854


15

21 Salary (including leave encashment) 2357204 2013540 2170109

22 Other Operating Expenses 1010451 961124 1008736

23 Provisions made during the year

(a) Against NPA's 303445 244916 594063

(b) Other Provisions -306919 44690 147808

(c) Amortization - - 31055

24 Interest received on

(a) Loans & Advances 11047289 13099251 14850970

(b) Investments 3799661 4488826 5418718

(c) Others - 20649 -

25 Other Income 1614741 1971914 2974895

26 Loss / Profit 2234707 3519912 5030146

H Other information

27 Share Capital Deposit Received Nil- Nil- Nil-

28 DI & CGC - - -

(a) Claims settled cumulative - - -

(b) Claims received but pending adjustment - - -

(c) Claims pending with Corporation - - -

29 Cumulative Provision - -

(a) Against NPAs 1043312 1221643 1676144

(b) Against Standard Assets 292611 342625 406021

(c) Against Intangible Assets Frauds etc. 121188 115864 231331

30 Interest Derecognized

(a) During the year Nil Nil Nil

(b) Cumulative Nil Nil

31 Loans Written off during the year

(a) No. of Accounts 35 3795 7448

(b) Amount 2600 59029 122662

32 Accumulated loss Nil Nil Nil

33 Reserves 13037325 16557237 21587384

Net NPAs 1476672 875754 280281

% Provisions to gross NPAs 41.40 58.25 85.67

% Gross NPAs to advances 2.38 1.69 1.36

% Net NPAs advances 1.41 0.72 0.20

CRAR 13.48 14.05 15.59

Rs. in 000's

Indicators 2015-16 2016-17 2017-18


16

Deposits (Rs. in Crores) Advances (Rs. in Crores)

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

5153

5869

6791

8280

10202

12819

14334

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

5533

6590

7895

12369

14317

10602

9066

Business (Rs. in Crores)

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

10686

12459

14687

17346

20804

25187

28650

Net Profit (Rs. in Crores)

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

120

159

180

202

223

352

503

Net Profit Per Employee (Rs. in Lakhs)

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

6.42

6.58

7.09

7.57

11.69

15.92

5.10

Business Per Employee (Rs. in Crores)

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

4.54

5.03

5.35

6.10

7.05

8.45

9.07

Net Profit Per Branch (Rs. in Lakhs)

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

20.91

24.92

25.64

27.69

29.76

45.83

65.50

Business Per Branch (Rs. in Crores)

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18 37.30

32.80

27.70

23.83

20.86

19.53

18.62


17


Chairman Shri V. Narasi Reddy receiving the Best Bank Award under MSME Banking Excellence Awards for our financial support to the MSME Sector during the year ended March 2017, from Shri Giriraj Singh, Honourable Minister of State for Micro, Small and Medium Enterprises, Government of India in New Delhi in a function organised by Chamber of Indian Micro Small & Medium Enterprises (CIMSME).

National Award for best performance in SHG Linkages 2017-18 ( National Rural Livelihood Mission) from Ministry of Rural Development, Government of India

18

Awards

Our Bank has bagged the Skoch Order of Merit Award from Skoch Group. Our GM-IV Shri K. Ravi Kiran is seen receiving the award on 20.06.2017

National award for Best Performance in SHG Bank linkages 2016-17 from Government of India on 22.11.2017- Shri S.L.N. Prasad, AGM (CRRM) is seen receiving the award

5th SMEs excellence award 2017 for Micro Lending, (Rural Sector) by ASSOCHAM on 14.12.2017- Shri T.V. Krishna Reddy, GM-II, receiving Award from Dr. Udit Raj, Honourable MP


Our General Manager -IV Shri K. Ravi Kiran receiving the "Maker of Excellence Award" From PFRDA for our performance in the APY Campaign.

19


Walkathon was taken up by our staff as part of Mega Sports Meet to create awareness on digital banking, cashless transactions, financial literacy and Social Security Schemes like PMJJBY, PMSBY, APY, etc

20

Board of Directors Report

2017-18

Lighting up the lives of rural people


21

Net Profit (Rs. in Crores)

Business (Rs. in Crores)

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

10686

12459

14687

17346

20804

25187

28650

Board of Director's Report 2017-18

Profit Analysis

The Bank registered a Net Profit of Rs. 503.01 Crore for the

year 2017-18 as against Rs 351.99 Crore for the previous FY

2016-17 at a growth rate of 42.90%.

Increase in interest income by Rs.266.10 Cr (which includes

increase in interest on investment by Rs.90.92 Cr), recovery of

AUCA to the extent of Rs 6.01 Crore, profit from sale of

investments to the tune of Rs 71.41 Crore and reduction in

NPAs by Rs 14.10 Crores, thus requiring less additional

provisions have impacted the net profitability of the Bank.

The Operating profit of the Bank stood at Rs 750.50 Crore as on

31.3.18 vis-à-vis previous FY's figure of Rs 522.70 Crore. The

increase of Rs 227.80 Crore (43.58%) in operating profit

during this year is impressive when compared with the

increase of Rs 181.47 Crore during 2016-17. This is due to

increase in income in all areas i.e., interest on advances,

investments, decrease in expenses ratio and decrease in cost of

deposits from 6.89% to 6.30% during the year.

Income and Expenditure (Rs in Crores)

thWe have pleasure in presenting the 13 Annual Report of

Andhra Pradesh Grameena Vikas Bank (APGVB) together

with the Audited Statement of Accounts, Auditors' Report and

the report on business and operations of the Bank for the stfinancial year ended on 31 March 2018.

Business Review

The Bank's business has registered a growth of Rs 3463.22 stCrore at 13.75% to reach Rs. 28650.33 as on 31 March 2018

as against Rs 25187.11 Crore as on 31.3.17.

56% of the business growth of Rs 3463.22 Crore was

contributed by Loans and Advances and the remaining 44% by

deposits with an absolute growth of Rs 1948.17 Cr and Rs

1515.05 Cr respectively. The distribution of growth between

deposits and advances in FY 2016-17 was in the ratio of 60%

and 40%.

Particulars 2016-17 2017-18 Growth %

Interest Income 1760.87 2026.97 15.11

Interest Expenditure 1108.94 1178.78 6.30

Non-Interest Income 197.19 297.49 50.86

Non-Interest Expenditure 297.46 317.88 6.86

Gross Profit/Operating profit 551.66 827.8 50.06

Tax expenses 170.71 247.49 44.98

Deferred Tax Asset &Earlier year adjustments (excess) 1.65 -4.55 -375.76

Provisions and Contingencies 28.96 77.29 166.89

Prior Period depreciation & rent 0 0

Net Profit 351.99 503.01 42.90

Net Interest Income

Total interest income earned during the year is Rs 2026.97

Crore where as total interest expenditure is at Rs 1178.78

Crore. The net interest income has increased by Rs. 196.26

Crore to Rs 848.19 crore during the year vis-à-vis Rs 651.93

Crore in 2016-17 with a growth rate of 30.10%.

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

120

159

180

202

223

352

503


23

Interest Expenditure

Interest paid on deposits has increased to Rs 841.49 Crore

from the last FY's figure of Rs 796.32 Crore by Rs 45.17

Crore (5.67%).

The Bank has paid Rs 337.29 Crore towards interest on

borrowings (refinance from NABARD, NHB and

MUDRA) during the year as against Rs 312.62 Crore of

FY 2016-17 with an increase of Rs 24.67 Crore.

Operating expenditure

Operating expenditure has increased by Rs 20.42 Crore (6.86%) to Rs 317.88 Crore in 2017-18 from Rs 297.47 Crore in previous FY 2016-17.

Interest Income

Interest income increased from to Rs 1760.87 Crore to Rs. 2026.97 Crore during the FY with an absolute growth of Rs 266.10 Crore (at 15.11%)

The Bank has earned an interest income of Rs 1485.10 Crore from loans and advances in current fiscal as against Rs 1309.93 Crore in 2016-17 with an increase of Rs 175.17 Crore (@ 13.37%).

The interest income received from investments has increased by Rs 90.92 Crore at 20.16% to reach Rs 541.87 Crore as against Rs 450.95 Crore in the previous FY. Cash payout of Rs 1800 Crore by State Bank of India on account of participation in IBPC, which was invested in STDR with them (SBI) has yielded good interest income.

337.29

841.49

312.62

796.32

273.91

694.61

203.55

578.77

Interest paid on Borrowings

Interest paid deposits

2014-15

2015-16

2016-17

2017-18

541.87

1485.1

450.95

1309.93

379.97

1104.73

249.89

993.98

Interest income on Investments

Interest income on Advances

2014-15

2015-16

2016-17

2017-18

1178.78

2026.97

1108.94

1760.87

968.52

1484.7

782.33

1243.86

Interest Expenditure

Interest Income

2014-15

2015-16

2016-17

2017-18

(Rs. In Crores)

(Rs. In Crores)

(Rs. In Crores)


Provision for NPAs:

The Bank has made a provision of Rs. 59.41 Cr on NPAs during the year, taking the total Provisions available on Advances to Rs. 208.21 Cr (including cumulative provision of Rs.40.60 Cr on Standard Assets).

24

(Rs in Crore)

Assets O/sProvision

O/sProvision

2016-17 2017-18

Standard 12158.79 34.26 14121.05 40.60

Sub Standard 36.69 5.94 26.27 4.12

Bad & Doubtful 171.61 114.79 152.03 146.14

Loss 1.43 1.43 17.35 17.35

Total 12368.53 156.43 14316.70 208.21

Balance Sheet Size

The balance sheet size amounted to Rs.25665.22 crores

(including IBPC gap of Rs 1800.00 Crore) with an increase of

Rs.4618.07 Crores over March 2017 level.

Capital & Reserves

Authorized Capital:

Pursuant to The Regional Rural Banks (Amendment Act)

2015,Raised the Authorized Capital of the Bank from 5,00,000

Equity Shares of Rs. 100/- each aggregating to Rs. 5 Crores to

200,00,00,000 Equity Shares of Rs. 10/- each aggregating to

Rs. 2000 Crores.

Paid up Capital:

The Bank's paid up capital stood at Rs 94,08,50,000

(9,40,85,000 shares of Rs 10 each), subscribed by Government

of India, State Government and State Bank of India in the ratio

of 50:15:35. The Reserves increased by Rs 503.01 Crore at

30.38% from Rs 1655.72 Cr as on 31.03.17 to Rs 2158.74 Cr as

on 31.03.18.

Ratio Analysis

S.No.

Ratios

2016-17

Amt/Ratio

% Change

2017-18

1 Yield on advances 11.90 11.44 -3.87

2 Yield on investments 8.47 8.21 -3.07

3 Cost of deposits 6.89 6.30 -8.56

4 Cost of borrowings 6.88 5.85 -14.97

5 Avg. cost of funds 5.75 5.26 -8.52

6 Avg. return on funds 9.13 9.37 2.62

7 Financial Margin 3.38 4.11 21.60

8 Cost of management 1.54 1.42 -7.79

9 Misc. Income as % to Working Funds 0.77 1.01 31.17

10 Risk Cost 0.35 0.15 -57.14

11 Net Margin 2.46 3.35 36.18

12 Return on Assets 2.82 2.25 23.63

13 Gross Rate of return 1.56 1.91 22.44

14 Expenses ratio 35.03 27.75 -20.78

15 Gross NPAs 209.74 195.64 -6.72

16 Net NPAs 87.58 28.03 -67.99

17 % Provisions to gross NPAs 58.27 85.67 47.02

18 % Gross NPAs to advances 1.69 1.36 -19.53

19 % Net NPAs to advances 0.72 0.20 -72.22

20 CRAR 14.05 15.59 10.96

Net worth

Net worth of the Bank stood at Rs 2252.82 Crore with a growth

of Rs 503.01 Crore (28.75%) over previous FY's figure of Rs

1749.81 Crore.

The Capital Adequacy Ratio has further strengthened to reach

15.59% at the end of the year vis-a-vis 14.05% as on 31.03.17

well above the level of minimum 9% stipulated by Dr. K.C

Chakravarthi Committee.

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18 2159

1656

1304

1080

879

698

539

Reserves (Rs. in Crores)


25

JCB financed by our Ramchandrapur Branch (Mahabubnagar R.O)

The following table gives the position of Tier-I, Tier-II

Capital, Reserves and computation of CAR.(Rs in Crore)

Deposits

Deposits registered a growth of Rs 1515.05 Crore over March

2017 level at a growth rate of 11.82%. Total deposits as on

31.3.2018 stands at Rs 14333.63 Crore as against Rs 12818.58

Crore as on 31.3.2017.

Deposit Mix

CASA deposits grew by Rs 780.43 Crore at 14.83% to reach Rs

6041.94 Crore as against Rs 5261.51 Cr as on 31.3.17. Term

Deposits grew by Rs 734.62 Crore to reach a level of Rs

8291.69 Crore at 9.72% as against Rs 7557.07 Crore.

Capital 2016-17 2017-18

1 Tier-I

a. Paid up Capital 94.08 94.08

b. Share Capital Deposit 0 0

c. Statutory Reserves &

Surplus 332.48 433.08

d. Capital Reserves 0.01 0.01

e. Other Reserves 14.31 14.31

f. Spl.Reserve u/s 36(1)(Viii)

of income Tax act 1961 3.85 10.38

g. Surplus in P&L 1305.07 1700.95

Total reserves (b+c+d+e+

f+g) 1655.72 2158.74

Total Tier-I Capital 1749.80 2252.82

2 Tier-II

a. Undisclosed Reserves

b. Revaluation Reserves

c. General Provisions &

Reserves 45.85 52.08

d. Investment fluctuations

Reserves / Fund

Total Tier-II Capital 45.85 52.08

Grand Total (Tier I + Tier II) 1795.65 2304.90

3. a. Adjusted value of funded

risk assets i.e., balance

sheet items 12754.79 14764.78

b. Adjusted value of non-

funded risk assets i.e.,

balance sheet items 21.98 21.62

c. a+b 12776.77 14786.40

d. Percentage of Capital

(Tier-I + Tier II) to Risk

Weighted Assets 14.05 15.59

(Rs. in Crores)

The share of CASA has increased from 41.05% to

(31.03.2017) to 42.15% as on 31.03.2018

Deposit mix 2016-17 2017-18

Current A/c 126.87 121.80

Growth 67.53 -5.07

Growth %age 113.80 -4.00

Savings Bank A/c 5134.63 5920.14

Growth 1460.20 781.51

Growth %age 39.74 15.30

Total CASA 5261.51 6041.94

Growth 1527.72 780.43

Growth %age 40.9 14.83

Term Deposits 7557.07 8291.69

Growth 1088.73 734.62

Growth %age 16.83 9.72

Total deposits 12818.58 14333.63

Growth 2616.47 1515.05

Growth %age 25.65 11.82

Deposits (Rs. in Crores)

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

5153

5869

6791

8280

10202

12819

14334


26

� (Rs. in Crores)

Borrowings

The aggregate borrowings of the Bank as on 31st March 2018

stood at Rs. 8041.21 Crore whereas it was Rs. 5620.84 Crore

as on 31st March 2017.

The Bank has availed refinance against Crop loan

disbursements from NABARD @ 20%. Refinance against

SHG disbursements and Rural Housing was provided by

NABARD and NHB respectively @ 100%.

Institution �2017-18 �2016-17 �VarianceS.No

1 NABARD 5299.46 3684.71 1614.75

2 SBI 2604.41 1894.61 709.80

3 NHB 97.33 41.52 55.81

4 MUDRA 40.00 0 40.00

Total 8041.21 5620.84 2420.36

Assets

Investments

Total investments portfolio– both SLR and Non-SLR - of the Bank has

increased to Rs 11427.37 Crore as on 31.3.18 from previous year's

level of Rs 8486.45 Crore by Rs 2940.92Crore @34.65%.

(Rs. in Crores)Investments 2016-17 2017-18

SLR 4343.25 5763.86

Growth 2054.61 1420.61

Growth %age 89.77 32.71

Non SLR 4143.20 5663.51

Growth 1235.76 1520.31

Growth %age 42.50 36.69

Total Investments 8486.45 11427.37

Growth 3290.37 2940.92

Growth %age 63.32 34.65

* IBPC – an amount of Rs 1800 Crore received from State Bank of India, on account of gap in IBPC, is kept as TDR in Banks which has to be returned on the expiry date of IBPC i.e., 23.09.18.

Investment Policy:

The Investment Policy of the Bank was formulated in 2006 and

the same was reviewed/revised and approved by the Board

from time to time, conforming to the RBI guidelines.

SLR Investments

In terms of Section 24 of the BR Act 1949, the Bank has

maintained investments in the avenues laid down in the Policy,

to fulfill the SLR requirements. All SLR investments are made


in GOI/State Govt Securities only. The purchase and sale of

Govt Securities are undertaken by the Portfolio Management

Services Department of State Bank of India.

Non SLR Investments

Non-SLR investments are invested in TDRs of Banks. The

Bank has been monitoring and following up for prompt receipt

of interest due from Govt Securities /Bonds. There was no

instance of income leakage from Non-SLR investments

portfolio.

CRR and SLR

The Bank has complied with the regulatory requirement of

maintenance of adequate balances towards CRR and SLR.

There is a well laid down system of assessing the CRR and

SLR requirements taking into account the NDTL. There was

no default in maintenance of adequate balances during the

year. The Bank has kept Rs 567.49 crore in CRR and Rs

5952.32 crores in SLR as on 31.03.2018.

Credit Portfolio

The credit portfolio of the Bank rose by 15.75 % to Rs.

14316.69 Crore during the financial year ended 31.03.2018

from the previous year level of Rs 12368.53 Crore, thus

showing an absolute growth of Rs. 1948.16 Crore as against

the target of Rs 1851.47 Crore.

27

Creating a New Value Curve - Marketing of our Bank'sproducts

Credit to Agriculture

Total credit to agriculture and allied activities including

agriculture-portion of SHG lending, stood at Rs 9666.29 Crore

as on 31.3.2018 as against Rs 8403.85 Crore with a growth of

Rs 1262.44 Crore (@ 15.02 %). Total number of Bank's

borrowers in Agriculture sector has increased to 1027206 vis-

a-vis 975289 in FY 2016-17. More than 75 % of the credit to

SHG finance is also towards agricultural operations.

The Bank has disbursed Rs. 7234.04 Crore to agriculture

during the year as against the previous year's disbursal of Rs

6687.77 Crore.

Total credit to agriculture and allied activities constitutes 66.67

% of the total credit portfolio as on 31.3.2018 vis-à-vis 67.95 %

as at the end of previous FY.

Crop loans under revised Kisan Credit Card System

As per the directions of Government of India and NABARD,

we have implemented revised Kisan Credit Card System for

crop loan borrowers from Kharif 2012. According to the

guidelines of revised KCC, we have introduced a new product

KCC-cum-SB account in the CBS for a period of 5 years. As

per this system, the farmers can remit their surplus funds in

their KCC account and can draw according to their requirement

and they need not maintain separate Savings Bank account.

There is a provision for giving interest as applicable for

Savings Bank account for the credit balances in the KCC

account. Further, loan limits will be fixed for 5 years and

documents will be obtained for the terminal limit. Year-wise

limits will be fixed basing on present Scales of Finance and

keeping in view the future cost of investment.

We have issued 850638 KCCs as on 31.3.2018 with an

outstanding credit of Rs 5509.40 Crore as against previous FY

level of 808713 KCCs for Rs 4727.55 crores.

During the year 2017-18, we have disbursed an amount of Rs

4513.97 Crore to 650780 KCC card holders as against Rs

3990.71 Crores to 704471 card holders during the year 2016-

17. Instructions were issued to all the branches to cover all

KCC holders up to the age of 70 under Personal Accident

Insurance Scheme(PAIS) during the three year card holding

period, with risk coverage of Rs.50,000/- The annual premium

of Rs.20/- was jointly borne by the Bank Rs.13/- and the

borrower Rs.7/-

Crop Loans - Vaddileni Runalu / Pavala Vaddi

Government of unified Andhra Pradesh had implemented

“Vaddileni Runalu/ Pavala vaddi” scheme i.e., reimbursement

of interest subvention and incentive subvention for prompt

payers of crop loan borrowers from Rabi 2011-12. Under the

VLR Scheme, farmers need not pay the interest portion. The

scheme has been in existence and continued by both the states

of Telangana and A.P. We have submitted our claim of

Rs.60,74,03,328/- and Rs.16,33,31,563/- to the State

Governments of Telangana and Andhra Pradesh respectively

during the year 2017-18.

Interest Subvention

As per Government of India guidelines, Bank is implementing

7% interest rate to all the crop loan borrowers up to Rs.3.00

lakhs and accordingly claimed an amount of Rs 65,50,31,683/-

towards 2% interest subvention from the GOI during the year

2017-18. As per the directives of Government of India, we had

passed on the benefit relating to interest subvention incentive

to the extent of Rs 58,56,85,000/- to the prompt repayers and

claim submitted accordingly

Crop Loan Waiver Scheme in Telangana State

Our Bank has implemented Crop Loan Waiver Scheme

announced by the Government of Telangana. Under the

Scheme, all crop loans and crop loans against gold ornaments

outstanding as on 31.3.2014 have been covered to the extent of

Rs 1 Lakh (including interest upto 31.8.14) per farmer. In case

the borrower took loan from multiple bank branches, the

outstanding loan amounts are clubbed for the purpose of

waiver.

Accordingly, we have submitted the data of all eligible loans

amounting to Rs 2401.42 Crores and Government of

Telangana released fourth phase of 25% of the total eligible

amount for credit to respective accounts.

Crop Loan Waiver Scheme in Andhra Pradesh State

Our Bank has implemented Crop Loan Waiver Scheme

announced by the Government of Andhra Pradesh. Under the

Scheme, all crop loans, crop loans against gold ornaments and

the crop loans converted to MTL, which were outstanding as

on 31.12.2013 including interest are eligible for waiver. The

maximum ceiling for waiver of the loans was Rs 1.50 Lakhs.

Entire family is taken as a unit and loans taken from multiple

Bank branches are clubbed for arriving at the maximum

waiver.

Accordingly, we have received an amount of Rs. 417.26

crores, out of which 417.07 crores was utilized and credited to

respective loan accounts. We have refunded an amount of Rs.

0.19 crores as ineligible amount.

Conducting of Grama Sabhas

All branches have conducted Grama Sabhas for the customers,

mainly for the purpose of educating the farmers in renewing

the crop loans to avail the benefit of Debt Waiver Schemes

announced by the State Governments. To ensure maximum


28

coverage of farmers, Grama Sabhas were conducted in the

evenings and mornings and sensitized farmers to renew their

crop loans to be eligible for Debt waiver benefits. Apart from

operating staff at Branches, functionaries from ROs, Head

Office right from office Assistant to Chairman have

participated in the Grama Sabhas, which yielded very good

results in successfully implementing the Debt Waiver

programmes.Tenant Farmers – Loan Eligibility Card Holders

We have financed 5697 tenant farmers under the Loan

Eligibility Cards Scheme with a credit outstanding of Rs.11.42

Crore during the year 2017-18. AP Land Licensed Cultivators

Ordinance aims at ensuring loan and other benefits to tenant

farmers, by means of Loan Eligibility Cards.

Joint Liability Groups (JLGs)

JLGs are expected to overcome the problem of tenant farmers

getting deprived of institutional credit.

The Bank has financed an amount of Rs 96.81 Crores to the

JLGs as on 31.03.2018, taking the total JLGs financed to 7228.

During the year 3348 groups were financed amounting Rs.

38.13 crores.

NABARD has sanctioned a grant assistance of Rs.16.36 lakhs for

formation and linkage of 818 JLGs during the year in both states.

We have claimed an interest subvention @ 5.5% Rs

118,08,44,179/- and 3% interest Incentive subvention Rs

56,57,50,254/- during the year 2017-18 under NRLM.

Self Help Groups

Our Bank has financed 194776 Self Help Groups (Covering about 26.50 Lakh rural women) with an outstanding portfolio of Rs 5584.02 Crore as on 31.3.2018 as against previous year's level of 189884 Groups with outstanding credit of Rs 4955.71 Cr. The total loans outstanding under SHG segment has increased by Rs 628.31 Crore at a growth rate of 12.68% during the year 2017-18 against previous year growth of Rs 971.02 Crore (@ 24.37%).

The Bank has disbursed Rs 3640.62 Crore to 147737 Groups during the year as against Rs 3655.37 Crore disbursed to 126847 SHGs during the previous year.

The Bank has highest number of Self Help Groups linked to Bank and loan amount outstanding, among all RRBs in the country.

As per the directions of Government of India and NABARD, we have been implementing Cash Credit System for SHG loans with effect from January 2012. Accordingly, we have arranged for fixing limits for a period of 5 years basing on their present corpus and proposed thrift. The loan documents will be obtained for the limit of terminal year duly preparing the appraisal for 5 years and year-wise limits will be fixed basing on present corpus and proposed thrift (subject to a maximum of Rs.7.50 lakhs). The limit will be fixed as 8 times of corpus (1:8) for the current year and for the subsequent years, the limit will be 1:8 of present corpus PLUS expected thrift.


Mudra Promotion campaign launched by GOI – Our Bank set up a stall to promote Mudra finance – Financing SHGs of Janagaon Dist to a tune of Rs.1.45 Crore – cheque handed over by Smt. Pausumi Basu, IAS, CEO, Telangana SERP. Sanction of loans under MUDRA – Chairman Shri V. Narasi Reddy is seen interacting with young MUDRA borrowers.

29

SHGs - Vaddileni Runalu

Both the State Governments i.e., Telangana and A.P have been

implementing “Vaddileni Runalu” scheme i.e. reimbursement

of interest for prompt payers of Self Help Groups upto loan

limit of Rs.5.00 lakhs. The Bank would provide particulars of

transactions in SHG accounts relating to all the branches to the

SERP and basing on that, the SERP, Hyderabad, arrives at the

list of SHG accounts eligible for VLR scheme and accordingly

release the interest amount which is credited to the respective

SHG accounts directly.

As per the directions of Government of India, SHG Cash Credit

loans are also to be treated as normal Cash Credit Loans for the

purpose of classification of asset etc. But, as per the guidelines

of VLR scheme the SHGs have to repay a minimum of 3% of

drawing power every month to become eligible for

reimbursement of interest. We have, therefore, insisted the

SHGs for repayment of 3% of drawing power towards EMI,

though it is sufficient if they pay only the interest and other

charges if any, every month.

National Rural Livelihood Mission (NRLM) - Aajeevika –

Interest Subvention Scheme

Our Bank has implemented NRLM Scheme as per the

guidelines issued by NABARD vide their letter No

249/MCID-LS/2013-14 dated 26.11.2013.

The government restructured Swarnajayanthi Grama

Swarozgar Yojana - SGSY (which was in existence since FY

2010-11) into National Rural Livelihoods Mission (NRLM) to

provide greater focus and momentum for poverty reduction.

The Mission aims at creating efficient and effective

institutional platforms of the rural poor enabling them to

increase household income through sustainable livelihood

enhancements and improved access to financial services.

Under the Scheme, all Women SHGs promoted by NRLM or

other Central or State Government Line Departments or

NABARD or any NGOs, which are linked with our Bank, are

eligible to avail the benefits of the Scheme. As per the Scheme,

GOI identified 250 backward districts all over the country

under Category-I, of which we have six districts in our notified

area namely Warangal, Khammam, Mahabubnagar (erstwhile

districts in Telangana state) and Srikakulam, Vizianagaram,

Visakhapatnam in Andhra Pradesh.

All such Women SHGs in the six districts have been extended

credit at 7% rate of interest upto Rs 3 Lakhs and Government

would subvent to the extent of difference between 7% and

actual rate of interest (12.5% ) subject to a maximum of 5.5%.

Apart from this, prompt paying SHGs will be extended an

additional 3% subvention. SERP (Society for Elimination of

Rural Poverty) would credit the remaining 4% interest for

prompt repayers reducing 'ZERO” interest burden to the

groups.

We have two districts among the Category-II districts (other

than the above 250 districts) under NRLM namely Nalgonda

and Medak. Funding for this subvention will be provided by

the SRLM (State Rural Livelihood Mission).

SRLM and SERP will provide each 7% interest as subvention

for prompt repayers through e-transfer to the SHGs accounts

under the Scheme for Category-II districts.

National Urban Livelihood Mission (NULM)

Government of India restructured Swarna Jayanti Shahari

Rozgar Yojana (SJSRY) as National Urban Livelihood

Mission (NULM). The SEP (Self Employment programme)

component of NULM focus on providing financial assistance

through a provision of interest subsidy on loans to support

establishment of Individual and Group Enterprises and SHGs

of urban poor. Under the Scheme, (a) Interest subsidy, over

and above 7% of ROI is available on a Bank loan of Rs 2 Lakh

(Rs. in Crores)

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

184440

189884

194776

No of SHGs

176281

163388

160186

163308

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

3985

4955.71

5584.02

3403.31

2513

2015.98

1665.19

(Rs. In Crores)Amt. o/s


30

(Rupees in Crore)

to individual enterprises and Rs 10 Lakh for Group Enterprises.

The difference between 7% p.a. and the prevailing ROI will be

provided to Banks under NULM; (b) SHGs in urban areas can

avail Bank loan at 7% ROI. The difference between 7% p.a.

and the prevailing ROI will be provided to Banks under

NULM. Further,an additional 3% interest subvention will be

provided to all women SHGs for prompt repayment as per

repayment schedule by GOI. Apart from this, as per State

Government of Andhra Pradesh, the balance portion of interest

will also be released under VLR Scheme as per the eligibility.

Priority Sector Lending

In terms of RBI Circular No: FIDD. CO. Plan. BC.

No.14/04.09.01/2015-16 dated December 3, 2015, w.e.f

01.01.2016 75 per cent of outstanding advances should be

towards Priority Sector, which constitutes loans extended to (a)

Agriculture (Farm credit , Agriculture infrastructure, Ancillary

activities ) (b) Micro, Small and Medium Enterprises

(Manufacturing and Service Sector, KVI and OD to PMJDY)

(c) Education (d) Housing (e) Social Infrastructure (f)

Renewable Energy (g) Weaker Sections and (h) Others

(SHG/JLG, distressed persons, Loans to State Sponsored

Organizations for Scheduled Castes/ Scheduled Tribes).

RRBs will have a target of 75 per cent of their outstanding

advances for priority sector lending and sub-sector targets as

indicated in table below.

Categories Targets

Total Priority Sector 75% of total outstanding

Agriculture 18% of total outstanding

Small and Marginal Farmers 8% of total outstanding

Micro Enterprises 7.5% of total outstanding

Weaker Sections 15% of total outstanding

The Bank's priority sector lending constitutes 91.66% of total

advances. In absolute terms, total priority sector lending stood

at Rs 13122.71 Crore as on 31.03.2018 as against Rs 11058.08

Crore as on 31.03.2017. There is a growth of Rs 2064.63 Crore

@ 18.67 The Weaker Sections Loans stood at Rs 9402.58

Crore, which forms 65.67 % of total lending.

S.

NoO/s O/s

No.of

A/cs

No.of

A/cs

2016-17 2017-18

1. Weaker Sections 972702 8895.42 988016 9402.58

2. Women borrowers 480029 4488.13 489568 4567.63

3. Minorities 48992 518.74 63571 609.72

4. Scs/STs 222626 2597.39 257984 3037.49

Inter Bank Participation Certificates

In accordance with the RBI guidelines, the bank has entered

into Risk sharing participation Contract with State Bank of

India under Inter Bank Participation Certificate (IBPC) and

issued priority sector advances to the extent of Rs.1320.00

Crore on 13.02.2017 for a period of 180 days as cash pay-out

and maturity period expired on 16.08.2017. During this

financial year the Bank issued priority sector advances to the

extent of Rs.1663.00 Crore on 14.09.2017 for the period of 180

days as cash pay-out and maturity period expired on

13.03.2018. Further, again during the year the bank issued

priority sector advances to the extent of Rs.1800,00,00

(thousands) on 27.03.2018 for the period of 180 days as cash

pay-out.

Priority Sector Lending Certificates

As per RBI master circular No. FIDD.CO. Plan. BC

23/04.09.01 /2015-16 dated 07.04.2016 of PSLC, trading on e-

Kuber portal is an ongoing process. All traded PSLCs will

expire by March 31st and will not be valid beyond the

reporting date (March 31st), irrespective of the date it was first

sold.

According to the SBI instructions on trading in "Priority Sector

Lending Certificates" through CBS e-Kuber portal, we have

started trading on e Kuber portal from 28.12.2017. Initially we

have sold surplus of Small & Marginal farmers Agri lendings

under Priority Sector to the tune of Rs. 50 crores as on

22.12.2017.

Government Sponsored Schemes

The Bank has participated in Govt Sponsored Schemes

actively during the year and as on 31.3.2018, the total finance

extended under various Schemes and loan outstandings in

various schemes are as under.


Auto trolley financed by our Bibinagar Branch (Nalgonda R.O)

31

Poultry farm financed by our Tadur Branch (Mahaboobnagar R.O) - Ms. Sangeeta Kartha, AGM, NABARD is seen visiting the unit

Rice Mill financed by our Balijapeta Branch (Parvathipuram RO) - Our Regional Manager, Shri D. Rama Rao inaugurating the unit


32

(Rs in Lakhs)

(Rs in Lakhs)

Scheme Target Achievement

No. of Amt. No. of Units Units Amt.

SCAP 5645 6444.45 5009 5717.98

BCAP 3594 2769.15 3269 2518.60

STAP 1548 675.00 1291 559.62

Minorities 817 510.09 748 478.25

Weavers 651 315.95 514 233.87

Pasukranthi / PPK 0 0.00 0 0

MEPMA 374 944.00 234 386.00

PHC 489 366.22 381 280.92

Others 2122 2195.00 1961 1707.62

Total 15240 14219.86 13407 11882.86

Achievement % 87.97 83.57

Position of Government Sponsored Schemes as on 31.03.2018.

Position of Government Sponsored Schemes as on 31.03.2018.

Scheme Outstanding Disbursement from as on 31.3.18 1.4.16 to 31.3.18

No. of Amt. No. of Amt. Units Units

SGSY 1588 1692.47 0 0.00

RYS 854 1785.00 0 0.00

SCAP 29152 9199.46 5009 5717.98

BCAP 24026 7026.86 3269 2518.60

STAP 25992 5513.97 1291 559.62

Minorities 5225 4710.75 748 478.25

Weavers 1895 1547.54 514 233.87

VAMBAY/INDIRAMMA 1592 955.22 0 0.00

KVIC 19 98.05 0 0.00

Pasukranthi / PPK 6670 5530.02 0 0.00

PMEGP 255 149.26 0 0.00

MEPMA 1363 412.08 234 386.00

PHC 764 428.67 381 280.92

Others 256 224.86 1961 1707.62

Total 99651 39274.21 13407 11882.86

Participation in State Credit Plans

The Bank's participation in State Credit Plans is as under:

S.No

Target Achievement

Target Achievement

2016-17 2017-18

1. Crop Loans 3200.00 3990.71 3800.00 4513.97

2. Total Agr & allied activities 200.00 212.36 220.00 214.94

3. NFS 552.00 561.12 580.00 678.02

4. OPS 2289.00 3566.83 2375.00 3437.62

5. Total Priority Sector 6241.00 8331.02 6975.00 8844.55

% of achievement 133.49 126.80

Retail Lending

During the year, we have focused more on increasing the share

of retail lending to Housing, Education Loans, Mortgage

Loans, Personal Gold Loans, MSME etc. Capacity building of

the operating staff has been given top priority by conducting

training programmes to diversify the credit portfolio to

increase our profitability. The performance is as under.

(Rupees in Crore)

S.

No Amt

O/s Mar 2016-17Segments

O/s Mar 2017-18

No.of

A/csAmt

No.of

A/cs

1 Housing Loans 8234 773.14 10634 1185.25

2 Mortgage Loans 2567 117.76 3072 167.46

3 Education Loans 3162 82.66 2499 72.56

4 Demand Loans 18368 181.78 16711 202.52

5 NFS - Term Loan /MSME 98167 932.59 106782 1134.28

6 Personal Loans 13259 290.01 10282 274.23

7 Personal Gold Loans 115201 538.84 105065 503.91

Total 258958 2916.78 255045 3540.21

In the branches covered under RASMECCC, Vishakapatnam

retail segment has increased by Rs 33.64 Crore over previous

year, of which Housing loan segment has accounted for Rs

24.85 Crore. Total outstandings increased to Rs 53.03 Crore

from Rs 19.39 crore at 173.44 %.


33


Cashew unit financed by our Kasibugga Branch (Srikakulam RO)

Kalyana Mandapam financed by our Arikathota Branch

(Parvathipuram RO)Housing financed by our Ashoknagar Branch (Ashoknagar RO)

34

CSIS Scheme

Government of India has introduced CSIS Scheme (Central

Scheme for Interest Subsidy) for providing relief to students

who were sanctioned / disbursed from 01.04.2009. Education

loans availed by the students from economically weaker

sections whose annual gross family income is upto Rs 4.50

Lakhs, are eligible under the scheme. Our bank has been

claiming Interest subsidies under this scheme for the eligible

students since 2009-10 to 2016-17 on the CSIS portal of Canara

Bank (Nodal Agency) every year. All the claims for all years

has been settled to our bank and partially settled for FY-2016-

17.

For the FY 2015-16, we have claimed an amount of Rs

96,88,739/- in respect of 353 education loan accounts and

received total amount from Government of India.

For the FY-2016-17, we have claimed an amount of

Rs.61,25,873/- in respect of 274 education loan accounts and

received total amount for SC & ST students amounting to

Rs.3,09,498/- and received 14.59% for General and OBC

students Rs.8,48,698/-, Remaining subsidy for General

students yet to be released by GoI.

ACSISOBCEBC: Further GoI has introduced Dr.Ambedkar's

Central Scheme of Interest Subsidy for Other Backward Caste

(OBC) and Economically Backward Caste (EBC) for

providing relief to students Studying in abroad, who were

sanctioned / disbursed from 01.04.2017. Education loans

availed by the students from Economically Backward Caste

(EBC) whose annual gross family income is upto Rs 2.50

Lakhs, and for Other Backward Caste (OBC) income is upto

Rs.8.00 Lakhs are eligible under the scheme. Our Bank has

been claiming Interest subsidies under this scheme for the

eligible students on the ACSISOBCEBC portal of Canara Bank

(Nodal Agency) for quarterly intervals , during the year 2017-

18, we have claimed Rs.47,77,961/- for 162 (for 4 quarters)

accounts and received claim of Rs.31,88,719/- (upto

December quarter) for both OBC and EBC yet to receive for

March 2018 quarter.

Central Registry of Securitisation Asset Reconstruction

and Security Interest of India (CERSAI)

Our Bank had registered with CERSAI in terms of RBI

gu ide l ines and compl i ed wi th the in s t ruc t ions .

Equitable/Registered mortgages and Hypothecation in respect

of all our loans, which are covered under Securitization and

Reconstruction of Financial Assets and Enforcement of

Security Interest Act, 2002 (SARFAESI Act) as on 31.03.2017

have been registered with CERSAI.

With this, the details of the security interest created in favour of

our bank is available on a public domain for search by citizens /

other banks / FIs as a result of which the potential fraud /

multiple financing against the same property can be prevented.

Credit Guarantee Fund Trust For Micro & Small

Enterprises (CGTMSE)

The objective of the Scheme is to make bank credit available to

the first generation entrepreneurs without the hassles of

collaterals / third party guarantees to realize their dream of

setting up a unit of their own Micro and Small Enterprise

(MSE). The Credit Guarantee Scheme (CGS) seeks to

reassure the lender that, in the event of a MSE unit, which

availed collateral free credit facilities, fails to discharge its

liabilities to the lender, the Guarantee Trust would make good

the loss incurred by the lender.

ISB Sector loans excluding retail trade advances and including

Small Road and Transport loans are eligible for guarantee

cover of CGTMSE up to a limit of Rs.10.00 lakhs, as per the

directions of Reserve Bank of India

The details of the loan accounts covered under CGTMSEscheme so far as under.

(Rs in lakhs)

During the year 2017-18 Cumulative

No.of A/cs Amount No.of A/cs Amount

5023 3550.07 11476 7350.60

Credit Information Companies

Our Bank has been a member of CIBIL (Credit Information

Bureau (India) Limited). CIBIL is the first Credit Information

Company licensed by the RBI and governed by the Credit

Information Companies (Regulation) Act of 2005. CIBIL

collects and maintains records of individuals' and non-

individuals' (commercial entities) payments pertaining to

loans and credit cards from Banks and other lenders on a

monthly basis. Using this information a Credit Information

Report (CIR) and Credit Score is developed, enabling lenders

to evaluate and approve loan applications.

Our Bank has been uploading the data regularly and all our

Regional Offices and Branches are accessing the credit history

of the loan applicants in their credit decisions.

Three other CICs, viz., Equifax Credit Information Services

Private Limited, Experian Credit Information Company of

India Private Limited and CRIF High Mark Credit Information

Services Private Limited have been granted Certificate of

Registration by RBI.

Reserve Bank of India vide its letter No. DBR No.

CID.BC.60/20.16.056/2014-15 dated 15.01.2015 has advised

us that all Credit Institutions have a mandate to become

members of all CICs. Accordingly we have become members

of the above three CICs also.


35

Inauguration of Asset Management Hub in Hanamkonda

Grama Sabha organized by our Sadasivapet Branch (Sangareddy

RO) - Shri Mallempati Ravi, AGM andRM, is seen addressing the

customers with Chairman present in the meeting

Rythu Avagahana Sadassu organized by our Warangal RO.

Our Chairman is seen interacting with farmers along with

Shri D. Viswa Prasad, AGM and RM Warangal.

Borewell Rig financed by our Lakshmidevipalli Branch (Bhadrachalam RO) Cloth Shop financed by our Burgampad Branch (Bhadrachalam RO)


36

Asset Quality – Management of Non Performing Assets

The Non-Performing Assets have decreased by Rs. 14.10 stCrores from Rs. 209.74 Crores as on 31 March 2017 to Rs.

st195.64 Crores as on 31 March 2018. Gross NPAs as a

percentage to total advances has come down from 1.69% as on

31.3.2017 to 1.36% as on 31.3.2018. Net NPAs (as a %age to

Net advances) has come down from 0.72% to 0.20%. In

absolute terms, Net NPAs was reduced from Rs 87.58 Crore to

Rs.28.42 Crore. The NPAs have come down in all segments

except KCC and recalled debts.

SARFAESI Act and Suit filing

Notices under SARFAESI Act were issued immediately after

the account becoming NPA. This was monitored by Head

Office at monthly intervals. Our actions in this regard have

yielded good results. We have taken demonstrative actions

particularly under SARFAESI. One desk officer each has been

posted to all Regions exclusively for the purpose of monitoring

NPAs who will be responsible for initiating action under

SARFAESI, Suit Filed, vehicle seizure etc., and also closure of

suit filed cases, AUCA recovery etc. Focus was given for

recovery of Recalled debts/ Suit filed accounts. Meetings with

Advocates were conducted in regions for expediting disposal

of suits.

Lokadalat

Lokadalat inter-alia, is one of the modes of Alternative

Dispute Resolution, of late, gaining popularity as the award

of the Lokadalat shall be deemed to be a decree of Civil

Court. The significant feature of the Lokadalat is that legal

experts holding Lokadalat bench guide the parties in

arriving at a compromise or settlement in a friendly and

harmonious atmosphere.

Compromise settlements

Bank has recovered huge amounts of NPAs during the year

2017-18 under compromise settlement which are overdue for

several years and where sufficient provisions are available.

(Rs. in Lakhs)

Compromise 2016-17 2017-18

No of A/Cs 2656 3006

Amount in Lakhs 3536.20 2255.11

Keeping the high NPA level under TL-ISB an exclusive OTS

scheme was announced during the year christened as Runa

Parishkar, 1745 A/Cs were closed under the scheme

amounting to Rs. 510.55 lakhs. A special OTS scheme for

resolving NPAs under SHG was also announced through

which 1005 proposals amounting to Rs.693.32 lakhs were

closed.

Performance under SARFAESI is as under:

A/cs Amt

Demand Notices issued 101 856.85

Possession Notices issued 83 761.29

Possession taken 13 169.45

Auctioned 7 125.35

Regularized 76 763.22

Performance under Suit-filed cases is as under: (Rs. in Lakhs)

Cases Amt

Suit filed 1857 4210.11

Decreed 1068 1997.72

EP Filed 478 1106.85

Recovery after filing suits 576 801.56

The Lokadalats shall have jurisdiction to determine and to

arrive at a compromise or settlement between the parties to

a dispute in respect of any case pending before any court or

any matter which is falling within the jurisdiction of any

court and any matter not brought before such court pre-

litigation.

Every award of Lokadalat shall be final and deemed to be a

decree of Civil Court binding on all the parties to the

dispute. Such civil court having jurisdiction shall execute

the order as if it were a decree made by that court.

No appeal shall lie to any court against the award of the

Lokadalat not even under Article 226 of the Constitution

because it is a judgement by consent.

In order to have uniformity, we have advised the percentage

of remission to be allowed while referring the cases to

Lokadalat Accordingly our branches have participated

exceedingly well and many branches have participated in

Lokadalats. During the year, 235 cases for an amount of

Rs.5.62 Crores were referred to Lokadalats of which 235

cases were settled for an amount of Rs.5.62 Crores. Of

which an amount of Rs.3.82 Crores was recovered.

The following strategies were adopted to reduce / contain the

NPAs:

1. One desk officer each has been posted to all regions

exclusively for the purpose of monitoring NPAs who will

be responsible for initiating action under SARFAESI, Suit

Filed, vehicle seizure etc., and also closure of suit filed

cases, AUCA recovery etc.


37

Asset Classification

Asset

(Rs. in Crores)

O/s % O/s %

2016-17 2017-18

Standard 12158.79 98.30 14121.05 98.63

Sub Standard 36.69 0.30 26.27 0.18

Bad & Doubtful 171.61 1.39 152.02 1.06

Loss 1.43 0.01 17.35 0.12

Total NPAs 209.74 1.69 195.64 1.36

Total Advances 12368.53 100 14316.69 100

2. Chief Managers at Head Office (HODs) have been

allocated one Region each to monitor NPA position. They

camped at those regions continuously and visited

branches, meeting NPA borrowers.

3. More than Rs.20.00 Lakhs outstanding NPA accounts are

being monitored by Chairman personally.

4. Top 100 NPA branches were monitored personally by

Chairman, four General Managers for reduction of NPA.

5. Chronic NPA branches have been allotted to officials who

are working in Head Office to monitor and reduce the

NPAs.

6. NPAs between Rs.6.00 Lakhs to Rs.20.00 Lakhs in the

allotted regions were monitored by General Managers.

7. Review mechanism has been put in place. Regular review

meetings are being conducted for Manager (Advances)

and Regional Managers.

8. Wide publicity was given with regard to advantages on

renewal of crop loans viz., enhanced scales of finance,

crop insurance facility, interest subvention incentive from

GOI and Vaddi Leni Runalu other government sponsored

schemes by way of arranging meetings, displaying wall

posters, Banners etc.

9. Top management has conducted audio conferences at

frequent intervals with Regional Managers, Manager

(Adv.), Desk Officers (NPAM),BMs for reviewing the

reduction of NPAs.

10. Account Tracking Centre (ATC) - The officials posted at

ATC continuously called borrowers under IRAC 1, 2, 4

and above for up-gradation of accounts.

11. Five to six clusters in each region have been formed with

officials having good track record for capacity building

and reduction of NPAs.

12. Conducted auction for Gold ornaments pertaining to

Personal Gold Loans which became overdue, at common

date at quarterly intervals.


Internal Control System – Inspection & Audit

All activities of the Bank are subjected to internal audit

function, which comprises four different types of audits

namely (a) Risk Focused Internal Audit (RFIA) (b) Snap Audit

(c) Concurrent Audit and (d) Bank Mitra Audit.

Risk Focused Internal Audit (RFIA)

The Risk Focused Internal Audit Report System has been

implemented in the Bank from July 2009, as suggested by our

Sponsor Bank i.e. State Bank of India. To tighten the criteria to

qualify for better ratings, the Bank has raised the benchmark

for the Inspection ratings with effect from 01.09.2011.

For further strengthening of the audit system the new format of

RFIA has been introduced in the Bank w.e.f.01.10.2016 as

advised by our Sponsored Bank, with the following rating

system parameter-wise marks.

Revised Rating Range of Marks

Well Controlled - A+ >=850

Adequately Controlled - A >700 and <=850

Moderately Controlled - B >600 and <=699

Unsatisfactorily Controlled - C <600

The marks allotted under each parameter have also

been revised as under:

S.N Parameter Revised Format -Marks

1 Business Development 100

2 Credit Risk Management 450

3 Operational Risk Management 410

4 External Compliance 30

5 Self-Audit 10

Revised reporting format of Risk Focused Internal Audit

(RFIA) has been implemented during the year, incorporating

IS & IT Risk scrutiny in it.

Branches with 'Well Controlled – A+' and 'Adequately

Controlled - A' ratings are audited within 18 months from the

previous audit date while the Branches with 'Moderately

Controlled - B' and 'Unsatisfactorily Controlled - C' rated

branches are audited within a year.

During the year 561 branches have fallen due for Audit and all

561 branches have been audited. Rating acquired by 561

branches is as under:

38

Rating Out of 561 Branches

audited during 2017-18

Well Controlled - A+ 171

Adequately Controlled - A 389

Moderately Controlled - B 01

Unsatisfactorily Controlled - C -

Total 561

The reports submitted by the Auditors have been dealt with by taking corrective measures, wherever necessary. The Department has carried out its operations with fair and without prejudice which helped in strengthening the systems and procedures.

Out of 525 Audit Reports which have fallen due for closure during the year, 506 have been dealt with and remaining Reports are pending for closure. These reports are overdue for closure for less than 3 months.

Snap Audit –

The schedule of Snap Audits have been advised to ROs on monthly basis to depute Officials from Region to other Region to carry out the Snap Audit of Branches to have effective audit of the Branches. 924 Snap Audits have been conducted during the year 2017-18.

Concurrent Audit

As a part of internal control system in our Bank, Concurrent Audit is introduced from the financial year 2012-13 as per the policy guidelines issued by NABARD. Keeping in view the staff availability, the Concurrent Audit is being conducted at 46 branches with the help of four Auditors. We propose to empanel the retired Bank Officials to cover at least 50% of the Credit and other exposures of the Bank under Concurrent Audit System in compliance with the guidelines issued by NABARD.

The Scope of Concurrent Audit is designed to cover (a) handling of cash (b) safe custody of securities (c) exercise of discretionary powers (d) sundry and suspense accounts (e) clearing differences (f) off balance sheet items, security aspects, verification of Assets Quality etc.

Bank Mitras Audit

Bank has introduced audit of Bank Mitras during the year and audited 934 Bank Mitras' transactions.

Apart from this, the following audits have also been carried out to enhance the efficiency levels:


Income Audit

Income Leakage Audit has been conducted at 160 branches and recovered Rs.549.70 lakhs. We have also arranged for recovery of income leakage through Regional Offices at remaining branches and recovered Rs.856.75 lakhs, aggregating to Rs.1406.45 lakhs during this year..

Special Audit

A special audit was also conducted in 21 Branches which have surpassed their budgeted growth over and above Rs.1.50 Crore to ensure all systems and procedures have been followed.

Compliance Audit:

Compliance Audit was conducted at 48 branches during this year as per the schedule.

IS Audit

IS Audit has been conducted at 11 Regional Offices and Head Office including IT Cell with the help of CISA qualified retired SBI official as per the instructions of Corporate Centre, State Bank of India, Mumbai.

Audit of other Administrative Units:

All the eleven Regional Offices and other departments i.e. Accounts, SLC, Stationery cell, HRMS have also been audited.

Audit Committee of the Board

The Audit Committee, constituted with one SBI-nominee-

director as Chairman and nominee directors of RBI ,

NABARD and Govt. of India as members has met 4 times

during the year and reviewed the following areas:

· Position of Conducting of different Audits

· Common irregularities observed in (a) Risk Focused

Internal Audits (b) Snap Audit Reports (c) Concurrent audit

(d) Bank Mitra Audit.

· Audit of Regional Offices, Accounts Department at Head

office

· Special Audits

· Review and follow-up action on the Internal Audit Reports,

particularly of “Unsatisfactory” branches and large

branches and also on Concurrent Audit observations.

· Follow-up action on irregularities pointed out by Internal

Auditors at large branches in RFIA and in the Concurrent

Audit Reports.

· Branches where audit rating is downgraded.

· Compliance for NABARD inspection Report, Statutory

Audit Report, Management Audit, RFIA, Snap Audit

reports, Concurrent Audit reports, Bank Mitra Audit

Report.

39

· Fixing accountability for unsatisfactory compliance of

Audit reports delay in compliance and non-rectification of

deficiencies.

· Review on omissions on the part of Internal Inspecting

Officials/ Concurrent Auditors to detect serious

irregularities which come to light later

· Periodical review of the accounting policies/systems

controls in the Bank with a view to ensuring greater

transparency in the Bank's accounts and adequacy of

accounting controls to address the risks faced or likely to

be faced by the Bank.

· Financial position – Balance Sheet and Profit & Loss

Account statement

· Position of house keeping and Inter Office reconciliation

(BCGA) and outstanding entries.

· Certification of holding securities as reported to the RBI

every quarter by Concurrent Auditor.

· Status of frauds surfaced etc.

Management Audit

The Management Audit of our Bank has been conducted by our

Sponsor Bank, SBI. The audit has been concluded on

06.02.2018. We have submitted our compliance to the the

Management Audit Report dated 06.02.2018 along with the

final Action Taken Report to State Bank of India, Mumbai.

Rating awarded 'A'

NABARD Inspection under Section 35(6) of the Banking

Regulation Act 1949

The NABARD Audit has been conducted as on 31.03.2017 and

the Rating awarded is – A. Final Compliance for the Report

Dated 06.11.2017 is submitted on 05.01.2018.


Policy Framework of the Bank

We have tried to identify all areas of Banking and put in place a

policy framework for consistency in our approach. While

framing the Policies, all extant instructions of Reserve Bank of

India, NABARD, Sponsor Bank and general principles of

banking as envisaged in various Acts governing the Banking,

have been taken into account. Our Bank has the following

policies now on record, duly deliberated in the Board Meetings

and approved by the Board.

1. Credit Policy

2. Recovery & NPA Management Policy

3. Risk Management Policy

4. Policy on lending against pledge of gold ornaments

5. Provision on Rural Advances Policy

6. Policy for Empanelment of Investigative Agencies

7. Procurement Policy

8. Policy on Internal Capital Adequacy Assessment Process

(ICAAP)

9. Investment Policy

10. Policy on Inter Bank Participation Certificate (IBPC) -

Issue and participation on risk sharing basis

11. KYC / AML Policy

12. Standard Operating Procedure (SOP) for Detection,

Impounding and reporting of Counterfeit Notes

13. Policy on Dealing with incidents of Frequent

Dishonoured Cheques

14. Policy on Depositor Education and Awareness Fund

(DEAF) Scheme and unclaimed deposits / inoperative

accounts in Banks.

15. Internal Audit Policy

16. Concurrent Audit Policy

17. HR Policy

18. Transfer Policy

19. Training Policy

20. Complaints Handling Policy

21. Information Technology (IT) Policy & Information

Security (IS) policy

22. Information System Audit Policy

23. ATM Operations Policy

24. Internet Banking Policy

25. Whistle Blower Policy

26. Customer Rights Policy

27. Compensation Policy

28. Ambiance Policy

These policies are meant to help ensure that the Bank has an

effective and proven systems and procedures on every key area

of the Bank's functioning. They also guide the operating staff

to comply with the regulatory requirements.

Risk Management

To enhance the monitoring mechanism and initiating

corrective measures, Risk Indicators on some of the key areas

of Banking are identified and a tool is developed and put in

place as part of Risk Management.

Depending on the periodicity and tolerance levels, each Key

Area is assigned the undernoted colors which indicates the

level of risk and alert for taking corrective action.

Green Colour-Acceptable: No immediate concern;

Amber colour-Increased concern: A potential problem that

requires further review and analysis, Needs close monitoring

and appropriate action to manage and bring back to Green

40

Red colour-Unacceptable: Needs immediate escalation for

resolution and requires appropriate initiatives to bring it back

to Green

Key Risk Areas, Threshold limits - level of risk wise and mitigation measures initiated are as under:

1 BCGA Pending : Debit entries 1. Up to 3 days- Green,

2. 3 to 7 days- Amber

3. Above 7 days- Red

2 e-VVR checking Pending:

1. Up to one day- Green,

2. One to 3 days- Amber,

3. Above 3 days-Red

3 Loan mix: a) SHG 1. Up to 30%- Green ,

to total Adv 2. Above 30% & up to 40% - Amber,

3. Above 40%- Red

4 Loan mix: b) Personal 1. Up to 5%- Green ,

loans to salaried class 2. Above 5% & up to 10%

to total Adv - Amber,

3. Above 10%- Red

5 Time barred debts: 1. Up to 0.50%- Green

% to total Advances 2. Above 0.50% to 1.0% - Amber

3. Above 1.0%- Red

6 Missing documents: 1. Ideal - Zero Green,

% to total Advances 2. Up to 0.50%- Amber

3. Above 0.50% -Red

7 Gross NPAs 1. Up to 1.75%- Green

2. Above 1.75% to 3.00% - Amber

3. Above 3.00%- Red

8 Inspection Rating 1. Rated Efficiently Run / Upgraded - Green

2. Downgraded by one step - Amber

3. Downgraded by two steps - Red

9 KYC Compliance 1. 100% - Green

2. 90% to below 100% - Amber

3. Less than 90% - Red

Key RiskIndicator

ThresholdS.No

The Bank has put in place the above monitoring mechanismavailable to all levels of management and operating staff to initiate appropriate risk mitigating measures.

Financial Inclusion

Financial Inclusion has been the concern of Indian economy

and banking industry since the independence. Leveraging

technology is the basic idea behind our initiative in providing

Banking Services at the doorsteps of the unbanked and

underprivileged people of the society.

The rural poor had long been in the clutches of money lenders

to meet their immediate financial needs for decades. This traps

them into debt for their life time. There were no means for these

people to come out of these debt traps and lead a debt free lives.

Thrift was an unusual habit in these group of people in the rural

areas.

As a Bank (established jointly by Government of India, State

Bank of India and State Government) we have made difference

in their lives. Using technology has greatly galvanised our

efforts to bring in unprecedented transformation in providing

banking facilities to these people at their door steps.

As part of financial inclusion, the bank has 1867 Bank Mitras

equipped with micro ATMs, operating 4444 villages which do

not have a formal banking outlet of any Bank. Out of 4444, 825

villages are with population of 2000 and above and remaining

3619 villages with a population less than 2000.

The Bank Mitras use the hand held Micro ATM devices to carry

out the banking transactions in real time on our CBS platform.

The following banking transactions are enabled at Bank Mitra

Points:

a. Account opening both SB & RD

b. Cash withdrawal and deposit

c. Receipt of loan installments

d. AEPS transactions both Onus and Off us

e. Rupay Debit card transactions both Onus and Off us

f. Aadhaar Seeding facility.

g. Facility of mobile number seeding to bank account.

The entire Financial Inclusion (FI) operations at BCAs work on

the principle of Biometric verification of the beneficiaries

through micro ATMs and are online, hitting our CBS server

instantly through Third Party Integration, which facilitates

updation of transactions carried out by BCAs on real time

basis, in CBS Server, via TSPs' Servers.


41

The following is the share of transactions (%) performed at Bank Mitras when compared with the total bank transactions

Sl.No

Channel at Bank Mitra2016-17 2017-18

% of Total Transaction

1 Cash Withdrawal & Deposit transactions 4.33 7.67

2 AEPS-Onus 4.99 8.23

3 AEPS-Acquirer Offus 0.87 1.03

4 AEPS-Issuer Offus 2.03 3.18

5 Rupay Card transactions 0.06 0.13

6 Total overall percentage. 12.51 20.01

7 Cost of transaction at Bank Mitra (Rs) 10.67 14.47

No. of Bank Mitra transactions have increased from 4836690

(involving an amount of Rs. 569.70 Crore) to 5166545

(involving Rs.843.16 Crore) as on 31.3.2018. We are targeting

a 30% growth in number of transactions for the FY 2018-19.

As at the end of the FY 2017-18, no. of SB Accounts opened

and maintained by Bank Mitras is 950922 (with a CASA

balance of Rs. 118.98 Crore – Rs.74.07 Crore as on 31.3.2017)

and we have set a target of 25% growth during the coming FY.

No. of RD Accounts opened and maintained by Bank Mitras is

22458 (with a balance of Rs. 6.16 Crore) and we have set a

target of 25% growth during the coming FY.

Financial Inclusion Accounts – Aadhar Seeding

It is mandatory to link bank accounts with Aadhaar. To speed

up the process of Aadhar Seeding, we have taken up the matter

with Corporate Business Correspondent M/s Irix Technologies

for developing a software for Aadhar Seeding through micro

ATMs with Bank Mitras. We have organized a campaign titled st“My Bank – My Account – My Aadhar” from 1 November

th2017 to 30 November 2017, to encourage Bank Mitras for

aadhar seeding. Out of 951144 Bank Mitras accounts, 809804

accounts (85.14% ) have been seeded with Aadhar.

Financial Inclusion – Social Security Schemes (JJBY, SBY

& APY)

Pradhan Mantri Jeevan Jyoti Bima Yojana(PMJJBY)

PMJJBY is a one-year life insurance scheme, backed by

Government of India, renewable from year to year, offering

coverage for death. People in the age group of 18 to 50 years

having a bank account who give their consent to join / enable

auto-debit, are eligible. Aadhar would be the primary KYC for

the bank account. The life cover of Rs. 2 lakhs shall be for the

one year period stretching from 1st June to 31st May and will

be renewable. Risk coverage under this scheme is for Rs. 2


Lakh in case of death of the insured, due to any reason. The

premium is Rs. 330 per annum which is to be auto-debited in

one installment from the subscriber's bank account as per the

option given by him on or before 31st May of each annual

coverage period under the scheme..

We have enrolled new 57343 customers under Pradhan Mantri

Jeevan Jyothi Bima Yojana during FY 2017-18, taking the total

accounts to 2,29,323. Total 756 claims worth Rs 15.12 Cr

amount was settled under PMJJBY during FY 2017-18.

PMJJBY claim amount given to Nominee by Sub- Inspector of

Police, Venkatapuram, Warangal.

PMJJBY Claim Settlement at Tekkali Branch of Srikakulam Dist.

Pradhan Mantri Suraksha Bima Yojana(PMSBY)

PMSBY is An accident insurance scheme and offers a one-year

accidental death and disability cover, which can be renewed

annually. The Scheme is available to people in the age group 18

42

to 70 years with a bank account who give their consent to join /

enable auto-debit on or before 31st May for the coverage period

1st June to 31st May on an annual renewal basis. Aadhar would

be the primary KYC for the bank account. The risk coverage

under the scheme is Rs.2 lakh for accidental death and

complete disability and Rs. 1 lakh for partial disability. The

premium of Rs. 12 per annum is to be deducted from the

account holder's bank account through 'auto-debit' facility in

one installment.

We have enrolled new 94717 customers under Pradhan Mantri

Suraksha Bima Yojana during FY 2017-18, taking the total to

583793 accounts. Total 66 claims worth Rs 1.32 Cr amount

was settled under PMSBY during FY 2017-18.

Atal Pension Yojana (APY)

APY is a pension scheme for unorganised sector workers such

as personal maids, drivers, gardeners etc., launched in June

2015 by the GoI. APY aims to help these workers save money

for their old age while they are working and guarantees returns

post retirement. Under the APY, there is guaranteed minimum

monthly pension for the subscribers ranging between Rs. 1000

and Rs. 5000 per month, depending on the entry age and

monthly contribution.

Aadhaar will be the primary KYC and all Bank Account

holders aged between 18-40 years are eligible for enrolment.

Total of 25149 enrolments were mobilised under Atal Pension

Yojana (APY) for FY 2017-18 as against 8038 mobilised upto

FY 2016-17, with the active participation of the 768 branches.

Average number of enrolments per branch under APY scheme

went up to 32.74 during FY 2017-18 whereas it was 10.46 as on

31.03.2017.

APY Special Campaigns conducted by PFRDA

With a view to make India a pensioned society, PFRDA

organized several campaigns to motivate Banks to contribute

to the Government of India's endeavor to make move our

Society from Pensionless to Pensioned. PFRDA also

prescribed enrolling minimum number of accounts per branch

to qualify for consideration and announcing award for the top

performer. We have actively participated in all the Campaigns,

the details of which are as under:

Transformative Leadership Campaign from 01.09.2017 to

11.09.2017

During this campaign, PFRDA prescribed minimum 15

accounts per branch to qualifying for consideration and

announcing award for the top performer. We have actively

participated in the Campaign and enrolled 2492 accounts.

Challengers Campaign from 12.09.2017 to 30.09.2017 -

During this campaign, we have enrolled 1498 accounts.


Maker of Excellence Campaign from 07.12.2017 to

30.12.2017

PFRDA came up with another campaign to identify the

excellent and most influential leaders among the banks .

PFRDA prescribed 5 accounts for each Branch for enrolment

and our Bank has secured the 6th position by enrolling 5351

accounts, among Banks all over country and bagged Makers of

Excellence Award.

We for Victory Campaign from 16.1.2018 to 31.1.2018

During this campaign, PFRDA prescribed minimum 5

accounts per branch to qualifying for consideration and

announcing award for the top performer. Our Bank enrolled

2441 accounts during the campaign period.

Splendid Seven Campaign from 07.02.2018 to 23.02.2018

Our Bank has got 3rd position with 7217 enrolments among all

RRBs during recent APY- Splendid Seven Campaign

observed.

Our Bank has been actively participating in Social Security

Schemes viz., PMJJBY, PMSBY and APY. We have

conducted a campaign by name "Mee Samajika Bhadratha -

Maa Badhyatha" which literally means "Your Social Security

is our Responsibility" from 16.11.2017 to 30.11.2017 to

educate and encourage the customers for enrolment under the

above three social security schemes. During this campaign

period, the Bank could mobilise 42465 enrolments under

PMSBY, 20853 enrolments under PMJJBY and 4180

enrolments under APY.

Digital Financial Literacy Awareness Camps (dFLAPs)

Following the need of the hour and taking cues from RBI's

policies and initiatives, our Bank launched Digital Financial

Literacy Awareness Camps to create awareness among rural

people and encourage them to use Card technology, ATMs,

micro ATMs, PoS transactions, use Mobile Banking, Mobile

Wallets and to highlight the role of Bank Mitras engaged by the

Bank. Street shows have been deployed in the villages with

the above contents so as to attract the rural customers to

upgrade their financial and technical skills. The publicity

material in the form of pamphlets, brochures and banners were

distributed during the camps to spread the message of financial

awareness among the rural people. While we have conducted

these programmes in 587 villages, NABARD sanctioned a

grant assistance for 275 programmes.

Financial Literacy Centres (FLCs):

With a prime objective to impart financial literacy in the form

of simple messages like 'why save with Banks, why borrow

from Banks, why repay the loans in time' the Reserve Bank of

India has advised all the Banks to set up one Financial Literacy

43

Center (FLC) each in the operating districts of the Bank. The

Bank has opened 8 such Financial Literacy Centres in 8

districts viz., Srikakulam, Vizianagaram, Visakhapatnam,

Khammam, Warangal, Nalgonda, Mahbubnagar and Medak in

tune with the guidelines issued by the NABARD. The Bank

has posted retired Bank staff to look after the affairs of FLCs as

counselors. These FLCs are located at the district centres and

housed in the Regional Offices. The Financial Literacy

Counsellors have conducted 1109 Financial Literacy

Awareness Camps during the year.

Our Rural Branches have conducted a total of 5473 Financial

Literacy camps during the year.

UIDAI-Migration to Registered device Services: All biometric

devices used for authentication of customer KYC, using

Aadhaar number have been migrated to Registered device

services. The biometric devices both at branches and Bank

Mithra's have been migrated to RD services.

Aadhar Enrolment and Updation Centres

Following the mandate from Government of India for all the

Banks to open Aadhar Enrolment and Updation Centres in

atleast 10% of their Branch network, our Bank has initiated the

task of opening Aadhar Enrolment Centers at 76 locations to

extend the services of aadhar enrolment and updation to the

public including our customers. Bank officials will assist in

enrolment process.148 officials have been identified to

supervise these Aadhar Enrolment Centres. As part of this

exercise, the Bank has conducted a Training progamme for

these officials in Hyderabad on 09.01.2018 with the inputs by

UIDAI Official.

Our Bank has inaugurated the first Aadhar Enrolment and

Updation Centre in our Ashoknagar branch, near


Ramachandrapuram in Hyderabad on 22.01.2018.

Customers can do new enrolments at this centre in addition to

getting modifications to the exiting cards. For new enrolment,

the Bank does not charge any amount, while for demographic

modifications such as address, name, gender, date of birth etc.,

they need to pay Rs.30/- (incl GST) in the Branch.

Our Bank has opened 43 Aadhar enrolment and updation

centers as on 31.03.2018 as per UIDAI guidelines

Cross Selling

SBI Life Insurance

The Bank is a corporate agent of SBI Life Insurance

Corporation Limited, to meet the life insurance needs of the

Bank's customers, as part of Financial Inclusion apart from

earning non-interest income. The Bank mobilized a New

Business Premium (NBP) of Rs. 22.68 Crore against the target

of Rs. 21.56 Crore and earned a commission of Rs. 3.02 Crore

during the FY 2017-18 vis-à-vis the NBP of Rs.18.54 crores

and commission of Rs.2.14 Crore during the year previous FY

2016-17.

SBI General Insurance

We have commenced SBI General Insurance Business during

the year 2015-16 as a Corporate Agent to market two Insurance

products viz., Group Health Insurance Scheme and Group

Personal Accidental Insurance Scheme apart from insurance to

the Assets financed by the Bank to the eligible and willing

customers. The Bank mobilized a business premium of Rs

12.86 Crore during the year 2017-18 against the target of

Rs.7.50 Crore vis-à-vis Rs.7.59 Crore business premium

during the previous FY 2016-17. The Bank earned a

commission of Rs. 77.44 Lakhs for the year 2017-18. vis-a-vis

the commission of Rs. 28.18 Lakhs for the year 2016-17.

Inauguration of Aadhaar Enrollment and Updation Center GPAI claim settlement of Rs, 4.00 Lakhs to the customer of our

Shivampet Branch (Sangareddy RO)- Shri M Ravi, AGM & RM

handing over the cheque

44

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45

Information Technology

Handholding the undereducated and rural population to a

technology driven banking has been the hallmark achieved by

our bank during the year. The IT initiatives introduced during

the year have more to do with the customers willing to embrace

it. Although the IT has been engulfing all sectors in urban

areas, it is slower in rural areas - particularly banking space.

Large number of our clientele is in farms and do not have great

urge to go tech-savvy. The way things are moving towards

complete transformation with IT, left alone, Rural will also

catch up with the technology but at its own pace. We have

accelerated the penetration of technology in rural areas, by

educating and sensitizing the rural folk.

Mobile Banking introduced during the last financial year and

other Alternative Delivery Channels , has been popularized

widely among the rural customers. We have conducted

campaigns, awareness programmes, instilled competition

among operating staff in Branches and Regions, to take the IT

Products and services to the rural customers.

The Bank has introduced the following new IT initiatives

during the year:

Immediate Payment System (IMPS) Remitter

IMPS facility as beneficiary bank was launched in January

2016 as sub member of Sponsor Bank. After IMPS accounting

procedure was put in place by SBI for RRBs, IMPS with

remitter facility was launched in July 2017 in our Bank.

A. Mobile Banking:

It is a new experience for a farmer to do banking while in farm.

Bilingual, the mobile banking app is a user friendly. The

availability in vernacular language has made it acceptable to

the rural customers. The app is compatible with, Android, iOS

and Windows mobile operating systems. The requirement of a

PIN mailer for registration/activation has been done away with

as a Go Green initiative. Mobile Banking app offers

remittance of funds through NEFT, IMPS, transfer transactions

within the bank and balance enquiry. Customers can also raise

cheque book requests for their accounts linked to the CIF

through mobile. This has enabled the bank to attract new

customers and retain the existing customers.

The transactions through Mobile Banking are secured with

three way authentication i.e. MPIN to access the services and

TPIN to perform financial transactions, the third factor of

security, is authentication of a financial transactions by the

onetime pass word flashed to the registered mobile of the

customer.

More than a lakh customers have activated Mobile Banking

service and each customer has carried out on an average a little

over four transactions during the Financial Year, involving an

amount of Rs. 246.81 Crore. No. of transactions put through

the Mobile Banking app, works out nearly 2.75% of the total

transactions.

Our Bank's mobile banking services have been well received

by the customers and their satisfaction can be gauged from the

rating awarded by them to the mobile banking app on the

Google play store feedback platform. The mobile banking app

has been receiving a consistent rating of 4.4 on the platform

and the downloads have reached 1,00,000 +.

There is a huge potential for the Mobile Banking Services in

our Bank. Out of 34 Lakh SB Accounts, over 50% accounts

have been seeded with Mobile Numbers. Similarly out of 15

Lakh BSBD Accounts, 49% accounts have been seeded with

Mobile numbers.

Mobile Baning Facility – On Feature Phones: *99#

We have also implemented *99# facility, another strategy of

mobile banking by NPCI for our rural customers with regular

feature phones. Internet (data) connection is not required to

avail banking services using *99# and this facility can be used

across all major Telecom service providers and avail Banking

services 24 x 7 seamlessly. Banking services on feature

mobile phones is available in multiple languages and also


46

available in Telugu. The *99# facility can be availed on the

mobile number that is linked to the customer's deposit account

only. Financial services that can be carried out using the *99#

facility are: (a) Transfer funds using Mobile No (b) Transfer

funds using UPI ID (c) Transfer funds using Aadhaar No. (d)

Transfer funds using Account No + IFSC code (e) Request

funds transfer from others using UPI ID or Mobile Number.

Non Financial Services such as (a) Account Balance enquiry

(b) Set up UPI PIN (c) Change UPI PIN and (d) Last five (5)

transactions.

Unified Payment Interface (UPI) Services

UPI is the most sophisticated public payments infrastructure

which our Bank has extended to our customers in January

2018. UPI simplifies online payments and it is way ahead of

NEFT / IMPS / digital wallet such as Paytm with regard to

convenience. UPI is a layer over existing IMPS facility.

The following benefits accrue to the customer who uses the

UPI services of the bank.

1. The enabling of the UPI facility has revolutionized funds

transfer by our customers and made it as simple as sending

a message.

2. Immediate funds transfer through mobile devices round the

clock 24 x 7, 365 days of the year.

3. Our onboarding the UPI platform enables our customer to

use a single mobile application made available by NPCI,

Bharat Interface for Money (BHIM) for accessing different

bank account and carrying out their transactions.

4. UPI facilitates the use of virtual address for performing

banking transactions.

5. The customer using UPI facility can make payments for

purchases made at merchant establishments by scanning

the Quick Response (QR) code.

6. Customer can raise complaints regarding transaction status

directly from the BHIM app.

Within a short span of 3 months from the date of launching,

339184 transactions involving an amount of Rs. 62.62 Crore

have taken place through UPI.

Internet Banking -Transaction Facility

After approval for rolling out Internet Banking facility with

transactions rights has been granted by RBI, Transaction rights

on the Internet banking platform of the bank have been

launched in February 2018.

AEPS-Aadhaar Pay:

To enable our customers to perform cash less transactions at

merchant establishments using their Aadhaar linked account of

our bank, Aadhaar Pay (Issuer) facility has been launched in

our bank. Using this facility our bank customer would be able

to perform cash less transactions at outlets using other bank

Aadhaar pay apps.

Missed Call Banking:

Many of our rural customers, particularly the beneficiaries of

DBT and Government Sponsored Schemes, come to branch to

know their account balance, thereby losing their daily wage

and incurring travel expenditure. To mitigate the hardship of

hand-to-mouth customers, the Bank introduced Missed Call

Banking to know their account balance. The customer through

the mobile registered with the account has to give a missed call

to a predefined number to get an SMS showing the account

balance. This facility is available 24 x 7 and has considerably

reduced footfalls at the branch counters and enhanced the

customer service at the counters by cutting down the waiting

time.

This is an initiative which has instant impact on the customer

service in the most inevitable area of banking i.e., need to know

the balance.

In order to popularize and maximize the usage of missed call

banking, we have displayed Banners prominently in the

branches and important location of the villages, depicting the

facility. In all Financial Literacy Camps and in Grama Sabhas,

the demonstrations were given to the villagers to provide a feel

of the facility to the rural folk.

Out of 51,17,626 active customers, 26,45,831 customers have

registered their mobile numbers to their accounts. Of this,


47

17,82,236 customers have registered for Missed Call Banking

facility. As at the end of the FY, 1558048 SMSs have flashed in

their mobiles.

Alternate Delivery Channels (ADCs):

Banking transactions through Alternate Delivery Channels has

been on the rise vis-à-vis transactions through brick and mortar

branches, reducing the footfalls considerably in the Branches,

thereby resulting in more focus on marketing and business

development. Various alternative delivery channels introduced

by the Bank has enabled the customers to avail banking

services 24 x7 at their convenience. The following table shows

the volumes and cost benefit analysis on transactions through

branches and ADCs.

SN Particulars 2016

-172017-18

2016-17

2017-18

Branch ADC

1 Avg Transactions per day 69292 70091 88191 144757

2 Avg % of transactions 32.62 44.00 56.00 67.38

3 Cost per transaction (Rs) 116.27 107.50 5.08 4.50

Rising trend of remittance of funds and banking transactions

using ADCs is shown in the following table.

SN

PaymentMode

No. oftransac

tionsPer day

Volumeper day(Rs. Cr)

No. oftransac

tionsPer day

Volumeper day(Rs. Cr)

2016-17 2017-18

1. CTS 1187 7.00 1487 12.00

2. RTGS 91 7.99 103 16.86

3. NEFT 15209 28.15 26561 33.90

4. ECS 2312 0.08 20425 0.53

5. IMPS 204 0.04 1377 12.05

6. POS 2689 0.04 4726 0.63

7. ATM 15222 2.81 22765 4.95

8. AEPS 26561 3.60 43474 5.87

9. Mobile Banking Services 269 0.17 1098 0.90

10. NACH (APBS & ACH) 29281 0.36 54908 7.01

Campaigns to promote Cashless Transactions

We have launched many campaigns to promote cashless transactions using our ADCs. A campaign named Festival Dhamaka was launched to promote cash less transactions amongst the customers of the bank was launched during the

festival seasons.

Bank has also launched a campaign by name Multitasker to encourage staff in promoting activations and transactions in digital products of the Bank, like Mobile Banking, ATM Card & POS machine installation. The best performers Region and Bank wise were recognized and awarded incentives.

Rupay BigBazar Campaign: Our Bank also participated in this campaign launched by NPCI who entered into a corporate agreement with Big Bazar a reputed multi chain retailer in India. The agreement envisages to provide a discount of 10% on the purchases made using Rupay Debit cards. The maximum discount has been pegged at Rs 250 per customer/card. The campaign was conducted for a period of 38 days from 23.03.2018 to 30.04.2018. This was to promote the usage of cashless transactions mode amongst our customers, increase ATM Debit card transactions and our customer would be benefited with the discount offered by the corporate

RTGS/NEFT direct Membership:

Our Bank has obtained approval from RBI for participating in the Centralized Payment System of RBI as Director Member. We have also obtained RTGS Membership and INFINET membership and opened RTGS settlement account and SGL/IDL-SGL account. Our participation in Centralised Payment System will be functional in the coming FY.

Desktop ATMs

In a move to facilitate customers wanting to withdraw small amounts, the Bank has installed Desktop ATMs in five of our Branches on a pilot basis.

This is the first time, our Bank has come up with a plan to set up Desktop ATM in our Branches and this is a unique model where it works like any other ATM and other Bank customers can also withdraw their money. With desktop ATMs, there is no need for separate ATM room and there is no security problem.

Inauguration of Desktop ATM in our Patancheru Branch on 29.01.2018 by Shri S. Ganesan, General Manager (RRBs), A&S Department, State Bank of India, Corporate Centre, Mumbai


48

Visakhapatnam Collector Sri Praveen Kumar, IAS, inaugurating the

Desktop ATM in our Kancharapalem Branch (Visakhapatnam city) on

21.2.2018.

Visakhapatnam Collector Sri Praveen Kumar, IAS, withdrawing cash

from the Desktop ATM after inauguration.

POS Machine Installation

During the year, our Bank has also took up the initiative of

installing PoS machines (as sub member of SBI) at merchant

establishments, who are our Bank's customers. Necessary

agreements have been entered into with the respective SBI

circles and 454 applications have been sourced for installation.

This will be functional during the next FY.

Online Voucher Verification System:

During the year, the Bank has introduced and implemented

online Voucher Verification System. Earlier, each transaction

put through CBS, supported by a Voucher used to be checked

manually with the Voucher Verification Reports generated

from CBS tallying with the physical vouchers. The timely

checking of the Voucher Verification Report(VVR) is a very

important function which would bring out the correctness of

the transaction performed by the CBS user and also brings out

any fraudulent/mischievous transaction that has been

perpetuated by any fraudulent user of CBS. This function of

VVR checking also need to be monitored by the controllers so

as to ensure that technology implemented in the banking

operations are not misused by any insider. In the manual

system, there used to be certain issues pertaining to

responsibility / accountability of the operating staff in regard to

the verification and more importantly the monitoring aspect as

to ensure 100% checking.

Online Voucher Verification system automated the checking of

transactions online by a person other than the checker or

maker. This acts as a deterrent in perpetuating fraudulent

transactions. The controller has been provided an effective

tool for verifying the pendency of VVR checking at branches

from a central location.

This has also effectively eliminated the necessity of printing

the Voucher Verification Reports saving paper, time and space

and curtailing the usage of peripherals like printer, leading to

Go Green initiative.

New NPA Module:

1. The health of loans and advances are system tracked. The

NPA tracking is carried out on a daily basis. The IRAC status of

the loan accounts identified by the system was studied and the

following steps initiated to improve the accuracy of the system

identification.

a. Data Gap in the loan/advances accounts as per the system

was shortlisted.

b. The data gaps were shared with the branches and updated as

per the loan documents.

c. The errors in classifying the loan accounts by the system

were studied to eliminate the error in system tracked NPAs.

d. A new NPA module was developed and promoted to

address and fix all the bugs in the old NPA module and

promoted.

NPA MIS Reports:

Success of our Bank in effectively monitoring the Loan

Accounts and initiating appropriate corrective action in

avoiding / reducing the NPAs, can be attributed to NPA Reports

generated and made available to all levels of administration.

MIS Tool for Branches: An MIS tool was developed for

generation of customized NPA reports at the branches using

the available loan balance file in the branch reports. This is a

user friendly tool and any branch staff can generate NPA MIS

report in the format he/she likes. This tool has been deployed at

all the branches for their convenience, to work out their own

strategies for tackling their NPA accounts. This tool is also

made available on the intranet for downloading and use.

Beyond the above the bank controllers at all levels are

provided with NPA MIS reports on daily basis. The reports are

provided branch wise, region wise, segment wise and IRAC


49

status wise. The NPA MIS reports are analyzed for slippages

and the stake holders sounded for corrective measures to be

implemented at the Head Office and Regional Office levels.

The daily slippages are flashed through SMS messages and in

WhatsApp groups at central level and regional office levels.

The regional offices also communicate with the branches the

NPA slippages individually. The NPA position is reviewed in

the monthly reviewing meeting at bank level and regional

office level and necessary instructions and corrective measures

adopted. Recovery teams are formed to assists branches in

recovery operations where ever the slippages are felt to be

monitored closely for recovery.

The adoption of technology in classifying, tracking and

monitoring of NPA has assisted in bring down the NPA of the

bank from 4.43% in 2013-14 to 1.36 % in 2017-18.

Audit Sampling Reports:

To facilitate improvement in the quality of audit during Branch

audit and inspection, a facility to generate random sample

accounts to be verified by the branch inspector has been put in

place.

Information Security:

The bank pays utmost importance towards safeguarding the

information technology assets of the bank. The Bank has

formulated, Information Security Policy, Information

Technology Policy, Information Security Audit Policy &

Internet Banking Policy and implemented after obtaining

Board's approval. As a policy, the Information technology

assets of the bank at our Application Service Provider M/s C-

Edge Technologies Ltd, are subjected to information security

review on yearly basis by an external IS audit agency. Bank's

controlling offices are subject to Information Security Audit by

external agency at periodical intervals. Information systems

audit is part of Risk Focused Internal Audit systems (RIFA) of

the bank which plays an important role in the assessment of the

IS assets and practices in use at the branches during branch

audits carried out by Internal auditors of the bank.

Anti-virus is installed and monitored in the bank centrally. The

patches of antivirus in branch servers are updated regularly. In

client systems the up-dation of antivirus is taken up by the

AMC providers. Regular instructions and updates are

provided to the branches to caution them in regard to any

impending threat. The use of external media is disabled at the

branches to arrest spread of any attack from the external media.

Biometric authentication system for login to the CBS

application was introduced. This eliminates login of

unauthorized persons into the application and also aids in

fixing accountability for any frauds or malpractices. The use of

operating systems is monitored and updated as per the

requirement in all the systems of the bank to remove any

vulnerability on this account.

The effectiveness of information technology is the continuous

availability of all the services to the branches to carry out daily

business and the customers for availing banking services at

their convenience.

The CBS platform functions on Wide Area Network (WAN)

which functions on connectivity provided on various carriers

like VSAT, RF and MPLS leased lines. A tool is developed and

deployed in the Bank to monitor the continuous availability of

connectivity at branches and to ascertain the reasons for loss of

connectivity and necessary steps initiated for restoration. This

has enabled our bank to maintain connectivity uptime at 99%.

Branch Connectivity Upgradation:

As the volume of transactions have increased over the years, to

enable branches to perform transactions at a faster rate

upgradation of the branch connectivity to 2 Mbps RF has been

taken up. As on 31.03.2018, 408 branches have been upgraded

to 2 Mbps RF connectivity.

DR Drill: As a measure of security and part of disaster

recovery plan, our ASP M/s C-Edge Technologies Ltd,

Mumbai, has conducted DR Drill two times during the year

and were smooth. The problems faced in earlier DR drills have

been addressed and did not recur in these drills. The short

comings noticed have been brought to the notice of the ASP for

analysis and rectification.

Computer Security Day

Computer Security Day was observed on 30.11.2017 at our

Head Office, at all our Regional Offices and Branches.

Handouts and brochures were distributed among staff to create

awareness on computer security and safe working in

computerized environment.


Release of computer security handouts-from left: Shri TV Krishna

Reddy, GM-II, Shri K. Ravi Kiran, GM-IV, Shri V. Narasi Reddy,

Chairman & Shri G. Sreedhar Reddy, Chief Manager (IT)

50

Security Measures – Installation of CCTVs and Burglar

Alarm Systems

Physical security systems that effectively protect the Bank

assets, customers and employees assume paramount

importance in view of increasing incidence of robberies,

mischief. The Bank has provided CC Cameras & Burglar

Alarms to all 768 branches of the Bank.

Liability Central Processing Center (LCPC):

To keep in pace with the high trajectory business growth and to

maintain the quality of liabilities of the bank Liability Central

Processing Centre (LCPC) was established. This has enabled

the bank to comply with the statutory regulations stipulated by

RBI and other statutory bodies in respect of the customers that

are availing banking facilities from this bank. The following

quality aspects of the liability assets of the bank are taken care

of at the LCPC.

a. Compliance towards Know your customer (KYC) norms

for the accounts opened at the branches are ensured.

b. The customer images like photo graphs and signatures are

ensured in the system.

c. The account opening forms of deposit accounts are stored

in a safe and secure environment at LCPC, which can be

retrieved in case of any dispute or frauds.

d. Personalized cheque books are arranged to the customers


Driving Banking Technology in Rural Areas

Customer Service & Complaints handling

While complaints cannot be avoided, some of the complaints provide useful feedback to review our performance and systems and procedures. A genuine complaint from a customer means an opportunity to the Bank to upgrade our skills and efficiency. The Bank has put in place complaint-handling-policy to redress the grievances of the customers and improve the quality of customer service. The Bank has placed enormous emphasis on timely disposal of complains and follow up system has been strengthened to dispose off the complaints within timelines set. All Branches are conducting customer meets every quarter and important customers are invited. Their views and opinion were solicited in order to take

51

from LCPC which has a direct impact on the brand image

of the bank. Cheque books can be indented by the

customer using mobile banking, internet banking, branch

and would be directly delivered to the customers address.

e. Due to the centralization of liabilities at LCPC the bank

could achieve aadhaar seeding to 96.2%.

f. E-Returns: A technological initiative for returning the

KYC deficient account opening in the form of images, to

monitor resubmission and processing was introduced.

This eliminates physical movement of account opening

forms to branches, and also eliminates the delay in time to

deliver the physical forms.

Nature ofcomplaint

Officer in charge atRegional Office /Branch level

At Head Office level

General Complaints(Other than vigilance nature)

Branch Manager(At Br level)

Regional Manager(at RO level)

Chief Manager(Board)

General Manager-IV

General Complaints

(Vigilance nature)

--

Chief Manager(Vig&DP)General Manager-I

Complaints fromBanking Ombudsman

Regional Manager /Branch Manager

Chief Manager(Board)General Manager- IV

The status of complaints both received directly and through Banking Ombudsman, is being put up the Board of Directors in every meeting for their review and information.

Sub-Committee of the Board has conducted a meeting with the customers of our Ashoknagar Branch on 20.03.2018 and interacted with them on the Bank's services, products etc. The Board of Directors Shri V. Narasi Reddy, Chairman, Shri M.S. Hari Shankar, RBI Nominee Director, Shri V.S. Gupta, NABARD Nominee Director who are members of the Sub-Committee to the Board on Customer service have participated in the Customer Meet.

Customer Complaints: Status as on 31.03.2018

SNo Particulars No.

1 No. of Complaints pending at the Beginning of the year 01

2 No. of Complaints received during the year 2017-18 135

3 Total Complaints 136

4 No. of Complaints Redressed / Disposed-off during the year 136

5 No. of Complaints pending at the end of the year Nil

For complaints received through Banking Ombudsman,

General Manager-IV is designated as “Principal Nodal

Officer” of our Bank at Head Office. The position of

complaints received through / from Banking Ombudsman

during the year.

SNo Particulars No.

1 No. of Complaints pending at the Beginning of the year 01

2 No. of Complaints received during the year 2017-18. 43

3 Total Complaints 44

4 No. of Complaints Redressed / Disposed-off during the year 43

5 No. of Complaints pending at the end of the year 01*

* Banking Ombudsman Compliant received during last week of March 2018.

Whistle Blowing Policy with an objective of providing an avenue for raising concerns related to frauds, corruption or any other misconduct is also in place. The Bank has also installed a Toll Free Number to receive feedback from the customers on the Bank's services.


corrective steps, wherever necessary. Regional Managers concerned are attending the customer meetings whenever feasible. The following system of monitoring of complaints for their redressal and submission of compliance is in vogue:

Sub Committee of the Board on Customer Service had a meeting with customers of our Ashoknagar Branch on 20-03-2018. Our ChairmanShri V. Narasi Reddy, RBI nominee director Shri MS Hari Shankar, NABARD nominee Director Shri VS Gupta, Our General Manager -I Shri M. Satyanaryana, Our AGM & RM Shri BRV Manoj Kumar & Shri DV Gurunadha Rao, Chief Manager Ashoknagar Branch haveparticipated in meeting

52

e-Complaints Management

The Bank has developed an e-Complaints Management

System with the in-house IT talent, to redress the grievances /

complaints from customers on a quickest possible time. This

system seeks to centralize all complaints, received through our

Website's complaints box, email, Toll Free Number, or post at

any level, either at Branch or RO or Head Office and raise a

ticket. Admin identified at Head Office, will direct the

complaints to the concerned Department and / or concerned

Department Head Office for redressal. Access to the e-

complaints system is given to the identified Officials in

Regional Offices and Head Office to ensure that each and every

complaint received at all levels are captured in the System so as

to monitor the complaints for timely disposal. Formal

launching will be done in the coming financial year.

Effective handling of complaints is fundamental to retain the

existing customers and attract the new customer base through

word of mouth. We seek to achieve prompt and effective

redressal of customer complaints through the e-Complaints

Management System.

Right to Information Act

The Bank implemented the Right to Information Act, 2005 in

letter & spirit setting out the practical regime of right to

information for citizens to secure access to information under

the control of bank in order to promote transparency and

accountability in the working of bank's various functionaries.

At the Branch level, the Branch Manager has been designated

as Central Assistant Public Information Officer while the

Regional Manager concerned is designated as the Central

Public Information Officer. At Head Office level, the Law

Officer is the Central Assistant Public Information Officer and

the Chief Manager (Audit & Inspection) is the Central Public

Information Officer. The General Manager – III has been

designated as Appellate Authority in the Bank, under RTI Act.

During the year 2017-18, the Bank has received 67 applications

and 24 appeals and disposed off all applications and appeals

within the stipulated time frame.


Human Resource Management

As at the end of FY 2017-18, the staff strength (excluding those

who exited the Bank service in the month of March 2018 on

account of retirements / resignations) and its composition is as

under:

Officers S-V 7

Officers S-IV 51

Officers S-III 188

Officers S-II 477

Officers S-I 1202

Office Assistants 1151

Office Attendants 84

Total 3160

During the year, 115 staff members have retired from the

Bank's Service. 92 staff members have resigned, 3 staff

members were removed from service. 7 Staff members

expired during the year.

Recruitments

Since 2009-10, the Bank has been recruiting staff through

IBPS, as per manpower assessment and requirement stundertaken as on 31 March of every year in terms of Thorat

Committee recommendations, presently as per Mitra

committee recommendations approved by GOI. Last seven

years have witnessed mass retirements of those staff members

who had joined erstwhile RRBs in late 1970s and in 1980s.

Accordingly, based on the business volumes as on 31.3.2017,

the Bank has taken up recruitment exercise for augmentation of

staff in various grades, including lateral recruitment of Scale-II

and Scale-III Officers in General Banking and with

specialization in Law, IT, Marketing, Treasury, CA etc

Grade No. of Candidates recruited during the year

1 Office Assistants 153

2 Officers Scale-I 133

3 Officers Scale-II 95

4 Officers Scale-III 8

Attn84,3%

115136%

Officers192561%

Assts

53

As at the end of FY 2017-18, there are 158 Scale-II Officers

and 25 Scale-III Officers directly recruited from the market

laterally.

The Bank's in house Learning Centre has been working

continuously to train and re-train the new recruits imparting

skills and supply inputs in all areas to equip them to handle the

day to day functions well. All the recruitments have been

completed through the Common Written Test including

interviews conducted by IBPS.

Promotions

Keeping in view the Bank's policy of giving promotions

promptly to staff, we have taken up promotion exercise in

terms of manpower assessment as on 31.03.2017 and

promoted as many as 186 people in various cadres to next

higher grade as under. Written Test for promotion was

arranged through IBPS online.

S.No Promoted to No. of Posts

1 Officers Scale-I 55

2 Officers Scale-II 48

3 Officers Scale-III 55

4 Officers Scale-IV 20

5 Officer Scale-V 8

6 Office Asst. 0

186

The Bank has fulfilled the statutory requirement of giving pre-promotion training to all SC/ST candidates, eligible for promotion, prior to written test. This has enabled the SC/ST candidates to prepare themselves better, to take on the written test.

Training - Staff Learning Centre

The Bank had laid down a Training Policy which envisages training to all staff members, atleast once in three years. During the year, APGVBSLC has conducted 46 training programmes and provided training to 1379 staff members. The participants include all cadres of staff (Officers-962 and Off. Assts417)

0

500

1000

1500

2000

2500

3000

3500

2060

142

1953

283

1813

541

1659

818

1502

1241

1429

141

4

1244

1707

1015

1997

940

2220

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

New Staff Old Staff


The Bank has also deputed 78 Officers, essentially in the

higher cadres, to external training institutions like BIRD

(Lucknow), RBI (CAB, Pune), BIRD (Mangalore), State Bank

Learning Centres on important subjects like AML, ALM,

KYC, RTI Act, Treasury Management, Business Development

etc.

Our Bank has been paying consistent attention towards women

employees. They constitute roughly 21 % of total workforce.

Bank has taken a number of steps to boost women

empowerment within the Organisation. They are talented and

highly enterprising. It is very gratifying that most of the

women officers volunteered to be the Branch Heads and Field

Officers which call for working in pressure situations.

Contribution of women staff members in the growth story of

the bank is significant.

Management Development Programme for Women Officers:

We have conducted one day workshop on Management

Development Programme on 10.8.2017 and 27.11.2017 in

Hyderabad and Visakhapatnam respectively involving around

100 women Officers. The workshops were handled by our

own Staff who were trained in BIRD Lucknow.

Internal Complaints Committee – We have also put in place a

safe working environment for women employees in the Bank

by implementing the provisions of The Sexual Harassment of

Women at Workplace (Prevention, Prohibition & Redressal)

Act, 2013. We have constituted Internal Complaints

Committee at 11 Regional Offices and at Head Office to handle

the complaints of sexual harassment. We have been

sensitizing the employees of both the genders to be fostering a

healthy and conducive work environment.

Trainees of our Staff Learning Center, being given practical exposure

at the Farmer Producer Organasation (FPO)

54

International Womens Day Celebrations on 08-03-2018


55

st1 Best BM

Mrs Jhansi P

st1 Best FO

Mrs P Divya Vani

st1 Best Accountant

Ms S Lakshmi Nirosha

st1 Best O. Asst.

Mrs Swapna Kumari

st2 Best BM

Mrs B Swathi

nd2 Best FO

Mrs G. Sravanthi

nd2 Best Accountant

Mrs Nishath Sultana

nd2 Best O. Asst.

Ms Pydi Sandhya

st1 Best Accountant

Ms P Rajani

Pressing for Progress

Winners of elocution competition on the occasion of International Womens Day from all categories


56


International Women's Day:

As a policy we have been Celebrating International Women's day on th8 March every year. This year also, we organized a programme to

thacknowledge their contribution and achievements on 8 March 2018.

It was not a routine felicitation programme. To bring out their

leadership qualities, we have given the following topics with only 15

minutes time for delivering speech.

Branch Administration, Importance of KYC, Banking Technology,

Future of Banking Technology, Alternate Delivery Channels, Frauds

in the bank – What needs to be done, Monitoring and control

mechanism in banks, Operational Risk in Banks, Role of RO in

Branch banking, Women empowerment, Training system in our Bank,

Importance of Learning, Leadership , Know Your Branch, Importance

of KYE, Importance of communication skills in leadership, HR

Practices in our Banks, Preventive vigilance in Banks, Customer

service , Gender equality in APGVB, Social media – Boon or curse,

Cashless economy, What should be our Credit Policy, Women as

Managers, Impact of demonetization on common man etc.

This was an instant hit and all the participants have chosen one or the

other and spoke with precision and come up with a presentation with

appropriate suggestions and views.Pressing for Progress

57

Staff welfare Measures

Mediclaim policy

In terms of Government of India letter No: F.8/1/2015-R RB

dated 20.10.2016, our Bank has implemented Medical

Insurance Scheme as per Xth Bipartite Settlement to

employees and officers along with their dependent family

members as detailed in Schedule IV. The Scheme covers

Employee + Spouse + Dependent Children + 2 dependent

Parents / parents-in-law with a Sum Insured of Rs.4,00,000 and

Rs.3,00,000 for Officers and employees respectively. We have

also taken a Corporate Buffer to cover additional expenditure

upto Rs.4.00 Lakhs and Rs.3.00 Lakhs for officers and

employees respectively, if the hospitalization expenditure

exceed the sum insured. The Scheme, apart from facilitating

hassle free admission into the hospital immediately and

payment of cash, makes the settlement of hospitalization

expenses become much easier, saving administrative time

considerably. The scheme also covers domiciliary treatment

expenses up to 10% sum insured.

Around 10000 members including family members of Staff

have been covered under the Scheme.

Group Personal Accident Insurance Policy

Most of our staff members are youngsters and travel by road,

frequently for various official works viz., Cash remittance,

field visits for recovery and inspection of units, review

meetings etc., and are exposed to the risk of road accidents and

face a life threat also.

We have taken the Group Personal Accident Insurance Policy

with the following sum insured to create a sense of security

among the staff members and build loyalty to the organization.

SN Cadre Sum Insured

1. Officer Scale-III & IV Rs 10 Lakhs

2. Officer Scale-I & II Rs 7.50 Lakhs

3. Office Assistants Rs 5.00 Lakhs

4. Office Attendants Rs 3.00 Lakhs

Our Bank has been facing severe attrition causing acute staff

shortage and these measures will boost the morale of the staff

members.

Gratuity and Leave Encashment Fund

The Bank has taken care of provisional requirements in respect

of Gratuity. The total corpus as on 31.3.2018 is to the tune of

Rs 155,76,85,180/- (Rupees One Fifty Five Crore Seventy Six

Lakhs Eighty Five thousand One Hundred and Eighty Only)

towards Gratuity and Rs 91,89,58,191/- (Rupees Ninety One

Crore Eighty Nine Lakhs Fifty Eight Thousand One Hundred

and Ninety One Only) towards Leave Encashment.

Industrial Relations

The Management and Officers Association and Employees

Union have worked in tandem for the welfare of the staff

members and business development, sorting out amicable

solutions for routine issues that cropped up during the year.

Cordial and amiable working atmosphere has prevailed during

the year.

Welfare of SC/ST and OBC Employees

The Bank has maintained cordial relations with the SC/ST

Welfare Association and OBC Welfare Association and

complied with statutory requirements in all aspects of

recruitments, promotions etc. The Bank has held regular

meetings with the representatives of Welfare Associations and

Liaison Officers to redress their grievances.

The Bank has taken all steps to keep up the morale and

motivation of the employees.

Settlement of Terminal Benefits

The Bank has made a policy that all terminal benefits are

settled on the date of retirement of staff members. The process

begins two months in advance of retirement to ensure that all

formalities are completed to make payment on the date of

retirement.

Payment of Ex-gratia

The Bank has implemented the GOI instructions, contained in

their notification No: F.20/5/2003-RRB dated 9.6.2006, on

payment of ex-gratia in lieu of appointment on compassionate

grounds for the legal heirs of the bereaved staff members and

also to the staff who are chronically sick and immobile on sick

grounds.

Vigilance Administration

As the Bank is growing in size and with the infusion of young

and inexperienced workforce, who now constitute over 70% of

total staff members, vigilance together with sensitization to be

vigilant has been thrust area for the Bank.

A new set up of Vigilance administration has been introduced

in the Bank with the active involvement of Sponsor Bank vide

their letter No: A&S/RRB/SKJ/416 dated 12th Sep 2017 after

obtaining the Board's approval.

Chief Vigilance Officer of State Bank of India is overseeing the

Vigilance Administration of our Bank, through Deputy

General Manager (Vigilance), State Bank of India, LHO,

Hyderabad.

Deputy General Manager (Vigilance), on a monthly

periodicity, reviews Pendency of vigilance cases,

implementation of Complaint handling policy and whistle

blower policy, pending complaints, PVC Meetings, Regular


58

Bank has conducted Second Mega Sports meet with four events namely, Cricket, Shuttle Badminton, Carroms and Tennikoit. Totally 200 Staff

members participated in the events. On the request of our Chairman Shri V. Narasi Reddy, Shri K Lakshmana Rao, GM, SBI, Amaravathi Circle

(Ex-Chairman, APGVB) and Shri V Arvind, Chairman, Telangana Grameena Bank, Hyderabad have participated in the programme and

encouraged the players.

2nd Mega Sports Meet


59

Preventive visits of Branches by Vigilance Cell officials, job

rotation, submission of Assets & Liabilities Statements by all

Officials, and will communicate his / her observations if any.

He will also send a quarterly report to State Bank of India,

Corporate Centre, Mumbai on the vigilance administration of

our Bank.

All Branches conduct Preventive Vigilance Meetings once a

quarter and officials from Vigilance Department, State Bank of

India, LHO, Hyderabad would visit at least one Branch in a

quarter during Preventive Vigilance Meeting.

As part of this arrangement, Deputy General Manager

(Vigilance), SBI, LHO, Hyderabad has also organized a

Training Programme on 23rd and 24th Jan 2018 for skill

upgradation of our Bank's officials dealing with Domestic

Enquiries as Presenting Officer, Enquiry Officer and

Investigation officials.

Vigilance Awareness week:thThe Bank has organized Vigilance Awareness week from 30

thOctober 2017 to 4 November 2017 in Head Office, Regional

Offices and all Branches.

In all training programmes, workshops and Review Meetings,

a session is taken to sensitize all staff members to be vigilant in

day to day operations.

Board

The Board of the Bank is constituted by

(a) Chairman of the Bank

(b) two non-official directors appointed by Government of

India

(c) one nominee director each from Reserve Bank of India and

NABARD

(d) two nominee directors from Sponsor Bank

(e) two nominee directors from state Government of

A.P./Telangana.

With Chairman of the Bank as Chairman of the Board.

Board Meeting Rules stipulate that the Board meets minimum

six times a year, at least once in a quarter. Minimum quorum

for the Board Meeting to transact business is four directors and

no meeting was adjourned for want of quorum.

Attendance of Directors at Board Meetingsduring the calendar year 2017

SNo

Name of theDirector

WEFNo. of

Meetingsheld

No. ofMeetingsattended

1 Shri V. Narasi Reddy 21.07.2014 6 6

2 Non Official Director - Vacant - - -

3 Non Official Director - Vacant - - -4 Shri M.S.Harishankar 24.06.2016 6 5

5 Shri V.S.Gupta 03.08.2015 6 6


Taking pledge on the occasion of Vigilance Awareness Week observed from 30th Oct 4th Nov 2017

Training program conducted for all POs, EOs and Investigation

officials

60

SNo

Name of theDirector

WEFNo. of

Meetingsheld

No. ofMeetingsattended

6 Shri Kasi Srinivas 16.09.2017 6 5

Shri D Somasekhara 01.05.2017 Sastry

Shri T.V. Reddy 28.07.2014

7 Shri S. Ganesan 07.09.2017 6 5

B.Bharani Kumar 11.05.2017

Shri KV Maruthi Rao 24.10.2014

8 Sri KVV 06.11.2017 6 Nil Satyanarayana

Smt K.Sunitha, IAS 27.06.2015

9 Ms. K.Amrapali,IAS 11.10.2016 6 Nil

*The term of Govt of India nominee directors have completed

during the previous year and proposals were sent to Govt of

India through NABARD/SBI for fresh appointment of

directors. New appointments are yet to be made by Govt of

India and presently these two posts are vacant.

During the intervening period of two Board Meetings, as and

when warranted, the Board has transacted the business by

means of Circulation of 12 agenda notes during the year, which

were confirmed by the Board in the following Meetings.

The Board has undergone the following changes in the

composition on account of transfer of officials during the year.

· Shri T.V. Reddy, Deputy General Manager, SBI, Hyderabad, SBI nominee director on the Bank's Board attained superannuation and has been replaced by Shri D. Somasekhara Sastry, DGM, SBI, LHO, Hyderabad. During the year, D. Somasekhara Sastry also attained superannuation and in his place Shri Kasi Srinivas, Deputy General Manager (FI & MF), SBI, LHO, Hyderabad, has been nominated on the Board.

· Shri K.V. Maruthi Rao, Asst. General Manager, SBI, Warangal has been replaced by Shri B. Bharani Kumar, AGM, SBI, Warangal. After merger of SBI and Associate Banks, our Bank, along with other sponsored RRBs, has been brought under direct control of SBI, Corporate Centre, Mumbai. Shri S. Ganesan, General Manager (RRBs), State Bank of India, Corporate Centre, Mumbai has been nominated as Director on the Board, in place of Shri B. Bharani Kumar.

· Shri K.V.V. Satyanarayana, IRAS, Special Secretary to Government (B&IF), Finance Department, A.P. Secretariat has been nominated as Director in place of Smt. K. Sunitha, IAS, Secretary (IF), Finance Department, Government of Andhra Pradesh, A.P. Secretariat.

The Bank places on record the invaluable services rendered by

the Directors T.V. Krishna Reddy, Deputy General Manager,

SBI, Hyderabad, Shri D. Somasekhara Sastry, DGM, SBI,

LHO, Hyderabad, Shri K.V. Maruthi Rao, Asst. General

Manager, SBI, Warangal, Shri B. Bharani Kumar, AGM, SBI,

Warangal and Smt. K. Sunitha, IAS, Secretary (IF), Finance

Department, Government of Andhra Pradesh, A.P. Secretariat.

· Both the Govt. of India nominee directors Shri V. Hanumantha Reddy and Shri C.L Naidu have left the board on completion of their term during the previous year.

Acknowledgements

The Board of Directors of the Bank would like to express their

sincere gratitude for the continued trust and patronage

received from the customers who have stood with the Bank all

through. The feedback received from customers by way of

suggestions / complaints/ interactions during the meetings on

the service element have helped the Bank to take corrective

measures and new initiatives to improve our efficiency levels.

The Board takes immense pleasure in expressing their

gratitude for the guidance and cooperation received from the

Sponsor Bank, Government of India, both the state

Governments Telangana and Andhra Pradesh, Reserve Bank

of India, NABARD, other Financial Institutions and Banks for

their unflinching and valuable support to the Bank from time to

time.

Further, the Board would like to convey its gratitude to Shri

Dinesh Khara, MD, State Bank of India, Corporate Centre,

Mumbai, Shri Ravi Nandan Sahay, Chief General Manager,

SBI, Corporate Centre, Shri S. Ganesan, General Manager

(RRBs), SBI, Corporate Centre and all the team members in

A&S Department, SBI, CC, Mumbai. They shared their

knowledge, their ideas, and numerous tips all of which were

extremely useful in taking this Bank forward. The Bank is

indebted to these executives for their constant hand holding.

We will be failing in our duty if we do not acknowledge the

help extended by NABARD and State Bank of India, Local

Head Office, Hyderabad in sparing their Officers to be

members of the Selection Committees constituted for

promotions.

The Board conveys its gratitude to Shri R.Subramanian,

Regional Director, Reserve Bank of India, Hyderabad; Smt.

Reeny Ajith, Banking Ombudsman, RBI, Hyderabad for their

support. The Board also acknowledges the great support and

affectionate guidance from Shri Dr. P. Radhakrishnan, Chief

General Manager, NABARD TSRO and his team of General

Managers Shri C. Udaya Bhaskar, Shri P.N. Satya Prasad and

Dr. Subhash Chandra and Shri K. Suresh Kumar, Chief


61

Brain Storming Sessions for Business Development & Managerial SkillsOrganisation has been growing in business volume and complexity of issues has also been increasing with sweeping changes brought in by technology. The complexity is augmented by skewed mix of experienced and inexperienced staff. Our Bank’s top management often brainstorm on crucial issues concerning the Bank. The following four areas which we thought have immense relevance at this juncture have been deliberated upon in the brainstorming session, inviting new ideas and suggestions.

a) How to ensure adherence to systems and procedures b) How to strengthen the machinery at HO and ROs to monitor Branches effectively.

c) Implementation of Technology – Opportunities and Threats – Our preparedness. d) Identification and grooming of youngsters to shoulder

higher responsibility.

The Ideas generated in the session have been taken into consideration in our policy framework

62


General Manager, NABARD, APRO and his General Manager

K.S. Raghupathi.

The Board also expresses sincere thanks to all the District

Collectors, Project Directors of DRDA, IKP, DWMA,

SC/ST/BC Minorities and Housing Corporations of all the

districts in Telangana and Andhra Pradesh where our Bank is

operating, for their support and encouragement.

The Board would like to gratefully acknowledge the support

rendered by our Technology Service Providers viz., M/s C-

Edge Technologies, Mumbai, M/s Irix Technologies and M/s

National Payments Corporation of India.

Apart from our customers, the support received from the

Government Departments / Institutions of both Telangana and

Andhra Pradesh states was immense and augmented our

resources. The Board wishes to thank Pollution Control

Boards, Sthree Nidhi credit co-op federation ltd, Markfed,

Industrial Development Corporations, endowments

departments of both Telangana and A.P States for their

patronage.

The Board extends its heartfelt gratitude to M/s Rao & Kumar

Central Statutory Auditors of the Bank and other Statutory

Branch Auditors for their cooperation in completing the Audit

of the Bank's Financial Year 2017-18 in time.

The Board also expresses its gratitude to all Public Relations

Officers, Print and Electronic media for their cooperation in

giving wide publicity for the Bank. The Board also thanks

the Officers Association, Employees Union and SC/ST/OBC

Welfare Associations for their constructive role played in

overall development of the Bank.

Words are not adequate to recall the excellent performance,

sense of involvement, ownership and dedicated services

rendered by each and every staff member in achieving the

sustained business growth and profit and surpassing all the

targets set out for the year under MoU with our sponsor bank.

Amazing work by the individuals is always valued and kept

on record.

For and on behalf of Board of Directors of Andhra Pradesh Grameena Vikas Bank

(V. Narasi Reddy)Chairman


63

Financial Literacy Camps


64

Tata Hitachi Excavator financed by Fort Warangal Branch through AMH WGL

Nursery Unit financed by our Shivampet Branch (Sangareddy RO) Members of a satisfied SHG with the Branch Manager,

Shivampet Branch


65


66

Balance Sheet

Profit & Loss A/c

Schedules

Notes to Accounts

Performance in Figures


67

INDEPENDENT AUDITORS' REPORT

Rao & KumarChartered Accountants

ToThe ShareholdersAndhra Pradesh Grameena Vikas Bank

Report on the Financial Statements

1. We have audited the accompanying financial statements of Andhra Pradesh Grameena Vikas Bank (“the Bank”) as at March 31, 2018, which comprises the Balance Sheet as at March 31, 2018, and Profit and Loss Account and the cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information. Incorporated in these financial statements are the returns of:

i) The Head Office, 39 Branches audited by us;

ii) 555 Branches audited by Other Auditors

2. The branches audited by us and those audited by other auditors have been selected by the Bank in accordance with the guidelines issued to the Bank by the National Bank for Agriculture and Rural Development (NABARD). Also incorporated in the Balance Sheet and the Profit and Loss Account are the returns from 174 branches (including other accounting units) which have not been subjected to audit. These unaudited branches account for 24.89% of advances, 23.31% of deposits, and 18.19% of interest income and 16.29%of interest expenses.

Management's Responsibility for the Financial Statements

3 The Bank's Board of Directors is responsible for preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of Bank in accordance with the applicable provisions of Regional Rural Bank Act, 1976, Banking Regulations Act,1949, applicable guidelines of Reserve Bank of India (RBI) / NABARD accounting principles generally accepted in India, including the Accounting Standards issued by Institute of Chartered Accountants of India(ICAI). This responsibility of management includes the design, implementation and maintenance of internal controls and risk management systems relevant to the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. In making those risk assessments, the management has implemented such internal controls that are relevant to the preparation of the financial statements and designed procedures that are appropriate in the circumstances so that the internal control with regard to all the activities of the Bank is effective.

Auditor's Responsibility

4. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

5. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Bank's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

6 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.


69

Opinion

7 In our opinion as shown by books of the Bank and to the best of our information and according to the explanations given to us:

i) The Balance Sheet, read with the significant accounting policies and the notes thereon is a full and fair Balance Sheet containing all the necessary particulars, is properly drawn up so as to exhibit a true and fair view of state of affairs of the Bank as at 31st March 2018 in conformity with accounting principles generally accepted in India;

ii) The Profit and Loss Account, read with the significant accounting policies and the notes thereon shows a true balance of profit in conformity with accounting principles generally accepted in India, for the year covered by the account; and

iii) The Cash Flow Statement gives a true and fair view of the cash flows for the year ended on that date

Report on Other Legal and Regulatory Requirements

8 The Balance Sheet and the Profit and Loss Account have been drawn up in Forms “A” and “B” respectively of the Third Schedule to the Banking Regulation Act, 1949.

9 Subject to the limitations of the audit indicated in paragraph 1 to 5 above and subject to the limitations of disclosure required therein, we report that:

a) We have obtained all the information and explanations which to the best of our knowledge and belief, were necessary for the purposes of our audit and have found them to be satisfactory.

b) The transactions of the Bank, which have come to our notice, have been within the powers of the Bank.

c) The returns received from the offices and branches of the Bank have been found adequate for the purposes of our audit.

d) The Balance Sheet and the Profit and Loss Account dealt with by this Report are in agreement with the books of account and the Returns.

e) In our opinion, proper books of account as required by Law have been kept by the Bank, so far as appears from our examination of those books

f) The Reports on the financial statements of the Branches audited by the Branch Auditors have been dealt with in preparing our Report in the manner considered necessary by us.

10 In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the applicable accounting standards.

For RAO & KUMARChartered Accountants

FRN: 003089S

CA C M Ravi PrasadPartner

MNO: 211322

Place: Hyderabad

Date: 02.05.2018


70

As per our report of even dateFor Rao & Kumar Chartered AccountantsFirm Registration No: 003089S

For Andhra Pradesh Grameena Vikas Bank

(Rs in '000s)stBalance Sheet As At 31 March 2018

Andhra Pradesh Grameena Vikas BankHead Office: Warangal

(CA. C.M.Ravi Prasad ) (T.V.Krishna Reddy) (V.Narasi Reddy)Partner General Manager-II ChairmanMembership No : 211322

(Y.Rambabu) (Kasi Srinivas) (S.Ganesan)Director Director Director

(V.S.Gupta) (Smt.K.Amrapali, IAS) (K.V.V.Satyanarayana, IRAS)Director Director Director

Place: Ramachandrapuram, Medak Dist.ndDate: 2 May 2018

Particulars Sch. As on 31.03.2018 As on 31.03.2017

CAPITAL AND LIABILITIES

Capital 1 94 08 50 94 08 50

Reserves & Surplus 2 2158 73 84 1655 72 37

Deposits 3 14333 62 93 12818 57 62

Borrowings 4 8041 20 59 5620 84 13

Other Liabilities & Provisions 5 1037 56 02 857 92 53

Total 25665 21 88 21047 15 15

ASSETS

Cash and balances with RBI 6 735 95 73 730 55 43

Balances with Banks and Money at Call

& Short Notice 7 5540 64 14 4057 12 69

Investments 8 5894 10 81 4433 07 29

Advances 9 12349 08 13 10926 36 75

Fixed Assets 10 57 28 44 57 17 70

Other Assets 11 1088 14 63 842 85 29

Total 25665 21 88 21047 15 15

Contingent Liabilities 12 32 06 98 33 37 92

st Profit & Loss for the year ended 31 March 2018 (Rs in '000)


Particulars Sch. 2017-18 2016-17

1 Interest Earned 13 2026 96 88 1760 87 26

a. Interest/Discount on Advances/bills 1485 09 70 1309 92 51

b. Interest on Investments 365 86 05 250 49 50

c. Interest on Balances with RBI and Other

Inter Bank Funds 0 0

d. Interest on TDRs with Banks 176 01 13 200 45 25

2 Other Income 14 297 48 95 197 19 14

a. Commission, Exchange and Brokerage 220 06 99 141 14 99

b. Miscellaneous Income 77 41 96 56 04 15

3 TOTAL 2324 45 83 1958 06 40

4 Interest Expended 15 1178 77 93 1108 93 87

5 Operating Expenses (a + b) 16 317 88 45 297 46 64

a. Employees Costs 207 14 06 199 66 43

b. Other Operating Expenses 110 74 39 97 80 21

6 Total Expenditure

(excluding provisions and Contingencies) ( 4+5) 1496 66 38 1406 40 51

7 Operating Profit before provisions and

Contingencies (3-6) 827 79 45 551 65 89

8 Provisions (other than tax) and Contingencies 77 29 26 28 96 06

9 Profit from Ordinary Activities before Tax (7-8) 750 50 19 522 69 83

10 Tax Expense

a. Provision for Taxation-Current Year (252 03 80) (169 06 00)

b. Deferred Tax Asset 3 88 02 (1 45 78)

c. Earlier Years Adjustments (Excess) 67 05 (18 93)

11 Net profit for the period from Ordinary

Activities after Tax 503 01 46 351 99 12


72

(Rs in '000s)

Particulars Sch. 2017-18 2016-17







APPROPRIATIONS

Net Profit for the period 503 01 46 351 99 12

Brought forward Profit 1305 07 18 1027 32 54

Transfer to the Statutory Reserves 100 60 29 70 39 82

Special Reserve u/s 36(1)(viii) of IT Act, 1961 6 53 06 3 84 66

Profit Carried Over to Balance Sheet 1700 95 29 1305 07 18

Summary of Significant Accounting Policies 17

Disclosures and Notes to Accounts 18


73

SCHEDULE – 1 CAPITAL

st Schedules forming Part of Balance Sheet As on 31 March 2018

(Rs in '000’s)

Andhra Pradesh Grameena Vikas Bank

Head Office: Warangal

Particulars As on 31.03.2018 As on 31.03.2017

Authorised Capital 2000,00,00 2000,00,00

(200,00,00,000 Equity Shares of Rs.10/-each)

Issued Capital 94,08,50 94,08,50


Subscribed Capital 94,08,50 94,08,50


Called up Capital 94,08,50 94,08,50


Less: Calls Unpaid NIL NIL

Add: Forfeited Shares NIL Nil

TOTAL 94,08,50 94,08,50


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SCHEDULE – 2 - RESERVES AND SURPLUS(Rs in '000s)


I. Statutory Reserve

Opening Balance 332 47 85 262 08 03

Additions during the Year 100 60 29 70 39 82

Deductions during the Year Nil Nil

TOTAL 433 08 14 332 47 85

II. Capital Reserve

Opening Balance 1 20 1 20

Additions during the Year Nil Nil


TOTAL 1 20 1 20

III. Share Premium

Opening Balance Nil Nil



TOTAL Nil Nil

IV. Special Reserve u/s 36(1)(viii) of Income Tax Act,1961

Opening Balance 3 84 66 Nil

Additions during the Year 6 53 06 3 84 66


TOTAL 10 37 72 3 84 66

V. Revenue and other Reserve

Opening Balance 14 31 49 14 31 49



TOTAL 14 31 49 14 31 49

Balance in Profit and Loss Account 1700 95 29 1305 07 18

TOTAL 2158 73 84 1655 72 37


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SCHEDULE – 3 - DEPOSITS

SCHEDULE – 4 - BORROWINGS

(Rs in '000s)

(Rs in '000s)




A. I. Demand Deposits

i) From Banks Nil Nil

ii) From Others 121 79 73 126 87 53

II. Savings Bank Deposits 5920 14 04 5134 62 68

III Term Deposits

i) From Banks Nil Nil

ii) From Others 8291 69 16 7557 07 41

TOTAL 14333 62 93 12818 57 62

B. i) Deposits of Branches in India 14333 62 93 12818 57 62

ii) Deposits of Branches Out Side India Nil Nil

TOTAL 14333 62 93 12818 57 62


I. Borrowings in India

i) Reserve Bank of India Nil Nil

ii) Other Banks 2604 41 11 1894 60 79

iii) Other Institutions (NABARD,NHB & MUDRA)

a) NABARD 5299 46 23 3684 71 42

b) NHB 97 33 25 41 51 92

c) MUDRA 40 00 00 0

II. Borrowings Outside India Nil Nil

TOTAL 8041 20 59 5620 84 13


76

SCHEDULE – 6 - CASH AND BALANCE WITH RESERVE BANK OF INDIA (Rs in '000s)

SCHEDULE – 5 OTHER LIABILITIES AND PROVISIONS

(Rs in '000s)



I. Cash in Hand

(Including Foreign Currency Notes) 168 46 82 185 07 22

II. Balances With Reserve Bank of India

i) In Current Account 567 48 91 545 48 21

ii) In Other Account NIL NIL

TOTAL 735 95 73 730 55 43



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I) Bills payable/Bankers Cheque 112 92 85 86 85 97

II) Inter Office Adjustments (Net) 15 85 19 3 90 01

III) Interest Accrued on Deposits 481 47 64 480 10 46

IV) General Provisions:

a) Provision on Standard Assets 40 60 21 34 26 25

b) Provision on Rural Advances 10 67 36 10 67 36

c) Provision on Frauds 80 40 91 28

d) Audit Fee Provisions 1 00 00 40 00

e) Income Tax Provision 252 03 80 169 06 00

f) Bonus Provision 39 34 38 50

g) Wage Revision provision 8 55 00 0

h) Depreciation on SLR Securities under

AFS category 3 10 55 0

V) Interest payables 57 57 61 42 45 11

VI) TDS on Bank Term Deposits 8 53 09 8 43 50

VII) Deferred Tax 0 2 68 67

VIII) Other Liabilities 44 02 98 17 79 42

TOTAL 1037 56 02 857 92 53

SCHEDULE – 7 - BALANCES WITH BANKS AND MONEY AT CALL & SHORT NOTICE(Rs in '000s)



I. In India

i. Balance with Banks

a) In Current Accounts 7 38 05 3 75 05

b) In Other Deposit Accounts (TDRs) 5533 26 09 4053 37 64

ii. Money at Call & Short Notice

a) With Banks Nil Nil

b) With Other Institutions Nil Nil

TOTAL 5540 64 14 4057 12 69

II. Outside India

a) In Current Accounts Nil Nil

b) In Other Deposit Accounts Nil Nil

c) Money at Call & Short notice Nil Nil

TOTAL 0 0

GRAND TOTAL (I&II) 5540 64 14 4057 12 69



78

SCHEDULE – 8 - INVESTMENTS (Rs in '000s)




I Investment in India

i) Government Securities 5763 85 82 4343 24 77

ii) Other Approved Securities Nil Nil

iii) Shares Nil Nil

iv) Debentures and Bonds Nil Nil

v) Subsidaries and /or joint Ventures Nil Nil

vi) Investment in Equity shares of National

Payment Corporation of India (Long Term) 24 99 24 99

vii) Others 130 00 00 89 57 53

TOTAL 5894 10 81 4433 07 29

II Investments Out Side India

i) Government Securities Nil Nil

(Including Local Authorities)

ii) Subsidiaries and/or Joint Ventures Nil Nil

iii) Other Investments (To Be Specified) Nil Nil

TOTAL 0 0

GRAND TOTAL (I&II) 5894 10 81 4433 07 29



79

SCHEDULE – 9 - ADVANCES(Rs in '000s)



A. 1. Bills Purchased and Discounted Nil Nil

2. Cash Credits, Overdrafts and Loans

Repayable on Demand 9538 01 01 8304 24 21

3. Term Loans 2811 07 12 2622 12 54

TOTAL (A) 12349 08 13 10926 36 75

B.1. Secured by Tangible Assets 12244 39 54 10891 49 77

2. Covered by Bank / Government Guarantees Nil Nil

3. Unsecured 104 68 59 34 86 98

TOTAL (B) 12349 08 13 10926 36 75

C.I. Advances in India

1. Priority Sector 10680 69 31 9573 43 61

2. Public Sector Nil Nil

3. Banks Nil Nil

4. Others 1668 38 82 1352 93 14

TOTAL (C.I) 12349 08 13 10926 36 75

C.II. Advances Outside India

1. Due from banks Nil Nil

2. Due from Others Nil Nil

TOTAL (C.II) 0 0

GRAND TOTAL (C.I+C.II) 12349 08 13 10926 36 75



80

SCHEDULE – 10 - FIXED ASSETS (Rs in '000)



I. Land

At cost as on the 31st March of the Preceding Year 9 57 9 57

Additions During the Year 0 0

Deductions During the Year 0 0

TOTAL 9 57 9 57

I. Buildings

At cost as on the 31st March of the Preceding Year 14 00 14 00

Additions During the Year 1 43 28 0

Deductions During the Year 0 0

Depreciation during the year 2 24 0

TOTAL 1 55 04 14 00

II. Other Fixed Assets

(including Furniture and Fixtures)

At cost as on the 31st March of the Preceding Year 112 46 63 103 00 38

Additions During the Year 8 02 47 9 51 00

Deletions During the Year 9 33 4 75

Depreciation as on 31st March of the preceding year 61 03 27 51 46 42

Depreciation during the year 9 28 23 9 56 85

Depreciation on deletions 3 31 0

TOTAL 50 11 58 51 43 36

III. Capital Work in Progress

At cost as on the 31st March of the Preceding Year 5 50 77 3 86 03

Additions During the Year 1 48 1 64 74

Deletions During the Year 0 0

TOTAL 5 52 25 5 50 77

TOTAL (I+II+III) 57 28 44 57 17 70



81

SCHEDULE – 11 - OTHER ASSETS(Rs in '000s)



SCHEDULE – 12 - CONTINGENT LIABILITIES (Rs in '000s)

Particulars As at 31.03.2018 As at 31.03.2017

Claims against the Banks not acknowledged as debts 18 45 00 18 14 00

Liabilities for partly paid Investments Nil Nil

Liabilities on account of outstanding forward exchange contracts Nil Nil

Guarantees Given on behalf of Constituents

a) In India 11 16 55 10 58 91

b) Out Side India Nil Nil

Acceptances, Endorsements and other Obligations Nil Nil

"Other items for which the Bank is contingetly liable

(DEAF Account)" 1 34 98 1 33 66

(Unclaimed Bankers Cheques treated as income) 1 10 45 3 31 35

TOTAL 32 06 98 33 37 92


1. Inter Office Adjustments (Net) 0 0

2. Interest Accrued 144 83 68 186 53 11

3. Advance Tax 230 00 00 145 00 00

4. Tax Deducted at Source 14 98 66 5 28 95

5. Stationery 50 10 36 83

6. Telephone deposit 3 98 3 85

7. Suspense 0 0

8. Subvention/Int. Incentive receivable from NABARD 621 62 00 452 37 08

9. Prepaid Expenses - Insurance 2 91 50 94 59

10. Income Tax paid against Disputed Demand 37 22 31 34 74 65

11. Deferred Tax 1 19 35 0

12. Others 34 83 05 17 56 23

TOTAL 1088 14 63 842 85 29


82

Interest/ Discount on Advances/Bills 1485 09 70 13099251

Interset on Investments 365 86 05 250 49 50

Interest on Balances with RBI and Other Inter Bank Funds Nil Nil

Others 176 01 13 200 45 25

TOTAL 2026 96 88 1760 87 26

SCHEDULE – 13 - INTEREST EARNED(Rs in '000s)



Particulars As on 31.03.2018


As on 31.03.2017

SCHEDULE – 14 - OTHER INCOME (Rs in '000s)

Commission, Exchange and Brokerage 220 06 99 141 14 99

Profit on Sale of Investment 71 41 12 49 60 43

Profit on Revaluation of Investments Nil Nil

Profit on Sale of Lands, Buildings and Other Assets Nil Nil

Profit on Exchange Transactions Nil Nil

Income Earned by way of Dividend etc, from subsidiaries/

Companies and /Or Joint Ventures Abroad /In India Nil Nil

Miscellaneous Income 6 00 84 6 43 72

TOTAL 297 48 95 197 19 14


SCHEDULE – 15 - INTEREST EXPENDED(Rs in '000s)

Year Ended31.03.2017

(Previous Year)Interest on Deposits 841 49 39 796 31 82

Interest on Reserve bank of India/Inter Bank Borrowings 337 28 54 312 62 05

Others Nil Nil

TOTAL 1178 77 93 1108 93 87



83

SCHEDULE – 16 - OPERATING EXPENSES(Rs in '000s)



Salary Payments and Provisions to Employees 207 14 06 199 66 43

Gratuity Contribution Fund 0 4 39 06

Leave Encashment Fund 9 87 03 1 68 97

Medical Expenses 5 42 68 6 53 71

Leave Fare Concession 12 67 7 49

Rent, Taxes, Lighting and Fuel 15 77 93 17 55 53

Printing and Stationery 5 78 92 2 82 24

Advertisement and Publicity 6 57 8 47

Director's Fee, Allowances and Expenses 0 12

Depreciation on Banks Property 9 30 46 9 56 85

Auditors Fee and Expenses 1 22 33 39 74

Legal Charges 25 60 15 24

Telephone Charges 1 44 68 1 39 02

Repairs and Maintenance 20 25 21 19

Insurance 13 75 39 11 86 88

Travelling and Halting expenses 6 41 74 4 97 59

AMC for Software and Hardware 15 79 42 12 61 76

Books and Periodicals 80 31 84 78

Computerization 51 49 58 65

Vehicle and Fuel 1 90 47 3 43 50

Entertainment 79 94 75 83

Other Expenses (Sundries) 21 26 51 17 83 59

TOTAL 317 88 45 297 46 64




84

SCHEDULE – 17 - SIGNIFICANT ACCOUNTING POLICIES

1. Basis of Preparation:

The Bank's financial statements are prepared under the historical cost convention, on the accrual basis of accounting on going concern basis, unless otherwise stated and conform in all material aspects to Generally Accepted Accounting Principles (GAAP) in India, which comprise applicable statutory provisions, regulatory norms / guidelines prescribed by the National Bank for Agriculture and Rural Development (NABARD) / Reserve Bank Of India (RBI), Banking Regulation Act 1949, Regional Rural Bank Act, 1976 and amendments thereto and Accounting Standards issued by the Institute of Chartered Accountants of India (ICAI), and the practices prevalent in the banking industry in India.

2. Use of estimates:

The preparation of financial statements requires the management to make estimates and assumptions considered in the reported amount of assets and liabilities (including contingent liabilities) as on the date of financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable and are based upon management's evaluation of the relevant facts and circumstances as of the date of financial statements. Future results could differ from to these estimates and the differences between the actual results and the estimates are recognised in the period in which the result are known / materialised.

3. Revenue Recognition:

a) Income and Expenditure are accounted on accrual basis, except otherwise stated.

b) Interest income is recognised in the Profit and Loss Account as it accrues except, income from Non Performing Assets (NPAs), comprising of advances and investments which is recognised upon realisation, as per the prudential norms prescribed by the RBI or other regulatory authorities.

c) Profit / loss on sale of investments is recognised in the Profit and Loss Account.

d) Income (other than interest) on interest bearing investments in "Held to Maturity (HTM)" category acquired at a discount to the face value, is recognised only at the time of sale / redemption.

e) Commission & Exchange and Locker rent have been recognized on realization basis.

f) Interest on overdue term deposits is accounted for on renewal.

g) In case of suit filed accounts, legal and other expenses incurred are charged to Profit and Loss Account and at the time of recovery of such expenses is accounted as income.

4. Investments:

The transactions in Government Securities are recorded on “Settlement Date”. Investments other than Government Securities are recorded on “Trade Date”.

a) Investments are classified into three categories viz., Held to Maturity (HTM), Available for Sale (AFS) and Held for Trading (HFT) as per RBI guidelines.

Investments that the Bank intends to hold till maturity are classified as Held to Maturity (HTM).

Investments that are held principally for resale within 90 days from the date of purchase are classified as Held for Trading (HFT)

Investments, which are not classified in the above two categories, are classified as Available for Sale (AFS).

An investment is classified as HTM / HFT / AFS at the time of its purchase and subsequent shifting amongst categories is done in conformity with regulatory guidelines.



85

However, for disclosure in Balance Sheet these are classified as under - Government Securities, Other Approved Securities and Others.

b) The Securities in each classification are valued in accordance with RBI guidelines as detailed hereunder:

In determining the acquisition cost of an investment:

Brokerage or Commission received on subscriptions is reduced from the cost.

Broking period interest paid / received on debt instruments is treated as interest expense / income and is excluded from cost or sale consideration.

Cost is determined on the weighted average cost method for investments under AFS and HFT category and FIFO basis (First in First out) for investments under HTM category

Transfer of securities from HFT / AFS category to HTM category is carried out at the lower of acquisition cost / book value / market value on the date of transfer. The depreciation, if any, on such transfer is fully provided for. However, transfer of securities from HTM category to AFS category is carried out on at acquisition price / book value. After transfer, these securities are immediately re-valued and resultant depreciation, if any, is provided

Investments under Held to Maturity category are carried at acquisition cost unless it is more than the face value, in which case the premium is amortised over the period of remaining maturity on constant yield basis. Such amortisation of premium is adjusted against income under the head “Interest on Investments”.

Investments in equity shares of other companies are valued at historical cost. A provision is made for diminution, other than temporary, for each investment individually.

Investments under AFS and HFT category are individually re-valued at market price or fair value determined as per regulatory guidelines, and only the net depreciation of each group for each category (viz., (i) Government securities (ii) Other Approved Securities) is provided for and net appreciation is ignored. On provision for depreciation, the book value of individual security remains unchanged after marking to market.

Investments are classified as Performing and Non Peforming, based on the guidelines issued by the RBI. Investments of domestic offices become non performing where:

Interest or instalment (including maturity proceeds) is due and remains unpaid for more than 90 days.

In the case of equity shares, in the event the investment in the shares of any company is valued at Rs. 1/- per company on account of the non availability of the latest balance sheet, those equity shares will be reckoned as NPI.

5. Loans or Advances and Provisions thereon:

Loans and advances are classified as performing and non-performing, based on the guidelines/ directives issued by the RBI. Loan assets become Non Performing Asset (NPA) where:

In respect of agriculture advances:

i. For short duration crops, where the instalment of principal or interest remains overdue for two crop seasons and

ii. For long duration crops, where the principal or interest remains overdue for one crop season.

In respect of Non Agriculture advances:

i. In respect of term loans, interest and / or instalment of principal remains overdue for a period of more than 90 days.

ii. In respect of Overdraft or Cash Credit Advances, the account remains “out of order”, i.e. if the outstanding balance exceeds the sanctioned limit or drawing power continuously for a period 90 days, or if there are no credits continuously for 90 days as on the date of balance sheet, or if the credits are not adequate to cover the interest debited during the same period.


86

III Doubtful Assets:

A loan asset that has remained in the substandard category for of 12 months is Doubtful Asset

Provisions are made for NPAs as per the extant guidelines/directives prescribed by the RBI:

a) All advances have been classified under four categories i.e., Standard Assets, Sub-standard Assets, Doubtful Assets and Loss Assets.

b) Provisions on Advances are made as under:

I Standard Assets: General Provision for Standard Assets at the following rates:

Direct Advances to Agriculture and SME sectors at 0.25%

Commercial Real Estate sector at 1%

All other advances not included in (1) & (2) above at 0.40%

II Sub-Standard Assets:

A loan asset that has remained non performing for a period less than or equal to 12 months is a Sub Standard AssetGeneral Provision of 15% on the total outstanding

Additional Provision of 10% for exposures which are unsecured ab-intio (i.e. where realisable value of security is not more than 10% ab-initio).

IV Loss Assets:

A loan asset where Loss has been identified but the amount has not been fully written off is a Loss Asset.

100% Provision on outstanding Advances.

Advances are net of specific loan loss provisions, unrealised interest, ECGC claims received and Inter Bank Participation Certificates.

For Restructured / Rescheduled assets, provisions are made in accordance with the extant guidelines issued by the RBI.

In the case of loan accounts classified as NPAs, an account may be reclassified as a performing asset if it confirms to the guidelines prescribed by the regulators.

Amounts recovered against debts written off in earlier years are recognised as revenue in the year of recovery.

In addition to the specific provision on NPAs, general provisions are also made for Standard Assets as per extant RBI guidelines. These provisions are reflected in Schedule 5 of the Balance Sheet under the head "Other Liabilities and Provisions - Other Provisions" and are not considered for arriving at the net NPAs.

Interest realized on NPAs are taken in to income account provided the credits in the accounts towards interest are not out of fresh/additional credit facilities sanctioned to the borrower concerned.

Appropriation of recoveries in NPAs i.e. towards principal or interest due as per the Bank's extant instructions is done in accordance with the following priority.

Secured Portion Up to One year 25%

One to three years 40%

More than three years 100%

Unsecured Portion 100%


87

Depreciation / amortisation is provided on straight line method as per the rates stated below.

In respect of assets acquired during the year (for domestic operations), depreciation is charged on proportionate basis for the number of days the assets have been put to use during the year.

Assets costing less than 5,000 each are charged off in the year of purchase.

a. Charges

b. Unrealized Interest/Interest

c. Principal

6. Floating Provisions:

The bank has a policy for creation and utilisation of floating provisions separately for advances, investments and general purpose. The quantum of floating provisions to be created is assessed at the end of each financial year.

7. Fixed Assets, Depreciation and Amortisation:

Fixed Assets are carried at historical cost less accumulated depreciation/amortisation.

Cost includes cost of purchase and all expenditure directly attributable to or incur in connection with acquiring the said asset before it is put to use. Subsequent expenditure incurred on the assets put to use are capitalised only when it increases the future benefits from such assets or their functioning capability.

8. Impairment of Assets:

Fixed assets are reviewed for impairment whenever events or changes in circumstances warrant that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future Net Discounted Cash Flows expected to be generated the asset. If such assets are impaired, the impairment to be recognised is measured by the amount which the carrying amount of the asset exceeds the fair value of the asset.

9. Employee Benefits:

a. Short Term Employee Benefits:The undiscounted amount of short - term employee benefits, such as medical benefits etc., which are expected to be paid for the services rendered by employees, are recognized during the period when the employee renders the service.

Description of Fixed Asset Depreciation / amortization rates

Buildings 1.6667%

Furniture & Fixtures other than Electrical Fittings and Fixtures 10%

Electrical Fittings with 3 years life 33.33%

Electrical Fittings with 5 years life 20%

Safe Deposit Lockers, Fire proof data safe 5%

Computer systems & ATMs 33.33%

Computer software which does not form an integral part of computer hardware and cost of software development 100%

Motor vehicles 10%


88

b. Long Term Employee Benefits

i. Defined Benefit Plans:

a. Gratuity: For all the eligible employees, the Bank provides for Gratuity liability based on actuarial valuation. The Bank makes periodic contributions to a fund administered by Trustees based on an independent external actuarial valuation carried out annually.

b. Leave Encashment: For all the employees who have completed five years of service, the Bank provides for Leave Encashment liability based on actuarial valuation and contributes to SBI Life Insurance Company Limited on annual basis.

The cost of providing defined benefits is determined using the projected unit credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains/losses are immediately recognised in the Profit and Loss Account and are not deferred.

ii. Defined Contribution Plans such as Provident Fund are recognized as an expense and charged to the Profit & Loss Account on accrual basis.

10. Income Tax Expense:

Income Tax expense is the aggregate amount of current tax and deferred tax expense incurred by the Bank. Current taxes expense and deferred tax expense are determined in accordance with the provisions of the Income Tax Act, 1961 and as per the Accounting standard 22 - Accounting for Taxes on Income respectively and tax laws prevailing in India. Deferred tax adjustments comprise of changes in the deferred tax assets or liabilities during the period.

Deferred tax assets and liabilities are recognised by considering the impact of the timing differences between taxable income and accounting income for the current year, and carry forward losses. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted at the Balance Sheet date. The impact of changes in Deferred tax assets and liabilities is recognised in the Profit and Loss Account. Deferred tax assets are recognised and reassessed at each reporting date, based on management's judgement as to whether their realisation is considered as reasonably / virtually certain.

11. Contingent Liabilities & provisions:

In conformity with AS - 29 "Provisions, Contingent Liabilities and Contingent Assets", issued by ICAI, the bank recognises the provisions only when it has a present obligation as a result of a past event and would result in a probable outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount of the obligation can be made.

No provision is recognised for:

I. Any possible obligation that arises from past events and existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the bank.

II. Any present obligation that arises from past events but is not recognised because

a. It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or

b. A reliable estimate of the amount of obligation cannot be made.

Such obligation are recorded as Contingent Liabilities. These are assessed at regular intervals and only that part of the obligation for which an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made.

III. Contingent Assets are not recognised in the financial statements.

12. Special Reserves:

Revenue and other Reserve include Special Reserve created under Section 36(i)(viii) of the Income Tax Act, 1961.


89

SCHEDULE – 18

DISCLOSURES & NOTES TO ACCOUNTS

I. Disclosures as per norms for RRBs

1. Capital

2. Investments

S.No Particulars Current year Mar 2018 Previous year Mar 2018

1 Value of Investments

i) Gross value of Investments 5894 10 81 4433 07 29

ii) Provisions for Diminution 3 10 55 0

iii) Net value of Investments 5891 00 26 4433 07 29

2 Movement of provisions held towards depreciation on investments

i) Opening Balance Nil Nil

ii) Add: Provisions made during the year 3 10 55 Nil

iii) Less: Write off / Write back of excess provisions during the year Nil Nil

iv) Closing Balance 3 10 55 Nil

3. Repo Transactions

Minimum Maximum Daily Average As onst outstanding outstanding outstanding 31

during the during the during the March, year year year 2018

Securities Sold under Repos Nil Nil Nil Nil

Securities purchased under Nil Nil Nil Nil Reverse Repos

Item

(Rs in '000s)

(Rs in '000s)

The Bank has invested a sum of Rs.24,99,200/- in National Payments Corporation of India (NPCI), a company

promoted by ten banks under the guidance of Indian Bank's Association.


Sl.No Particulars Current year (%) Mar 2018 Previous year (%) Mar 2017

i) CRAR(%) 15.59 14.05

ii) CRAR – Tier I Capital (%) 15.24 13.70

iii) CRAR – Tier II Capital (%) 0.35 0.35

iv) Percentage of Shareholding of the :

A Government of India 50 50

B Government of Andhra Pradesh 15 15

C State Bank of India (Sponsor Bank) 35 35


90

4. Non-SLR Investment Portfolio

i) Issuer composition of Non SLR Investments

(ii) Non-Performing Non-SLR Investments

Particulars Amount

Opening balance NIL

Additions during the year since 1st April NIL

Reductions during the above period NIL

Closing Balance NIL

Total provisions held NIL

(Rs in '000s)

(Rs in '000s)

5. Asset Quality

No. Particulars Current year (2017-18) Previous year (2016-17)

i) Net NPAs to Net Advances (%) 0.20 0.72ii Movement of NPAs (Gross) (a) Opening balance 209,73,96 251,99,83(b) Additions during the year 305,26,38 123,58,98(c) Reductions during the year 319,36,10 165,84,85(d) Closing balance 195,64,24 209,73,96iii Movement of Net NPAs (a) Opening balance 87,57,54 147,66,71(b) Additions during the year 23,37,23 0(c) Reductions during the year 82,91,96 60,09,17(d) Closing balance 28,02,81 87,57,54iv Movement of provisions for NPAs (Excluding provisions on standard assets) (a) Opening balance 122,16,42 104,33,12(b) Provisions made during the year 59,40,63 24,49,15(c) Write-off / Write-back of excess provisions 13,95,61 6,65,85(d) Closing balance 167,61,44 122,16,42

I. Non-Performing Assets (Rs in '000s)

S. No Issuer Amount Extent of Extent of Extent of Extent of Private below investment unrated unlisted placement grade securities securities securities

1 2 3 4 5 6 7

i) PSUs NIL NIL NIL NIL NIL

ii) FIs NIL NIL NIL NIL NIL

iii) Banks NIL NIL NIL NIL NIL

iv) Private NIL NIL NIL NIL NIL Corporates

v) Others (MF)

& Equity shares of

NPCI 1302499 NIL NIL NIL NIL

vi) Provisions held towards NIL NIL NIL NIL NIL depreciation

Total 1302499 NIL NIL NIL NIL


91

ii. Details of Loan Assets subject to Restructuring

II. Details of financial assets sold to Securitization (SC) / Reconstruction Company (RC) for Assets Reconstruction

S.No Particulars Current year Previous year

i No. of accounts Nil Nil

ii Aggregate value (net of provisions) of accounts sold to SC/RC Nil Nil

iii Aggregate consideration Nil Nil

iv Additional consideration realized in respect of accounts transferred in earlier years Nil Nil

v Aggregate gain / loss over net book value Nil Nil

III. Details on non-performing financial assets purchased / sold

A. Details of non-performing financial assets purchased:

S.No Particulars Current year Previous Year

1 (a) No. of accounts / purchased during the year Nil Nil

(b) Aggregate outstanding Nil Nil

2 (a) Of these, number of account restructured during the year Nil Nil

(b) Aggregate outstanding Nil Nil

B. Details of non-performing financial assets sold :

S.No. Particulars Current year Previous year

1 No. of accounts sold Nil Nil

2 Aggregate outstanding Nil Nil

3 Aggregate consideration received Nil Nil

(Rs in '000s)

(Rs in '000s)

(Rs in '000s)

(Rs in '000s)


i Total amount of loan assets subject to restructuring, rescheduling, renegotiation Nil Nil

ii The amount of Standard assets subjected to restructuring, rescheduling, renegotiation Nil Nil

iii The amount of Sub-Standard assets subjected to restructuring, rescheduling, renegotiation Nil Nil

iv The amount of Doubtful assets subjected to restructuring, rescheduling, renegotiation Nil Nil

(i) = (ii) + (iii) + (iv) Nil Nil


92

IV. Provisions on Standard Assets

S.No. Particulars Current year Previous year

1 Provisions towards Standard Assets 406021 342625

6. Business Ratios


i Interest income as a percentage to Working Funds 9.01 9.11

ii Non-Interest income as a percentage to Working Funds 1.32 1.02

iii Operating profit as a percentage to Working Funds (Before provisions) 3.68 2.85iv Returns on Assets (%) 2.24 1.82

v Business per Employee (Dep + Adv)(Rs'000) 90666 84520

vi Net profit per Employee (Rs'000) 1592 1181

7. Asset Liability Management – Maturity pattern of certain terms of Assets and Liabilities

Particulars1 to 14

days15 to 28

days

29 days to 3

months

Over 3 months

and upto 6

months

Over 6 months

and upto 1 year

Over 1 year and

upto 3 years

Over 3 year and

upto 5 years

Over 5 years

Total

Deposits 9345708 3136902 12923598 39960926 21635305 1253652 2745549 52334653 143336293

Advances 7288481 3178319 12691951 15383203 2820353 16697381 11381993 54175000 123616681

Investments & STDRs 1300000 408509 38003089 18079793 988736 2432313 53061250 114273690

Borrowings 0 0 0 10463257 285349 21585320 10397948 80412059

Foreign Currency Assets NIL NIL NIL NIL NIL NIL NIL NIL NIL

Foreign Currency Liabilities

NIL NIL NIL NIL NIL NIL NIL NIL NIL

(Rs in '000s)

(Rs in '000s)

37680185

0


93

8. Exposures – Exposure to Real Estate Sector


a Direct exposure

i Residential Mortgages above Rs. 20.00 lakhs lending fully secured 468 96 21 131 60 32 by mortgages on residential property that is or will be occupied by the borrower or that is rented (individual housing loan upto Rs. 20 lakh may be shown separately)

Up to Rs. 20.00 lakhs 716 29 27 641 53 37

ii Commercial Real Estate Lending secured by mortgages on commercial real estates (office buildings, retail space, multi-purpose commercial premises, multi-family residential buildings, multi-tenanted commercial premise, il N Nil industrial or warehouse space, hotels, land acquisition, development and construction, etc.) Exposure would also include non-fund based (NFB) limits.

iii Investments in Mortgage Backed Securities (MBS) and other securitized exposures Nil Nil

a. Residential Nil Nil

b. Commercial Real Estate Nil Nil

b Indirect Exposure Nil Nil

Fund-based and non-fund based exposures on National Housing Bank (NHB) and Housing Finance Companies (HFCs) Nil Nil

9. Details of Single Borrower (SGL), Group Borrower Limit (GBL) exceeded by the bank:

The bank had not exceeded the single borrower limit, group borrower limit fixed by the Board

10. Miscellaneous – Amount of provisions made for Income tax during the year.

Particulars Current Year Previous year

Provision for Income Tax 2520380 1690600

11. Disclosure of Penalties imposed by RBI

The Bank has maintained CRR and SLR as per RBI Act 1934 and Banking Regulation Act 1949 and not defaulted

during the financial year under report.

12. Additional Disclosures as per Accounting Standards applicable to the Bank

(i) Related party disclosure

a) Related parties where control / significant influence exists or with whom transaction have taken place during

the year.

Sponsor Bank their Subsidiaries and Associates : State Bank of India

(Rs in '000s)

(Rs in '000s)


94

For the year For the year st st ended 31 ended 31

March 2018 March 2017

Refinance received from State Bank of India Nil Nil

Interest paid to SBI 58,82,80 81,65,40

Investments made with:

SBI - in the form of STDRs 22,19,21,00 34,83,95,00

SBI Fund Management Private Limited Nil 49,57,53

Interest received from SBI 1,68,15,15 1,98,36,68

Profit on sale of Investments on SBI 7,79,96 10,98,93

Contributions to Gratuity Fund with SBI Life Insurance Company Limited Nil 7,32,69

Contributions to Group Leave Encashment Policy with SBI Life Insurance Company Limited 9,87,03 3,06,29

Current Account Balance with SBI 1,48,37 9,66

(iii) Particulars of Managerial Remuneration:

Key Management Personnel

Shri V. Narasi Reddy, Chairman

Shri M. Satyanarayana, General Manager -I

Shri T.V. Krishna Reddy General Manager-II

Shri S.Prakash Kumar General Manager - III (Upto : 23.06.2017)

Shri G. Nagaraju General Manager - III (From : 11.12.2017)

Shri K. Ravi Kiran, General Manager - IV

(ii) Particulars of related party accounts transactions:

The following is the summary of significant related party transactions:

For the year For the year st st ended 31 ended 31

March 2018 March 2017

Shri V.Narasi Reddy, Chairman 21,80,811/- 21,68,711/-

Shri M. Satyanarayana, General Manager - I 16,32,996/- 9,01,288/-

Shri T.V.Krishna Reddy, General Manager - II 16,67,124/- 16,40,771/-

Shri S. Prakash Kumar, General Manager - III 3,56,424/- 18,01,154/-

Shri G.Nagaraju, General Manager - III 5,54,257/- Nil

Shri K. Ravi Kiran, General Manager - IV 16,83,829/- 8,71,441/-

(Rs in '000s)

(in Rupees)


95

13. Provisions on Rural Advances

14. Disposal of Complaints:

A) Customer Complaints:

S.No Particulars Nos

a No. of complaints pending at the beginning of the year 01

b No. of complaints received during the year 2017-18 135

c Total Complaints 136

d No. of complaints redressed during the year 136

e No. of complaints pending at the end of the year 0

B) Award passed by the Banking Ombudsman:

S.No Particulars Nos

a No. of complaints pending at the beginning of the year 01

b No. of complaints received during the year 2017-18 43

c Total Complaints 44

d No. of complaints redressed during the year 43

e No. of complaints pending at the end of the year 01

f No. of awards passed by Banking Ombudsman 0

g No of awards implemented Not applicable

h No. of awards pending implementation Not applicable

15. Concentration of Deposits, Advances, Exposures and NPAs

(Rs in '000s)

1. Concentration of Deposits

(Rs in Cr)

Total Deposits of Twenty largest depositors 724.02

Percentage of Deposits of twenty largest depositors to Total Deposits of the Bank 5.05%

S.No. Particulars Current Year Mar 2018 Previous Year Mar 2017

a Opening balance in the Rural Advances Provision Account 106736 106736

b The quantum of Rural Advances Provision made in the accounting year Nil Nil

c i. Amount of Draw down made during the accounting year Nil Nil

ii. Provision written back to profit and Loss account Nil Nil

Total of Draw down Nil Nil

d Closing balance in the Rural Advances Provision Account 106736 106736

Pending complaint as on 31.03.2018 was received during the last week of March 2018, and we have taken up

with Regional Office/Branches for redressal of the complaint


96

Sub-Total (B)

Total (A+B)1693.36 41.97 2.47 1228.02 10.06 0.82

14316.70 195.64

1.36 12368.53

209.74 1.69

16. Sector Wise NPAs (Rs. in Cr)

Sl. No Sector*

Current Year Mar 2018 Previous Year Mar 2017

OutstandingTotal Advances

Gross NPAsPercentage of Gross NPAs to Total Advancesin that Sector

Percentage of Gross NPAs to Total Advancesin that Sector

A Priority Sector

1 Agriculture and allied activities

9686.33 82.77 0.85 8431.78 116.43 1.38

2. Advances to industries sector eligible as priority sectorlending

381.15 38.29 10.04 300.01 48.02 16.00

3 Services 89.69 9.01 10.04 68.69 11.74 17.09

4 Personal Loans 2466.17 23.60 0.95 2340.03 23.49 1.00

Sub-Total (A) 12623.34 153.67 1.21 11140.51 199.68 1.79

B Non-PrioritySector

1 Agriculture and allied activities -

-

-2 Industry

3 Services

4 Personal loans 1693.36 41.97 2.47 1228.02 10.06 0.82

OutstandingTotal Advances

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Gross NPAs

2. Concentration of Advances

(Rs in Cr)

Total Advances of Twenty largest Borrowers 15.16

Percentage of Advances of twenty largest borrowers to Total Advances of the Bank 0.11%

3. Concentration of Exposures

(Rs in Cr)

Total Exposure of Twenty largest Borrowers/Customers 724.02

Percentage of Exposures to twenty largest Borrowers/Customers to Total Exposure of the Bank on borrowers / customers 2.53%

4. Concentration of NPAs

(Rs in Cr)

Total Exposure to top four NPA accounts 2.00%


97

17. Movement of NPAs

II. NOTES TO ACCOUNTS

1. Reorganization of Area of Operations of the Bank:st The Bank has been formed vide Notification dated 31 March 2006 issued by Department of Economic Affairs

(Banking Division), Ministry of Finance, Government of India. As per the said notification, the area of the operation of the Bank is in eight districts of erstwhile State of Andhra Pradesh (Warangal, Medak, Khammam, Nalgonda, Mahabubnagar, Srikakulam, Vizianagaram and Visakhapatnam districts).

th Vide notification dated 20 October 2014 issued by the Department of Financial Services, Ministry of Finance, Government of India the districts of Warangal, Medak, Khammam, Nalgonda, Mahabubnagar are omitted. Pending finalization of the modalities for this notification and approvals from the competent authority, the operations of the bank are being carried out in all the five districts. Financial statements as at the end of the reporting date include assets and liabilities, income and expenses relating to the Bank in all the eight districts.

st2. Classification of Assets (Advances) as on 31 March, 2018:(Rs in 000s)

3. Inter Bank Participation Certificate (IBPC):

The bank has entered into Risk sharing participation Contract with State Bank of India (Sponsor Bank) under Inter Bank Participation Certificate (IBPC) and issued priority sector advances to the extent of Rs.1320,00,00 (thousands) on 13.02.2017 for the period of 180 days as cash pay-out and maturity period expired on 16.08.2017. During this financial year the Bank issued priority sector advances to the extent of Rs.1663,00,00 (thousands) on 14.09.2017 for the period of 180 days as cash pay-out and maturity period expired on 13.03.2018. Further, again during the year the bank issued priority sector advances to the extent of Rs.1800,00,00 (thousands) on 27.03.2018 for the period of 180 days as cash pay-out. The said cash pay-out is grouped in Balances with Banks in other deposit Accounts (Sch-7).

Particulars Rs. in CrstGross NPAs as on 1 April 2017 (Opening Balance) 209.74

Additions (Fresh NPAs) during the year 305.26

Sub-Total (A) 515.00

Less:

(I) Upgradations 60.09

(ii) Recoveries (excluding recoveries made from upgraded accounts) 245.32

(iii) Write-Offs 13.95

Sub-Total (B) 319.36stGross NPAs as on 31 March 2018 (Closing Balance) (A-B) 195.64

Classification Gross Advances Net Advances

Standard Assets 14121 05 32 14121 05 32

Sub Standard Assets 26 26 74 22 14 60

Bad & Doubtful Assets 169 37 51 5 88 21

Total 14316 69 57 14149 08 13

Add: Provision on Sub-Standard And Doubtful Assets etc 167 61 44

Total Gross Advances 14316 69 57


98

(Rs in 000s)

7. Fixed Assets:

The Bank is in possession of Land at various places to the extent of 9,432.26 square yards, which was gifted by

certain donors / assigned by Government of Andhra Pradesh for construction of Office Buildings. The Bank had

incurred site development expenditure and the said costs were capitalized under Land. During the earlier years the

Bank has given Contract to Bharat Sanchar Nigam Limited (BSNL) for construction of Office Buildings at various

locations and amounts paid to BSNL against the bills submitted for construction / initial advance aggregating to

Rs.5,52,25 (thousands) which was disclosed under Capital Work in progress in Fixed Assets Schedule and pertaining

to the constructions completed buildings Rs.1,43,28 (thousands) was capitalized during the year.

8. Income Tax Matters:

Income Tax department has raised certain demands on the Bank, with regard to assessment of income of the Bank and

the tax payable thereon. The Bank is contesting demands raised by the Income Tax Department and pursuing the

same. Against the said tax demands based on the opinion obtained from the tax consultant, the Bank recognized an

amount aggregate to Rs.18,14,00 (thousands) as Contingent Liabilities and are shown in Schedule 12 - "Contingent

Liabilities - Claims against the Banks not acknowledged as debts". Against the disputed claims, the Bank paid an

amount of Rs.37,22,31 (thousands) and the same is being shown in Schedule 11 - "Other Assets - Income Tax paid

against Disputed Demand". Bank is confident of resolving the dispute in it's favour. Liability, if any, will be charged

to Profit and Loss account in the year of settlement of these disputes / claims.

9. Data Purification and Asset Classification

The Bank is having a seamless system in its Core Banking Solution (CBS) for recognizing and identifying the non

performing assets in accordance with the extant guidelines. Further, the Bank has a system of manual verification for

ensuring the correctness of base data fed. Management intends to continue such manual verification to ensure

compliance of the Income Recognition and Asset Classification norms and other statutory compliances.

4. Priority Sector Lending Certificate (PSLC): th The Bank has sold the priority sector advances (SF/MF) of Rs.50,00,00 (thousands) on 28 December 2017, validity

stupto 31 March 2018.

5. Bankers' Cheques:

The Unpaid Banker Cheques which were credited earlier years to P&L account aggregating to Rs.1,10,45 (in thousands) furnished as contingent liability in Schedule 12.

6. Depositor Education and Awareness Fund (DEAF) Scheme:

Disclosure as required under Depositor Education And Awareness Fund Scheme – 2014 notified by the Reserve Bank of India under DBOD No. DEAF Cell.BC.114/30.01.002/ 2013-14 dated 27th May 2014:

Sl No Particulars Current Year Mar 2018 Previous Year Mar 2017

1 Opening Balance of Amount transferred to DEAF 1,33,66 1,34,75

2 Add: Amount transferred to DEAF during the Year 16,89 5,36

3 Less: Amounts reimbursed by DEAF towards Claim 15,57 6,45

4 Closing balance of amounts transferred to DEAF 1,34,98 1,33,66


99

10. Fraud Cases:

Details of Fraud cases are as under: (Rs in 000s)

11. The figures mentioned in Balance Sheet, Profit & Loss Account and Schedules 1 to 16 have been rounded off to the

nearest thousand rupees.

12. Previous Year's figures have been regrouped /reclassified/recast wherever necessary to confirm the current year

classification.

Particulars 31.03.2018 31.03.2017

Provision at the beginning of the year 91,28 1,44,53

Less: Written off during the year 69,93 53,25

Add: Additional provision created during the year 59,29 Nil

Less : Provision reversed during the year Nil Nil

Provision as at the year end 80,64 91,28

Number of fraud cases at the year end 17 8








100

Head office : 2-5-8/1 Near Ambedkar Statue, Ramanagar, Hanamkonda - 506 001 Warangal [Telangana]Ph: 0870-2577256 I Tollfree: 18004257900 I

e-mail: [email protected] I www.apgvbank.in

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Documents

Untitled-1 [] Report 2017-18.pdfNear Eenadu office, Seethammadhara Visakhapatnam Tel 0891-2713942, Fax 0891-2746341 [email protected] Parvathipuram Vizianagaram Dist. 1435-27-112,