Union Bank of India
Chairman Speech
Chairman
Speech by Shri D. Sarkar, Chairman & Managing Director, Union Bank of India at 11th
Annual General Meeting of the Bank (26th June, 2013)
Dear Shareholders,
1. It is indeed a pleasure welcoming you to the 11th Annual General Meeting of the
Bank. Your support in the steady progress of the Bank over the years has been highly
valuable. For this, I would like to convey sincere appreciation to all the shareholders of
the Bank, on behalf of the Board of Directors and on my personal behalf.
2. Financial year 2012-13 was a challenging year for the commercial sector as well as
banking sector as economic growth slowed down to a decade low. During the year 2012-13,
India's real gross domestic product grew at 5.0 percent. While global situation remained
adverse, the prospects deteriorated further with domestic challenges like high inflation
at retail level, rupee depreciation, slowing consumption demand and a weak investment
climate. Banking sector is the mirror image of the overall economic growth and therefore,
banks also faced challenges during the fiscal year 2012-13.
3. In this backdrop, let me share with you the performance of your Bank during the year
2012-13. Your Bank's business strategies were aimed at consolidating business and lending
to productive sectors while managing the asset quality. The strengthening of systems and
control, better risk management practices, further initiatives towards a meaningful
financial inclusion and launch of Talking ATMs were other highlights of the year. The
detailed discussion is already available in the Annual Report of the Bank. For the sake of
relevance, however, I will highlight a few points.
4. The focus on customer centricity guided your Bank's performance during the year.
Over the recent years, the Bank has taken several initiatives to enhance customer
convenience, increase transparency in all transactions, and build a robust customer
redressal mechanism. Through Customer Care Unit, your Bank has created a centralized
capability for handling all types of customer requirements, be it online grievance
redressal, reporting of service deficiency or any specific service request. The integrated
Case Management Tool has been put in place to integrate complaints across delivery
channels and also to facilitate customer feedback.
Business & Profit
5. Coming to business performance, your Bank's Global Business stood at Rs. 4,75,673
crore as of 31st March 2013, registering an annual growth rate of 17.8 percent. Gross
advances stood at Rs. 2,11,911 crore while Total Deposits stood at Rs. 2,63,762 crore as
on 31st March 2013. Growth in business was supported by increase in low-cost deposits,
retail loans, agriculture loans and loans to micro, small and medium enterprises.
6. Your Bank's total income grew by 17.9 percent to Rs. 27,677 crore for the year
2012-13 from 23,476 crore a year ago. Net interest income recorded annual growth of 11.0
percent to Rs. 7543 crore. Operating Profit of the Bank increased to Rs. 5,583 crore in
2012-13 from Rs. 5,254 crore during the previous year. Net profit recorded a growth rate
of 20.8 percent and stood at Rs. 2,158 crore for the year 2012-13 compared to Rs.1787
crore in the previous year. The Bank has recommended a dividend of 80 percent for the year
2012-13.
Improvement in Asset Quality
7. I shared in the beginning about challenges in the banking sector, particularly about
deterioration in asset quality due to economic slowdown. Your Bank, however, was able to
reduce gross non-performing assets (NPAs) from 3.01 percent of gross advances as of 31st
March 2012 to 2.98 percent as of 31st March 2013. In fact, on quarterly basis beginning
June 2012, your Bank was also able to record reduction in Gross NPA in absolute amount as
well as a ratio to gross advances. The Bank could also increase the provision coverage
ratio to 65.2 percent as of 31st March 2013 from 62.2 percent a year ago. This is regarded
as a healthy development in order to strengthen your Bank's balance sheet.
Capital Strength
8. During the year 2012-13, the Bank allotted 4.62 crore equity shares of Rs. 10 each
at a premium of Rs. 230.89, aggregating to Rs. 1,114 crore to the Government of India.
Consequently the Government's shareholding in the Bank increased from 54.35 percent as on
31st March 2012 to 57.89 percent as on 31st March 2013. With this, Bank's total Capital
Adequacy Ratio, as per Basel II, stood at 11.45 percent as on 31st March 2013 which is
well above regulatory requirement of 9 percent.
9. The Bank's net worth improved by 20.7 percent to Rs.15,777 crore during FY 2013 from
Rs. 13,075 crore in the previous year. Thus, the Book value per share increased to Rs.
264.37 as on 31st March 2013 from Rs. 237.48 in the previous year.
Overseas Operations
10. Your Bank has opened its second foreign branch at Dubai International Financial
Centre (DIFC), Dubai on 9th March 2013. Bank's other overseas branch is at Hong Kong,
operational since May 2008. Deposits and advances of these two overseas branches stood at
Rs. 2763 crore and Rs. 13017 crore respectively as of 31st March 2013. Your Bank is also
in the process of opening branches at Sydney in Australia and Antwerp in Belgium and a
subsidiary at London in the UK during the financial year 2013-14. The Bank already has
representative offices at Shanghai (China), Abu Dhabi (UAE), Beijing (China), Sydney
(Australia) and London (UK).
Human Resource Management
11. The Bank is committed to nurturing its human capital in order to attain sustainable
higher growth. The manpower strength increased to 31798 as on 31st March 2013. During the
year, Bank completed the recruitment for 4,509 officers and clerks. Bank is also engaged
in leadership development and succession planning considering the imminent challenges due
to large scale retirement in coming years.
Corporate Social Responsibility
12. Your Bank is committed to the objective of corporate social responsibility (CSR) by
creating enablers for social and community development. The 'Union Bank Social
Foundation', a trust set up by the Bank is spearheading its CSR initiatives. Through the
trust, the Bank is engaged in empowering people through various developmental initiatives.
13. The Bank has set up 202 Village Knowledge Centres (VKCs) across the country. Each
VKC assists in overall development of the village by coordinating with various
developmental agencies/ Government departments and disseminate knowledge to farmers about
latest developments in methods of cultivation, technologies, proper use of fertilizers,
pesticides, etc.
14. The Bank has also adopted 150 villages across the country and is involved in
development of these villages through a special scheme known as 'Union Adarsh Gram
Yojana'. In these adopted villages, various developmental activities are being undertaken,
like, providing safe drinking water, sanitation and solar lamps. In these villages, Bank
has adopted 150 Girl children as part of its initiative to increase enrolment of girl
child at the schools.
15. Your Bank has 14 Rural Self- Employment Training Institutes (R-SETIs) and 16
Financial Literacy and Credit Counseling Centers (FLCCs) across the country. These R-SETIs
and FLCCs extend financial literacy, counseling and training to the needy people so that
they become self reliant. Through these R-SETIs, 28522 persons have been provided training
so far and 18709 beneficiaries have been settled with employment.
16. During the year 2012-13, Bank donated a total of Rs. 1.24 crore for supporting
activities like rehabilitation in calamity affected areas, cancer relief, provision of
food distribution vehicles and installation of solar lamps in villages.
Reaching out to the Society
17. Besides, CSR activities, your Bank's business focus is also on reaching out to
hitherto unbanked population, less developed sections of the society and creating
convenience for them. I will briefly share some of these.
18. With a motive of encouraging women entrepreneurs, the Bank extended finance to 6.13
lakh women beneficiaries and loans increased by 32.1 percent to Rs 9,053 crore as on 31st
March 2013. This constituted 5.53 percent of adjusted net bank credit (ANBC) which is
higher than 5 percent mandated by the RBI. Similarly, loans to Weaker Sections stood at
Rs. 15,023 crore, i.e. 9.2 percent of ANBC as on 31 st March 2013, higher than 6.3 percent
of ANBC in the previous year. Advances to SC/ST covered over 1 lakh beneficiaries, with
outstanding loans of Rs. 2,617 crore compared to Rs. 1,386 crore in the previous year.
Loans to Minority Communities stood at Rs. 5,289 crore covering over 2.7 lakh
beneficiaries.
19. Ernakulam district, one of the Bank's lead districts in the state of Kerala, was
declared by the RBI Governor, Dr D Subbarao as country's first district to achieve
'Meaningful Financial Inclusion'. Under this prestigious project, your Bank focused on
"need" creation rather than simply opening of accounts. With the help of
community-based organizations, Bank sensitized its customers about need for savings and
credit. This helped sharp increase in usage of mobile banking and number of operative
accounts. Other than this, your Bank extended banking services to 29497 unbanked /
underbanked villages in 2012-13 by providing basic banking services through Business
Correspondent Model. Your Bank is also an active participant in implementation of the
Central Governments Direct Benefit Transfer Scheme.
20. During the last financial year, your Bank unveiled India's first ever truly
accessible and Talking ATM in Vastrapur, Ahmedabad on 6th June 2012 for the visually and
physically challenged people. Your Bank has pioneered Talking ATMs in India. Union Bank's
Talking ATM model and workflow has set a benchmark for the banking industry. The Bank has
100 Talking ATMs across the country as on 31st March 2013.
Awards and Recognition
21. Many initiatives of your Bank were recognized by the various organizations and
agencies during the year. Your Bank received four IBA Banking Technology Awards for Best
Financial Inclusion Initiative, Best Technology Bank of the Year, Best Use of Mobility
Technology in Banking and Best Use of Business Intelligence. The Bank also received the
prestigious ACI Excellence Award 2012 for implementing three remittance products. For
launching truly accessible Talking ATMs for the visually challenged, the Bank received the
prestigious IT Innovation Award from the Computer Society of India.
The year ahead
22. Global growth prospects are marginally better than a year ago but challenges and
uncertainties remain. This will also impact India's growth, though there is likelihood of
better growth in the 2013-14 than in the previous year. Your Bank will endeavor to capture
the opportunities with specific focus on increasing low cost deposits and augmenting loans
to agriculture, retail and MSME segments during the financial year 2013-14. Overall, the
customer centricity will continue to be the driving force for the Bank.
Acknowledgement
23. On behalf of the Board of Directors of the Bank, I would like to express my sincere
appreciation to all the shareholders for their continued and valuable support in growth of
the Bank. I also convey my sincere gratitude to the Government of India, Reserve Bank of
India, Securities & Exchange Board of India, lnsurance Regulatory and Development
Authority, Central Vigilance Commission and other authorities for their valuable guidance
and support. The co-operation and support of financial institutions and correspondent
banks is also acknowledged. I will be failing in my duty without acknowledging the support
of our esteemed customers and all other stakeholders for their continued patronage, and
express my deep appreciation to each employee of the Bank for their dedication in taking
the Bank to a greater height.
Thank you very much.
| Place: Mumbai |
(D. Sarkar) |
| Date: 26.06.2013 |
Chairman & Managing Director |
Union Bank of India
Directors Reports
Dear Shareholders,
The Board of Directors are pleased to present the 103rd Annual
Report of the Bank for the Financial Year 202122 together with the ‘Audited Balance
Sheet', ‘Profit & Loss Account', ‘Cash-Flow Statement' and the report on
‘Management Discussion & Analysis'. The ‘Corporate Governance Report' and
‘Business Responsibility & Sustainability Report' also form part of the Annual
Report 2021-22.
1. Highlights:
1.1 India's economic growth remained resilient in FY 2021-22, as the
lifting of most virus containment measures boosted demand, keeping war-induced price
pressures from dampening the recovery. A slew of data, from services activity to bank
credit pointed to the return of demand in the second half of FY 202122. Consumer activity
were encouraging, with bank credit growth at 9.6% in FY 2021-22, up from 5.6% in FY
2020-21. Liquidity conditions also continued to remain in surplus. Having achieved the
milestone of over US$ 400 billion of merchandise exports in FY 2021-22, the country is
aiming for an ambitious export target of approximately US$ 800 billion for both goods and
services for the next year, nearly 19.5% higher than that achieved in 2021-22.
1.2 The COVID-19 pandemic will go down in history as one of the worst
health crises the world has ever faced. Its economic impact may linger for many more years
and confront us challenges of rebuilding livelihoods, safeguarding businesses and reviving
the economy. Economic activity has barely recovered to pre-COVID levels even after two
years. India's economic rebound faces difficult challenges from the legacy of deep- rooted
structural bottlenecks as well as the scars of the pandemic. The Russia-Ukraine conflict
has also dampened the momentum of recovery, with its impact transmitting through
record-high commodity prices, weaker global growth outlook, and tighter global financial
conditions. Concerns surrounding de-globalization impacting future trade, capital flows
and supply chains have amplified uncertainties for the business environment. The RBI in
its latest Report on Currency and Finance, has stated that it may take 12 years for the
Indian economy to recover from the losses incurred during Covid-19 pandemic.
1.3 The global economy is in the midst of a geo-political debacle, with
heightened uncertainty complicating the outlook. International commodity prices, which
were already on an upward spiral amidst demand- supply imbalances, hardened precipitously
in early March 2022 and remained volatile at elevated levels thereafter. India too is
experiencing tremors from these developments. The fallout of the war and retaliatory
sanctions is already evident in inflation prints and balance of payments developments.
1.4 The IMF in its World Economic Outlook had slashed global growth
projections from 6.1% in 2021 to 3.6% in both 2022 and 2023. Reasons ascribed include the
Ukraine war that has resulted in considerable economic damage coupled with worldwide
spillovers through commodity markets, trade, and financial channels. Elevated inflation
levels are another looming challenge complicating the trade-offs that central banks are
faced with, between containing inflation and boosting economic growth. The war and
lockdowns in China have worsened supply disruptions, narrowing the limited fiscal space
for countries.
1.5 Notwithstanding economic uncertainties triggered by the
Russia-Ukraine war it is quite clear from all accounts that India will remain the fastest
growing economy in the world. According to National Statistical Organisation (NSO)
estimate, India is projected to grow 8.9% in 2021-22. The Reserve Bank has pegged the
economic growth rate for 2022-23 at 7.2%, while IMF in its latest report projected India's
growth at 8.2% for 2022-23 and 6.9% for 2023-24. Given the reforms undertaken by the
government and the various supportive measures by the RBI, a very strong foundation is
being laid for further rapid increase in economic growth in the coming years. The Union
Budget 2022-23 has provided for a sharp increase in public investment and capital
expenditure. The various government initiatives are seen to be supporting growth and
credit demand is expected to further pick up in FY 2022-23. As per RBI, sustained thrust
on capital expenditure by the government, push to digitalization and growing opportunities
for new investment in areas like e-commerce, start-ups, renewables, and supply chain
logistics could, in turn, contribute to step up the trend growth while closing the
formal-informal gap in the economy.
2. Bank's Performance
Established in the year 1919, your Bank has 8870 branches and 3
overseas branches, 11,232 ATMs across 29 States and 5 Union Territories and 75201
employees as on March 31, 2022.
Key achievements during FY 2021-22:
> Net Interest Income for FY 2021-22 stood at ' 27,786 crore.
> Operating profit for FY 2021-22 stood at ' 21,873 crore.
> PCR stood at 83.61% as on March 31, 2022
> Net NPA ratio stood at 3.68% as on March 31, 2022.
During FY 2021-22, your Bank has undergone many transformations/adopted
new processes as given below.
2.1 EASE (Enhanced Access and Service Excellence)
Enhanced Access and Service Excellence (EASE) was launched by
Government of India in the financial year 2018-19 to increase efficiency of PSBs across
every domain and to measure the performance on a common index on a quarterly basis. Your
Bank has registered third rank in EASE 3.0 annual index.
EASE Agenda under its fourth iteration primarily required PSBs to
expand their digital portfolio, establish a robust IT infrastructure and onboard strategic
partners to leverage their expertise within the overall sphere of banking activities.
Your Bank has continuously striven to adopt & adapt to the reforms
recommended by EASE Agenda. To upgrade the banking experience for its customers and
embrace the digital transformation as envisioned, the major developmental goals
accomplished by your Bank in FY 2021-22 are :
• Retail & MSME portfolio under the straight through
processing (STP) channel has been expanded for easy & quick disbursal of loans.
Agriculture STP has been launched on a pilot basis to make farm credit easily accessible.
• Under co-lending model, your Bank has tied up with several NBFCs
in the Retail & MSME segments. The aim is to leverage their reach to expand our loan
book.
• Your Bank has adopted industry leading IT infrastructure to
offer uninterrupted banking services.
• While fine-tuning the credit lead generation models, your Bank
has further strengthened its analytics-based capabilities to identify potential customers
for several non-credit related investment product offers.
• Your Bank has deployed ‘EASE Banking Outlets' under the
banner ‘Digiconnect'. These outlets offer round-the-clock basic banking services.
Multi-functional kiosks have been deployed to offer digital banking, cheque deposit,
passbook printing & non-financial transactions facilities apart from cash deposits
& withdrawal.
• With a mammoth workforce of over 70,000 employees, your Bank has
taken several initiatives on the human resources front. It includes quarterly appraisal
process to monitor performance throughout the year and a digital Performance Management
Tool to lend transparency to the system, amongst others.
• To strengthen compliance mechanism, individual level compliance
monitoring tool has been introduced which has been completely developed using in-house IT
capabilities.
In the latest EASE 4.0 index for Q3 FY 2021-22, your Bank stood fourth
amongst all PSBs. Your Bank was the runner-up in two out of six themes and has registered
the third best performance in one theme.
True to the idea of EASE, your Bank is taking concerted efforts to
improve financial inclusion, leverage technology to simplify banking experience and
effectively monitor asset portfolio by digitalizing collections actions for cleaner loan
books. Through active digital adoption, your Bank has geared up to keep up with the
rapidly evolving banking landscape.
2.2 Strategy -Business Process Re-engineering (BPR)
Bank embraced the amalgamation process and successfully achieved the
harmonisation of products, processes and policies, reorganisation of structure of Central
Office as well as field, rollout of various CPCs, communication support to field
functionaries for effective integration and road map for realisation of cost synergy etc.
Amalgamation related exercise was carried out by the bank under "Project
Samarth".
The Bank during the year endeavored to focus towards designing,
implementing and driving the new initiatives required for the process improvements across
the Bank in the post amalgamation scenario under Project Samarth 2.0
Brief initiatives undertaken by Bank during the FY 2021-22 are
enumerated below:
Project Samarth 2.0
To carry out various post amalgamation transformation initiatives,
Project SAMARTH 2.0 has been undertaken. The objective of the project includes
Digitization of various products, processes and back offices to achieve operational &
cost efficiency along with enhanced customer experience and services. Through these
initiatives, Bank aim to create a brand of Digital Union Bank.
The overall scope of work under Project Samarth 2.0 is grouped under 7
Work Streams (WS) as under:
Continued support and strategy for synergy realization
• Digitization of Customer Journey across asset and liability
products segment
• Revamping the CAPS, POS, Credit card business model and
implementation to derive benefits
• Designing new branch model for smaller, sales-oriented and
digital branches, touch points and Business Banking Branches for MSME advances and
revamping of BC Model.
• Digitization of Back-office operations and entire reconciliation
activities
• Strengthening of the Organization Structure
• Design technology architecture and a roadmap for implementation
of ML, AI, and Robotics Process
2.3 Continued support and strategy for synergy realization
The bank achieved great milestones in the amalgamation journey. Post
amalgamation the focus is on long-term business strategies and leveraging the expanded
size to re-tune the entire products and processes on par with emerging competition for
desired level of business growth and process efficiency.
Long term synergy plan for the Bank - For getting long term synergy, 15
niche areas in 10 segments have been identified with the help of respective verticals for
achieving substantial growth in the selected segments.
Digital adoption enhancement
With the objective to enhance digital adoption by customers on various
platforms and payment systems (IB, MB, UPI etc) many new changes have been implemented in
U-Mobile (Bank's Mobile banking platform) to enhance user interface and experience.
Further, 2 successful campaigns have been launched and complemented with hand in hand
marketing efforts which included bulk SMS, Social Media Channels, websites and offline
channels like poster & banners for creating awareness. During these campaigns 1.5
million customers were onboarded on U-Mobile.
Redesigning Central Processing Centres (CPC)
For redesigning SARAL, ULP & USK model, multi-prong interventions
have been suggested for optimization of process and implementation has been initiated,
which includes
• Digitization of processes and transfers between Branch, CPC
& borrower
• Optimization of query solving through direct contact between CPC
and borrower
• Larger role in compliance monitoring & lead generation
• Optimizing resources and changes in processing to optimize TAT
Collections Improvement
A hybrid model of collection has been launched in our Bank with
dedicated structure to take care of end-to-end collections process with Call Centre &
Feet on street and Regional Collection Centre structure."Regional Collection Centres
(RCoC)" have been opened across all 125 Regional Offices, with deployment of 600+
internal staff at these centres to have focused approach on collections.
Pilot of ‘Feet on Street' (FOS) Model of collections has been
launched in 5 FGMOs viz Pune, Vijayawada, Bangalore, Vishakhapatnam & Hyderabad, under
which 60 external FOS has been deployed in five zones for affecting collections.
2.4 Digitization of Customer Journey across asset and liability
products segment
The main objective has been to create a road map for end-to-end digital
journeys across asset and liability products and design the digital journey for assets and
liability products. The end-to-end digital journeys aim at substantial reduction in TAT,
enhanced customer experience and reduced operational cost.
Retail Asset Journey
Pre-Approved Personal Loan (PAPL) phase-1 was launched in September
2021 where offers were sent to eligible salaried customers on pilot basis. Based on the
learnings from Phase-I, new BRE rules have been framed to expand our customers base by
covering non-salaried customers also. Subsequently PAPL phase 2 has been launched on
10.03.2022.
The digital journey design for Personal loan, Education loan &
Vehicle loan has been completed and implementation is under way.
MSME Journey
To give boost to MSME lending and reduce TAT of loan sanction,
following 3 journeys have been prioritized for end-to-end digitization
• Renewal of MSME Loans upto ' 10.00 lacs (WC & Term Loans)
• Union GST Gain (Traders Working Capital) upto ' 2.00 cr
• Union Mudra under ‘Kishor' and ‘Tarun' Category
Post pilot launch in 4 regions, the STP journey of MSME renewals upto '
10.00 lacs is planned to be launched pan India in April 2022. The scheme envisages no/
minimal manual intervention to complete the review/ renewal of Working Capital as well as
Term Loan accounts of MSMEs having combined credit limits upto '10.00 Lakh. The product
has been designed to provide much needed relief to the MSMEs by waiving submission of
Balance Sheet and assessing the credit limits on the basis of cash flow.
The digital journey design for Union GST Gain & Union Mudra under
‘Kishor' and ‘Tarun' Category has been completed and implementation is under
way.
Agriculture Journey
Two Agri products, KCC and SHG have been prioritized for end-to-end
digitization journeys. The Journey design and Screen field design for these products have
been finalized.
For KCC renewal journey upto ' 1.60 lacs, vendor has been onboarded,
pilot has been initiated and pan India launch is expected by June 2022. The journey
includes features like farm assessment through satellite imagery, auto assessment of limit
based on Satellite data & SOF, digitized land record integration with Government
portal, etc. The STP journey is expected to reduce the TAT and the workload of Branches as
approx. 17 lacs KCC accounts would be eligible under this.
2.5 Cyber Security Operation Centre (CSOC): Bank has implemented cyber
security framework and instituted Cyber Security Operation Centre. A dedicated skilled
team is deployed to manage the CSOC. The CSOC helps to identify, detect, protect &
prevent the cyber threats.
2.6 Cyber Security Centre of Excellence (CCoE): Bank has established
the CCoE (Cyber Security Centre of Excellence) with a vision to create the best in the
industry new generation cyber security technologies to protect the Bank and focus on
comprehensive awareness & education program for its employees & customers.
3. Revamping the Collection & Payment Services (CAPS), POS, Credit
Card business model and implementation to derive the benefits
During harmonisation and rationalization of processes during
amalgamation, certain strengths of eCB and eAB were identified such as CAPS, POS and
Credit Card Business. Going forward, need was felt to revamp these models to cater the
larger customer base by creating a strong and sustainable business model with digital
solutions for operational efficiency and synergy.
Collection & payment System (CAPS)
To create a sustainable CAPS business model, Sales acceleration
pitching programme has been launched for 1200 plus Corporate Customers and 154 new clients
have been onboarded till now. Besides this training has been provided to the CAPS Branches
and Tracking template has also been designed as a part of review mechanism. API
development for Collection & payment services started for the Corporate clients
Point of Sale (POS)
To Design and implement a sustainable and profitable POS business model
with end-to-end digitisation and centralisation of processes, Soft POS product has been
launched which provides multiple modes of payment options for merchant (tap to pay, QR
scanning, payment through SMS link) with value added services such as Kirana, Khata book
etc
Credit Card
To Design and drive implementation of a sustainable and profitable
Credit Card business model with end- to-end digitisation of processes including sourcing,
analytics-based lead generation, risk profiling, early warning signals, collection,
recovery, dispute management and increase the penetration, various initiatives have been
taken.
Under the initiative new variant of Credit card, UniCarbon Credit card
(co-branded with HPCL) has been launched which has shown good traction. Further
Preapproved Credit Card (PACC) has been launched in 2 phases, showing good conversion rate
of more than 2.5%.
For Enhancing the customer onboarding journey, pilot of end to end STP
journey has been launched and journey will be launched pan India shortly.
4. Designing new branch model for smaller, sales-oriented and digital
branches, touch points and Business Banking Branches for MSME advances and revamping of BC
Model Digi Connect & Digi Connect Pro Outlets
As a part of long-term synergy, need was felt to adopt lean branches to
reduce the cost and increase the efficiency. Accordingly, Bank identified redesigning and
digitizing the branch formats as one of the primary avenues of transformation. With
changed scenario in banking and adoption of technology, bank expanded its footprints by
opening ‘smaller, sales-oriented and digital branches' which are named as
Digi-Connect & Digi-Connect Pro outlets.
As of now, Bank has launched 5 Digi Connect Pro outlets and 1 Digi
Connect outlet at different locations as a pilot. These Outlets are in line with the
guidance of Government for opening 75 Digital Banking Branches unit in 75 districts of the
country.
Union MSME First Branches
(UMFBs) have been designed to have supreme focus on providing
customized service to valued MSME customers efficiently as well as cater to the needs of
mid and large corporate accounts in the absence of MCBs and IFBs, by suitably modifying
the Business Banking Branch model.
UMFB will cater to the needs of MSME customers by providing all
services like MSME loans, deposits, forex services, LC/BG, credit cards, insurance
products, etc., under one roof dedicated to bringing the synergic value to the
customers.These branches have dedicated Relationship Managers who work closely with
customers to fulfill their banking needs. The location of these branches has been
finalized based on advanced analytics done to determine the MSME potential of the area
along with field expertise. As per the aspiration of Bank, already 50 UMFBs have been
opened during the Financial Year. These UMFBs are proactively scouting for MSME proposals.
Revamped BC Model
To strengthen the BC channel, additional services have been identified
for implementation at BC points under the project. These additional services include-
• Lead generation of third party products
• Assistance of BCs for Mobilizing Sishu Mudra Loans
• Introduction of Fixed BC Points for decongestion of branches
• Collection of SMA Loans
Pilot for the above processes have been launched and showing good
traction. Based on the input of the pilot, the initiatives will be launched pan India
5. Digitization of Back Office and Reconciliation Processes
Under Project Samarth 2.0, initiatives have been undertaken to create,
design and implement a digitised process for back-office operations which currently employ
large manpower for doing routine jobs, so as to release the manpower and to improve the
operational efficiency in terms of cost, TAT, tracking capabilities and contain
operational risk.
28 Reconciliation activities and 8 Back-office processes from various
verticals have been taken up for digitization, in alignment with respective verticals. For
Government Business Vertical, their various reports are automated and now the report is
generated by single click. For E-Kuber reconciliation process, automation has resulted in
saving of time and effort.
6. Strengthening of the Organization Structure
The Revamped Organization Structure needs to be strengthened with
digitation of operating models, which should result in increased efficiency and reduced
manpower.
Accordingly, more than 98 internal activities of 27 verticals have been
taken up for digitization. A strong operating model with clear SOP and process flow has
been suggested for these activities which includes use of technology and best practices to
increase efficiency of the structure and release the manpower. This automation will
potentially save 70-80% man hours for the identified activities with improved TAT and
enhanced tracking mechanism.
7. Design technology architecture and a roadmap for implementation of
ML, AI, and Robotics Process
Keeping in view the technological advancement and digital interventions
in Banking sector, Bank has taken up the initiative of creating a road map for digital
architecture considering next 10 years journey with agility to adopt the changed scenarios
during the process. Presently the existing API gateway, ESB, EAI, Infrastructure, Digital,
CBS, external integration, CRM and other Core applications of the Bank were reviewed and
Post review implementation is underway.
Change in Organization Structure
The organization structure is periodically assessed and based on the
suggestion of Top management, verticals, committees the desired changes in the structure
are being implemented. One such major reorganization was taken up during September'21
where realignment of verticals/functions of verticals for better coordination, monitoring
and further strengthening of verticals.
Further Centralized Credit Operations Back-office has been formed to
monitor loan accounts opening in Finacle and periodical data management pertaining to
credit like CRILIC Cell, BG e-Confirmation, CERSAI Cell, NeSL Cell and Interest table and
Limit Node maintenance.
Customer Surveys
BPR vertical has taken up the activity of conducting Periodical
customer surveys to assess the customer opinion, feedback and actionable recommendations
based on suggestions to improve the products, process and systems.
Bank has empaneled 5 Market Research Agencies in FY 2021-22 for
conducting various surveys and 4 Surveys have been conducted during the Financial Year:
1. Customer Satisfaction Survey to assess the satisfaction level of our
customers
2. Customer Experience Survey to assess the quality of services
provided by Marketing Officers of the Bank to Retail Loan customers.
3. Brand Penetration Survey to access the Brand Penetration of the bank
across Country
4. Customer Exit survey to understand the pain points of customer who
have closed their Saving Accounts during FY 2021-22.
The insights emerging out of these surveys are being acted upon for
better customer experience.
8. Business Highlights:
8.1 The global business of the Bank stood at ' 17,48,800 crore as on
March 31, 2022.
8.3 Gross Advances stood at ' 7,16,408 crore as on March 31, 2022.The
RAM (Retail, Agriculture and MSME) sector stood at ' 3,84,339 crore as on March 31, 2022
compared to ' 3,51,459 crore as on March 31, 2021. RAM Sector as a whole grew at an annual
rate of 9.36%.
8.4 Overseas business of the Bank stood at ' 17,429 Crore as on March
31, 2022 compared to ' 18,191 Crore as on March 31, 2021. Your Bank has three overseas
branches at Hong Kong, DIFC (Dubai) and Sydney (Australia). Your Bank also operates in the
United Kingdom through its wholly owned subsidiary, Union Bank of India (UK) Ltd.
9. Income and Expenditure:
Table 1: Income and Expenditure Statement
(Rs in crore)
| Sr. No. |
Particulars |
FY 2021-22 |
FY 2020-21 |
| 1 |
Interest Earned |
67944 |
68767 |
| 2 |
Other Income |
12525 |
11744 |
| 3 |
Total Income (1+2) |
80469 |
80512 |
| 4 |
Interest Expended |
40157 |
44079 |
| 5 |
Net Interest Income (1-4) |
27786 |
24688 |
| 6 |
Operating Expenses |
18438 |
16766 |
|
w/w Establishment Expenses |
10115 |
9284 |
| 7 |
Total Expenditure |
58596 |
60845 |
| 8 |
Operating Profit (3-7) |
21873 |
19667 |
| 9 |
Provisions |
16641 |
16761 |
| 10 |
Net Profit/Loss |
5232 |
2906 |
| 11 |
Earnings per share (in ') |
7.73 |
4.54 |
10. Profitability and Efficiency:
10.1 Your Bank reported an Operating Profit of ' 21,873 crore in FY
2021-22 as compared to ' 19,667 crore in FY 2020-21.
10.2 Net profit of the Bank stood at '5,232 crore in FY 2021-22.
10.3 Cost-to-income ratio of your Bank stood at 45.74% in FY 2021-22.
10.4 During FY 2021-22, Return on Average Assets stood at 0.47%,
whereas Return on Equity stood at 10.11%.
| Table 2: Efficiency Ratios |
|
|
| Parameter (%) |
FY 2021-22 |
FY 202021 |
| Return on Average Assets |
0.47 |
0.27 |
| Return on Equity |
10.11 |
6.68 |
10.5 The following are the key productivity ratios of the Bank for FY
2021-22.
| Table 3: Productivity Ratios |
|
|
| Parameter |
FY 2021-22 |
FY 2020-21 |
| Business per Employee (Rs in crore) |
23.26 |
20.17 |
| Business per Branch (Rs in crore) |
198.91 |
169.35 |
| Gross Profit per Employee (' in lakh) |
29.09 |
25.15 |
10.6 Dividend:
Board of the Bank has recommended dividend of '1.90 per equity share of
face value '10 each for FY 2021-22.
11. Shareholders' Return:
11.1 The Bank's net worth was ' 51,765 crore as on March 31, 2022.
12. Asset Quality:
12.1 Gross Non-Performing Assets (GNPA) of the Bank stood at ' 79,587
crore as on March 31, 2022. GNPA as per cent to gross advances stood at 11.11% as on March
31,2022.
13. Capital Adequacy
13.1 The Capital Adequacy Ratio as per BASEL III norms stood at 14.52%
as on March 31,2022. Common Equity Tier I (CET I) capital of the Bank stood at 10.63% in
March 2022
Table 4: Capital Adequacy Ratios - Basel III
(Rs in crore)
| Parameters |
RBI Minimum Benchmark March 31, 2022 |
March 31, 2022 |
March 31, 2021 |
| Total Risk Weighted Assets |
|
545,923 |
5,51,521 |
| Total Capital Funds |
NA |
79,281 |
69,263 |
| CET 1 Capital |
|
58,049 |
50,001 |
| Tier 1 Capital |
|
66,589 |
57,091 |
| CRAR (%) |
11.50 |
14.52 |
12.56 |
| CET 1 (%) |
8.00 |
10.63 |
9.07 |
| Tier 1 (%) |
9.50 |
12.20 |
10.35 |
| Tier 2 (%) |
NA |
2.32 |
2.21 |
13.2 Capital raised by the Bank
Bank has raised equity captial of ' 1,447.17 Crore on allotment of
42,79,03,111 equity shares under Qualified Institutions Placement.
Further, the Bank has issued and allotted Basel III compliant Tier 1
Bonds of ' 5,000 Crore and Tier II Bonds of ' 2,000 Crore during the FY2021-22.
14. Network
Branch Network of your Bank is widely spread across the country with
8870 branches and 3 overseas branches (Hongkong, Sydney, Dubai) as on March 31, 2022. Out
of these 57 percent of the branches are located in rural and semi-urban centers.
15. Awards & Accolades
During FY 2021-22, your Bank received various awards for its new
initiatives taken in Digitization, Financial Inclusion, HR management, Customer Service
etc.
| Award |
Category |
Year |
| Appex India HR & Business Excellence Awards 2020 |
Best Strategy in HR 2020 |
Apr-21 |
|
HR Oriented CEO Award 2020 |
|
| Award |
Category |
Year |
| ET Best Place to work for Women 2021 |
ET Best place to work for Women 2021 |
May-21 |
| Golden Peacock |
HR Excellence Award - 2020 |
Jun-21 |
| Ease 3.0 Reform |
Governance & outcome-centric HR |
Aug-21 |
|
Deepening Financial Inclusion & customer Protection |
|
|
Smart lending |
|
|
Tech enabled ease of banking |
|
|
Best improvement category |
|
|
Ease Reform Index Award 2021 |
|
| Rajbhasha Kirti Puraskar |
1st prize in Nationalized bank Category for Implementation of
hindi for 2019-20 |
Sep-21 |
|
3rd prize in Nationalized bank Category for
Implementation of hindi for 2020-21 |
|
|
2nd prize in House Magazine Category for
"Union Srijan" for 2018-19 |
|
|
2nd prize in House Magazine Category for
"Rajbhasha Sarita" for 2018-19 |
|
|
2nd prize in Town official language Implementation
committee (TOLIC) Vishakhapatnam of Union Bank of India for 2019-20 |
|
| Award for highest percentage of digital Payment transactions |
Digital Payment Utsav |
Dec-21 |
| Infosys finacle Innovation award 2021 |
Application Programming Interface Management Under Process
Innovation category |
Jan-22 |
| IDC Industry innovation awards |
Application Programming Interface Management (APIM)under
Innovation in Operations category. |
Jan-22 |
16. Social Media
Your bank is extending services through its official handles on all
major social media platforms viz. Facebook, Twitter, Instagram, YouTube and LinkedIn.
Users were engaged in business interactions through conversation sessions, customer care,
contests, educating posts/ videos, organizing online events etc. User interactions were
used to understand brand perception and gained competitive intelligence to increase
business prospects through social media.
Your bank has thrived on cost-effective brand publicity through social
media and posted dynamic content with attractive static/ video posts, bringing customer
awareness of the products, services and offers. Awareness was also created through posts
on cyber security, urging customers to be aware of frauds, cyber scams and other social
engineering, social causes, remembering personalities, significant days/ events etc.
Your bank is available 365x24x7 on all handles which are very
responsive and reply instantly. In the last year, 1.37 lakhs queries from social media
users were responded ensuring timely guidance, proper redirections and complaint redressal
resulting in customer delight. Your bank brand was well received by the public at large,
justified with a whopping 399.13 lakhs impressions and 14.17 lakhs engagements.
Your bank has a huge follower base on social media presence which has
grown to 24.33 lakhs as on 31st March 2022 against 19.51 lakhs last fiscal scaling a
growth of 24.06% YoY.
Your bank is continuously measuring the overall sentiment about
existing or new products, collecting feedback about initiatives, customer interest to meet
the expectations of customers in product offerings and services rendered.
Your bank has run more than 100+ Digital Marketing campaigns on social
media handles and targeted ad campaigns on Google Ads creating buzz for maximum reach on
products/ services/ offers and roped in new customers along with improved search engine
visibility and enhanced website traffic.
Your bank has made e-commerce business tie- ups across hospitality,
entertainment and health sectors with key market players like MakeMyTrip, Swiggy, Zomato,
BookMyShow, Apollo Pharmacy etc. and encouraged card holders to embrace cashless payments
thereby remaining with digital banking ecosystem.
17. Changes in the Directors on the Board of the Bank
The following changes took place in the Board of directors of your Bank
during the financial year 2021-22.
• Shri Laxman S. Uppar has been appointed as a Part-Time
Non-Official Director on the Board of the Bank on March 21,2022.
• Shri Nidhu Saxena has been appointed as an Executive Director on
the Board of the Bank on February 1, 2022.
• Shri Gopal Singh Gusain, Executive Director of the Bank has
completed his term in the office on January 31, 2021 upon superannuation.
• Shri Suraj Srivastava has been appointed as a Part-Time
Non-Official Director on the Board of the Bank on December 21,2021.
• Shri Sameer Shukla has been appointed as a Government Nominee
Director of the Bank on November 08, 2021.
• Shri Rajneesh Karnatak has been appointed as an Executive
Director of the Bank on October 21,2021.
• Shri Dinesh Kumar Garg, Executive Director of the Bank has
completed his term in the office on September 30, 2021 upon superannuation.
18. Directors' Responsibility Statement
The Directors confirm that in the preparation of the annual accounts
for the year ended 31st March, 2022:
• The applicable Accounting Standards had been followed along with
proper explanation relating to material departures, if any.
• Accounting Policies had been selected and applied them
consistently and made judgments and estimates that are reasonable and prudent so as to
give a true and fair view of the state of affairs of the Bank at the end of the financial
year and of the profit and loss of the Bank for that period.
• Proper and sufficient care was taken for the maintenance of
adequate Account Records in accordance with the provisions of the relevant Acts for
safeguarding the assets of the bank and for preventing and detecting fraud and other
irregularities.
• The Annual Accounts were prepared on a going concern basis.
• Internal financial controls had been laid down to be followed by
the bank and that such internal financial controls are adequate and were operating
effectively.Explanation.-For the purposes of this clause, the term "internal
financial controls" means the policies and procedures adopted by the Bank for
ensuring the orderly and efficient conduct of its business, including adherence to Bank's
policies, the safeguarding of its assets, the prevention and detection of frauds and
errors, the accuracy and completeness of the accounting records, and the timely
preparation of reliable financial information.
• Proper systems were in place to ensure compliance with the
provisions of all applicable laws and that such systems were adequate and operating
effectively.
19. Corporate Governance
The Board of the Bank is committed to adopt good Corporate Governance
practices in letter and spirit. A detailed report on Corporate Governance is given in a
separate section of the Annual Report. The Corporate Governance report for financial year
2021-22 has no audit qualifications.
20. Corporate Social Responsibility (CSR)
20.1 Union Bank of India has been in the forefront in meeting its CSR
commitments. Towards this the Bank has established Union Bank Social Foundation Trust
(UBSFT) in the year 2006 as an extended arm for carrying out the CSR activities of the
Bank. UBSFT has been incorporated aiming to support initiatives towards Social
upliftment& improving lives of underprivileged segments. The major CSR activities of
the Bank are now being carried out through the UBSFT. Its Board is headed by the Bank's
Managing Director & CEO with Executive Directors as Vice Chairman Trustees, other
trustees include the Bank's General Managers and one independent trustee. The UBSFT Board
provides directions in accordance with the Bank's thrust areas and undertakes review every
quarter. The directions of the Board are executed by the Chief Executive of UBSFT. While
the Registered office of UBSFT is at Bengaluru, the administrative office is at Mumbai.
20.2 The CSR activities undertaken by the Bank/UBSFT in 2021-22
UBSFT has approved 28 projects involving an amount of '547.36 lacs
during the year 2021-22 under various sectors like Education, Health care, Community
Development, Skill Development etc. details of some major projects undertaken by
Bank/UBSFT are given below:
• Bankers Institute for Rural & Entrepreneurship Development,
Hyderabad have been approved an amount of '26.80 lacs towards sharing of revenue expenses.
• Swarna Bharat -Soma Institute of Technical training,
Venkatachalam have been approved an amount of '39.73 lacs towards sharing of revenue
expenses
• SBT-MRGI -Skill Development Institute, Muchintal have been
approved an amount of '9.75 lacs towards sharing of revenue expenses.
• Corporation Bank Centenary Public Library, Mangalore have been
approved an amount of '25.00 lacs towards meeting the revenue expenses of the Library.
• Corporation Bank Heritage Museum, Udupi have been approved an
amount of '17.00 lacs towards meeting the revenue expenses of the Museum
• Supported District administration Udupi for setting up an Oxygen
plant at district hospital at a cost of ' 46.25 lacs for treating COVID 19 patients.
• Supported National Health Mission Ranchi for purchasing one
Ambulance at a cost of '19.21 lacs for transportation of patients.
• Supported Mangalore Jesuit Education Society for procuring
educational research equipments for St. Aloysius College, Mangaluru at a cost of '25.00
lacs.
• Supported King George Hospital, Visakhapatnam for procuring one
Doppler machine at a cost of ' 29.50 lacs.
• Supported Akshayapatra Foundation, Bangalore for purchase of two
food distribution vehicles (custom built) for supporting food distribution (mid day meal
scheme) to schools at Mangalagiri, Vijayawada at a cost of ' 23,36,320/-.
• Saraswati Education & Welfare Trust, Meghalaya have been
approved donation of '24.00 lacs for construction of 3 class rooms in Saraswati Vidya
Mandir, Kongong.
• Supported Shraddha Foundation Mumbai for purchase of a mini bus
for transportation of cancer patients from shelter to AIIMS Bhubaneswar at a cost of
'20.90 lacs.
• Devbhumi Siksha Prasar Samiti, Rudrapur, Udham Singh Nagar have
been approved donation of '20.00 lacs towards construction of multi purpose hall in their
college of pharmacy.
21. Acknowledgements
21.1 The Directors thank the shareholders, valued customers,
well-wishers, Share Transfer Agent and correspondents of the Bank in India and abroad for
their goodwill, patronage and support.
21.2 The Directors acknowledge with gratitude the valuable and timely
advice, guidance and support received from Government of India, Government of Maharashtra,
Reserve Bank of India, Securities & Exchange Board of India, Insurance Regulatory and
Development Authority of India, Central Vigilance Commission, BSE, NSE, financial
institutions, correspondent Banks and Statutory Central Auditors of the Bank,in the
functioning of the Bank.
21.3 The Directors place on record their deep appreciation for the
dedicated service and valuable contribution made by members of staff in the overall
performance of the Bank during the year and look forward to their continued co-operation
in the realisation of the corporate goals of the Bank in the years ahead.
21.4 The Directors also express that the staff members stay safe,
healthy and maintain good health.
| For and on behalf of the Board of Directors |
|
| Place : Mumbai Date : 30.05.2022 |
(Rajkiran Rai) Managing Director & Chief
Executive Officer |