Chairman’s Desk

Respected members,

I have great pleasure in presenting 42nd Annual Report of our bank, together with the audited Balance Sheet and Profit & Loss account for the year ended 31st March 2012, and welcoming you to this Annual General Body Meeting. Indian economy has strongly come out during the year 2011-12 from the economic meltdown experienced during previous years. I am sure that our country will make further economic progress in the coming years because of its internal economic strength and preparadeness for growth and development. I agree that the fluctuating prices of crude oil, recession prevailing in European countries as well as in Japan, high rate of inflation coupled with rising prices, play a deterent role against our quest for progress. Still, the expertise of Gujarati community, able and inspiring political leadership, progressive industrial policy of state government has lead our state on the path of progress. Our bank has also made noteworthy alround progress under the guidance of experienced management and faithful employees. With this background, I am happy to present the report on progress made and activities under taken by the bank during the year 2011-12.

Financial Indicators

(Rs. in crore)

We will make analysis of the above statistical data.

Share Capital, Reserves and Capital Adequacy – CRAR – 19.50 %

During the year,Bank’s Share Capital grew to Rs.60.25 crore from Rs.48.63 crore during the year. Likewise, the number of share holders also increased to 42862 from 40161. Bank’s reserve funds have reached to Rs.662.96 crore from Rs.617.18 crore during the year. Bank's CRAR, which was 27.31% as on 31.03.2011 declined to 19.50%. This reduction in CRAR is partly due to increase in advances.

20.27% rise in Deposits :
Total deposits Rs. 2696.99 crore

I am very happy to state that the total deposits of our bank have increased to Rs. 2696.99 crore as on 31.03.2012, which were at Rs. 2242.50 crore as on 31.03.2011. This growth rate in deposits which works out to 20.27% is higher than the 17.40% rate deposits growth rate of entire banking sector in india. I thank all depositors, for their support in achieving this growth, in a highly competitive scenario.

During the year under review; Bank had decided to give thurst to increase low cost deposits like savings and current account deposits to increase profitability and broad base the clientele. Now the savings account holders get more interest as interest on daily bases is being given as per Reserve Bank guidelines. As a result, such low cost deposits have increased to Rs.800.72 crore, which form 36% of total deposits. Bank has paid premium to DICGC up to 30.09.2011 on the deposits held by bank.

The growth in bank’s deposits is a result of abundant faith of depositors in our bank. I appreciate the efforts of officers and staff of bank’s branches in this regard.

38.90% rise in Advances:
Total advances Rs. 1884.21 crore

During the year under review, bank’s advances have increased to Rs.1884.21 crore from Rs.1356.91 crore last year, rising a fabulous growth of 38.90%. This growth is much higher than the 19.30% growth rate registered by the entire banking industry of India. This includes priority sector advances of Rs.683.93 crore. The rise in advances can be considered very satisfactory, considering the fact that bank has discontinued adhoc L.C. Bills discounting type advances of about Rs.100- 125 crore. Bank charges low interest, i.e. 10 % on educational loans and loans given to doctors under Doctor Mitra Yojna. Also, the rate of interest charged on loans to small businessmen and industries is also low i.e. 12.50% which is given on easy terms. The disposal of loan applications has become faster due to bank’s customer friendly loan policy and delegation of powers at branch level. Moreover, the disposal of loan application of higher amount has become faster as bank has delegated wide powers to officials at bank’s head office and weekly meetings of loan sanctioning committee. The credit for quick disposal of loan applications also goes to officials of head office and branches.

Bank has obtained membership of Credit Information Bureau (India) Ltd, (CIBIL) to get credit reports of prospective borrowers.

Further, bank has introduced a scheme of granting interest rebate ranging between 0.50 % and 1.50% based on credit rating given to borrowers maintaining financial discipline which is welcomed by customers. I request borrower customers to observe financial discipline and avail the benefit of this scheme.

The progressive policy adopted by bank in grant of loans and incentives given to the staff in the terms of promotions, additional salary, prizes etc; for doing praise worthy work in mobilizing advances, has resulted into growth in advances.

Investments: Rs.1101.31 crore

Bank’s treasury department manages investment of bank’s investments. Bank’s total investments remained at Rs.1101.31 crore at the end of the year 2011-12, which were at Rs. 1100.04 crore, the previous year.

Since our bank is a member of Clearing Corporation of India Ltd (CCIL), bank can comfortably undertake transactions government securities and call money market.

Expansion of Banking services – “Vadhu Seva – Vadhu Vikas” (More Service – More Progress) – Our motto.

As you know, our bank offers many additional services to customers in addition to regular banking services. These services are welcomed by our customers.

DEMAT SERVICE:

It is a matter of pride for us that we have more than 32000 demat account holders. Since, we have got permission under “Application supported by Blocked Amount “(ASBA)”, to receive applications for allotment of shares, our demat account holders can now comfortably make application in I.P.Os of companies. Bank has also made arrangements with M/s Ratnakar Securities Pvt Ltd and M/s Investmenter Securities Ltd, for auto pay in facility and trading facility of our customers. The working of our Demat department is put under concurrent audit by a firm of Chartered Accountants as per SEBI guidelines. NSDL is also extending full co-operation to this department. Shri Gagan Rai, Managing Director and Shri Jayesh Sule, Executive Director, NSDL visited our bank in October 2010 and appreciated the work of Demat department. I thankfully acknowledge their gesture.
This department had arranged a customers meet on 10th July 2010 which was addressed by Noted Economist and Chairman of 3rd Finance Commission, Gujarat State - Shri Bharat Gariwala and expert analyst of Share Market – Shri Yamal Vyas. I place on record, our thanks and gratitude to these dignitaries.

Other Banking Services

1. Our bank also offers facilities like, RTGS and NEFT for speedy fund transfer, the use of which is now extensively done by our customers. Further, the NECS facility now available to customers has felicitated direct credit of dividend / refund in customers’ accounts.
2. Since our bank is connected with speedy clearing arrangements, cheques drawn on bank branches in over 1190 towns / cities in our country are cleared faster. This facility is also availed by many customers.
3. We have arrangements for collection of various taxes like Income Tax, TDS., TCS, VAT for our customers without any additional charges. We have also arrangements for collection of property tax bills of Ahmedabad Municipal Corporation and Electricity bills at Vadodara. I request you to avail these services extensively.
4. The safe deposit locker facility of our bank is very popular. We have about 49,875 lockers. Our locker halls are air conditioned and well maintained and the locker rent is very reasonable. Bank has installed 4169 new lockers during the year 2011-12 and adds more as per demand.
5. Bank has facility of 28 ATMs. During the year under report, bank has installed four more ATMs at Anand, Vadodara, Sanand and Bodakdev branches. Bank is planning to join the network of National Financial Switch. Since this is the largest ATM network in India, our ATM card holders will be in a position to access more than 80,000 ATMs of nationalized / other banks all over the country, once the arrangements are operationalized. Bank shall issue fresh ATM cards for this purpose.
6. SMS and Mobile Banking facility is also available to bank’s customers. Transactions through ATM, RTGS/NEFT, due date of locker rent and renewal of insurance etc are advised through SMS to customers under this facility. Moreover, mobile banking facility helps customers get information of balance in their account, status of deposited cheque, last two transactions, etc. Registration of mobile number is necessary for availing this facility. I request you to take maximum benefit of these services.
7. CBS system for bank’s functioning adopted by other banks has been adopted by our bank also; in order to give speedy and quality banking services to our customers. Now our customers are in a position to transact banking business through any of our branch. Our bank is not recovering any additional charge for any of the facility under CBS. I am happy to state that bank has operationalized Disaster Recovery Site at Vadodara for uninterrupted banking services in case of any accidental event.
8. Bank’s 33 out of 38 branches are functioning in bank’s own well maintained premises. An annexe building has also been at Head Office to add to the services to our customers, where Demat Department, Information Technology Department and Clearing Departments are housed. An ultra modern data centre has been prepared in I.T. dept in this building.
9. This data centre was inaugurated by Shri Eknathji Thakur, the Chairman of the Saraswat Co-op Bank Ltd. I thank him for accepting over invitation.
10. On the eve of his visit to our bank, we also arranged his lecture on “Challenges against Co-operative banks” to get the benefit of his vast knowledge and experience. The programme was attended by more than 500 representatives of various co-operative banks.
11. Bank offers stamp franking facility through 33 branches, the benefit of which is taken by large number of our customers and members of public. Bank also proposes to make arrangements for E-stamping in a near future.
12. Bank offers General Insurance facility in collaboration with M/s Bajaj Allianze General Insurance Company, for the benefit of customers. We are planning to expand the scope of this service.

International Business Banking Division: Forex related services – Turnover - Rs.7000 crore

Our bank is the first and only co-operative bank to get AD category-I licence from Reserve Bank of India for conducting Forex business for the last four years. The division extends all kinds of Forex related services.

Our bank gives facility to sell / purchase all major foreign currencies through its dealing room. The exporters / importers of industries in Ahmedabad and its vicinity, like chemicals, pharmaceuticals, engineering, gems & jewellery, cotton & cotton textile, pigments, oil etc, avail the services like Buyers’ credit, Suppliers Credit, Foreign Currency Term Loan etc. Many industrial units of SME and C&I sectors avail the benefits of these facilities. This division issues Bank Guarantees in Foreign Currency also. Commerz Bank, Well Fargo Bank and Bank of Baroda have granted line of credit to our Bank. Our bank has facility for opening NRE / NRO / RFC / EIFC FCNR accounts. Bank maintains NOSTRO accounts in five currencies viz. US Dollar, Great Britain Pound, Japanese yen, Euro and Canadian Dollar. Bank is planning to start transactions in Australian / New Zealand Dollar shortly. Bank is using SWIFT facility for transmitting messages, which facilitates exchange of messages with 43 international banks. The turnover of this division has crossed Rs.7000 crore in a short span of time. I congratulate all employees working in this division for their glorious performance.

Customer Service:

Customer service plays a very important role in development of co-operative banks. Personal relationship with customers strengthens the bonds between the bank and customers. Our bank, therefore, attaches immense importance to the customer service. Bank takes all policy decisions keeping customers interest in mind, and makes earnest efforts to implement suggestion received from customers. We, therefore, arrange customer meets to solicit suggestions to make our services customer oriented. During last year, 20 customer meets were arranged, which were attended by office bearers and senior officers. The customers also attend such meets with enthusiasm.

A senior officer has been posted in the bank to attend to customer complaints. Special care is taken in about ten branches to extend better services to senior citizens / illiterate citizens and women customers. Bank’s service charges are kept very reasonable and we not collect any hidden charges. We are committed to add more and more services and make progress.

Corporate Governance :

Bank’s Board of Directors comprises of experienced and expert members or diverse fields like Banking, Accountancy, Food Grain Trade, Education etc. It also comprises of professional directors. Bank gets immense benefit of experience and expertise of all the directors. The Board of Directors meets at least once a month and takes unanimous decisions on policy matter, after thoughtful deliberations, in a transparent manner.

Various committees such as, Audit Committee, Directors / Standing Committee, Investment Committee, Committee for Supervision and Recovery of NPAs; comprising of members of Board of Directors, invited professionals and senior executives of bank for taking important decisions for efficient functioning of our bank have been formed by Board. These committees meet regularly and give helpful guidance to the Bank. The members of these committees extend the benefit of their knowledge, expertise and experience to our bank.

Moreover our bank has also constituted Branch Development Committees at branch level, comprising of local personalities. The committees meet five six times in a year. The vast experience and expertise of members of these committees help developing bank’s business and resolving local issues.

Ten branches of our bank and other important departments like investment, demat, forex, taxation have been put under concurrent audit by Chartered Accountants to ensure compliance with rules and regulations. Besides this, all branches are inspected on half yearly basis by our inspection department also.

Conference, Workshop and Seminars:

I am happy to inform you that our bank arranges conferences, workshops and seminars time to time for the benefit of co-operative banks and employees. I give details of such programmes arranged during the year.

1. In August 2010, bank had invited Dr. Vinayak J. Bhomiya, an eminent doctor of Sanjivani Hospital, who gave informative speech on Hypertension and Diabetes.
2. In October 2010, a two day conference of CEOs of leading co-operative banks and state level federations of co-operative banks was arranged under the banner of NAFCUB, which was sponsored by our bank. It was attended by 22 CEOs of Multi State Scheduled Co-op Banks and officials of NAFCUB and discussed issues confronting the sector.
3. In November 2010, a lecture of Shri Mukund Ghaisas, founder Chairman of The Ahmednagar Nagarik Sahakari Bank and past Chairman of Maharashtra Urban Co-op Banks Federation was arranged on CAMELS rating for co-operative banks, which was attended by about 100 officials of co-operative banks of Ahmedabad and Gandhinagar District.
4. In January 2011, a seminar on VISION – 2020 for co-op banks was arranged under the leadership of well known Chartered Accountant and Vice Chairman of the Vijay Com. Co-op Bank Ltd Shri Kalpakbhai Doshi, which was attended by large number of office bearers of Ahmedabad and Gandhinagar based co-operative banks.
5. In March 2011, a workshop was arranged at the behest of Financial Intelligence Unit – New Delhi by our bank to educate the co-operative banks on anti money laundering transactions, large value cash transactions, suspicious transactions and transactions by NPOs. The workshop was handled by Shri Pankaj Rajwanshi, Deputy Director and Shri P.K. Mishra, Additional Director, FIU, which was attended by more than 30 Banks.

Human Resources Development

Human Resources Development play a significant role in development of any organization in the present time of fierce competition. Satisfied and trained staff is considered our asset. Bank, therefore, arranges training programmes on various aspects of banking in bank itself. Our staff is also deputed to training institutions at Pune, Mumbai, Hyderabad, etc.

Training programmes are arranged in our bank for professional banking examinations also; in which employees of other banks also participate. Bank provides all the facilities free of charge for this purpose. Due to our vigorous efforts, and hard work by employees, we have now a good number of employees having JAIIB / CAIIB qualifications, which is a praiseworthy achievement for co-operative bank like ours. Bank has also started recruiting employees having professional qualifications like C.A., C.S., M.B.A. etc. Because of this prudential approach; bank’s working has become professional. We have now 571 employees in our bank.

Bank also gives prizes, productivity linked bonus and publicly honours employees, in order to boost their morale and strengthen their ties with the bank. Employees of such of the branches which perform better in mobilizing deposits and advances, securing recoveries and increasing low cost deposits are given prizes also.

I am happy to state that bank honoured five employees by giving prizes who had exhibited exemplary honesty by returning valuables left by bank’s locker holders.

Thus, it is our persistent endeavour to promote welfare of employees along with the progress of Bank.

Finance to Directors:

No director of our bank nor his relatives as defined by Reserve Bank of India have been granted any credit facilities except overdraft on fixed deposits in their own name and thereby bank follows RBI guidelines in this regard.

Appropriation of profit and dividend:

Bank’s total income for the year 2010-11 was Rs.235.29 crore. After deducting a sum of Rs.209.79 crore comprising of expenses, provisions and Income Tax paid, bank’s net profit stood at Rs.34.50 crore as on 31.03.2011, which was Rs.28.10 crore for the year 2009-10. Bank’s Board of Directors have recommended appropriation of profit as under and 12% dividend to share holders. I request members to approve the same.