canara bank annual report

7/28/2019 Canara Bank Annual Report

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2011-2012

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A N NUA L RE PO RT 2011- 2012

CONTENTS1 . N OT I C E . . . .. . . .. . . .. . . .. . .. . . .. . .. . . .. . . .. . .. . . .. . .. . . .. . .. . . .. . .. . . .. . .. . . .. . .. . . .. . .. . . .. . .. . . .. . . 2

2 . P R O GR E S S AT A G L AN C E . . . .. . . .. . . .. . .. . . .. . .. . . .. . .. . . .. . .. . . .. . .. . . .. . .. . . .. 8

3 . D IR E CTO RS R E PO RT 2 0 11 -2 01 2 . .. . .. . .. . .. . .. .. . .. . .. . .. . .. .. . .. . .. . . 9

M A NA G EM E NT D I SC U SS I ON A N D A N ALY S IS . . . . . 1 0

C A NA R A B AN K I N 2 0 11 - 20 1 2 . . . .. . . .. . . .. . . .. . . .. . .. . . .. . .. . . .. . . . 1 4

C H A NG E S I N T H E BO A RD O F D I R E CT OR S . .. . . .. . . .. . . 5 3

D I R E CT OR S ' R E S PO N SI B I L I TY S TAT E ME N T . . .. . . .. . .. . . 5 7

A CKNOWLED G MENT ........................................................ 58

4 . R EP ORT O F T HE B OA RD OF D IR EC TO RS ONCORPORATE G OVERNA NCE ................................................. 59

5 . A UD I TO R S' C E RT I F IC AT E O N C O RP O RAT EG OVERNA NCE ............................................................................. 82

6. S TA ND A LONE FINA NCIA L S TATEMENTS ........................ 83

A U D ITORS ' REPORT ............................................................. 84

BA LA NCE S HEET ................................................................... 87

P R OF I T A N D L O S S A C CO U N T . . . .. . .. . . .. . .. . . .. . .. . . .. . .. . . .. . . . .. . 8 8

S CHED U LES FORMING PART OF THEBA LA NCE S HEET ................................................................... 89

S CHED U LES FORMING PART OF THEP R OF I T A N D L O S S A C CO U N T . . . .. . . .. . . .. . .. . . .. . .. . . .. . .. . . .. . . . . . 9 7

A CCOU NTING POLICIES ................................................... 99

NOTES ON ACCOUNTS ..................... ..................... ........... 105

PILLA R 3 (BA S EL II) D IS CLOS U RES ............................... 143

CA S H FLOW S TATEMENT .................................................177

7. CONSOLID ATED FINA NCIA L S TATEMENTS ...................179

A U D ITORS ' REPORT ............................................................. 180

CONS OLID ATED BA LA NCE S HEET .............................. 182

CONS OLID ATED PROFIT A ND LOS S A CCOU NT ...183

S CHED U LES FORMING PA RT OF THECONS OLID ATED BA LA NCE S HEET .............................. 184

S CHED U LES FORMING PA RT OF THECONS OLID ATED PROFIT A ND LOS S A CCOU NT ...191

ACCOUNTING POLICIES ...................................................193

NOTES TO THE CONSOLIDATED FINANCIALSTATEMENTS ................... ...................... ..................... ............ 197

CONSOLID ATED CA S H FLOW S TATEMENT ............ 208

8 . C H AI R MA N & M AN AG I NG D IR E CTO RS 'ADDRESS TO SHARE HOLDERS............................ ............... 210

9 . AT T EN D AN C E S L I P- C UM - EN T RY PA S S . . . . . .. . .. . . .. . . .. . .. . . .. . . 2 1 3

1 0 . P R OX Y F O RM . . . .. . . .. . . .. . . .. . .. . . .. . .. . . .. . . .. . .. . . .. . .. . . .. . .. . . .. . .. . . .. . .. . . .. . .. . . .. . . 2 1 5


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, 28 ] 2012 0 4 .0 0 , , , -560 001 :

1. " 31 2012 ,31 2012 - , "

2. 2011-12

NOTICEN o t i c e i s h e r e b y g i v e n t h a t t h e T e n t h A n n u a l

G en er al M ee ti ng o f t he S ha re ho ld er s o f Ca na ra B an kwill b e held on Th ursday the 28th June 2012 at

4 .0 0 P. M. a t J na na jy ot hi A ud it or iu m, C en tr al C ol le ge ,Palace Road, Bangalore-560 001 , to transact the followingbusiness:

1. To discuss, a pprove a nd adopt the Audited Ba la nceSheet of the Ba nk as a t 31st March 2012, Profit & L ossa cc ou nt f or t he y ea r e nd ed 3 1s t Ma rc h 2 01 2, t heR ep or t o f t h e B oa rd o f D ir ec t or s on t h e w or ki ng a nda ct i vi t ie s of t he B an k fo r t h e p e ri od c ov er ed b y t heA cc ou nt s a nd t h e A ud it or s' Re po rt o n t he B al an ceSheet and Accounts.

2. To decla re dividend for the fina ncia l yea r 2011-12.

B y O rd er o f t he B oa rd o f D ir ec to rs

Pla ce : Ba nga loreDa te : 21.05.2012

S R AM ANCha irma n And Ma na ging Director : : 21.05.2012


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1. : 4 23 ] 2012, /

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, , 23,] 2012

3 . : 28 ] , 2012 03.00

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NOTES

1 . A PP OI N TM EN T O F P RO XY:A S H A RE H O LD E R E N TI T LE D T O AT T EN D A N D V OT E ATT HE M EE TI NG I S E NT IT LE D TO A PP OI NT A P ROX Y TOAT TE N D A N D V OT E I N ST EA D O F HI MS E LF A ND S UC HP RO XY N E ED N OT B E A S HA R EH OL DE R O F T HE B AN K . T h e P r ox y F or m i n o r de r t o b e e f fe c t iv e m u st b e l o dg e da t the Hea d Office of the Ba nk , a t least Fourda ys beforethe d at e of the Ann ual Gene ral Mee ting i.e . on orb e fo r e t h e c l os i ng h o u rs of t h e B a nk o n S a tu r da y t h e23rd June2012.

2 . A P PO I N TM E NT O F A N A UT H O RI S ED R E P R ES E NTAT I VE :N o p er s on s ha ll b e e nt i tl ed to at te n d o r v ot e a t t hem ee t in g as a d u ly a ut h or iz ed r ep re s en ta ti ve o f ac om pa ny or a ny ot he r B od y Co rp ora te w hi ch i s ashareholder of the Bank, unless a copy of t heR es o lu t io n a p p oi n ti n g h im / he r a s a d u l y au t h or i ze dr ep re s en ta ti ve , c er t if ie d t o be t r ue c op y b y t h eCha irma n of the meeting a t which it was pa ssed, sha llh av e b e e n d e p o s it e d a t t h e H e ad O f fi c e o f t h e B a nk a t

l e as t fo u r d ay s be fo re t h e d at e o f t h e A nn ua l G e ne ra lM e et i n g , i. e . o n o r b e fo r e t h e c l os i ng h o u rs o f t h e B a nkonSa turda y , the23rd June2012.

3 . R E GI ST R AT IO N :

I n o r de r t o f ac i li t at e t h e s h ar e ho l d er s a t te n di n g t h em e e ti n g , R eg i st r at i on p r oc e s s w i ll c o mm e n ce f r om3 p .m . o n T hu rs d ay, th e 2 8t h J u ne 2 01 2 a t t he v en u e.S h ar eh ol de rs a re r eq u es te d to b e p re s en t fo r t h emeeting well in a dva nce, to complete the Registrationformalities.

4 . AT TE N DA N CE S LI P:

Fo r t he c on ve ni en ce o f t he s h ar eh o ld e rs , a tt e nd an c es l i p - c u m - e n t r y p a s s i s a n n e x e d t o t h i s n o t i c e .S h a r e h o l d e r s / P r o x y H o l d e r s / A u t h o r i s e dR ep re s en ta ti ve i s r eq u es t ed to fi ll i n, af fi x t h ei rs i g n a t u r e s a t t h e s p a c e p r o v i d e d t h e r e i n , a n ds ur re nd e r t he s am e a t t h e v en ue . P ro xy /A ut h or is edRe pr es en ta ti ve o f a s ha re ho ld er s ho ul d s ta te o n t hea t t e n d a n c e s l i p a s ' P r o x y ' o r ' A u t h o r i s e dRe p re s en ta ti ve ' a s t he c as e m ay be . S h ar eh ol d er s /P r ox y h o l de r s / A u th o r is e d R e pr e se n ta t iv e s m a y n o t et h at t he a d mi s s io n to t he m e et i n g w i l l b e s u b je c t t ov er i f ic a ti o n / c h e ck s, a s m ay b e d e em e d n e c es s ar y a n d


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- / /

/ / - -

5 . :

:

" " , . 4 6, I V . 1 ,

, - 500 034

, ] - ( ) [email protected] /

-

6. : \ , , 16.06.2012 2 8 . 06 . 2 01 2 ( )

7. :

2011-12 110% ( } 11/-)

/ 1 5 ] 20 1 2 / 30

8 . : ,

t he y a re a dv is ed t o c ar ry va li d p ro of o f i de nt it y v iz .,Vo te rs I D C ar d / E mp lo ye r I de nt it y Ca rd / Pa n C ar d /P as s po r t / D r iv i ng l i ce ns e e tc . E nt r y t o th e v en u e w i ll

b e p er mi tt ed on ly o n t he b as is o f val id At te nd an ceSlip-cum-Entry Pass.

5. COMMUNICATIONWITHTHE SHARE TRANSFER AGENTS:

S ha re ho ld e rs ho ld in g s ha re s i n p hy si ca l f or m a rerequested to intima te cha nges, if a ny, in theirRegistered Addresses, to the Sha re Tra nsfer Agents of the Ba nk a t the following a ddress:

K a r vy C o mp u t er s h a re P v t . L t d

Unit :Canara Bank

K ar v y H o u s e , N o . 46 , A ve n u e I V S t r ee t N o .1 ,

B a n ja r a H i ll s , H Y DE R A BA D 5 0 0 0 3 4

F ur t he r, t h e s h ar eh o ld e rs a r e a d vi s ed t o i n fo r m/r eg is te r t h ei r e - ma il I D s e it he r t o t he S ha re Tr an sf erA g e nt s ( at t h e a b ov e a d dr e s s) t o t h e B an k a [email protected]

Sha reholders holding sha res in dema teria lised forma re r e qu e st e d t o i nt i ma te t h e a fo re s ai d c h an g es /e-ma ilIDs only to theirdepository pa rticipa nts.

6 . C LO S UR E O F B O OK S:Th e Register of shareh olders and th e share tran sfer books

of the Bank will remain closed from 16.06.2012 to2 8. 06 .2 01 2 ( bo th d ay s i nc lu si ve ) i n c on ne ct io n w it h t heAnnual General Meeting and for the purpose of a sc er t ai ni ng s ha re ho ld er s e nt it le d t o p ar ti ci pa te i n t hee l e c t i o n a n d r e c e i v e d i v i d e n d , i f d e c l a r e d b y t h e B a n k .

7 . PAY ME N T O F D I V I DE N D

T he B oa rd h as r ec om me nd ed a d iv id en d o f 1 10 %(}1 1/ - p er e qu it y s hare ) fo r t he ye ar 2 01 1- 12 . It ha sb e e n d e c i de d t o p ay t h e d i v id e n d t o t he S h a re h o l de r s

w ho se n am es a pp ea r o n t he Re gi st er o f M em be rs /Beneficia l owners a s furnished by NSDL /CDSL a s onFriday, t he 15th June 2012 and t he same shall bed i sp at c he d /c re d it e d w it h in 3 0 da ys f r om t h e d at e o f t h e A n n u a l G e n e r a l M e e t i n g .

8 . C O N SO L I DAT I O N O F F O LI O S :

T h e s h a re h o ld e r s w h o ar e h o l di n g s h ar e s i n i d e nt i c a l


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,

,

9 . ,

/ /

( ) , 1 9 7 0 10 , , 1956 205 ()

1 0 . : / /

(www.canarabank.com )

1 1 . -

17/2011 2 1 , 2 0 1 1 1 8 / 2 0 1 1 2 9 , 2 0 1 1 " " , , , -

order of names in more than one account arer e q ue s t e d t o i n t im a t e K a rv y C o m p ut e r s ha r e P v t . L t d ,t he le dg er fo lio o f s uch a ccou nt s t oge the r w ith

t h e s h a r e c e r t i f i c a t e s t o e n a b l e t h e B a n k t oc o n s o l i d a t e a l l t h e h o l d i n g s i n t o o n e a c c o u n t .T h e s h a r e c e r t i f i c a t e s w i l l b e r e t u r n e d t o t h eSha reholders a fter ma k ing necessa ry endorsement ind u e c o u r s e .

9 . U N CL A IM E D D I VI D E ND, I F A N Y

The sha reholders who ha ve not enca shed theirDividend Wa rrants / received dividend of previous

p e r io d s, a re r e qu e st e d t o c o n t ac t t h e S h ar e Tr an s fe rA ge nt o f t h e B an k f or r eva li da ti on / i s s ue o f d u pl ic at e

dividend warrants.

Th e M in is tr y o f Co rp orat e Affai rs has take n a

Gr ee n I ni ti at i ve i n t he C or po ra te G ov er na nc e v id ei ts c ir cu la r n os . 1 7/ 20 11 d at ed A pr il 2 1, 2 01 1a nd 1 8/ 20 11 d at ed A p ri l 2 9, 2 01 1 w hi ch e na bl es

the entity to effect electronic delivery of documentsin cl ud in g th e N ot ic e o f A nn ua l G en era l M ee ti ng ,

a udited fina ncia l sta tements, Directors' Report,Auditors' Report, etc , in electronic form, to the e-ma il

address. A recent amendment to the listing

As per the newly inserted Section 10B of the Banking

C om p an ie s ( A cq ui s it i on s a nd Tr an sf er o f U nd e rt ak i ng s)Act, 1970, the am ount of dividend remaining unpaid or

uncl aimed for a per io d of s even yea rs is req uired to betransferred to the Investor Education and Protection Fund

(IEPF) established by the Central Govt.under section 205Co f t he C om pa ni es A ct , 1 95 6, a nd t he re af te r n o c la im f or

paym ent shall lie in respect thereof either to the Bank ortotheIEPF.

1 0 . A N N UA L R E P OR T:S h a r e h o l d e r s / P r o x y h o l d e r s / A u t h o r i z e d

R ep re s en ta ti ve s a re r eq u es t ed t o b r in g t h ei r c op i es o f

t he A nn ua l Re po rt t o t he A nn ua l G en eral M ee ti ng .Ple ase not e t hat th e full cop y o f t he Ann ual Re por t

i s u p l o a d e d o n t h e w e b s i t e o f t h e B a n k

(www.canarabank.com). Share holders may downloadtherea da bleversionofthesa mefromthewebsite.

11. R E C E I V E D O C U ME N T S T H R O U G H E - m a i l BY

REGISTERINGYOUR E-mail ADDRESS


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, -

- / -

/ - :

.. /

2 0 1 1 - 1 2 - . . /

w w w . c a n a r a b a n k . c o m

, - / / - /

12. :

( ) 1970 3 ( 2 ) , , ,

] 1970 3 ( 2 ) , ( ) 2000 68(i)

a greement with the Stock Exchanges now permits a

Company to send soft copies of the Annua l Report to

a ll t ho se s ha re ho ld e rs w ho h av e r eg is te re d th ei r

ema ila ddress forthepurpose.

Sha reholders a re requested to register / update their

e - m ai l a d dr e ss e s im m ed i at e ly i n t h e ir r e sp e c ti v e D P

A c co u nt s s o a s to r ec e iv e d e l iv er y o f d o cu m en t s

including Notice of AGM a nd Annua l Report by e-mail

i n st e ad o f g e t ti n g t h e s a me i n p h ys i ca l m o de .

Sha reholders holding sha res in physica l form desirous

o f a v a i l i n g e l e c t r o n i c f o r m o f d e l i v e r y o f

documents/notices are requested to immedia tely

re gi st er /u pd at e t he ir e -m ai l a dd re ss es w it h o ur

Registrar a nd Tra nsfer Agents namely,. M/s Ka rvy

Comuptershare Private Limited, Hyderabad.

T hi s ye ar, a lo ng w it h t he p r in te d c op y o f N ot ic e o f

1 0t h A GM a nd A nn ua l Re p or t f or t he f in an ci al y ea r

2011-12, the Ba nk proposes to send the soft copy of

t h e a fo re s ai d N o ti ce a nd A n n ua l R ep or t t h r ou gh e -

m a i l t o a l l t h o s e s h a r e h o l d e r s w h o s e e - m a i l

a ddresses were a va ila ble/registered with DPs. The

A nn ua l R ep or t is al so ho s te d o n t he w eb si t e o f t he

Bank viz., www.canarabank.com.

P l e as e n o te t h at w h il e e ve r y n o t ic e / d o c u me n t w i ll b e

m a il e d t o t h e e m ai l a d dr e ss r e g i st e re d w i t h t h e B a nk ,

i n c a se y o u d e s ir e t o r e ce i ve a n y n o t ic e /d o c um e nt in

p h ys i ca l f or m , p l e a se i n ti m at e b y e - m a i l a n d t h e s a me

s ha ll b e s e nt f re e o f c os t to yo ur a dd re ss re gi st e re d

with the Ba nk / Depository.

1 2 . V OT I N G R I G H T S O F S H A RE H O LD E R S:

In ter ms of t he provisions of S ec tion 3 (2E) of The

B a nk i ng Co m p an i e s ( A c qu i s it i o n a n d Tr a ns f er o f

U n d er t a ki n gs ) A c t , 19 7 0 , n o s ha r eh o ld e r o f t h e B a nk ,

other tha n the Centra l Government sha llbe entitled toexercise voting rights in respect of a ny sha res held by

h im / h er i n e xc es s of o ne p er c en t of t he t ot al vo ti ng

r i gh t s o f a l l t h e s h ar e ho l de r s o f t h e B a nk .

I n t er ms of Cl . 68 (i ) o f Ca nara B an k ( Sh are s a nd

Meetings) Regula tion, 2000, subject to the provisions

conta ined inSection3(2E)ofTheBa nk ing Compa nies


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,

( A cq u i si t io n a n d Tr an s fe r o f U n de r t ak i ng s) A c t , 1 9 7 0 ,

e ac h s ha re ho ld er w ho h as b ee n r eg is te re d as a

shareholder as on the date of the closure of theRe gis ter, p rior to t he d ate of the Ann ual Ge neral

M e et i ng sh a ll h a ve o n e v ot e o n s h ow of h a nd s a n d i n

c as e o f a p ol l s ha ll h ave o ne vo te fo r e ac h s har e h el d

by him.

B y O rd er o f t he B oa rd o f D ir ec to rs

Pla ce : Banga loreD at e : 21.05.2012

S R AM AN

Cha irma n And Ma na ging Director : : 21.05.2012


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( } / Amount in } Crore) 2009-10 2010-11 2011-12

] / Paid-up Capital 410 443 443 / Reserves 14262 19597 22247

] / A ggregate Depo sits 234651 293437 327054 (%) / Growth (%) 25.55 25.05 11.46 ] / Non-Resident Deposits 13567 12884 13762 / Foreign Business Turnover 127614 124095 144624 ( ) / Ad van ce s (Ne t) 169335 211268 232490 (%) / Growth (%) 22.51 24.76 10.04 / Retail Advances 18519 25259 24782 / Prio rity Secto r Advances 59310 62108 67383 / Agriculture 25052 26305 31946 ( ) / Agriculture(Disbursal) 18130 22374 27327 , / M i cr o, S m al l a n d M e di u m E n te rp r is es 31074 37684 34893 ] / Advances under DRI Scheme 50 52 58]/]] / Advances to SC/ST Clients 3905 5087 4293 / Export Credit 8966 10489 10382 / Total Income 21610 25752 33778 / Total Expenditure 16549 19660 27835\ / Operating Profit 5061 6091 5943

/ Net Profit 3021 4026 3283 / Number of Branches 3046 3257 3600 / Number of ATMs 2017 2216 2858 ( ) / Clientele (In crore) 3.73 3.87 4.20\ / Total Number of Staff 43380 43397 42272 () / Self Help Group (Nos.) 320000 351000 371000

(%) / K ey P e r fo r m an c e R a ti o s ( % )] - / Capital Adequacy Ratio 13.43 15.38 13.76 ] (}) / E a rn i ng s Pe r S h ar e (}) 73.69 97.83 74.10 (}) / Book Va lue (}) 305.83 359.25 431.26

\ (}= ) / B u s in e s s P e r E m pl o ye e (} Crore) 9.67 11.96 13.74 \ (}= ) / P r of i t P e r E m p lo y ee (} Lakh) 7.35 9.76 8.21 / Return on Average Assets 1.30 1.42 0.95 - / Cost-Income Ratio 40.73 42.05 44.02 ] / Gross N PA Ratio 1.52 1.49 1.73 ] / Net N PA Ratio 1.06 1.10 1.46-] / Credit - Deposit Ratio 72.16 72.00 71.09 ] /Pr ior ity Credit to Adjusted Net Ba nk Credit 43.92 38.69 33.45

^ / P R OG R ES S AT A G LA N C E


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DIRECTORS REPORT: 2011-12

31 2012 31 2012 43

-

I . ...

( ) 2011-12 2010-11 8.4% 6.9% : 2.5%(7.0%) 3.9%(7.2%) 9.4% (9.3%)

, 8.3%(3%), 3.9%(7.6%) , , 11.2% (11.1%) , 5.9% (4.5%)

2011-12 : 31.6% (32.3%) 35.2% (35.1%) 2011-12 2011-12 : 9% 2011 9.68% \ 2012 6.89%

{ , 2011-12 $ 30 0 .

, - 2011-12 2 0 .9 % $ 3 0 4 - 2011-12 32.2% $4 8 9 2011-12 150 185 2010-11 119

T he B oa rd of D ir ec t or s ha ve p l ea su re i n p re se nt in g t he

43rd Annua lReport together with the Ba la nce Sheet a s on3 1 st M a r c h, 2 0 1 2 a n d P ro f it a n d L o ss A c c ou n t f or t h efina ncia l yea rended Ma rch 31, 2012.

MANAGEMENT DISCUSSION AND ANALYSIS

I . E CO NO MI C E N VI RO NM EN TIndian economy continues to be one of the fastest growingeconomies in the world. Compared to cha llenging globa leconomic environment, Indian economy remained, by andlarge, stronger and resilient. As a cumulative impact of pastmonetary policy tightening and global uncertainties, the GDPgrow th m oderat ed dur ing t he year. As p er t he advan ceestimates released by the Central Statistical Organization(CSO), GDP growth for 2011-12 was estimated at 6.9%compared to 8.4% in 2010-11. Agriculture and industrialsectors grew by 2.5% (7.0%) a nd 3.9% (7.2%) respectively.Services sector recorded a healthy growth of 9.4% (9.3%).Under industry segments, while electricity, gas and watersupplygrewby8.3%(3%),manufacturingsectorgrewby3.9%( 7. 6% ). U nd er s er vi ce s, t rad e, h ot el s, t ra ns po rt an dcommunications grew by 11.2% (11.1%) and community,socialandpersonalservicesgrewby5.9%(4.5%).

M od er at io n i n m aj or m ac ro ec on om ic i nd ic es a nds lo wd ow n i n i nv es tm ent d em an d re su lt ed i n a s li gh tl y

lower consumer sentiment during the yea r. Savings a ndinvestment rates for 2011-12 estimated at 31.6% (32.3%)a nd 35.2% (35.1%) respectively. Infla tion continued to bet he p rim ar y co nc er n a mo ng t he p oli cy ma ker s d ur in g2011-12. Inflation, whichremained over 9% for a large partof 2011-12, was mainly driven by food a nd fuel items. Them ont hly w ho le sale p ric e i ndex ( WP I) s too d at 6 .8 9% i nMarch2012comparedto9.68%inMarch2011.

Indias exports posted a significant growth andsurpassedt he g ro wt h t arg et o f U S$ 30 0 b il li on s et fo r 2 01 1- 12 ,d es pi te c ha ll en gi ng e co no mi c e nv ir on me nt i n m aj orm ar ke ts l ike t he U S a nd E ur op e. A s p er t he p rov is io na l

data relea sed by the Directora te Genera l of CommercialIntelligence and Statistics (DGCI&S), during April-March2 01 1- 12 , m er ch an di se e xp or t s o f I nd ia i nc re as ed t o U S$ 30 4 b il li on , r ec or di ng a g ro wt h o f 2 0. 9% . C um ul at ivevalue of imports during April-March2011-12increased to

U S$48 9 b ill ion , re gis ter ing a grow th of 32 .2% . Trad ed ef ic it w id en ed t o a r ec or d U S$ 18 5 b il li on i n 2 01 1- 12 ,h ig he r t ha n t he G ov er nm en t' s t ar ge t o f U S$ 15 0 b il li onand US$119 billiondeficit recorded during 2010-11.

: 2011-12


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T he f in an ci al m ar ke ts i n I nd i a m ov ed i n t un e w it h t h ed e ve l op m e nt s w i tn e ss e d i n t h e g l ob a l a n d d om e s ti cfronts. India n fina ncia l ma rk et segments ha ving a high

d e g re e o f e x te r n al l i nk ag e s tu r n ed v ol at i le , w hi l e t h eother segments without strong linkages remained lessso. The foreign excha nge a nd equity ma rkets exhibitedhigh volatility. Money markets remained largely stablew it h c al l m on ey r at e l ar ge l y r em ai ni ng w it h in t heL iquidity Adjustment Fa cility (L AF) corridor. Increa se inc ap it al o ut fl ow s c ou pl ed w i th h ig he r t ra de d ef ic itr e su l te d i n s h ar p f al l i n t h e e xc h an g e r at e o f t h e I n d ia nr u p ee d u r in g t h e y e ar. R u pe e d e p re c ia t ed a g a in s t U Sdolla r a nd rea ched 54.20 in December 2011. However,with ma rk et interventions by RBI a nd the deregula tiono f N R E de po s it s, t he r u pe e w as a t 51 .1 6 a ga in st U S

d o ll a r a s o n M a rc h 3 0 , 2 0 12 .Economic Environment in Karnataka

K ar nat aka i s o ne o f t he p ro gr es si ve S tat es i n I nd ia .Widely a ccla imed for its interna tiona lly reputedInforma tion a nd Bio-technology compa nies, the Sta teis home to va ried industria l a ctivities, lea ding resea rcha nd d e ve lo pm e nt i n s ti tu t io ns a n d a p o ol o f s ki ll edma npower. As per the Economic Survey of Ka rnata k a2 01 1- 12, t h e re al g ro wt h i n G ro ss S t at e D om es ticProduct (GSDP) is estima ted a t 6.4% during 2011-12d ri ve n b y h ig he r g ro wt h i n s er vi ce s s ec to r ( 10 .6 %) .Ca nara Ba nk , owing its origin to the Sta te, is continuing

i t s k ey p o s i ti o n i n t h e S t at e . T he B a nk h a s b e e n p l ay i nga l e ad i n g r o le i n e x te n di n g fi n an c ia l s e r vi c e s to l a rg en um be r o f p e op le t hr ou gh i ts 6 82 b ra nc he s, s pr ea da cr os s t he S tat e. T he S ta te c on tr ib ut es o v er 1 5% t otota l domestic business of the Ba nk . The tota l business

of the Bank in the State stood at } 8 23 78 c ro recomprising } 4 8 45 5 c r or e u n de r d e po s it s a nd }=33923croreunder a dvances a s a t March 2012.

I I . M O N ETA R Y A N D B A NK I N G D E V E LO P ME N TSGrowth in k ey monetary a ggregates a nd money supply

in 2011-12 reflected the cha nging liquidity conditionsa r i s i n g f r o m d o m e s t i c a n d g l o b a l f i n a n c i a l

environment. The monetary policy sta nce during theyea r wa s to contain inflation a nd a ctively ma na geliquidity to support growth.

M on ey s u pp ly ( M 3) g ro w th , wh ic h w as 1 7 % a t t hebeginning of the fina ncia l yea r, modera ted during thec o ur s e o f t h e y e ar t o 1 3 .7 % b y e n d -M a rc h 2 0 12 , l o we rthan t he Reser ve Bank o f Ind ia' s (R BI ) indicativetra jectory of15.5%.

{

{

{ ...

{

]

] 2011 54.20

, { { 30 2 0 1 2

51.16 - , 2011-12 , 2011-12 (10.6%) , ()

6.4% , 6 82 { }82378 ] 2012 }48455 }33923

II. 2011-12

,

(3) 2011-12 17% , 2 01 2 1 3 .7 % { 15.5%


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12

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\ 2010-11 1 5 . 9 % 2011-12 17.4%

21.5% 19.3% - 30 2012 76.97% , ]

2011-12 , , ,

2011-12 {

{ 1 7 5 : 8.50% 7.50%

{ 1 2 5 .... 6.00 % 4.75%

D ur in g t he y ea r, S ch ed ul ed Co mm er ci al B an ks ( SC Bs ),a ggrega te deposits increa sed by 17.4% a s a gainst 15.9%r ec or de d i n 2 01 0- 1 1. T he g ro w th i n c re d it w a s a t 1 9. 3%

co mp ared to 21.5% a ye ar ago. Wit h t he y- o-y credi tg ro w th o u tp a ci n g d e po si t s g r ow t h d u ri ng t h e y ea r, t h ecredit-deposit (CD) ratio increa sed sha rply to 76.97% a sonMa rch30,2012,thehighest inthepa st 5yea rs.

T he b an ki ng s e ct or i n I nd ia r em ai ne d h ea lt hy a ndresilient a nd performed rea sonably well during 2011-1 2 . H o we ve r, th e s l ow d ow n i n m a cr o e c on o my ha sresulted insome deteriora tion in the a sset qua lity.

T he ye ar 2 011 -12 s aw the fo llow ing key poli cymea sures a nnounced by theRBI.

R BI in cr ea se d t he Re po rat e a nd Re ve rs e Re po rat e b y

175 ba sis points to 8.50% a nd 7.50% respectively.

R BI r ed uc ed t he C RR b y 12 5 b a si s po in ts f ro m 6 . 00 % t o

4 . 7 5 % o f N D T L .

C ha ng es i n C R R a nd R ep o R at e d u ri n g th e y ea r: ...

May 3, 2011 7.25 (+0.50) 6.00

June 16, 2011 7.50 (+0.25) 6.00

July 26, 2011 8.00 (+0.50) 6.00

Sept . 16, 2011 8.25 (+0.25) 6.00

Oct . 25, 2011 8.50 (+0.25) 6.00

Jan 28, 2012 8.50 5.50 (-0.50)

March 10, 2012 8.50 4.75 (-0.75)

Effective Since Repo CR R

3, 2011 7.25 (+0.50) 6.00

16, 2011 7.50 (+0.25) 6.00

26, 2011 8.00 (+0.50) 6.00

. 16, 2011 8.25 (+0.25) 6.00

. 25, 2011 8.50 (+0.25) 6.00

28, 2012 8.50 5.50 (-0.50)

10, 2012 8.50 4.75 (-0.75)

.. .

R BI , du ri ng Ma y 2 01 1 p ol ic y an no un ce me nt , ha scha nged the operating procedure of moneta ry policy.T h e R ep o R at e w as ma d e a s t h e o n ly in d e pe n d en t lyv ar y i ng p o l ic y r at e i n o r de r t o m o re a c cu r at e l y s ig n al

t h e m o ne t a ry p ol i cy s t an c e . T h e R ev e rs e R ep o Ra t ew ou ld b e d et er mi ne d w it h a s pr ea d o f a 1 00 b as ispoints below the Repo Ra te. RBI has instituted a newMa rgina l Sta nding Fa cility (MSF). Ba nk s can borrowo ve rn ig ht f ro m t he M SF u p t o 1 % o f t h ei r r es p ec t iv eN DT L. Th e M SF r at e w as fi xe d at 1 00 b as is p oi nt sa boveRepo ra te.

R BI , d ur in g O ct ob er 2 01 1 p ol ic y a nn ou nc em ent ,

2011 {

\ 100 { ( ) 1 % 100

{ 2011 :


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o h as de re gu la te d th e s av in gs ba nk de po si t ra tewith the following two conditions.

Fi rs t, e ac h b an k wi ll h ave t o offe r a u ni fo rmi n te r es t r a te o n s av i ng s b a n k d ep o s it s u p t o}1 lakh, ir resp ec tive of the amount in thea ccount within this limit.

S ec on d, fo r s av in gs b an k d ep os it s o ve r }1 lakh,a b a n k m a y p r o v i d e d i f f e r e n t i a l r a t e s o f i nt er es t, i f i t s o c ho os es . H ow ev er, t he re s ho ul dn ot b e any d is crim inatio n f rom c us to mer toc u st o me r o n i nt e re s t ra te s f or s i mi l ar a mo u nt o f deposit.

o a n d u n d e r a m o r e l i b e r a l i z e d b r a n c ha uthoriza tion policy, the ba nk s were permitted too pe n b ra nc he s i n Ti er 3 t o Ti er 6 c en tr es ( wi th

p op ul at io n u p to 4 9, 99 9) a nd i n Ti er 2 c en tr es( wi th p op ul at io n o f 5 0, 00 0 t o 99 ,9 99 ) u nd er agenera l permission, subject to reporting.

R BI, d ur ing De ce mb er 2011, has d ere gulat ed i nte res trates on Non-Resident (External) Rupee (NRE) Depositsa nd Ordina ry Non-Resident (NRO) Accounts. Theimporta nt draft guidelines were issued under Ba sel IIIC ap it al Re gu lat io ns a nd L iq ui di ty R is k M an ag em en ta nd Ba sel III Fra mework on L iquidity Sta nda rds.

R B I, d ur i ng F eb r ua r y 20 12 a nn ou nc em e nt , re al ig ne dt he B an k Rat e t o MS F Rat e i n a o ne -t im e t ec hn ic aladjustment.

OUTLOOK FOR 2012-13Globa l growth prospects a re seen gra dua lly strengtheningb u t d o wn s id e r i sk s r e ma i n e l ev at e d . T h e I n te r n at i on a lMonetary Fund, in its la test World Economic Outlook,p ro je ct ed gl ob al g ro wt h at 3 .5 % fo r 2 01 2 a nd 4. 1% fo r2013. Emerging economies will continue to lead globa lgrowth. However, uncerta inties ma y emergein the formof h ig h c ru de o il p ric es a nd o th er c om mo di ty p ri ce s,medium-term sovereign debt concerns, macroeconomicimba la nces persisting in ma ny economies, disruption inglobal bond a nd currency ma rk ets.

I n di a s G D P g ro w t h i s e xp e c te d t o i m pr o ve i n 2 0 12 - 13 i nv ie w o f t he e xp an s io na ry m o n et ar y p o li cy s t a nc e a ndi m p r o v i n g d o m e s t i c d e m a n d c o n d i t i o n s . I m p r o v e dsa vings a nd investment ra tes, fa vora ble fina ncia l ma rketconditions, increa se in ca pital flows, moderating inflationa nd positive business outlook would help the economy tob ro ad -b as e t he g ro wt h m om ent um d ur in g 2 01 2- 13 .Sa vings a nd investment rates for 2012-13 estimated a t3 2. 5% a nd 3 5. 5% r es p ec t iv el y. S e rv ic es s e ct or w il l b e ama jorcontributorinthepositivedomestic outlook .

o

:

, }1 \

, }1 , ,

o

3 6 (49,999 )

2 (50,000 99,999 )

{ 2011 () () () III III

2 01 2

2012-13 - 2012 3.5% 2013 4.1% , { , , , {

{ 2012-13 2012-13 { , { , , 2012-13 : 32.5% 35.5% {


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Effo rt s t o b ri ng i n m ore i nc lu si ve g ro wt h a nd fo cu s o n t her ura l e co no my w ou ld p ro pe l t he e co no my f ur th er. O n t hedomesticfront,the major challenges during the year relate to

highfiscalandcurrent account deficits,lowindustrialgrowth,volatile foreign exchange markets, lower capital inflows andinflationary pressures in the form of high oilprices.The RBI initsAnnualMonetary PolicyStatement for2012-13 placed real

GDPgrowthat 7.3%.

Indian bank ing sector is expected to perform well during theyea r. Majorcha llenge before theba nks remainson improving

the quality of advances. The RBI envisages containing moneys up pl y ( M3 ) a t a ro un d 1 5% i n c on so na nc e w it h t he o ut lo okon growth a nd inflation. SCBs growth in a ggregate depositsa nd growth in a djusted non-food credit is projected a t 16%a nd 1 7% re sp ec ti ve ly fo r 2 01 2- 13 . T he a nn ua l p ol ic y a ls o

endeavorstocontaininflationat 6.5%.

, , { , 2012-13 { 7.3%

( 3) 15% 2012-13 16%

17% 6.5%

I I I . C A NA R A B AN K IN 20 1 1- 1 2

C an a ra B an k h as b e en r ec og n iz ed a s a S ys te mi ca l lyImportant Financial Institution in India catering to then ee ds o f mo re t ha n 4. 2 c ror e c us to me rs . T he B an kc o n t i n u e s t o i n v e s t i n i n f o r m a t i o n t e c h n o l o g y ,c u s to m er s e r v i c e, s t af f k n ow l e dg e a n d n e w p r od u c ts /s er vi ce p ro ce ss t o st re ng th en i ts p os it io n i n th emarket. During the year, the Bank opened 343branchesand642ATMs.

I II . 2 0 1 1- 12

4.2

{

[ , , ,

/

343 642

FINANCIAL PERFORMANCE

D u r i n g t h e y e a r , d u e t o s l a c k e n e db u s i n e s s g r o w t h a n d i n c r e a s e i ns t r e s s e d a s s e t s a t t h e i n d u s t r yl e v e l , t h e B a n k t o o k a c o n s c i o u sd e c i s i o n t o c o n s o l i d a t e i t sb u s i n e s s p o s i t i o n a n d r e b a l a n c ea s s e t s a n d l i a b i l i t i e s . T h ep e r f o r m a n c e o f t h e B a n k o n t h eb u s i n e s s , p r o f i t s a n d p r o f i t a b i l i t yfronts a re a s under.

The Ba nk ea rned a net profit of }3283 crore for 2011-12 compa redto }4026 crore la st yea r. Opera tingprofit of the Ba nk stood a t }5943crore compa red to }6091 crore la st

yea r. Return on a vera ge a ssets(RoAA) for the yea r stood a t 0.95%.Profit per employee work ed out to}8.21 la k h for the yea r.

: ,

2011-12 }4 02 6 }3 28 3 }6 0 91 }5943 0.95% }8 . 2 1

O p e r at i n g a n d N e t P r o fi t (} in Crore)

0

1000

2000

3000

4000

5000

6000

2009-10 2010-11 2011-12

Op erat in g P ro fit Ne t Pro fi t

7000

5061

3021

6091

4026

5943

3283


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2 0 1 1 - 1 2 11 0 %

2011 -201 2 110% 2012 }3 5 9 . 2 5 }4 3 1 . 2 6 2012 }9 7 . 8 3 }=7 4 . 1 0 2011 -12 1 8 . 7 5 %

D iv id en d o f 1 10 % fo r 2 01 1- 12

E n h a n c i n g S h a r e h o l d e r V a l u e T h e B a n k s B o a r d o f D i r e c t o r sr e c o m m e n d e d a d i v i d e n d o f 1 1 0 % f o r 2 0 1 1 - 1 2 . W h i l e B o o kV a l u e i n c r e a s e d t o }4 3 1 . 2 6 a s a tM a r c h 2 0 1 2 a s c o m p a r e d t o} 3 5 9 . 2 5 f o r t h e p r e v i o u sf i n a n c i a l , E P S s t o o d a t }7 4 . 1 0 a sa t M a r c h 2 0 1 2 c o m p a r e d t o}9 7 . 8 3 a y e a r a g o . R e t u r n o nE q u i t y s t o o d a t 1 8 . 7 5 % f o r

2 0 1 1 - 1 2 .

Cost of Funds 5.37 6.72

Yield on Funds 8.13 8.95

Cost of Deposits 5.80 7.35

Yield on Advanc es 9.73 10.93

Yield on Investments 7.72 7.96

Spread as a % to AWF 2.76 2.23

Net Interest Margin (NIM) 3.12 2.50

Operating Expenses to AWF 1.56 0.51

Return on Avg. Assets (RoAA) 1.42 0.95

Return on Equity 29.47 18.75

B u si n es s p er E m pl o ye e (} in C rore) 11.96 13.74

P r of i t p e r E m p lo ye e (}in Lakh) 9.76 8.21

Book Va lue (}) 359.25 431.26

E ar n i ng s p e r S h ar e (}) 97.83 74.10

March MarchK e y F i n a n c i a l R a t i o s ( % )

2011 2012

A WF - A ve r ag e Wo r ki n g Fu n d s

5.37 6.72

8.13 8.95

5.80 7.35

9.73 10.93

7.72 7.96

% 2.76 2.23

3.12 2.50

1.56 0.51

( ) 1.42 0.95

29.47 18.71

( }= ) 11.96 13.74

( }= ) 9.76 8.21

(}) 359.25 431.26

(}) 97.83 74.10

(%) 2011 2012

-

E a rn i n gs P er S h ar e (} in crore)

02009-102009-10 2010-11 2011-12

20

40

60

80

120

73.69

97.83

74.10

100


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Income and Expenditure AnalysisT h e B a n k s i n t e r e s t i n c o m er e co r de d a y - o- y gr o wt h o f 3 4 .5 % t o

reach }3 08 51 c ro re c om pa re d to}2 2 94 0 c r or e r e co r de d d u r in g t h ep r e v i o u s f i n a n c i a l y e a r . N o n -

interest income increased to }2928c ro re c om pa re d to }2 811 c ro rerecorded last year.

T h e B a n k s c o s t o f d e p o s i t si n c re a se d t o 7 . 35 % d u e t o u p tr e ndin interest ra tes during the yea r. The

yield on a dva nces improved to10.93% a s at Ma rch 2012 compa redto 9.73% la st yea r. Interest sprea d

stood a t 2.23% compa red to 2.76%a s a t Ma rch2011.

W h i l e i n t e r e s t e x p e n d i t u r eincreased to }23161 crore witha y- o- y in cre as e o f 5 2% , th e B an kcontained its increase in operatinge x pe n se s at 5 . 7 % a m ou n ti n g to}4 6 7 4 c r o r e . T h e n e t i n t e r e s ti nc om e o f t h e B an k s to od a t }7689

crorea nd Net Interest Ma rgin(NIM) worked out a t 2.50%.

-

}2 29 4 0 3 4. 5% }3 08 51 }2 81 1 }2 92 8

7.35% 9.73% 2012 10.93%

2011 2.76% 2.23%

52% }23 16 1 5.7% }4674 }7689 2.50%

O th er O peratin g

E xpen ditu re6%

InterestE x p e n d i t u r e

83%

S t a ff C o s t11%

C o mp o s i t io n o f E x p e nd i t u r e: 2 0 1 1 -1 2

Capital and ReservesN et wo rt h o f t he B an k, as at M ar ch 2 01 2 i nc re as ed t o}19027 crore compared to }1 5 91 5 c r or e a s a t M a r c h 2 0 11 .W hi le t ot al p ai d- up c a pi ta l o f t he B an k wa s }4 43 c ro re ,

reserves and surplus increased to }2 22 47 c ro re . T he

Government Shareholding in the Ba nk stood a t 67.72% a sa t Ma rch2012.

R is k We ig ht ed A ss et s 1 76 13 6 2 10 87 5

Tier I Capital 19139 21829

CRAR (%)(Tier I) 10.87 10.35

Tier II Capital 7956 7179

CRAR (%)(Tier II) 4.51 3.41

Total Capital 27095 29008

CRAR (%) 15.38 13.76

M a rc h 2 0 11 M a rc h 2 0 12Composition of Capital

Basel II Basel II

(Amt. in }Crore)

176136 210875

I 19139 21829 (%) ( I) 10.87 10.35 II 7956 7179

(%) ( II ) 4.51 3.41 27095 29008 (%) 15.38 13.76

2011 2012 II II

( } )

2011 }1 5 9 1 5 2012 }1 9 0 2 7 }4 4 3 , }2 2 2 4 7 2 0 1 2 6 7 . 7 2 %

C om p os i ti o n o f I n co m e : 2 0 11 - 12

L o a ns a n d A d v an c e s69%

I nvest ment s21%

Ot hers1%

Non - I nt erestI ncome

9%


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Ca pita l Adequa cy Ra tio stood a t 13.76%, with Tier I

ca pita l ra tio a t 10.35% a s a t Ma rch 2012. The Ba nk ha s

a dequa te hea droom a va ila ble under both Tier-I a nd Tier-

II options to ra ise ca pita l to support business growth

momentum.

B U SIN E SS G R OW TH

Business Volumes at over }5.59 lakh Crore

DepositsT o t a l D e p o s i t s o f t h e B a n kregistered a growth of 11.5% torea ch }327054 crore a s a t Ma rch2012 compa red to }293437 crore a

yea r a go. The Ba nk s CASA depositsrea ched }79611 crore a s a t Ma rch2012. The Ba nk s CASA deposits tod o m e s t i c d e p o s i t s s t o o d a t25.16%.

Sa vings deposits rose by 10.5% to}64792 crore a s a t Ma rch 2012.During FY12, the Ba nk la unchedn a t io n w i de c a m p ai g n t o m o b i l i zeSB deposits in two pha ses. During

the ca mpa ign period, the Ba nk ha s brought in a bout 24la k hs fresh SB clientele a nd a bout }3000 crore SBdeposits in the new a ccounts.

P u r su i n g a s t r at e g y o f b r o ad - b a s in g d e p o s i t c l i e n t e le , a l lthe bra nches together opened over 33 la k hs deposita ccounts, ta k ing the tota l number of deposit a ccounts to3.75 crores.

2012 10.35% I

13.76%

I II {

}5 .5 9 }2 93 43 7 2012 11.5% }327054

2012 }7 9 6 1 1 = 25.16%

2012 10.5% }6 47 92 . . 1 2 }3 0 00 24

, 33 , 3.75

( ) 2012 }2 1 1 2 6 8

10% }2 3 2 4 9 0 , ( ) , 2 0 1 2 45

Advances(Net)

During 2011-12, the Ba nk 's neta dva nces witnessed a 10% growthto rea ch }232490 crore compa redto }211268 crore a yea r a go. TheBa nk s diversified credit portfolio

include a ll productive segments of the economy lik e a griculture a ndM i c r o , S m a l l a n d M e d i u mEnterprises (MSME), exposure toc o r p o r a t e a n d i n f r a s t r u c t u r esegments. As a t Ma rch 2012, then u m b e r o f b o r r o w a l a c c o u n t sstood a t 45 la k hs.

D e po s it s (}=in crore)

02009-102009-10 2010-11 2011-12

50000

100000

150000

200000

250000

300000

350000

234651

293437

327054

A d va n ce s (} in crore)

02009-102009-10 2010-11 2011-12

50000

100000

150000

200000

250000

169335

211268232490


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A n n u a l R ep o r t 2 0 1 1 - 20 1 2

2012 }2 4 7 82 }1 2 27 9 }1 5 8 0 8 64%

- 2012 1 9 2012 37 . . 6 . .

. . 1 4 5 6

RetailLendingOperations

O u t st a nd i ng r e ta i l l e nd i ng o f t h e B a nk s t oo d a t }24782c ro re a s at M ar ch 2 01 2. Th e d is bu r sa ls u nd e r t he r et ai llending stood at }12279 crore. The outsta nding housingloa n portfolio increa sed to }15808 crore, constituting 64%of the tota lreta il lending portfolio.

The Ba nk took severa l mea sures during the yea r to expandr et ai l c re d it . R et ai l L oa n f es ti va l w as ob s er ve d d u ri ngS ep te mb er- Ma rc h 2 01 2, w he re in r at e o f i nt er es t w a sreduced a long with concession in processing cha rges. Tofa cilitate speedy disposa l of proposals a nd credit flow, 19C en t ra l iz e d P ro c es s i ng U n i ts ( C P U) w e re u p gr ad e d t oRetail Asset Hubs (RAHs). As a t Ma rch 2012, the Ba nk ha d3 7 R A Hs a n d 6 C P U s at m a j o r c e nt r es a c r os s t h e c o un t r y,

c ov e ri n g 14 5 6 b r an c he s . T h e B a nk h as i m pl e me n te dOnlineL oa n Application a nd Track ing System.

During 2011-12, the tota l business of t h e B an k g re w b y 10 .9 % t o re ac h}5 59 54 4 c ro re a s a ga in s t }504705

c r or e d u ri n g th e p r ev i ou s f in a nc i al .T h e B a n k s d o m e s t i c b u s i n e s sc on s ti tu t ed ab o ut 96 % o f t h e t ot albusiness.

P r o d u c t i v i t y , a s m e a s u r e d b ybusiness per employee, increa sed to}1 3 .7 4 c r or e f r om }1 1. 96 c ro re a y ea ra go. D ur in g th e y ea r, t he B an ksclientele ba se increa sed to 4.20crores.

2011-12 }5 04 70 5 10.9%

}5 5 9 5 4 4 96%

}1 1. 96 }1 3. 74 4.20

TREASURY AND INTERNATIONAL OPERATIONS

Aggregate investments (net) of the Bank was at }102057c ro re a s a t M ar ch 2 01 2. P or t fo li o m od if ie d d ur at io n c am ed ow n t o 4 .6 2 y ea rs a s a t M ar ch 2 01 2 f ro m 4 .7 5 y ea rs a y ea ra go. T he m od if ie d d urat io n o f t he Avai la bl e fo r S al e ( AFS )p or t fo li o h as i nc re as ed t o 3 .2 3 y ea rs a s a t M ar ch 2 01 2 f ro m2.23yearsasat March2011duetoredemptionofshort datedsecurities a nd fresh investments made in medium a nd longdatedsecurities.Thetradingprofit fortheyearwas}324crore

a s a ga in st }2 36 c ro re l as t ye ar. T he y ie ld o n i nve st me nt simprovedto7.96%ascomparedto7.72%ayear=a goK

T he B an k c on ti nu es t o b e a n a ct iv e p la ye r i n G ov er nm en tsecurities as a primary dealer. The total amount of underwriting commitments for the year was }52688 crore.During the year, the Ba nk a chieved over 64% success ratio a sa gainst ma nda tory40% of itsobligationa s a Prima ryDea ler.

2012 ( )}1 0 2 0 5 7 4.75 2012 4.62 2 0 1 1 2 . 2 3 2 0 1 2 3 . 2 3 }2 3 6 }3 2 4

7.72% 2012 7.96%

}5 2 6 8 8 = 40% 6 4 %

To t al B u si n es s (} in cro re)

02009-102009-10 2010-11 2011-12

100000

200000

300000

400000

600000

403986

504705559544

500000


20/217


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A n n u a l R ep o r t 2 0 1 1 - 20 1 2

TheBa nk a cted a s Collecting Bankersin 1 Rightsa nd 3 PrivatePlacement Issues,involvinganamount of }1147.16crore.Then um be r o f i ss ue s h an dl ed u nd er A pp li ca ti on S up po r te d b y

Blocked Amount (ASBA) by the designated branches were 34andthe amount blockedwas}140.54crore.

T he B an ks Syndication Group ha ndled projects involvingproject cost of }2 72 21 c ro re d ur in g t he ye ar, w it h a t ot alde bt si ze of }6825 crore. The Group has generated

s ub st ant ia l fe e b as ed i nco me f ro m t he s yn dicat io no pe rat io ns . T he f un ds a re a rr an ge d f or p ro je ct s i n va ri ou ssegmentslikeSteel,Power,Road,Sugar,Textiles,etc.

T h e B an k h as t ie - up a rr an ge m en ts i n b o th l if e a nd n on - li fei ns ur an ce s eg me nt s u nd er i ts bancassurance a rm . T heB an k e ar n ed a c om mi s si on i n co me o f }2 6. 2 4 c ro re f ro m i t s

joint ventureviz.,Ca na ra HSBC OBCL ife Insura nce Compa nyLt d. U nd er t he m ut ual f un d b us in es s, t he B an k e ar ne d acommission of}3 .9 c ro re f ro m i ts j o in t v en tu re v iz ., C an ar aRobeco Asset Management Company Ltd. The Banks tie-uparrangement withM/sUnitedIndiaInsuranceCompanyLtd(UIICL) fornon-life(genera l)insurancebusiness ha sresultedi n a c om mi s si on i n co m e o f }1 1 .6 c ro re d u ri n g t h e y ea r. T heB a n k h a s a l s o C o r p o r a t e A g e n c y A g r e e m e n t w i t hM /s Ex po rt C re di t G ua ra nt ee Co rp orat io n o f I nd ia fo rmarketingexport policiesthroughitsbranchesacrossIndia.

Corporate Cash Management Services ( CC MS ) n e tw or k o f t h e B an k, c ov er in g 6 0 O p er at i ng C en tr es , p ro vi de s s er v ic es

rela ted to local a nd upcountry cheque collection facility. TheB an k h as p la nn e d t o i nt e gr at e t h e c ol le c ti on p r od uc t s w it hcore banking services covering 300 centres with new

features.

Under C ar d B u si n es s, t he B an k t oo k s ev er al i ni ti at iv es t oexpand credit a nddebit-cum-ATMca rd ba se. Thetota l debitc ar d b as e o f t he B an k i nc re as ed t o 7 1. 92 l ak hs a s a t M a rc h2 01 2. I nc om e u nd er c ar d b us in es s d ur in g t he y ea r w as a t}1.4crore.

T he B an k o ffe rs i ts d ep os it or y s er vi ce s f ro m 5 5 D P S er vi ceCe nt re s s pr ea d a cr os s 3 6 c en tr es i n t he c ou nt ry. T hr ou ghthese Centres, the Ba nk is extending Online Tra ding Facilityt o D P c li en ts f ro m i ts o wn b ro ki ng s ub si di ar y M /s Ca na raBankSecuritiesLimited,Mumbai.

Executor, Trustee and Taxation Services o ut fi t o f t he B an kprovides services like Debenture/Security Trusteeship, Willa nd Executorship, Trusteeship, Personal Ta x Assista nce a ndP ow er o f At to rn ey S er vi ce s. D ur in g t he y ea r, i t s ec ur ed n ewdebenture/security trusteeship issues, a mounting to }905crore.

1 3 = =}1 1 4 7 . 1 6 ==

= 3 4 }=1 4 0 . 5 4

= }27221 = }6 82 5 ] , , , \ ,

" " - .... - }2 6 .2 4 }3 .9 . - }1 1 . 6

() 60

300

-- 2 0 1 2 7 1 .9 2 }1 . 4

55 36 ,

{ . .

, / , , , }905= /


22/217

21

A n n u a l R ep o r t 2 0 1 1 - 20 1 2

Under Government Business, comprising Direct andI n d ir e c t Ta x c o ll e c t io n s, p a y m e nt o f p e n si o n s o f v ar i ou sd e p ar t m e nt s , M i n i st r y A c c o u nt s , P o s t al D e p ar t m e nt ,

P u bl i c P r ov i d en t Fu n d Sc h e me a n d i s s ue o f b o n ds o f R B Ia n d Go ve r n me n t o f I n d ia , t he B a n k e a r ne d a n i n co m e o f }76croreduring theyea r.

The Ba nk ha s been a uthorized a s thea ccredited ba nker forM i n is t r y o f H u m an R e so u rc e s D e ve l o pm e nt ( MH R D ) ,h a n dl i n g De p ar t m e nt o f S c h oo l E d uc a t io n a n d L it e ra c y,D e p ar t m e nt o f H i g he r E d uc a ti o n, D e p ar t m e nt o f A r t s A rc h eo lo g ic al S u rv ey of I nd i a, Mi n is t ry of C ul t ur e a ndM in is t ry of Yo u th A ff ai r s a nd S po r ts . T he B an k h asd e ve l o pe d a W eb - Po r t al f o r M i ni s t ry o f H R D f o r e - t ra c ki n go f f un ds u nd er t he S ar va S hi ks ha A bh iya n ( SS A) S ch em e

a nd i mp l em e nt e d t h e w e b p o rt a l i n a ll t h e S t at e s. T h eB a nk ha s i m p le m e nt e d t h e e - p ay m e nt o f s a l es t ax /c o mm e r ci a l t a x i n t h e s t at e s o f M a h ar a sh t ra , Ta m i l N a d u,Ka rnata k a a nd Delhi.

TheBa nk is a uthorized a s oneofthea ccredited Ba nk ers forU n iq u e I d en ti f ic at io n A ut ho r it y o f I nd i a ( UI DA I) , NewDelhi. The UIDAI wa s established in Februa ry 2010, a s ana g e n c y o f G o v e r n m e n t o f I n d i a , r e s p o n s i b l e f o rimplementing the Multipurpose Na tiona l Identity Ca rd orUnique Identifica tion Ca rd (UID Card) project in India . Theproject is implemented in 8 Centres a t present a nd theBa nk s bra nches at these Centres ha ve been designated a s

the bra nches for ha ndling the UIDAI a ccounts.

D u r in g t h e y e ar, t h e B a nk h a s e n t er e d i nt o a n M o U w i thM i n i s t r y o f H R D f o r i m p l e m e n t i n g M a u l a n a A z a dNa tiona l Fellowship a nd Nationa l Scheme of Incentives toGirls forSeconda ry Educa tion(NSIGSE).

The Ba nk ha s implemented e-payment ofCustoms i n 1 03l o c at i o ns a s p e r t h e d i re c t io n o f t h e C e nt r al B o ar d o f E xc i s ea nd Customs, New Delhi, witheffect from16.01.2012.

The Ba nk ha s introduced e-stamping p r o j e c t i n 5 b r a n c h e si n B an ga lo re . T h e p ro j ec t i s u n de r i m pl em e nt at i on a t

o t h er 2 6 b r an c h es s i tu a te d i n t h e D i s tr i c t H ea d Q ua r t er si n t h e S t a t e o f K a r n a t a k a .

Agricultural Consultancy Services ( AC S) o u tf it o f t h e B an kha ndled 105 a ssignments. These 105 a ssignmentsc o mp r i se d of 7 5 a p p ra i s al s , 1 v i ab i li t y s t u dy, 2 1 v e tt i n ga n d 8 o t h er s t u di e s a n d t r ai n in g s . T h e t o t al o u t la y o f t h eassignments was}467 crore.

, , ,

, { }7 6

, , , - , - - ]

, , / -

\ , ... 2 01 0 . ... 8 .. ..

{ ,

16.01.2012 , 103 -

5 -

2 6

( ) 105 105 75 , 1 , 21 8 }4 6 7


23/217

22

A n n u a l R ep o r t 2 0 1 1 - 20 1 2

, \

}4032 1.49% 1.73%

}3386 2012 1.46% 2012 67.59 %

}2032 =}3295 }1191 }1 =}2000

}1270 =17200 = }1575 800

/ : , , - =}1

} 3 29 5 -

AssetQualityT he B an k h as i mp le me nt ed s ys te m b as ed i de nt if ic at io n i nco ll at io n o f N PA s d ur in g t he y ea r, i rre sp ec ti ve o f s ize a ndcategoryoftheborrowalaccounts.

Wi th t he m od er at io n i n t he e co no my, a ss et q ua li ty o f t heb an ki ng s ec to r w as u nd er s tr es s. T he g ro ss N PA l ev el o f t he

Bank stood a t}4 03 2 c ro re w it h a g ro ss N PA r at io o f 1 .7 3% a sat March2012.TheBanksgrossNPAratiocontinuestobeoneofthelowest a mongthepeers.Witha net NPAlevelof =}3386

c ro re , n et N PA r at io w as a t 1. 46 %.=The Provision CoverageRatiostoodat 67.59%asat March2012.

Cash recovery during the yea r a ggregated to a n a ll time highof }3 29 5 c ro re , w el l e xc ee di ng t he p re ce di ng ye ar s c as hrecovery of }2032crore. Out of this, recovery from written off a ccounts a t bra nches, writeJb ac k a nd u na pp li ed i nt er es ttogether a mounted to }1191 crore. Recovery from a ccountswheretheliabilityislessthan }1crorewas}2000crore.

D ur in g t he ye ar, re cove ry a mo unt in g t o }1 270 crore wasmade under SARFAESI Act . The Bank conducted 17200recovery meetsI w hi ch r es ul te d i n a r ec ov er y o f }1575 crore.U nd er L ok ad al at , 8 00 c as es w er e s et tl ed . B es id es , t he B an kt oo k s eve ra l i ni ti at ive s t o co nt ai n s li pp ag es a nd s pe ed u p

recovery from= o ve rd ue l oa n a cc ou nt s. T he se i nc lu dei de nt if ic at io n o f s tr es s ed a cc ou nt s fo r r es tr uc t ur in g/rephasing in time, conduct of Canadalats at branch level andmega adalats at Circle level for one time settlements, regularfollow-up of overdues in loa n a ccounts through Call Centre

a nd e -a uc ti on s. T he B an k a ls o fo rm ul at ed a s pe ci al s ch em eforsettlement ofsmallNPAsandforMSMEsbelow =}1crore.

A SSE T Q UA L IT Y A N D R I SK M A NA GE M EN T

A ll Time Hig h C as h Re co v er yat }3 29 5 c ro re

The objective of Risk Ma na gement is to ba la nce the tra de-offbetween risk and return. The Ba nk weighs the businessg r ow t h a n d r ev e nu e g e n er at i o n i n t h e c o nt e xt o f t h e r i s ksinherent in the business strategy a dopted.

T he B an k ha s pu t i n p la ce a u ni fi ed R is k Ma na ge me ntA r c h i t e c t u r e t o a t t a i n g l o b a l b e s t p r a c t i c e s f o re f f e c t i v e i m p l e m e n t a t i o n o f R i s k M a n a g e m e n tini ti at ive s in t un e wit h t he N ew Ca pital A de qu ac yFra mework prescribed by the RBI. An independentRisk Ma na gement Structure is in pla ce for Integra ted Risk

R i s k M a n a ge m e n t

[ \

II .. , {,

C ap i ta l A d eq u ac y F ra m ew or ka n d F ut u re S t ra t eg i es


24/217

23

A n n u a l R ep o r t 2 0 1 1 - 20 1 2

( )

, { , - , - ( )

{ ] -

, { 34

, { , , , , , , , , , , , { , ( ), ( ), ( ) ( )

() ]

M an ag em ent , c ove ri ng C re di t, M ar ke t, O pe rat io na l a ndGroupRisk.

The Board of Directors drive the Risk Management initiativesi n t he B an k a nd h av e o ve rs ig ht o n t he r is ks a ss um ed b y t heB an k. T he B oa rd o f D ire ct or s i s w el l s up po rt ed b y t he R is kManagement Committee(RMC)oftheBoard.

Various Risk Committees at the Top Executive level like CreditRisk Management, Market Risk Management, Operational

Risk Management and Asset Liability Management are alsoconstituted and operationalized to assist the Board and RMCof the Boa rd. These Committees meet periodica lly to a ssessa nd proa ctively review a ll policies related to various risk s a ndva li da ti ng c om pl ia nc es , p or t fo li o r ev ie w o n p er io di c b as is .The Audit Committeeof the Board (ACB) provides direction toa nd a ls o m on it or s q ua li ty o f i nt er na l a ud it f un ct io ns a ndreview of risk policy initiatives. The Banks business activitiesa r e u n d e r t a k e n w i t h i n t h e p o l i c y f r a m e w o r k a n dindependent departments are set up at all levels to facilitateimplementationofallriskinitiativesoftheBank.

T he r is k i s m an ag ed t hro ug h a f ram ew or k o f p ol ic ie s a ndprinciples a pproved by the Boa rd of Directors a nd supportedbyanindependent RiskManagement Wingthat ensuresthatt he B an k o pe ra te s w it hi n i ts r is k a pp et it e a s w el l a s d ef in edlimits.

An independent Risk Management Wing at the Head Office isfunctioning a s a nodal centre for overa ll implementation of

various risk management initiatives across the Bank. IntegratedMid-Office of both Domestic as well as Forex Treasury isf un ct io nin g u nd er t he Ri sk Man ag em ent fo r e ffe ct ive a ndi nd ep en de nt s up er vi sio n a nd m on it or ing o f Ma rke t R is k i ninvestment and forex functions. Risk Management Sections arefunctioningatallthe34CircleOfficesoftheBankasanextendedarmoftheRiskManagementWing.

The Bank has put in place several Risk Mana gement Policies.These include policies on Credit Risk Mana gement, MarketR i s k M a n a g e m e n t , O p e r a t i o n a l R i s k M a n a g e m e n t ,Management of Conflicts of Interests, Disclosures, Group RiskMa na gement, Colla tera l Ma na gement, Outsourcing,Corporate Governance, Investment, Compliance, Asset

L ia bility, Credit Monitoring etc. Besides the a bove, the Bankh as p ut i n p la ce R is k M an ag em en t P ol ic ie s f or i ts o ve rs ea sb ranc he s, taki ng int o ac cou nt t he re qui re me nt s o f t here gu lat or s i .e . C hi ne se B an ki ng Re gu lat or y Co mm is si on( CB RC ), H on g Ko ng M on et ar y A ut ho ri ty ( HK MA ), F in an ci alServicesAuthority (FSA) andCentralBank ofBahrain (CBB).

A ll t he R is k M an ag em ent P ol ic ie s f ra me d b y t he B an k a rea pp ro ve d b y t he R MC o f t he B oa rd a nd B oa rd o f D ir ec to rs a ta nnua l intervals. The policies a re a lso reviewed by the AuditCommittee ofthe Board (ACB) annually.


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A n n u a l R ep o r t 2 0 1 1 - 20 1 2

II : 31.03.2008 ..

II I

II II , , ,

{ - /

-

II II

, {

, , , / ,

" "

Migration to Basel II Norms: The Ba nk smoothly tra nsited

t o B a se l I I N o r ms a s o n 3 1 .0 3 .2 0 08 . T h e C ap i t al t o R i sk

Weighted Assets Ratio (CRAR) is being ca lculated a s per

Pillar 1 requirement of Ba sel II norms, a dhering to the New

Capital Adequacy Framework guidelines stipulated by RBI.

Th e Bank has also p ut i n p lace an Int ernal Capit alAdequacy Assessment Process Document (ICAAP) in pla ceu n de r P i ll a r 2 o f B a se l I I N o r ms . T h e I CA A P e xe r ci s e c o ve r st he d om es t ic , o ve r se as o pe ra ti on s o f t he B an k, t h e

subsidiaries, sponsored entities and associates. Linkagesto Stress Test Scenarios are also documented in ICAAP. TheICAAP document is reviewed a nd a pproved by the RMCBa nd theBoa rd ofDirectors.

A s p a r t o f I C A A P , t h e B a n k h a s c o n d u c t e d s t r e s s t e s t i n gu n d e r v a r i o u s h y p o t h e t i c a l s c e n a r i o s t o a s s e s s e f f e c to n c a p i t a l p o s i t i o n . T h e m e t h o d o l o g y i s a p p r o v e d b y t h eB o a r d o f D i r e c t o r s a n d s u b m i t t e d t o R B I a n n u a l l y a sp a r t o f I C A A P . T h e s t r e s s t e s t r e s u l t s a r e r e p o r t e d t o t h eA L C O / C R M C p e r i o d i c a l l y f o r v a r i o u s r i s k s a s s o c i a t e dw i t h l i q u i d i t y a n d c r e d i t r i s k .

A C ap i t al P l an n in g C om m it t e e i s o p e ra ti o na l a t H e adO f f i c e a n d t h i s C o m m i t t e e a r t i c u l a t e s t h e m a c r oeconomic scenarios vis--vis t h e c a pi t al r e qu i re m e nt s o f t h e B a nk i n t u ne w i th b u s in e s s st r at e g ie s o f t h e B a nk . Th eC om m it t e e e n s ur e s m a in t en a nc e o f a p pr o pr i at e l e ve l o f

CRAR and evaluates various options for raising capital.

T h e B a nk a d he r es t o t h e D i sc l os u re N o rm s i n t u ne w i thRBI guidelines under Pillar 3 of Ba selII Norms. A DisclosureC om mi tt e e i s f un c ti on in g i n t he B an k, w hi ch e n su re sa dherenceto theDisclosureNorms.

The Ba nk ha s initia ted necessa ry steps for moving over toAdva nced Approaches for computa tion of ca pital in Credit,

Market and Operational Risk.

Credit RiskManagementThe Ba nk ha s a well defined Credit Risk Ma na gement Policy,w hi c h d e fi ne s c re d it r i sk a nd o ut l in e s t h e t y pe o f p r od u ct s

offered, customer ca tegoriza tion, ta rget customers, credita pp rova l / m on it or in g p ro ce ss, e xp os ure l im it s an d r is ka ppetite,a pprovedbytheBoa rdofDirectors.

TheBa nk ha s a schemeof 'Delega tionof Powers'a pproved byt he B oard of D ire ct or s. T he o bj ec ti ve of Cre dit R is kM an ag em en t D ep ar tm en t o f t he B an k i s t o m ai nt ai n ahealthyandrobust credit portfolioandmanagethecredit riskinherent in individualexposures aswell asat portfolio level.


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A n n u a l R ep o r t 2 0 1 1 - 20 1 2

,

:-

,

-

/

]

/ , , , , , , {

/

]

/ }1

Risk Rating is pre-sanction tool for credit a ssessment, which

p ro vi de s i nt eg ri ty, s ta nd ar di zat io n a nd o bj ec ti vi ty t o t he

credit grantingprocess.

T he B an k ha s s ev er al r i sk m an a ge m en t s ys t em s fo rm an ag in g C re di t R is k. T he va ri ou s i ni ti at iv es t ak en b y t heBankareasunder.

A c om pr eh en si ve C re di t R is k M a na ge me nt P ol ic y i n t un ewithStatutoryand Regulatoryguidelinesis put inplace.

S pe ci fi c r at in g d ef in it io ns , p ro ce ss es a nd c ri te ri a i n p la ceforassigningexposurestogradeswithinaratingsystem.

Fo ur C re di t Ri sk Rat in g Mo de ls a re i n p lac e. Th es em o de ls h av e b e en d ev el op e d in te r na ll y fo r r at in gb or ro wa l a cc ou nt s b as ed on t he e xp os ur e l im it s.R at i ng o f e l ig i bl e a c co u nt s i s ma d e m a nd a to r y as apre-sanction exercise.

Migration Ana lysisofra ted a ccountsis done periodica lly.

The Bank is using the ratings assigned by recognized

External Credit Assessment Institutions to optimize

capitalunderStandardizedApproach.

PricingislinkedtobothinternalandexternalCreditRiskRating.

E n tr y b ar r ie r s / Hu r dl e Ra t e a r e f i xe d b as e d on C re d itRisk Ra ting.

Well structured 'Delegation of Powers' to variousa u t h o r i t i e s f r o m B r a n c h l e v e l t o M a n a g e m e n tCo mm it te e i s i n p la ce . C re di t S an ct io ni ng P ow er s a relinked to Credit RiskRating ofBorrowers.

To a vo id C re di t Co nc en tr at io n R is k, e xp os ur e c ei li ng s f ors in gl e/g ro up b or ro we rs , s ub st an ti al e xp os ur es , Te rmloa ns, unsecured a dva nces, exposure to va riousi nd us tr ie s, N BF Cs, Re al E st at e S ec to r, Ca pi ta l M ar ke tSectorareinvogue.

C re di t Ad mi ni st ra ti on a nd M on it or in g W in g i s f or me d t ohave focused follow-up mechanism a nd to strengthen

theloanreview/monitoringmechanism.

The Loan Review Mechanism ar ticulated in the CreditMonitoring Policy of the Bank covers the entire gamut ofreviewandmonitoringtobeaneffectivetoolforevaluatingthe loan book continuously and intends to bring outqualitativeimprovementsincreditadministration.

C re di t Au di t Sy st em b y e xt er na l/ i nt er na l a u di to rs o f a l lborrowersaccountsof }1 C r o r e a n d a b o v e i s i n p l a c e .


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MarketRiskManagement

OperationalRiskManagementO pe rat io na l R is k M an ag em en t f r am ew or k i n t he B an k i sba sed on ethics, orga nization culture a nd strong opera tingp ro ce du re s, i nv ol vi ng c or po rat e va lu es , i nt er na l c on tr olc ul tu re , e ffe ct ive i nt er na l r ep or t in g a nd c on ti ng en cyplanning.

T he B an k h as ad op te d p ol ic es fo r M an ag em en t o f O pe rat io na l R is k, w hi ch c ove rs va ri ou s a sp ec ts , s uc h a s,Opera tiona l Risk Ma na gement Structure, Insura nce,BusinessContinuityPla n,Outsourcinga ndL ega lRisk s.

At p resent, the Bank is moving towards migration toA dva nc ed M ea su re me nt A pp ro ac h ( AMA ) f ro m B as ic

Indica tor Approa ch of Ba sel II framework . In AMA a pproa ch,t he B an k c an u se i ts o wn m et ho d t o a ss es s i ts e xp os ur e t oo p er at i on al r i sk , b y i de nt i fy in g Ke y R is k I n di c at or s ( K RI ), b yconductingRiskControlandSelfAssessment (RCSA).

I n t h is d i re c t io n , t h e B a nk h a s i n it i at e d f ol l ow i ng p r oc e s s/a ctivitiesforimplementa tionofAdva ncedApproa ches.

The Ma rk et Risk framework of the Ba nk a ims a t ma ximizingt he re tu rn b y provid ing inp ut s re gardi ng the ext ent of

m ar ke t r is k ex po su re s, t he p er fo rm an ce o f p or tfo li osvis--vis theriskexposureandcomparablebenchmarks.

The Bank is comp ut ing Capital Charge for Market Risk onAvailableforSale(AFS)andHeldforTrading(HFT)portfoliounderinvestment byadoptingStandardizedMeasurement Method.

Mar ke t Ris k Man age me nt is gove rne d by t he BoardApproved Policies forInvestment and other Policies.

Integra ted Mid-Office a t Risk Ma na gement Wing ismonitoring Market Risk Exposure. Exposure limits, sucha s, Stop L oss L imits on tra ding book , Intra da y and

overnight limit for various currency positions, Dealer-wise

l i mi t s, A g g re g at e G a p L im i t, L i m it s o n M o ne y M ar k etO p e ra t io n s, M o d i fi e d- d u ra t io n l i mi t s f or i n ve s tm e ntp o r t f o l i o a n d V a R l i m i t s a r e f i x e d t o a c t a s r i s kmitigants/triggers. These limits a long with other triggersa r e t r ac k ed d a i ly a n d n e ce s s ar y a c t io n s a re i n it i at e d .R ep o r t in g s y s te m h a s b e e n s t re n g th e ne d f or e ff e ct i veMarket Risk Management.

Towa rds implementa tion of Interna l Models Ba sedApproa ch for ca lculation of Ca pital Charge for Ma rket Risk,t h e B an k h as p u t i n p l ac e a Va R b a se d m o de l f or e s ti m at i ngG e ne ra l M ar ke t R is k. T h e p ro ce s s o f b ac k t e st i ng o f r es ul t sgenerated by the model ha s been completed. StressedVa R

i s b ei ng c al cu la te d a s p er R BI g ui de li ne s o n a w ee kl y b as is .Stresstestingexercisea sperguidelinesisunderprocess.


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M ap p e d d i ff er e nt p r od u c ts a nd s er v ic e s o ff er e d a n da c t i vi t i e s u n d er t a k en i n t o e i gh t b u s i n e ss l i n e s i nC o re B a n ki n g So f t wa r e . T h e B a n k i s i n t h e p r o c e ss o f

e v ol v i n g s u i t a b le M a n ag e m e nt I n fo r m at i o n S y s t emfor ma pping of a ctivities/ products to eight businessl i n e s i n o r d e r t o c o m p u t e C a p i t a l C h a r g e f o rOpera tiona l Risk under the Sta nda rdized Approa ch.

O p er a t i on a l L o s s ev e n t s d at a ba s e i s be i ngs t r e ng t h e n ed , t h r o ug h c o l l ec t i o n o f l o s s d a t a / n e a rm i s s d a ta t h r o ug h i n c i d en t r e p o r t in g , w h i c h i s m a d em o r e c o m p re h e n s iv e . O p e r at i o n al R i s k Lo s s d at a a r ecollected since2006.

We b b as e d i nc id en t r ep or t in g p ac ka ge i s i n p la ce t of a ci l i t at e r e a l t i m e r e p o r ti n g o f O p e r at i o n al R i s k L o s sevents occurring a t Bra nches / Offices.

I d en t if i ed au d it re l at e d K ey Ri s k I n di c at o rs , w h ic h i so n e o f t h e p r e r e q u i s i t e s f o r A M A .

Ve tt in g of N ew P ro du c ts f ro m o p er at io na l r is k an gl e,w hi ch i s o ne o f t he s ta nd ar ds of O pe rat io na l R is kMa na gement Fra mework (ORMF).

The Ba nk ha s joined t he loss data consor tiump r o p o s e d b y I B A , w h i c h p r o v i d e s t h e e x t e r n a lincidents for scena rio a nalysis a nd interna liza tion a tt h e t i m e o f a d o p t i o n o f a d v a n c e d a p p r o a c h e s .

Re po rt in g m ec ha ni sm fo r R is k M it ig an ts, s uc h a s,

Insura ncea nd Outsourcing a ctivities is inpla ce.

Co ll ec ti on o f Ex te rn al O pe rat io na l Lo ss e ve nt s f ro msources, such a s, print media , internet etc, which ca nb e u s e d f o r d e v e l o p m e n t o f s c e n a r i o s .

E sc al at io n o f O pe rat io na l R is k Lo ss e ve nt s t o To pM a n a g e m e n t a s o n e o f t h e r e q u i r e m e n t s o f Adva nced Approa ches.

Va ri ou s r is k m it ig at io n m ea su re s a re s ug ge s te d o ni s s u e s i n v o l v i n g H u m a n R e s o u r c e s , I n d u s t r i a lRela tions a nd Interna lControletc.

Asset LiabilityManagementA n e f fe c t i ve A s s e t L i a b il i t y M a n ag e m e nt ( A L M ) s y s t e ma ddresses issues rela ted to liquidity a nd interest ra te risk st o m a i n t ai n a g o o d b a l an c e a m o n g s p re a d s, p r o f i t ab i l i t ya n d l o ng - te r m v i ab i li t y. T h e B o ar d o f D i re c t or s o f t h eB a n k h a ve c o n s ti t u t e d a n A s s e t L

canara bank annual report

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