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Home > Equity Market > State Bank Of Bikaner and Jaipur share price- Director's Reports >

State Bank Of Bikaner and Jaipur share price- Director's Reports

Industry: Finance - Banks - Public Sector
BSE Code :501061
NSE Code :SBBJ
Business Group:SBI Group
LTP (Rs.)
ISIN No :INE648A01026
Face Value/M Lot :10.00/1
P/E Ratio : 5.44
Market Cap : 3978.80 Cr
You can view full text of the latest Director's Report for the company.
Year End : 03 / 2014
The Board of Directors of State Bank of Bikaner and Jaipur have pleasure in presenting this Annual Report together with the audited Balance Sheet and Profit and Loss Account of the Bank for the year ended 31st March 2014.

FINANCIAL HIGHLIGHTS

NET INTEREST INCOME

The Bank's total interest income increased from Rs. 7498.19 crore during 2012-13 to Rs.8168.56 crore during 2013-14, recording a growth of 8.94%. Interest expenditure increased by 8.36% to Rs. 5344.78 crore, as against Rs. 4932.38 crore in the previous year. The net interest income recorded a growth of 10.05% to Rs. 2823.78 crore, as against Rs. 2565.81 crore in 2012-13. The net interest margin remained the same at the last year's level of 3.62%.

NON-INTEREST INCOME

The non-interest income of the Bank has increased by 20.66% from Rs. 726.28 crore in 2012-13 to Rs. 876.34 crore during 2013-14. The increase during the year as compared to the last year is mainly on account of increase in profit on sale of Investment by Rs. 63.08 crore and recovery in Written- off accounts by Rs. 38.57 crore.

OPERATING EXPENSES

The operating expenses recorded a growth of 26.99% from Rs. 1579.22 crore in 2012-13 to Rs. 2005.46 crore during 2013-14. Of this, employee costs increased by 31.20% to Rs. 1295.64 crore, while total other operating expenditure increased by 19.96% to Rs. 709.82 crore.

PROFIT

During 2013-14, the operating profit decreased to Rs. 1694.66 crore, (by -1.06%) as against Rs. 1712.87 crore in the previous year. The net profit recorded a growth of 0.20% from Rs. 730.24 crore in 2012-13 to Rs. 731.69 crore in 2013-14.

DIVIDEND

During the year 2013-14, the Bank declared an Interim Dividend of 143% i.e. Rs. 14.30 per equity share (face value of Rs. 10/- per share). Record date for ascertainment of entitlement of shareholders for Interim Dividend was 31st March, 2014. Interim Dividend may be treated as final dividend.

KEY FINANCIAL INDICATORS

The Return on Assets of the Bank stood at 0.87% during 2013-14 as against 0.96% in the previous year. The Return on Equity decreased to 13.66% as against 15.33% in the previous year. The Earnings Per Share increased from Rs. 104.32 in 2012-13 to Rs. 104.53 in 2013-14, while the book value per share improved from Rs. 678.74 in 2012-13 to Rs. 765.13 in 2013-14. As at end-March 2014, the Capital Adequacy Ratio of the Bank stood at 11.71% and 11.55% as per Basel II and III norms respectively, as against 12.16% as per Basel II norms respectively, as at end-March 2013. This was well above the RBI benchmark of 9%. Due to rise in NPAs on account of continued stress faced by the industrial sector coupled with agriculture NPAs, the Bank's Gross NPA ratio and Net NPA ratio increased from 3.62% and 2.27% respectively as at end-March 2013 to 4.18% and 2.76% respectively, as at end- March 2014. The average business per employee increased to Rs. 977 lakh in 2013-14, as against Rs.900 lakh in the previous year. The net profit per employee decreased to Rs.5.62 lakh in 2013-14, compared to Rs.5.91 lakh during 2012-13. The average business per branch increased to Rs. 116.52 crore during 2013-14, as against Rs.112.42 crore in the previous year.

CREDIT MANAGEMENT

The overall credit demand remained muted during the FY 2013-14, with GDP growth in sub 5% range due to overall slowdown in the economy leading to a lower level of investment activity. However, the Bank continued to focus on qualitative credit growth and faster credit delivery. Total advances of the Bank grew by 11.72% during 2013-14, as against growth of 16.98% during 2012-13.

The Bank's Commercial & Institutional (C&I) segment advances (other than food credit) during the FY 2013-14 grew by 9.40% with an increase of Rs.3099.00 crore over FY 2012-13, whereas non C&I segment comprising personal, small & micro enterprises and agricultural advances grew by Rs.2907.42 crore (11.50%).

Against the backdrop of stress in the various segments of the industry, the impetus of financing remained mainly towards top rated PSUs and other sectors such as Real Estate (RH), textiles and NBFCs etc.

In view of the prevailing competitive and stretched market scenario, closer interaction and regular meetings by the Top Management with high value customers were held at major centres in the country which resulted in booking several good advances.

PERSONAL BANKING

Deposits under Personal Segment grew from Rs. 41,905 Crore as on 31st March 2013 to Rs. 46,726 Crore as on 31st March 2014, thus recording a growth of 11.50%.

ACQUISITION OF NEW CUSTOMERS

Acquisition of new customers was the prime focus of the Bank during the year to augment its retail deposit base. We could open 24.97 lakh new Savings Bank Accounts during the year, which accounts for 23.46% of the base level. The resources mobilized in the Savings Bank portfolio was Rs. 3,617 crores, which helped the Bank to improve its CASA deposits.

55% of the new accounts were opened by either students or youth which reflects the Bank's penetration amidst the younger age groups of the population.

Nearly 73% of the total deposit in the newly opened accounts were contributed by youth and middle aged customers ranging from 20 years to 60 years which shows the Bank's effective linkage to salaried/ income earning segments of the society.

MAHALAKHPATI CAMPAIGN

To encourage the habit of regular monthly savings among customers, we have made our Recurring Deposit scheme popular through a special campaign called "Mahalakhpati RD Campaign." The campaign was focused on the opening of high value recurring deposit with a maturity value of Rs.10 lakh and above. We could mobilize 27,397 new Millionaire Recurring Deposit accounts during the campaign. We could open 70,084 Recurring Deposit accounts during the year.

SBBJ VAIBHAV & SBBJ DHANSHAKTI

We could mobilize Rs.1,190 Crore in a specially designed term deposit/ product called SBBJ Vaibhav launched during the year. SBBJ Dhanshakti, another deposit product for short term deposit, has mobilized Rs. 104.74 Crores during the year.

PERSONAL FINANCE

The Personal finance portfolio has crossed a landmark of Rs.10,000 crore during the financial year 2013-14. The Bank continued to be active in catering the credit requirements of P segment customers, mainly by way of Home Loans, Car Loans, Education Loans and Personal Loans. The advances under the personal segment rose to a level of Rs.10,295 crore as at March 2014 from Rs.9,131 Crore as at the end of March 2013.

During the year under review, 7,631 home loans aggregating to Rs.816 crore were granted, taking the outstanding home loan level to Rs. 3,768 crores as on 31.03.2014. Similarly 14,507 Car Loans aggregating Rs.648 crore were granted during the same period taking outstanding car loan level to Rs. 1,452 crore as on 31.03.2014. We could disburse 37,741 Personal loans aggregating Rs.1,116 crore during the same period.

As in the previous years, the Bank contributed to support the younger generation to pursue higher studies by extending Education Loan. To support the efforts of Government of India to boost the sentiments of retail/consumer durable segments, the Bank has introduced a new Scheme for financing of Consumer Durables during the year. The other retail segment products like Max Gain Scheme, Rent Plus and Home Cash have been revamped during the year to make them more customer/market friendly.

PRIORITY SECTOR LENDING(PSL)

Priority Sector Lending is the major thrust area of the Bank's operations. As at the end of March, 2014, the Bank's Priority Sector Advances increased to a level of Rs.23641 crore as compared to Rs. 20807 Crore in the previous year i.e. growth of 13.72% over March 2013. The PSL constituted 40.73% of the Adjusted Net Bank Credit, against the RBI benchmark of 40%. However, Priority Sector Lending in Rajasthan stood higher at 66.40% of Rajasthan's ANBC.

AGRICULTURE

Lending to Agriculture remains one of the major thrust areas of the Bank. The outstanding level of Agriculture advances increased from Rs.9188 crore as at the end of March 2013 to Rs. 10962 crore as at the end of March 2014, a growth of 19.31%. Our Bank's total direct agriculture lending is 99.35% of total Agriculture advances amounting to Rs.10911 crore, and has registered a growth of Rs.2658.90 crore during the Financial Year under review. The flow of credit to agriculture stood at Rs. 7644 crore against the annual target of Rs.3500 crore during the current financial year. Agriculture advance constituted 18.90% of the Adjusted Net Bank Credit (ANBC), against RBI benchmark of 18%. In the State of Rajasthan, it is even higher at 37.2% of ANBC for Rajasthan State.

The Bank has issued 109933 Kisan Credit Cards (KCCs) with sanctioned limits of Rs.2302 crore during the financial year 2013-14. The total number of KCC stood at 600317 as at end of March 2014.

FINANCIAL INCLUSION (FI)

In the first phase, our Bank was allocated 829 villages with population above 2000. Accordingly 794 USBs (Ultra Small Branches) were established using PoS technology and BCs/BCAs were engaged covering 823 villages and in the remaining 6 villages, Brick and Mortar branches were opened. In the second phase of FI (2013-16), our Bank has been allocated 7588 villages with population below 2000 in 1878 Gram Panchayats which are to be covered by engaging BCs and / or opening of branches by 31.03.2016. During the current Financial Year i.e. 2013-14 we have been allocated target to cover 1067 villages and we have covered 1070 villages by 31.03.2014.

The KIOSK Banking Software developed by M/s TCS Ltd. and provided by SBI has been rolled out in our Bank. Our Bank has entered into agreement with M/s CSC E-Governance Services India Limited on 07.01.2013 and with M/s. FIA Technology Services Pvt. Ltd. (a Corpoprate BC) on 20.11.2013 for providing the BC service. M/s CMS Computers Ltd., which is a Service Centre Agency (SCA) of M/s. CSC e-Governance Services India Ltd., has been allotted 19 districts in Rajasthan for engaging CSCs as BCAs in the Gram Panchayats allocated to our Bank. Pali and Barmer districts have been allotted to M/s FIA Technology Services Pvt. Ltd. for engaging their BCAs. In the remaining 12 districts, our existing Corporate BCs namely Lupin Human Welfare & Research Foundation Samiti / P2P Microfinance and Allied Services or Individual BCs will continue to provide banking services.

AADHAAR SEEDING AND MAPPING ON NPCI PORTAL:

Our Bank has successfully implemented Aadhaar based payment system (APBS/NACH) through National Payment Corporation of India (NPCI) gateway. Seeding of Aadhaar Number in CBS account is under progress. We have seeded 625759 accounts with Aadhaar, of which 616746 Aadhaars have been uploaded on NPCI Portal.

DIRECT BENEFIT TRANSFER:

DBT has been rolled out in 121 districts across the country, of which 6 districts are in the State of Rajasthan and SBBJ is the Lead Bank in two DBT districts i.e. Udaipur and Pali. In both the districts, banks have opened accounts of all the beneficiaries as per the list received from District Authorities.

MICRO, SMALL AND MEDIUM ENTERPRISES (MSMES)

The Micro, Small and Medium Enterprises (MSME) sector is crucial to the Indian Economy. There are 3 crore enterprises in various industries, employing approx 7 crore persons. Together, these account for 45% of the industrial output and 40% of the exports. This sector is contributing approx.11% per annum to India's GDP and is critical for the overall GDP growth. RBI has also emphasized to adopt suitable strategies for higher lending to MSMEs. Accordingly, our Bank has also given high priority to this area.

We have arranged MSME customers meet at Jaipur, Alwar, Bhiwadi, Udaipur, Chittorgarh & Bikaner centres. We have also sensitized our operating officials by way of training & seminar etc.

The Bank has assisted 21156 new MSME units during the year 2013-14. In order to boost MSME advances, the Bank has modified its existing MSE loan schemes to make them most competitive.

The Bank has continued its thrust to provide collateral free loans to MSMEs under the Credit Guarantee Scheme of CGTMSE. During the year (April 13 to March, 14), the Bank provided new collateral free loans under Credit Guarantee Scheme of CGTMSE to MSE units amounting to Rs 119.11 crore, taking the CGTMSE covered accounts (cumulative) at Rs405.40 crore as at the end of March 2014.

LOANS TO WOMEN BENEFICIARIES:

The Bank finance as on 31st March, 2014 to women beneficiaries has increased to Rs 3181.21 Crore in 212925 accounts against Rs 2732.87 crore in 204680 accounts as on March 2013, registering a growth of Rs 448.34 crore. This constitutes 5.48 % of ANBC against the benchmark of 5%.

ASSISTANCE TO MINORITY COMMUNITIES, WEAKER SECTIONS AND SCHEDULED CASTES / SCHEDULED TRIBES

As at end March 2014, assistance to minority communities stood at Rs. 2960.73 crore spread over 101591 accounts.

Financing to weaker sections stood at Rs. 10998.90 crore benefiting 1014090 persons as at the end of March, 2014. The assistance to weaker sections as a percentage of Adjusted Net Bank Credit (ANBC) is 18.93% as at end March, 2014. This is well above the benchmark of 10% prescribed by RBI.

The outstanding assistance towards Scheduled Castes (SCs)/ Scheduled Tribes (STs) stood at Rs 3070.27 crore in 258602 accounts under priority sector as on 31st March, 2014.

GOVERNMENT SPONSORED SCHEMES

Laying utmost emphasis on Government sponsored schemes has been amongst the major strategies of the Bank in pursuit of financial inclusion. The Bank continued to play a pioneering role in financing entrepreneurs under various Government sponsored schemes. The SGSY scheme was replaced by National Rural Livelihood Mission (NRLM scheme) w.e f. 01/04/2013. The position under various Government sponsored schemes as on 31 March, 2014 is as under: -

Scheme Number of Amount Beneficiaries sanctioned during financial year (Rs. crore)

Swarn Jayanti 1893 10.88 Shahri Rojgar Yojana (SJSRY)

Prime 712 34.77 Ministers Employment Generation Programme (PMEGP)

Mukhya Mantri 2564 53.00 Swavlamban Yojana (MMSY)

POP 5612 22.55

LEAD BANK SCHEME

Our Bank has Lead Bank responsibility in nine Districts in the State of Rajasthan viz. Bikaner, Barmer, Hanumangarh, Jaisalmer, Jalore, Pali, Sirohi, Rajsamand and Udaipur. The Bank has been implementing and monitoring the Annual Credit Plan and other developmental and poverty eradication schemes launched by the Govt. of India, Govt. of Rajasthan and NABARD. Target allotted for Annual Credit Plan to our Bank for the year 2013-14 was Rs4011.00 crore, as against which the achievement of our Bank up to March, 2014, was Rs.4670.00 crore, thereby achieving 116%.of the annual targets.

MICRO CREDIT (SHGs)

At the end of March,2014, the Bank has credit linked a total of 44244 Self Help Groups (SHGs) with outstanding amount of Rs.200.94 crore, out of which 36363 accounts are of women beneficiaries with outstanding amount of Rs.169.08 crore. NABARD had, in the past ranked the Bank as Number One in Rajasthan State for its performance under Micro Credit continuously from the year 2004-05 to 2008-09.

Ministry of Finance, Govt. of India launched a project for financing to Women Self Help Groups with the support of Anchor NGO as SHPI in 24 backward Districts of 24 States in the country, which was later extended to 150 back ward Districts, including 109 Left Wing Extremism (LWE) districts. In Rajasthan, Barmer (our lead district), Banswara, Dungarpur and Jhalawar districts have been selected for this purpose.

The progress in this regard is directly reviewed by Department of Financial Services, Ministry of Finance, Govt. of India. Bank branches and NGO have been identified and Anchor NGO, CECOEDECON has surveyed and mapped the area in Barmer District. In Barmer District, NGO has Linked 931 SHGs by SB Linkage and 521 SHGs by Credit Linkage during the year against the targets of 1000 up to March, 2014.

RURAL SELF EMPLOYMENT TRAINING INSTITUTES (RSETI)

In order to impart job-oriented skills to rural unemployed youth, the Bank has set-up eight RSETIs at Bikaner, Hanumangarh, Barmer Jaisalmer, Jalore, Pali, Sirohi and Nathdwara (Distt. Rajsamand).

By the end of March, 2014, 33702 candidates have been imparted training for various local demand jobs in these institutions and by imparting skill trainings, 4270 candidates have been engaged in various jobs and 15340 candidates have started their own ventures. 8935 persons have been credit linked amounting to Rs.4734.45 lakh. Rating process was introduced by MoRD, New Delhi through State Project Co-coordinator of RSETIs in the year ending March 2013. All our RSETIs secured AA /AB rating. Our Managing Director and Directors of four RSETIs namely Bikaner, Barmer, Hanumangarh and Jaisalmer were honoured at the felicitation function organized by MoRD, GoI on RSETI Diwas at Vigyan Bhawan, MoRD, Delhi on 21/11/2013.

FINANCIAL LITERACY AND CREDIT COUNSELLING CENTRES (FLCCs)

During the year 2010-11, in order to educate farmers and other people in rural / urban areas with regard to various financial products, Bank schemes and services available from the formal financial sector, the Bank had set up 9 Financial Literacy and Credit Counseling Centres (FLCCs) in all nine Lead Districts in Rajasthan. These FLCCs are providing awareness service, free of charge. Up to 31/03/2014, 111598 persons have been counselled by these centres out of which 23605 persons have been linked with Banks.

A campaign was launched to arrange five awareness camps per month in nearby villages by FLCC Counsellors, which is still continuing and is very beneficial to rural people. In addition to this, a campaign was also launched by way of wall paintings, brochures and pamphlets. The FLCC Counsellors also organized awareness camps in minority concentrated blocks, in their districts.

REGIONAL RURAL BANK

The Marudhara Gramin Bank (MGB) sponsored by SBBJ with its Head office at Jodhpur has a network of 501 branches spread over 12 districts of Rajasthan state namely Pali, Jalore, Sirohi, Sriganganagar, Bikaner, Hanumangarh, Jaisalmer, Barmer, Jodhpur, Nagaur, Jaipur & Dausa. SBBJ continues to provide managerial support and financial assistance by way of refinance etc. to MGB. All branches of MGB are on CBS platform and provide Electronic Fund Transfer facility. MGB had deposits of Rs. 5143.57 Crore and advances of Rs. 3792.89 Crore as on 31.03.2014. MGB recorded Gross Profit of Rs. 80.60 Crore & Net Profit of Rs. 55.50 Crore.

GOVERNMENT BUSINESS

The Bank conducts Government Business on behalf of State/Central Government departments through 494 Authorized Branches. Income Tax, Central Excise, Service Tax, Value Added Tax etc. are collected through physical challans and also through the electronic mode. The Bank has established a Centralized Pension Processing Centre (CPPC) which calculates as well as credits pension to the accounts of pensioners across all the branches. We also have an Online Treasury Branch for online payment of salary of Rajasthan Govt. employees on behalf of the State Govt. Presently our Online Treasury Branch is processing 9 lakh State Govt. transactions received through 18000 digitally signed files in a month. During 2013-14, the commission income from Government business was Rs. 132 crore.

INTERNATIONAL BANKING

The Bank provides Foreign Exchange related services to exporters/ importers, other resident and non- resident customers through a network of 68 Authorized Category "B", 184 Category 'C branches and 4 Trade Finance Central Processing Centres(TFCPCs).

The Bank's forex dealing room at Mumbai and all the Authorized Category 'B' branches are equipped with infrastructure of latest technology for real-time communication and are connected through SWIFT network with more than 750 offices of foreign banks throughout the world. The Bank maintains 21 NOSTRO accounts in all major currencies and non-account correspondent banking relationship with all major banking groups in the world. To facilitate NRI customers for inward remittances, there is online remittance facility and tie-ups with 5 Gulf based Exchange Houses.

The Bank also undertakes proprietary Forex trading to increase profit by taking advantage of market movements. Our Merchant Forex turnover stood at Rs. 31678 crore in the FY 2013-14 as against Rs. 26717 crore of last financial year, representing an increase of Rs.4961 crore (18.57 %) during the year.

Our NRI deposits stood at Rs. 1384 crore at the end of March 2014 against the base of Rs.1249 crore in March 2013, registering a growth of Rs. 135 crore (10.80%). Our export credit stood at Rs.2740 crore at the end of March 2014 as against Rs. 2334 crore of March 2013, recording a growth of Rs. 406crore (17.39%) during the financial year.

The Bank chairs the local chapter of Foreign Exchange Dealers' Association of India (FEDAI). The Bank is also an active member of FEDAI, International Chamber of Commerce (ICC) and Clearing Corporation of India Limited (CCIL).

INDUSTRIAL REHABILITATION

Rehabilitation / restructuring of potentially viable industrial unit remains an important thrust area of the Bank. For this purpose, the Bank has its own Industrial Rehabilitation Policy containing detailed guidelines for undertaking rehabilitation / revival package and the same is updated from time to time. Whenever units are found to be non-viable or not responding to the rehabilitation / restructuring package, the focus is shifted to recovery of Bank's dues through legal recourse such as action under SARFAESI / compromise settlement / assignment of debt / through courts/ Debt Recovery Tribunals (DRTs).

As at the end of 31st March 2014, the Bank had 23 large sick /weak units on its books with aggregate outstanding of Rs. 405.39 crores. There are 41Corporate Debt Restructuring (CDR) cases with aggregate exposure of Rs. 2069-68 crores and 24 BIFR cases with exposure of Rs. 498.19 crores. The Bank has been acting as BIFR's Operating Agency in 4 cases. During the year under review, 16 accounts with aggregate exposure of Rs. 954-26 crores have been restructured under CDR mechanism as warranted basically by the tight economic scenario. Sustained efforts are undertaken by the Bank in timely restructuring of the accounts and post sanction close monitoring and follow up have resulted in retaining most of the restructured assets as Standard Assets.

NPA MANAGEMENT

The Bank continues with its multipronged strategy of controlling Non-Performing Assets (NPAs) through intensive monitoring of large value accounts, close follow-up with DRT/BIFR, restructuring of viable accounts and effectively utilizing the remedies available under the SARFAESI and RODA Acts. GMs, DGMs and AGMs posted at Head Office have been assigned the role of mentors of Zones / Regions and Branches to provide support and monitor the NPA level. Due emphasis has been given to follow-up with the Court and filing of Execution Petitions. During the year, large numbers of "Recovery Camps", Bank Adalats and Lok Adalats were organized for NPA recovery, the results of which were quite encouraging. Recovery camps are being held in every village every week. The progress in NPA / AUC recovery is being discussed / reviewed by the Management Committee by conducting Video-conferencing with all the Zones and DGM headed branches. The "Loan Tracking Centre" monitors / tracks the irregular Standard accounts from Head Office level. Pre-emptive measures such as restructuring etc. are also taken, as per RBI guidelines. By adopting the above measures and utilizing the provision of SARFAESI Act effectively, Bank also received a number of acceptable compromise proposals which resulted in good recovery in NPA. There has been an addition of Rs. 2123.54 crore in NPA during 2013-14. However, there has been recovery / upgradation to the tune of Rs. 1110.77 crore. At the end of March 2014, gross NPA ratio of the Bank Stood at 4.18% and Net NPA ratio stood at 2.76%.

LOAN TRACKING

The Bank had set up the Loan Tracking Centre (LTC), a Centralized Outbound Call Centre at Jaipur in June 2011, for follow-up of Personal and SME Segment Loan accounts in IRAC4, IRAC3, IRAC2 and IRAC1 categories to avoid slippages of accounts into hardcore NPAs. Subsequently in July 2012, the LTC started following up AGR segment accounts also. The Call Executives at the LTC make calls to the borrowers, where contact details are available in CBS, in a sustained manner to recover the overdue amount and upgrade accounts in co- ordination with Branches / CPCs.

IMPROVEMENT DONE DURING THE CURRENT YEAR:

(a) LTC has been set up at all the 8 Zonal Offices of the Bank.

(b) Auto-Dialler system has been installed at the Head Office LTC, whereby the telephone / mobile numbers of borrowers are dialled by the Auto-Dialler system and our staff communicates with the borrower using a Head Phone attached with the PC.

(c) With the setting up of Zonal LTCs, all the NPA borrowers of the Bank are contacted, at least once during every 2 months.

RISK MANAGEMENT STRUCTURE OF THE BANK

The Bank has an independent Risk Management framework in place.

At the apex level, there is a Risk Management Committee of the Board (RMCB), which oversees the policies and strategies for Risk Management in the Bank. The Credit Risk Management Committee (CRMC), Asset Liability Management Committee (ALCO), Market Risk Management Committee (MRMC) and Operational Risk Management Committee (ORMC) provide support to RMCB. These sub-committees are required to place all critical issues/ development in their respective areas before the RMCB. The Bank has Credit, Market and Operational Risks Management Policies for identification, measurement and management of major risks. These policies are reviewed and updated from time to time, keeping in view the dynamic business environment. Integrated Risk Management Department (IRMD) at the Head Office, functions under a Deputy General Manager. The IRMD acts as the nodal centre for coordination with other departments/ operating units engaged in managing risk in their respective business areas.

CAPITAL FRAMEWORK

BASEL II : Under Pillar-I of the New Capital Adequacy Framework (NCAF) guidelines issued by Reserve Bank of India, the Bank is computing Capital to Risk Weighted Assets Ratio (CRAR) using Standardised Approach for Credit Risk, Standardised Duration Approach for Market Risk and Basic Indicator Approach for Operational Risk. Under Pillar-II of NCAF, the Bank has assessed capital requirement for 2013-14 for other risks in its Internal Capital Adequacy Assessment Process (ICAAP) document, a copy of which has been submitted to RBI. Basel-II Disclosures have been made by the Bank in the Annual Report as also on Bank's website as part of the Pillar-III guidelines of NCAF.

BASEL III : In order to improve the quality of capital and address the liquidity risk issues, Basel III Capital Regulation has been implemented in phases in India w.e.f. 01.04.2013. Accordingly, the Bank is computing Capital to Risk Weighted Assets Ratio (CRAR) as per Pillar-I of Basel III framework. With a view to improve market discipline under Pillar 3 of Basel III framework and to improve transparency of capital base, Basel-III Disclosures have been made by the Bank in the Annual Report as also on the Bank's website.

CREDIT RISK

Credit Risk management remains a major task for Bank and receives prime attention. Control and monitoring of Credit Risk is dealt with as per the Loan Policy and Credit Risk Management, Credit Risk Mitigation & Collateral Management Policy of the Bank approved by the Board. These policies cover methodologies for measuring, monitoring and control of credit risk. In order to control the magnitude of credit risk, prudential norms on benchmark, financing ratios, single borrower or borrower- group exposure, industry specific and sector-specific exposure, exposure to sensitive sectors, hurdle rate for taking a fresh exposure etc. have been set up. Credit appraisal systems and a clearly defined Delegation of Powers form an integral part of the Bank's Loan Policy.

MARKET RISK

To monitor market risks and treasury operations, mid-offices (domestic & forex) are functional at IRMD. Scenario Analysis on market risk covering events such as decline in stock markets, rise in bond yields and foreign exchange rate movements are conducted regularly as per the Stress Testing Policy of the Bank to assess resilience of Investment portfolio.

OPERATIONAL RISK

One of the major tools for managing operational risk is to put in place a well established internal control system, which includes segregation of duties, clear management reporting lines and adequate operating procedures.

Most of the operational risk events are associated with weak links in internal control systems or laxity in complying with the existing internal control procedures. The Bank has suitable systems and procedures for managing and control of operational risks.

PREPARATION FOR ADVANCED APPROACHES OF BASEL-II

Bank plans to move over to Advanced Approaches of Basel-II guidelines for Credit, Market & Operational Risks in a phased manner. Letter of Intents (LOIs) for all the three Risks have been submitted to Reserve Bank of India for this purpose. On receipt of approval from Reserve Bank of India, Internal Rating Based (IRB) Approach for Credit Risk, Internal Models Approach (IMA) for Market Risk and Advanced Measurement Approach (AMA) for Operational Risk will be followed under Advanced Approaches. This will not only help the Bank to maintain Economic Capital, but will also strengthen the risk monitoring framework and control aspects.

DATA CLEANSING

Augmentation of capital is not only costly but its availability is also scarce. Hence, efforts are being made for optimum utilisation of the existing capital. Bank aims at conservation of capital by improving data quality. Cleansing of data will lead to accurate computation of the Risk Weighted Assets of the Bank and is likely to reduce requirement of additional capital.

ASSET LIABILITY MANAGEMENT

A comprehensive Asset Liability Management (ALM) System is in place for effective management of Liquidity Risk and Interest Rate Risk. These Risks are assessed and monitored through Structural Liquidity Reports and Traditional Gap Analysis respectively. The structural liquidity report is being prepared and reviewed on a daily basis as per RBI guidelines.

Both these risks on Foreign Assets & Liabilities are being monitored through Maturity & Positions (MAP) and Sensitivity to Interest Rate (SIR) statements. The monitoring of liquidity on a dynamic basis, over a time horizon spanning 1-90 days, is in place. Duration Gap Analysis is also used to manage interest rate risk for the entire Balance Sheet.

The Asset Liability Management Policy, coupled with Investment Policy of the Bank specifies various prudential limits for management of Liquidity and Interest Rate Risks. The Bank is regularly monitoring these limits. A comprehensive Contingency Funding Plan and a system of daily monitoring of inflows & outflows of deposits are in place for managing liquidity on a day-to-day basis. Calculation of Value at Risk (VaR) on Foreign Exchange Forward Positions and Stress Testing on Liquidity, Interest rate and Foreign Exchange Open & Forwards Positions is also undertaken regularly.

INTERNAL CONTROL, INSPECTION AND AUDIT

The Bank has in place a well established independent audit system and structure to ensure adequate internal control for safe and sound operations. Internal Audit is carried out under Risk Focused Internal Audit (RFIA) as envisaged under Risk Based Supervision of RBI with focus on assessment of risk and internal control mechanism.

The branches have been categorised into three groups as per risk perception and are subject to varying degrees of audit. During FY 2013-14, 738 Branches and 50 Centres/Processing Centres (under Business Process Re- engineering (BPR) initiatives) have been subjected to Internal Audit. No branch of the Bank remained overdue for audit as on 31.12.2013.

As at the end of March, 2014, 99.90% of the Bank's branches were rated "Well Controlled" and "Adequately Controlled ".

CONCURRENT AUDIT

106 branches and 35 Centres/ Processing Centres (under BPR initiatives) covering 66.31% of advances and 40.70% of deposits as on 31.03.2013, alongwith 13 Head Office Departments have been placed under Concurrent Audit.

INFORMATION SYSTEM (IS) AUDIT

Information System Audit Cell is in place to conduct IS audit of major IT establishments including Core Banking Project, Zonal Computer Centres, etc. in accordance with RBI directives and Bank's IT Security Policy.

RECONCILIATION OF INTER- OFFICE TRANSACTIONS

As per the RBI guidelines, all the entries need to be reconciled within a period of six months from the date of their origin. By the end of March 2014, the bank has reconciled inter- branch debit transactions originated up to 28.02.2014 i.e. well before the time limit prescribed. The Bank shall aim at reconciling all entries within two months of their origin.

INFORMATION TECHNOLOGY

1. CORE BANKING SOLUTION (CBS)

All our branches are running successfully on Core Banking Solution (CBS). We were able to provide better customer satisfaction and services by providing many Value Added Services like multi functional ATMs, Internet Banking, Mobile Banking, Flexi Deposit Scheme, Multi City Cheque Facility, instant credit of local and outstation cheques, etc. For all type of Debit/ Credit transactions in CBS, SMS alert is sent to customers, where mobile number is registered with the Bank.

2. ELECTRONIC PAYMENT SYSTEMS: RTGS, NEFT & SBGRPT

Real Time Gross Settlement (RTGS) is an instant payment and settlement system and National Electronic Fund Transfer (NEFT) is a scheme for inter- bank funds transfer operated by the RBI. All branches of our bank are RTGS & NEFT enabled. Our customers can make their inter-bank remittances in a faster and secured manner at very nominal cost. SB Group Payment (SBGRPT) functionality for electronic funds transfer within State Bank Group is also available for customer.

3. AUTOMATED TELLER MACHINES (ATMS)

The Bank has installed 467 new networked ATMs and replaced 123 ATMs during the year to take the tally of ATMs to 1554. All the ATMs are connected to the network of State Bank Group ATMs, thereby enabling more than 62.50 lakh card holders of the Bank to have free of cost access to over 45000 ATMs of the State Bank Group all over the country.

4. INTERNET BANKING

All our branches are enabled to offer Internet Banking facility to our Retail as well as Corporate customers. Looking to the rapid increase in the usage of Internet banking worldwide, the Bank has introduced several new features during the year. Apart from own account and third party transfer within bank, our customers can transfer funds to other banks in online mode. TDS enquiry for Term Deposits from the comfort of their homes or offices, opening / closing of e - TDR / e - STDR / e - Recurring Deposit (RD) account, facility to view the details of Income - Tax Statement (26 -AS) and viewing of Pension Slip is available. Retail Internet Banking facility for visually challenged persons has also been made available. For Corporate customers, a new facility 'SB - Collect', for on line collection of funds has been provided.

Online payment of direct and indirect taxes e.g. Income Tax, Service Tax, Excise Duty, Customs Duty of Central Government, VAT/CST of Rajasthan State Government and Maharashtra State Government, EGRAS facility for online collection of all Tax and non Tax revenue of Rajasthan Government, facility of online payment of Professional Tax of Maharashtra State Govt. has also been provided. Facility of online application for IPOs using ASBA (Application Supported with Blocked Amount) facility where investor customer continues to earn interest during the application process is available to internet banking users.

Facility of online booking of Railway / Air Tickets has been widely accepted. Electronic payment of railway freight (E-Freight) is gaining popularity. We have integrated number of Aggregators to our online system to provide the payment facility of wide range of merchants, e-commerce services and utility bills to our Internet Banking users.

Bank has taken steps to increase awareness about Internet banking among staff as well as customers through seminars and awareness meets. To popularize online payment of taxes, a facility of "Zero Balance Internet Current Account" has been introduced.

5. MOBILE BANKING & IMMEDIATE PAYMENT SERVICES (IMPS)

Mobile Banking facility was introduced in 2009, for our customers having a Savings / Current Account. The product is named "State Bank Freedom. Presently, there is upper ceiling of Rs. 50000/- for fund transfer and for purchase of goods / services per day within overall calendar month limit of Rs.2,50,000/-. In order to make the registration process more robust and to eliminate the threat of frauds/ phishing attempts, our Bank enabled registrations over ATM/CBS, only if the mobile number entered matches with the mobile number already available in the customer's CIF in CBS.

"Immediate Payment Service" (IMPS) P2P (Person-to-Person), was launched in our Bank in 2012 for enabling our customers to use mobile instruments as a channel for remitting funds 24 x7 using MMID (Mobile Money Identifier) & Mobile Number. During 2013-14, two more services P2A (Person-to-Account) & P2M (Person-to-Merchant) has been enabled in our Bank to make fund transfer using Account No. & IFS code and to make various utility payments at shops and commercial establishments, ticket booking though IRCTC website etc., The upper ceiling for remittance or payment of bills is same as in Mobile Banking facility.

6. GREEN CHANNEL COUNTER

Bank has implemented "Green Channel Counter" facility at various branches viz. all district headquarters in Rajasthan, branches situated at Delhi NCR, Mumbai, Bangalore and Ahmedabad and other identified urban, semi-urban and rural branches.

It is a paperless, eco-friendly and easy facility for the customers to be carried out through ATM cum Debit Card using a Transaction Processing Device (TPD) placed at the Single Window Operator's (SWO) terminal connected to CBS terminal of the SWO. Presently this facility is available at 506 branches with 2 such counters minimum at each branch.

7. PREPAID CARDS

The Rupee Pre-paid Card (eZPay Card) has been launched, particularly for salaried persons and students for pocket money and scholarship payments, who undertake only one or two transactions in a month and maintain account for the purpose. The Rupee Pre-paid Card (eZPay Card) is equally useful for the Corporate, who have to make various payments to their staff and vendors. The cards can be reloaded and can be used in any ATM or with any POS merchant, any number of times during their validity period.

8. BUNCH NOTE ACCEPTOR (BNAs)

BNA machines are installed at the Bank's 2 branches. It is a full-functional freestanding lobby machine installed in the branch's Banking Hall. The BNA machine is capable of accepting Rs. 49,900/- cash in bundles and receipt is given to the customer and cash is immediately credited to the customer on real time basis.

9. CASH DEPOSIT MACHINE (CDM)

The Bank has planned to install CDM at various High Cash Receipt branches providing 24x7 availability with round the clock security in onsite ATM kiosk. The CDM machine is operable through ATM-cum-Debit card and is capable of accepting cash up-to Rs.49,900/-. Receipt of the deposit transaction is given to the customer and cash is immediately credited to customer's account on real time basis.

10. SELF SERVICE KIOSKS (SSKs)

75 Self Service Kiosks (SSKs) have been installed at various branches of our Bank. Customers can perform financial and non-financial transactions such as passbook printing, fund transfer etc. using State Bank ATM- cum-Debit Cards at these SSKs. The SSK solution has user friendly touch screen based customer interface.

11. ADOPTION OF ADVANCED IT INFRASTRUCTURE PRODUCTS FOR INTERNAL HOUSEKEEPING AT THE BRANCHES/OFFICES:

I. BIOMETRIC AUTHENTICATION OF CBS USERS

For improved security in Core Banking Solutions, the Bank has rolled out Biometric Authentication Solution (BAS) at branches/offices for the front end tellers using CBS. The solution is used as a second factor for authentication of CBS tellers, the primary mode being the CBS password combination.

II. ACTIVE DIRECTORY SERVICES (ADS )

For enhanced security, Bank has implemented Active Directory Services (ADS) within State Bank Connect Network in all the branches/ offices. Active Directory (AD) provides centralized administration of network and security. It authenticates and authorizes all users and computers in a Windows domain, assigning and enforcing security policies for all computers and facilitates installing or updating software centrally.

III. SB-CONNECT:

At present all 1100 branches/offices are connected through State Bank Connect. A technology shift from 'Point to Point' to MPLS has been initiated by Bank to ensure seamless best path connectivity at all the branches with availability of redundant circuits at all times. Wifi / Wimax / 3G and 4G modes of connectivity is also under consideration at the Group level, after ensuring information security clearance of these products in our Bank.

IV. ONLINE VOUCHER VIEWING AND VERIFICATION MODULE(OVVVM)

OVVVM has been implemented in the Bank at all branches/offices (other than single officer branches). Same day transactions can be verified by the supervisors after posting of the transactions in CBS. With the viewing / verifying of transactions online on the same day, any fraud / malpractices can come to notice on near real-time basis and adverse position can be avoided to the extent possible.

12. MGNREGA E-PAYMENT

Government of Rajasthan has designated our Bank as the Nodal Bank for MGNREGA e-Payments in the State of Rajasthan. MGNREGA e-Payment system has been implemented for centralized payment of NREGA wages and other expenditures directly to the beneficiaries' accounts. The project has been smoothly handling about 2 to 2.5 lakh transactions per month.

13. SMS UNHAPPY

The "Project SMS Unhappy" was launched by the Bank with the objective to provide a simple and economical way to the customers to represent their grievances. This has reduced complaint resolution time drastically, to below 48 hours, thereby enhancing the customer satisfaction level and creating a loyal customer pool.

14. INSTANT LOAN SANCTION

Bank is providing the facility of online instant sanction of Housing Loan and Car loan to the customers under the head "Home Loan in 20 minutes" and "Car Loan in 10 minutes" respectively on Bank's website http: //www.sbbjbank.com.

The customer gets a sanction letter instantly on submitting completely filled application form on Bank's website, if he fulfills the eligibility criteria.

15. ONLINE LOAN APPLICATION TRACKING SOFTWARE

Bank has introduced a web based application for Online Tracking of Loan application for customer and status of their application can be viewed by customer on internet through our Bank's website.

16. INFORMATION SYSTEM (IS) SECURITY

With the efforts of the Bank to popularize IT enabled services, the threats and risks to our IT assets have increased manifold. To control these threats and risks our Bank has formulated a comprehensive IT and Information Systems (IS) Security Policy that addresses all these concerns, including maintenance of customers' confidentiality, security and integrity of data. State Bank's Data Centre, where our CBS data base resides (both at the Primary and Disaster Recovery Site), has already acquired the accreditation from the International Standard for Information Security Management Systems ISO/IEC: 27001: 2005. All the Banking applications have built-in security features like access control, data encryption and transmission through secured channels, as per requirement of the application. The threat of 'virus' and 'worms' is minimized by having a centralized anti-virus solution.

Adequate Firewalls and Intrusion Detection Systems are in place, so as to prevent unauthorized access to the network. The Disaster Recovery Plan (DRP) and Business Continuity Plan (BCP) for all branches are in place.

KNOW YOUR CUSTOMER (KYC)/ ANTI MONEY LAUNDERING (AML)/ COMBATING OF FINANCING OF TERRORISM MEASURES

The Bank follows Reserve Bank of India/ Government of India guidelines on Know Your Customer/ Anti Money Laundering / Combating Financing of Terrorism. Prescribed documents relating to the identity and address are obtained from customers while opening their accounts.

With the objective of Universal Financial Inclusion, Bank facilitates opening of 'Small Account' by migrant labourers, street hawkers and other poorer sections of the society, with limited KYC documents.

To facilitate inclusion of lower strata of society to mainstream banking, Basic Saving Bank Deposit Account (BSBA) for the customer having prescribed KYC documents has been introduced. BSBA shall not have the requirement of minimum balance. At the same time, the entire range of services available to a normal saving bank account is extended to this product.

In order to identify and examine suspicious transactions, the Bank has installed the AMLOCK software besides setting up an Anti Money Laundering Cell at the Head Office. The customers' accounts have been allocated different risk categories and alerts are generated once any transaction exceeds a predefined threshold limit.

These alerts help in identification of suspicious transactions, which are further reported to the Financial Intelligence Unit, Government of India, in appropriate cases.

DEMAT SERVICES

Our Bank is providing Depository Participant Services with National Securities Depository Limited (NSDL) to our customers, wherein they can hold their securities as electronic book entries and transfer securities, without actually handling physical scripts. Customers can also obtain loans against Demat shares. SBBJ is registered with NSDL as a Depository Participant.

CUSTOMER SERVICE:

Customer Service is a top priority for the Bank. We are in a service industry and our success to a very large extent depends on the satisfaction level of our customers. The environment we operate in is increasingly becoming intensely competitive.

The meetings of the Customer Service Committee of the Board and Standing Committee on Customer Service were convened at regular intervals to review the position of customer service rendered. Similar committees are also functioning at branches, Zonal Offices and Head Office, which helps in continuous improvement in service standards.

The Bank is a member of the Banking Codes and Standards Board of India (BCSBI) and has voluntarily adopted a 'Code of Bank's Commitment to Customers,' which sets a framework for setting a minimum standard of banking services to be provided by the banks. An awareness camp for BCSBI code was organised at Jaipur on 19 November 2013 in coordination with BCSBI.

CUSTOMER GRIEVANCES REDRESSAL MECHANISM:

The Bank has put in place a multi pronged grievances redressal mechanism to suit varied customer requirements. An aggrieved customer can either make a written complaint at branch / Regional / Zonal / Head Office of the Bank or make an online submission in the form provided on the Bank's website / through e-mail against acknowledgement.

DISCLOSURE OF COMPLAINTS/ UNIMPLEMENTED AWARD OF BANKING OMBUDSMENT :-

In terms of RBI circular DBOD.No.Leg BC.60/09.07.005/2006-07 dated 22.02.2007, the information in respect of customer complaints and awards passed by the Banking Ombudsman is given in the Table below :-

A. Customer Complaints

(a) No. of Complaints 71 pending at the beginning of the year

(b) No. of Complaints 6470 received during the year(*)

(c) No. of Complaints 6434 redressed during the year(*)

(d) No. of Complaints 107 pending at the end of the year

(*) Excluding 1499 Complaints found non maintainable.

B. Awards passed by the Banking Ombudsman (BO)

(a) No. of unimplemented 01 Awards at the beginning of the year

(b) No. of Awards passed by 17** the Banking Ombudsman during the year

(c) No. of Awards 12 implemented during the year

(d) No. of unimplemented 03 Awards at the end of the year(in 2 cases Appeal has been made before Appellate Authority and in 1 case matter in under process)

** Out of the remaining 3 cases, under 1st case BO Delhi has re-examined the case and cancelled the award against the Bank. In 2nd case, the complainant not accepted the award and in another one, the appeal allowed and award passed by BO is set aside by the Appellate Authority.

ATM COMPLAINTS

To monitor the ATM failed transactions related customer complaints received at the branches, ATM Complaints Reconciliation Cell has been established at Head Office. Reserve Bank of India has prescribed that all ATM related complaints be resolved within 7 working days. For faster resolution /redressal of complaints, an online ATM Complaint Management System (ATMCMS) has been developed and implemented. During the year 2013-14, the Bank has received 20567 ATM failed transactions related complaints, out of which 20477 complaints were resolved. No home bank complaint (where customer and ATM both belong to our bank) is pending for more than 7 working days. Number of complaints pending for more than 7 days, where claim is pending with other banks, is 3.

THE RIGHT TO INFORMATION (RTI)

The Right to Information (RTI) Department was constituted at the Bank's Head Office in December, 2010 for better coordination and effective implementation of the Right to Information Act, 2005 . The Department has since then been instrumental in ensuring that information sought for under the various RTI applications received by them is dispensed with efficiently and effectively in a time bound manner as per the provisions of the RTI Act, 2005 and that the appeals too, if received, are redressed timely, while also complying with the directives of the Hon'ble Central Information Commission (CIC) in this regard.

During financial year 2013-14, the RTI Department received 1553 applications under the RTI Act, 2005, out of which 1532 applications were disposed off. 21 applications were awaiting disposal as on 31st March, 2014, and these were all pending for less than 30 days.

Besides, the Department also received 73 appeals under the RTI Act, 2005 during financial 2013-14, out of which 71 appeals were disposed off. 2 appeals were awaiting disposal as on 31st March, 2014, and these also were pending for less than 30 days.

BUSINESS PROCESS RE-ENGINEERING

Business Process Re-engineering (BPR) Initiatives stabilized further during 2013-14 and their coverage was extended to more branches. Bank operates 12 city-centric loan CPCs, viz. Retail Assets Central Processing Centre (RACPC)/ Small & Medium Enterprises City Credit Centre (SMECCC)/ Retail Assets and Small & Medium Enterprises City Credit Cell (RASMECCC) having end- state at 11 centres with 275 branches linked to them. Coverage of Rural Central Processing Centre (RCPC) was increased to 374 branches at 19 centres. 22 Relationship Managers- Medium Enterprises (Hub Model) and 1 Relationship Manager-Small Enterprises are working at 14 major business centres.

Non loan CPCs/ initiatives, viz. Liability Central Processing Centre (LCPC), Trade Finance Central Processing Centre (TFCPC), Currency Administration Cell (CAC), Central Pension Processing Cell (CPPC), Clearing CPC (CCPC), Multi Product Sales Team (MPST), Relationship Manager-Personal Banking (RMPB) have helped in further improvement in customer service. The coverage of various non loan CPCs / initiatives as on 31.03.2014 vis-?-vis 31.03.2013 was as under:

CPC / Branches Covered Initiative 31.03.2013 31.03.2014

LCPC 996 1097

TFCPC 122 124

CAC / 155 180 SCAB

Clg. CPC 224 250

CPPC 844 909

Branch Re- 185 196 design

During the Financial Year 2013-14, the following developments took place to make CPCs / initiatives more effective and to optimize gains:

- In Branch Cash Handling (IBCH) has been rolled out w.e.f. 15.06.2013.

- RASMECCC at Bhiwadi centre started functioning w.e.f. 31.01.2014.

- CAC at Delhi centre started functioning w.e.f. 26.02.2014. Shifting of back office activities to loan CPCs, implementation of revised roles for branch functionaries and better ambience in branches has not only improved the Bank's image but also helped the linked branches to focus more on customer service and marketing for business.

CURRENCY MANAGEMENT DEPARTMENT

Owing to our Bank having the highest market share in Rajasthan, RBI has designated our Bank's 199 branches as Currency Chest branches in the state and 15 Currency Chest branches in other parts of the country. All our Currency Chest branches are undertaking the following activities in an efficient manner:-

1. Circulation of New Currency Notes among Public.

2. Distribution of Coins to the Public.

3. Exchange of torn/damaged/ soiled/mutilated notes.

4. Providing of linkage facilities to branches of other banks which are linked to them.

5. Our 9 branches are providing facilities of Note Exchange and coin distribution on 3rd Sunday of every month and 6 branches are providing facilities of Note Exchange and coin distribution on 3rd Sunday of alternate month.

CROSS SELLING

The Bank continues to market life and non-life insurance, mutual fund and credit card products in order to augment its non interest income. For the purpose, the Bank has in place tie up arrangements with SBI Life Insurance Co. Ltd., SBI General Insurance Co. Ltd., SBI Fund Management Pvt. Ltd. and SBI Cards and Payments Services Pvt. Ltd. Various campaigns were launched for marketing of these products, and the bank earned a total income of Rs. 20.03 crore from cross selling activities.

COMMUNITY SERVICES BANKING

As a responsible Corporate Citizen, the Bank undertakes community based social activities such as tree plantation, free health check up & blood donation camps, establishing of water huts and water coolers, sponsoring prizes / kit for sports competitions, honouring meritorious students etc. During the year 2013- 14, the Bank donated Rs. 1.00 crore for Uttarakhand Chief Minister's Relief Fund and Rs.25 lakh for Odisha Chief Minister's Relief Fund as assistance in relief measures to people affected by natural calamity. The Bank also provided 5 ambulances, one each to Maheshwari Hospital & Research Centre Trust, Jaisalmer, Ram Niwas Dham Trust, Shahpura, Bhilwara, Sant Sukhdev Shah Memorial Religious & Charitable Trust, Alwar, L.K.C. Shri Jagdamba Andh Vidhyalaya Samiti, Sriganganagar and People Welfare Society, Sikar as also one Antim Darshanika Vahini (Mortuary Van) to Jagriti, Jaipur.

Other activities or financial assistance by our Bank are listed as under :-

- Providing of Water purifiers and ceiling fans by every branch of the Bank to its nearby School which had scarcity of funds.

- Provided medical equipments to Manav Sewa Sangh, Jaipur, which has been providing free treatment of Bone Marrow Transplantation to Thalassemia affected children of poor families.

- Financial assistance to Society for Rational Development, Jodhpur for free education to poor children in rural areas.

- Providing of Computer, Projector, Laptop, Printer and T.T. Table to 'Udayan Care' Jaipur, an NGO which shelters, educates and rehabilitates, orphaned/ abandoned children.

- Providing of Computer & Projecter to 'I Create' Jaipur, an NGO which organizes training programmes and vocational training for youth and women.

- Provided furniture to 'Vimukti Sansthan' engaged in providing free education and vocational training to girls in slum areas.

- Donated Generator to RamaKrishana Mission, Khetri for running various welfare activities like health support programmes (free eye surgery) and providing nutritious food for poor children and their mothers.

- Branches of the Bank Continues to adopt one girl child each from a poor family with an objective of providing financial assistance for pursuing their studies in Government /Municipal Schools.

- Distributed 200 folding sticks to poor blinds at Blind & Humanity Welfare Centre, Mumbai.

- Provided Roti Making Machine to Manav Sewa Samiti Udaipur, serving poor people by way of providing free meals to attendants of patients at Hospitals.

- Provided Vela Ventilator (Life Saving Equipment) to Sheth D.C.Shroff Ashaktashram Hospital, Surat which is charity based hospital.

Bank shall remain dedicated to respond to the needs of the less fortunate and under- privileged members of the society and will also do its bit for a clean environment.

BRANCH EXPANSION

During 2013-14, the Bank opened 113 new fully computerized branches which includes 34 branches in unbanked rural centres in Tier V and VI. 25 branches were inaugurated online from the Head Office on 27.02.2014.

As on 31.03.2014, the total number of branches of the Bank stood at 1148, the category wise distribution thereof being as under:

Rural Semi Urban Metro Total Urban

416 308 214 210 1148

The Bank continued to maintain its dominant presence amongst all other banks in the State of Rajasthan with a network of 932 branches as on 31.03.2014, with 699 branches being located in rural and semi urban areas.

The Bank continues to play a pivotal role in the socio-economic development, alleviation of poverty and resultant overall uplift of the masses in the State .

HUMAN RESOURCES DEVELOPMENT

The Bank's staff strength as on 31.03.2014 was 13359 employees, with the following break up: -

AS ON 31.03.2014 OUT OF WHICH

STAFF CADRE SC ST GENERAL TOTAL WOMEN MINORITY

OFFICERS 1058 489 3837 5384 695 368

CLERKS 936 584 3744 5264 918 317

SUB-STAFF 318 219 1418 1955 125 67

SAFAI 591 19 146 756 234 6 KARAMCHARI

TOTAL 2903 1311 9145 13359 1972 758

Out of the Bank's total staff strength as on 31.03.2014, 2903 (21.73%) belong to SC and 1311 ( 9.81%) to ST categories which is well above required percentage. SC/ST cell to safeguard interests of SC/ST employees is also well in place. Reservation policy is implemented in our Bank as per Government guidelines.

Necessary complement of staff has been made available for working in new frontiers like Core Banking Solution, Tele-banking, Internet Banking, ATMs, Credit / Debit cards, marketing, Cross Selling, Business Process Re-engineering etc. The Bank has been according high priority to training and sensitization of staff members to respond to the customers' expectations and deliver modern banking facilities in the technology- driven environment.

Human Resource is the most important constituent and quintessence of an organization and its progressive development has now become a major corporate concern. An organization should be able to bring in proper integration of human resources management strategies with the business strategies. Qualitative training for human resources has become necessary for improvement of their efficiency. As most of the senior functionaries / operational staff are going to retire in next 2-4 years, the Bank, has to develop a second line of expertise and enable them to cater to the needs of its esteemed customers and the Organization . Looking to these facts, a total no of 8981 employees of all categories, including 787 employees of the sponsored RRBs, were provided training opportunities on various subjects related to banking and technology at all the three Staff Training Centres (STCs) of the Bank during the year.

The Bank also provided pre-promotion training to 27 SC/ST Clerical candidates, eligible for promotion to Officer Cadre Group A / B & 167 SC /ST Sub-Staff candidates eligible for promotion to Clerical Cadre during the year. In addition to this, 37 seminars / workshops were conducted on various burning issues to update skills of employees. More thrust has been accorded to Mobile Banking, Internet banking, ATM services, Soft skills, System & Procedures, Marketing, quality services to the customers, in view of the ever changing customer needs. In this direction we have also conducted 39 one day Motivational Programmes for Clerks encompassing 1518 clerks.

Two HR Conclaves were conducted by us - The first one for the Top Executives was held at Jaipur from 26.07.13 to 28.07.13, which was an open discussion for continuous growth of our Bank, NPA management etc. The second conclave was held at Udaipur from 29.11.13 to 30.11.13 wherein the target group was Controllers and was meant for team building and leadership development / BPR initiatives / NPA management.

Apart from in-house training, the Bank has provided facility of training to its officers in specialized areas at Apex Training Institutes like State Bank Academy, Gurgaon, State Bank Staff College, Hyderabad, SBIICM Hyderabad and SBIRD Hyderabad. During the said period, 1308 officers have been trained at these external agencies in different areas of Banking. For various other programmes, we have also deputed our officers for training to IDBRT, NIBM-Pune, CAB- Pune and FEDAI Mumbai.

During the financial year 2013-14, we deputed 10 officers for specialized training programmes abroad viz : - 24th Annual Forex Assembly of Forex Association of India at Dubai, Deutsche' Bank International Banking Seminar at New York, Seminar & Annual Meeting of the IMF & World Bank Group at Washington,DC (USA), 12th Advanced Management Programme towards Next Orbit :Indian Banking Sector at Delhi, Paris, Milan and Berlin, Programme on Leadership Development for Corporate Excellence in Collaboration with Kellogg School of Management - North Western University, USA, 13th Advanced Management Programme "Building Global Competitive Edge in the Banking Sector" held at Delhi, Paris, Milan and Berlin.

Our "Gyanodaya" e-learning (anywhere, anytime learning) portal is in full swing. Due to our efforts for increasing the number of registrations by providing incentive of recognition and reward , a link to access the portal from the intranet site and by making it mandatory for newly promoted clerks/officers to pass at least 10/15 tests, the number of registrations has increased to 3297 (27.03.2014) and is increasing every day.

In the scheme of deputing top executives (GMs and DGMs) of the bank to one training programme of their choice, at reputed external training institutions, we deputed DGMs to IIM Ahmedabad and IIM Banglore. We also conducted 05 training programmes in the specialized area of Credit Management / SME Business / Analysis of Financial Statements / Corporate Credit with the support of outside faculty.

ORGANISATIONAL PLANNING

For faster credit dispensation by bringing credit decision nearer to business centres and customers as also to meet competition from other banks, the Delegation of Powers of various Credit Committees were revised and new credit committees (NWCC & RCC) were constituted to ease pressure on the HOCC- II & ZOCC. The financing powers for allied & general matters and advance related matters were also steamlined to impart more effectiveness. The Delegation of Financial Powers up to Scale -V was consolidated for ready reference to the staff. ATM Cell Mumbai was rechristened as ATM Nodal Office, Mumbai and reallocated under DGM (IT), in line with the other Associate Banks for sake of uniformity. The Calendar of Reviews submitted to the Board/ ACB/ M.Com was streamlined to impart more efficiency in the decision making process.

STAFF WELFARE

The Bank believes in keeping the morale and motivation of the employees high, considers employees as its most important assets and accords high priority to their welfare.

The Bank undertook following staff welfare activities

1. Granting of Scholarship to the meritorious wards of the employees.

2. Providing free medical consultancy services at various hospitals.

3. Insurance cover for employees to the extent of Rs.8.00 lakh f 16.00 lakh for accidental death) under Group Insurance Scheme of SBI Life.

4. A total amount of Rs.3.00 lakh outstanding in various loan a/ cs viz. Housing Loan, Overdraft limit (Personal loan), PF Loan, Conveyance Loan is allowed to be waived for employees who die in harness .

5. A one-time award of Rs. 10,000/- for education to one ward of the deceased employee is also given.

6. Reimbursement of funeral expenditure is being made to the extent of Rs. 10,000/- from staff welfare fund for both serving and retired employees.

7. Annual Health Check up scheme is extended to the spouse of the employees who are within the age group of 41 to 49 years.

8. For employees who are on leave for debilitating sickness and are on loss of pay, an amount of Rs. 15000/- per month (upto 24 months during the entire service period) is paid.

9. The Bank has set up Holiday Homes at Jaisalmer, Chandigarh, Mussoorie, Jaipur, Manali, Mumbai, Goa, Delhi, Haridwar, Katra, Bengaluru, Mt. Abu, Vrindavan and Udaipur. This facility is also available for retired employees.

10. Various cultural and sports activities were organized during the year.

INDUSTRIAL RELATIONS

The Bank has a long history of harmonious and cordial relations with both supervising as well as workmen employees enlisting their total commitment, support and cooperation. The Employee's Union and Officers' Association have extended their wholehearted cooperation for the all-round growth of the Bank. A well established and on going consultative machinery is functioning at various tiers of the administration for resolving issues through joint consultations and negotiations.

VIGILANCE ADMINISTRATION

Vigilance Administration is an integral part of the management. Vigilance activities are accorded high priority in the Bank. Keeping in view the paramount importance of the preventive vigilance, greater emphasis is laid on the preventive measures. Preventive Vigilance training programs have been conducted to improve skills of the staff. In other training programs conducted at Bank's Training Centres also, areas with focus on "How to be a Vigilant Employee" and "Areas of Concern from Vigilance Angle" are dealt with. The training platform of the Bank has been effectively used to create awareness amongst all officials about Vigilance function, areas of concern where officials need to pay more attentions, nature of fraud/ serious irregularities taking place, determination of vigilance angle and how bonafide actions of the officials can be protected. The interaction and feedback from the participants has been used to identify operational risk areas and to suggest systematic improvement if any. Sensitization of officials on Vigilance related issues was also done at various Zones. Preventive Vigilance Committee set up has been revamped. Accordingly, branches having staff of 10 or more, processing centers irrespective of staff strength, unsatisfactory rated branches and fraud detected branches have been included for formation of Preventive Vigilance Committee. Meeting of Preventive Vigilance Committees are held regularly where staff is sensitized towards preventive vigilance measures. Complaints received in the Vigilance Department are dealt expeditiously and investigations were conducted wherever needed. An independent Internal Advisory Committee is functioning to examine all cases to decide whether there is a Vigilance Angle. Significant emphasis is laid on the transparency in the tendering process (procurement of goods and services, auctions, etc.) by the Bank. The tenders issued by the Bank are uploaded on the Bank's website as well as Government of India website.

An In-house magazine titled as "Vigilance Bulletin" is published every quarter with an objective to create vigilance awareness amongst staff. Many new initiatives have been taken as preventive measures like Biometric login system, Electronic Voucher Verification, On line Tracking of status of loan application by the applicant, better pre-sanction due diligence process etc. Scheme of Recognition & Alertness Award for staff in respect of detection / foiling of frauds has been revamped and amount of incentive has been increased. Whistle Blower Policy has been implemented in the Bank whereby any staff member can provide information on any malpractices or instances of misuse of official powers where the identity of informer will be protected

The department disposed of 440 complaints, 104 Investigations and 32 preventive vigilance inspections were conducted. 90 disciplinary cases having vigilance angle have been concluded during the year 2013-14.

USE OF HINDI

The implementation of Official Language Policy in the Bank is not only a statutory requirement but also a business need. The Bank made all possible efforts to comply with the statutory provisions relating to the Official Language Policy of the Govt. of India during the year and took several initiatives to provide benefit of Bank's different schemes to the masses through Hindi Language.

During the year 2013-14, the Bank made significant progress in promoting and propagating the use of Official Language and ensured compliance of various other statutory requirements framed under the Official Language Act /Official Language Rules. The Bank made all possible efforts to achieve the targets set by Official Language Deptt. Ministry of Home affairs, Govt. of India.

Bank continued its efforts to promote use of Hindi in the field of information Technology. A portal of Rajbhasha Vibhag was made available on Bank's Infonet site. Various useful materials like Hindi typing tool, format of Quarterly Progress Report, Annual Programme etc. were made available on the portal. Officers/employees were imparted desk training to work on computer in Hindi with the help of Unicode.

Hindi Day and Hindi-fortnight were celebrated in Offices/Branches of the Bank in the month of September 2013 and various competitions were conducted for the staff members. An All India Hindi Essay competition was also conducted by the Head Office. To increase progressive use of Hindi Head Office Rajbhasha Trophy competition (Head office and Zonal level) was organized during the year. A Seminar was organised on 4th March, 2014 for all Hindi officers/nominated Hindi officers of our Bank.

Bank's quarterly in House Rajbhasha magazine "Upwan" is being published regularly. Since last two years this magazine had been awarded consolation prize by Reserve Bank of India. During the year State Bank of Bikaner and Jaipur has been awarded consolation Prize by RBI for the progressive use of Hindi among Region "A".

Representative of Govt. of India also visited our Zonal Office Delhi , Kota , Regional Office Chandigarh, Sonipat, Amritsar, Ghaziabad and Saket branches and appreciated our efforts. Bank TOLIC Jaipur and Kolkata and TOLIC of Jodhpur and Kota also awarded our Bank for Official Language implementation.

AUDIT

State Bank of India, with the concurrence of the Reserve Bank of India, approved the appointment of 5 firms of Chartered Accountants viz. M/s. Agarwal Anil & Co. of Delhi, M/s. M K Aggarwal & Co. of Delhi, M/s. Chaturvedi & Co. of Kolkata, M/s. Uberoi, Sood & Kapoor of Delhi and M/s. P S D & Associates of Jaipur as the Statutory Central Auditors of the Bank for the year 2013-14. During the period under review, the scope of audit covered 664 branches / centralized processing units as against 587 branches/centralized processing units covered in 2012- 13.

RESPONSIBILITY STATEMENT

The Board of Directors hereby states:

1. That in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

2. That they have selected such accounting policies 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 as on the 31st March 2014, and of the profit or loss of the Bank for the year ended on that date;

3. That they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Banking Regulation Act, 1949, and State Bank of India (Subsidiary Banks) Act, 1959 for safeguarding the assets of the Bank and preventing and detecting frauds and other irregularities; and

4. That they have prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

The details on Corporate Governance are annexed.

ACKNOWLEDGMENT

The Board of Directors is grateful to its valued customers, esteemed shareholders and the public at large for their patronage and confidence reposed in the Bank and places on record its deep appreciation. The Board of Directors thanks the Government of India, State Bank of India, Reserve Bank of India and other regulatory agencies for their valuable support and guidance throughout the year.

The Board of Directors places on record its deep appreciation of the commitment, sense of involvement and dedication exhibited by each staff member and constructive role played by the Employees' Union and Officers Association in the overall development, growth and prosperity of the Bank.

For and on behalf of the Board of Directors

B. Sriram

Managing Director

Place : Mumbai

Date : 23rd April, 2014

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