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    Harsha Dutta
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    4 Ansichten33 Seiten

    Mda 2009 354608

    Hochgeladen von

    Harsha Dutta
    mda_2009

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    © All Rights Reserved
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    Management Discussion & Analysis MACROECONOMIC AND INDUSTRY OVERVIEW. The Indian economy remains on course correction and the real GDP growth for the Financial Year 2008.09 is estimated at 67% per GOI advance estimates, with the Reserve Bank of India (RBI) estimating GDP growth at 70% with a downward bias. Though India's economic performance has demonstrated a fair degree of reslience despite an adverse external efivironment, the real economy will remain stressed in the near-term and we hold our GDP estimate at 65-67% for the Financial Year. However, the country’s medium term fundamentals remain faiey robust and we expect the real economy to tum-around from the current slow growth phase by the second half of 2010. The services sector was the key growth driver and grew by 9.2% in the Financial Year, led by subgroups viz. community and social services, financial services, and trade, transport and communication services. We expect community and social services to print strong end-period growth on the back of a huge pickup in government final consumption expenditure. Moderation in economic activity can be traced to slowing industrial activity with sectoral growth estimated at 24% for the Financial Year, substantially lower than the 9.4% average growth seen in the preceding two years The first half of the year saw the Central Bank adopting a tight monetary policy stance in response to escalating infation which touched an alltime high of 12.91% in ‘August 2008 on growing global commodity prices, especially crude oil prices that peaked at $147/bb in Juy 2008, However, the collapse of Lehman Brothers in mid-September 2008, and the ensuing international credit crunch and high risk aversion led to a significant reversal in capital flows exerting pressure con domestic liquidity, Tight domestic liquidity conditions were further exacerbated by advance tax collections and RBI intervention in the forex markets to arrest the pace of rupee depreciation. In response to these dramatic developments, the RBI adopted an aggressive monetary ceasing stance and eased prudential norms, a sharp policy reversal. To alleviate credit constraints, the RBI enhanced export credit refinance, special refinance for Scheduled ‘Commercial Banks (non-RRB) and refinance facilites for SIDBI, NHB and EXIM Bank Additionally, risk weights on banks’ exposures to all unrated claims on corporates, claims secured by commercial real estate and claims on NBFCs- NDSI were reduced to 100% from 150%, Commercial real estate exposures restructured up to June 30, 2009 were allowed to be treated as standard assets. As a one-time measure, the second restructuring done by banks of exposures (other than exposures to commercial real estate, capital market exposures and personalfconsumer loans) up to June 30, 2009 were also made eligble for concessional regulatory treatment. Since October 2008, the RBI has been actively cutting key short-term rates - the Repo by 400 bps, the Reverse Repo bby 250 bps and the Cash Reserve Ratio (CRR) by 400 bps since October 2008, to 5.0%, 35% and 5.0% respectively, The Reverse Repo has clearly emerged as the key policy signal instrument in recent months over the Repo. ‘Additionally, the RBI also reduced the Statutory Liquidity Ratio (SLR) for Scheduled Commercial Banks from 25% to 24% of their Net Demand and Time Liabilties (NTL) effective November 2008. Fiscal policy response to limit the slowdown and cushion the economy too, picked up pace from the fourth quarter. Since December 2008, the government launched three fiscal packages to target stressed sectors viz,, banking, auto, housing, real estate and exports and improve and ease credit flow to prodictive sectors ike infrastructure and rural development. Among others, measures have included the easing of foreign currency borrowing rules, increasing foreign investment limit for m7 __ae lw corporate bonds to $15 bn, sector-specific sops, and indirect tax concessions including the reduction of Cenvat to 8%. Government finances remained under pressure on the back of higher expenditures (in part also on subsidies due to peaking global crude oil prices) coupled with lower revenues. As the sources of funds for the government (viz. tax collections) have tightened, fiscal deficit will likely exceed 6% of GDP (with the consolidated deficit likely to be in: excess of 11% of GDP), targeted as per: the: revised estimate for the'Financial Year 2008.09. Reflecting the moderation in economic activity, Scheduled ‘Commercial Banks’ credit growth too" softened. Bank credit grew only by 17.3% in the Financial Year 2008-09 as compared to 223% posted in the Financial Year 2007-06. Growth in non-food credit too slowed. considerably at. 17.8% versus 23.0% in the preceding year, rile aggregate deposits of Scheduled Commercial Banks grew 19.8% against 22.4% in the preceding year In tems of the overall macroeconomic contions, WPI infason has continued to,trend downwards, fling 19 2 fistorc low of 026% at end March pray on account ofa high base efect. However, consumer price infaton at above 9% sil remains warnsome.Intajon ill continue to trend downwards and is expecied to enter negate, tenitory by early ne 2008, essential saiscal phenomenon We can expect the pace of growth to maderste further in the first half f the Financial Year 2009-10 with policy stimuli providing cftca'growth support While weak spending sentinient, and high investories limit private business activity, some positives wil be visible from the second half of 2010, as the réal economy responds to policy stimuli only with a lag However, since the current’ monetary easiig ojcle has spanned only six months" whilé the RBI had earliér tightened rates over a period of four years, leding rates have been“adjustng to:this policy direction reversal wth a measured lag, While banks wil eck to balance higher credit flows with heightened risk of * deterioration in asset qialty, the key question fothe eral economy now centres around the efciency and effectiveness of the monetaty transmission mechanism, 28 BUSINESS OVERVIEW ‘At your Bank sustainability means operating in an ethically, and socially responsible manner, respecting and supporting ‘our communities; protecting the environment: and delivering superior stakeholder value. By embracing sustainable growth strategies, your Bank propels its progress and differentiates itself from competition. ‘The sustained growth of your Bank, is based on the key pillars of GROWTH, TRUST, TECHNOLOGY, KNOWLEDGE DRIVEN HUMAN CAPITAL, TRANSPARENCY and RESPONSIBLE BANKING. Your Bank is committed to offer innovative sustainable, business solutions that are customised ‘to meet the growing and dynamic needs of customers across ‘generations. Your Bank also believes in bringing about a sustainable transformation in banking, combining traditional and modem ways of thinking, to give maximum. benefit tp all our stakeholders. By continuously striving to create, innovate and ‘vansform, your Bank goes beyond the traditional realm of banking to create long-term value for all stakeholders. Moving forward in this direction, your Bank has evolved an innovative business model entaling a conscious move away from philanchropy based’ CSR to using CSR/Sustainability where corporate self regulation is integrated in the business modal and is a critical business driver Inthe incresbingy conscience marketplaces of the 21° cetur, there his Been a significant increase in the demand for ‘ior ethical Busineis processes and actions Your Bank embraces responsibilty forthe impact ofits activties,on the environment, consumers, employees, communities, stakeholders and,all other members of the public sphere. Your, Bank stives to operate in the ‘Sugganablty Zone, between pure philanthropy and pure profits. where wider economic, environmental and socal objectives are met.-Your. Bank, therefore focuses on sustainably. as a, strategie dffereniator, lending compective advantage in-a-challenging business environment ensuring long-term sustainable growth and development of all stakeholders, in turn creating a virtuous yee of sustained economic prosperity Your Bank has experts ranging from the field of banking to specific industry sectors, each contributing their knowledge and expertise individually and through collective thinking thereby ensuring that every solution, product and innovation works in tandem with your Bank's customers’ needs, at every stage of evolution of their business This differentiated approach has resulted in your Bank receiving several recognitions across leading banking league tables from independent institutions of repute and leading media houses while winning multiple awards and accolades ‘across product and service categories both nationally and alobally ‘Your Bank was ranked as the No. | Emerging Markets Sustainable Bank of the Year-Asia at the FT/IFC Washington Sustainable Banking Awards, 2008 in London, ‘Your Bank was also ranked as the No. | Bank in the Business Today-KPMG Best Banks Annual Survey, 2008, (Balance Sheet < 24,000 crore) and has been recognised among the World's Top 25 ‘Unsung’ Innovative Companies by one of the most prestigious publications - BusinessWeek. These recognitions validate your Bank's innovative business model that is based on the principles of sustainability which are encapsulated within the Responsible Banking strategy, while offering a combination of Relationship, Product, Knowledge and Service Capital to all customers ‘through our unique ‘One-Bank Model” approach. & s Knowledge Capital Relationship Capital RELATIONSHIP CAPITAL ‘Your Bank has always put special focus and emphasis on building institutional Relationship Capital, as a comersstone of, sustainable success, and believes in building long-term, core relationships. Your Bank's approach is buit on a 3. dimensional structure of Relationship, Product and Knowledge Managers, to create a differentiated proposition, and incremental value generation, throughout the clients’ business life-cycle, across multiple customer segments and knowledge verticals as defined below: ee =. Institutional Banking i | =o | cay Seo MN CORPORATE & INSTITUTIONAL BANKING Your Bank has made consistent efforts in the Corporate and Institutional Banking segment to ensure every partnership delivers profits as well as long-lasting environmental and social value. The Corporate & Institutional Banking (CAIB) division at your Bank provides comprehensive financial and risk management solutions to clients having a tumover of over INR 10 billion. The relationship experts across this business Unit, provide financial solutions to the folowing categories of institutions 7 Large Incian Corporate Groups 7 Public Sector Enterprises 7 Central’ and State Govemments » 7 Government Bodies 7 Multinational Companies 1 Financial institutions and Banks ‘Your Bank provides a comprehensive range of client- focused Corporate. Banking Services, including Working Capital Finance, Term Loans, specialised Corporate Finance products, Trade; Cash Management & Transactional Services, Treasury Services, Investment Banking Solutions and: Liquidity Management Solutions to name.a few. All product. offerings: are suitably structured after in-depth research and assessment, taking into account the client’s risk profile and specific needs, because at your Bank maintaining the highest asset qualty, is of utmost priority, ‘Your Bank is committed to provide innovative financial solutions by leveraging on superior product delivery, knowledge-based advisory, industry benchmarked service levels and a strong client orientation. Your Bank has made significant inroads into developing core relationships with a umber of Indian companies while joining hands with various Government Institutions at the central, state and city levels Your Bank provides industry specific financial solutions by creating tallor-made services through superior structuring to best suit client requirements, helps lower entry barriers, strengthens business relationships, and ensures risk mitigation ie / COMMERCIAL BANKING By. continuously evolving sector-specific products and services, your Bank paves thé path for a sustainable future for Emerging Corporates. Your Bank understands: the financial needs of growth focused, fast paced enterprises that are emerging as leaders in their respective industry domains through YES BANK's Knowledge Banking approach, and ‘our objective of being the Bank for'the ‘Future Businesses of India’ ‘Commercial Banking (CB) dedicated to. serve this specialised segment of companies, with an annual turnover between INR 1,000 million and INR 10 billion, and to provide a strong backborie af Partners to cents throughout their lifecycle, and be a key strategic value driver Your. Bank has institutionalised CB targets companies in the “high octane’ middle market segment, operating across the key emerging sectors like Food afd Agribusiness, Life Sciences & Healthcare, Media and Entertainment, Engineering, Telecommunications, Information Technology and: Infrastructure, thereby laying the foundation of long-term growth, CB's relationship managers aim to deliver the highest standards in service to their customers by following a Money. Doctor approach of Diagnostic and Prescriptive solutions through a’careful evaluation of client specific financial needs and providing tailor-made solutions to them, ‘These include structured: products based on the customer's risk profile and growth requirements as well as general banking products and services like Working Capital, Term Funding, Liabilities, Investments, Insurance, Trade Finance and Treasury, amongst others Empowered with CRM tools and a relationship driven team, CB delivers financial solutions customised to address the specific life cycle needs of the identified customers across the above mentioned sectors, This “Life Cycle Banking” approach has been instrumental in influencing sustainable growth and transformation of a large number of ‘the Bank's customers, resulting in strong customer loyalty and a mutually enriching experience, BRANCH BANKING ‘Your Bank believes in providing a holistic banking experience to all its customers through its high quality, state-ofthe-art branch network, using cutting-edge technology, a truly customer-centric offering, and significantly differentiated marketing and branding strategies across major towns and cities in India Backed by aesthetic design, your Bank's retail branches are not only strategically located at premium high-street locations but are also benchmarked with world-class design standards to ensure smoother and convenient customer engagement. Your Bank's branches are highly accessible and the various consistent and evocative touch points facilitate warmth, coherent communication and a consistent customer experience. The focus is not only in providing ease of transaction but also in engaging, informing and involving, in a personalised manner thereby providing incremental value for the time spent inside the branch by the customer. Currently, your Bank’s customers are being served through an extensive branch network, comprising of 117 branches in fe ATMs in Mumbai, Pune and the NCR region. Your Bank will continue 92 locations across India as well as 93 off ‘to expand its branch presence in line with its strategy of building the highest quality branch network covering major cities and towns across India, ‘While your Bank's branches have been designed to cater to all segments of customers under the ‘One Bank Model Business Banking and Retail Banking & Wealth Management customers are the most frequent users of this world-class infrastructure, These two segments, together constitute the Branch Banking business, which is an area of very high focus for your Bank and significant investments have been made to provide an exceptional experience to its customers. Under the aegis of Branch Banking, various innovative Liability and Financial products re provided across both segments, including 1 Savings Accounts (with multiple variants) 1 Current Accounts (with mutiple variants) 1 Nests Accounts 7 Nonresident Accounts (with multiple variants) 1 Fixed Deposits (for various tenors) 1 5:Year Tax Eficient Fixed Deposits 1 Smart Saver Accounts: A unique proposition, which provides high returns of a Fixed Deposit with the Complete liquidity of a Savings Account. 1 Smart Salary Accounts: An innovative Corporate Salary Programme, backed by superior technology that enables convenience and direct access. 31 ‘Chembur on oregon aran Pent Thane) Vas Vash wert i? ‘natn 2) oda Road YES BANK Branch Network Across India JAREIU & KAREBAIR, Etec) enkuen a) NeDab ~ Chatarpr, Gren Park Kapasbra, Mow Fonds olny yaya arg Moda Yon oj Garden, Sat Goth Etnaon Pun B09 Marana - Dharuheds, Faridabae, Garhi Warssrv, Gurgaon} Manes, al Shakarpur Warated ~ Ata, Baghpat Ghalabd, NODA, Sup Mohr Cente 117 Branches'| Over 200 ATMS | 2 National Operating Centres YES COMMUNITY ‘Your Bank also believes that the branches need to play a significant role in Community engagement in the Branch Serving Area and be centres of social transformation, ln line with this belief, your Bank is driving a unique Responsible Banking initiative, called YES COMMUNITY ‘through the Bank's branches. The aim of YES COMMUNITY is to espouse causes which are of public interest and add long-term value to. society. BUSINESS BANKING Your Bank believes in generating stakeholder value through responsible business practices. In meeting this responsiblity, your Bank contributes significantly by supporting Small and Medium Enterprises (SME), which in ‘turn propel a strong economy and a sustainable business environment. Hence, your Bank has established YES BUSINESS, 2 dedicated Business Banking segment. driven by our unique Knowledge Banking approach, backed by a team of experts, along with a suite of products, services and resources. Your Bank ensures that identified Small & Medium Businesses, with annual turnover of INR 100 million: to INR 1000 milion, excel in the future as they are the driving force for innovations, development and sustainable growth of the economy..Your Bank citers to all the service requirements of these SMEs across various product segments like Fund based lending, Cash Management, Payment Solutions, Direct Banking, Trade services and Advisory through a strong branch network of 49 branches across significant SME: clusters. The Relationship Managers at your Bank invest in understanding the client's diverse and dynamic needs ‘The core objective of Business Banking is to easily enable SME's access to finance (including term finance), and thereby fostering growth, offer state-of-the-art transaction services and a lability management proposition, competitiveness and employment creation that are key to achieving sustainable economic growth. ‘Your Bank's strategy to attract SME customers include: 1 Offering a customised service proposition tailor-made for high transactional volumes in the key businesses of ITITES, Foreign Trade, Logistics, Travel/Tourism, Media and Entertainment, Gems and Jewellery, Trusts, Societies & NGOs, Realty, Professional Services and various Business associations, using a combination of Relationship, Knowledge and Product Capital 4 Offering holistic banking solutions to customers through the services of Business Banking Relationship Managers and Service Managers for all their banking needs (including business, wealth management and advisory) at the branch level 1 Offering liability products like Cash Management Services (CMS), Payment Solutions, Net Banking Phone Banking and Trade Services. >| » Personal Finance Aggregation’ tool in India in 2008, It provides seamless information of the client's financial health: by aggregating “data, frorh. over | 1,000 financial arid related sites across the world into his YES BANK: Interndt "Banking Account: thereby giving hima single View across his: own and family ‘accounts! This is-» powered in. partnership" with YODLEE.’ The wide-range: of transactions. that can-be conducted: COniine include: . e ‘+ Real‘ time’ payments using RTGS alid NEFT payinent systems z © "Requests for demand drafts, cheque books, query cheque status, stop payments, purchase fixed deposits and TDS enquiry on fixed deposits amongst others. + Pay utility bills to over 115 billers across India and make donations to various religious and charitable institutions + View and download account statements across multiple formats. + View and initiate standing instructions ‘+ Set various email alerts based on transaction thresholds and account activites + Integrated view across Corporate and Cash Management services (payments and collections). ‘© Differential bulk transactions along with fie-level encryption for corporate clients ‘© Airticket reservations and E-shopping funded by direct debit to the customer's account. ‘+ Real time payments to various e-brokerage accounts. ‘© Foreign exchange trading for corporate clients © Request and view real-time balances and transaction information. INDIAN FINANCIAL INSTITUTIONS RELATIONSHIP MANAGEMENT Your Bank believes in creating superior sustainable value for its stakeholders, customers, employees and communities through responsible partnerships with various Banks and Financial Institutions nationally, ‘The Indian Financial Institutions (IFi) team at your Bank spearheads relationship development efforts with various Banks and Financial Institutions nationally. The team achieves this by supporting product delivery while creating and sharing industry knowledge with internal and external stakeholders. Indian Financial Institutions (FI) Relationship Management experts at your Bank offer an array of services to the following set of clients /- Domestic Banks (Govt owned, Private and Cooperatives) 7 Mutual Funds 7 Insurance Companies 7 Non: Barking Finance Companies (N8FC) 1 Private Equity Funds /- Brokers (both Capital market and Commocity market) The IFI team members at your Bank leverage their existing relationships with various Banks and Financial Institutions to raise resources, and to set up counter party limits for your Bank, Additionally, IFI offers a wide variety of products including Debt, Trade Finance, Guarantees, Treasury Services, Working Capital Finance, Cash Management & Transactional Services and Liquidity Management Solutions to your Bank's customers by entering into partnerships with other Banks and Financial Institutions. Your Bank has a strategic tie-up with NABARD to offer Food and Agricuture Consultancy Serviced and with SIDBI-to offer SME Consultancy to the Bank's customers. This relationship with other Banks and Financial Insttutioné is also leveraged for syndication of loans for your Bank's Corporate & Institutional as well as ‘Commercial Banking customers, and to raise resources through refinancing your Bank's loan portfolios. The IFI team leads your Bank’s efforts towards raising debt capital in the form of Tier | and Tier II bonds from various Indian Institutions, INTERNATIONAL BANKING ‘As a global corporate citizen, your Bank extends its responsible partnerships to financial institutions and ‘customers across the world. Through in-depth knowledge of growth sectors, your Bank caters to their present as well as future needs with unmatched credibility International Banking has augmented the network and visibility of your Bank's brand and its presence intemationaly International Banking continues to further strengthen its strategy with a clear focus on servicing the correspondent banks’ businesses in India. Additionally, the division provides 2 suite of advisory services to international corporations which are keen to expand or enter the Indian market under the aegis of a dedicated India Business Facilitation Desk (IBFD), which provides advisory services to corporates at every step of business establishment on various sectors through Knowledge Banking initiatives, apart from providing complete banking solutions. ‘These initiatives intend to evolve customer centric solutions for your Bank's Intemational customers such as 7 Foreign Banks with or without any presence in India 7 Muttlateral Agencies 7 Foreign Institutions such as US-€XIM, Coface, Euler Hermes amongst others 1 Private Equity Fund houses with a focus on India 7 NBECs registered in India and backed by foreign Banks The Intemational Banking business offers a complete suite of products including Debt, Trade Finance, Treasury Services, Investment Banking solutions, Financial Advisory 37 <8 foi and Global Indian Banking to international customers of ~ your Bark. These products are offered through partnerships / and tie-ups with international Banks. and Institutions in the target geographies ‘Your Bank has entered into cooperation agreements with two international banks viz. Mashreq Bank, Dubai. and, UBI Banca, Italy. The cooperation is envisaged across various: bbanking products, which has provided further traction to the International Business of your Bank. The differentiated and innovative. Knowledge. Banking. v approach has not only created a riche position for your. Bank in the international market, but has also helped the division to reach.out across multiple, geographies. while providing specialised services to corporations eager to enter India The dedicated India Business Facitation Desk (BFD),. complements international corporations at every step of business establishment, ranging from providing sectoral advisory to complete banking solutions including support services like setting up of an offcelestablishment in India ‘The division also provides valye-added services including macroeconomic analysis, trade and investment assessment, advisory, regulatory and country specific framework, education ‘and knowledge exchange, cultural adaptability and exchange. 38 PRODUCT CAPITAL Your Bank has created range of products to effectively » service customers across differentiated market segments. The ‘One Bank Model’ approach built on 2 3-Dimensional organizational structure of Relationship, Product & Knowledge enables greater cross-sell and up-sell of these products to customers. This approach enables'to further augment tke! existing rBatiohships by proving’ multiple engagement opportune’, and’iniroduce’ customised products acréss the customer's growtife cycle. FINANCIAL MARKETS, ‘Your Bank believes in delivering, value by:striking.a healthy balance between economic and social retums, its sustainable approach towards the Financial Markets (FM) business model provides effective Risk Management solutions relating ‘to foreign currency and interest rate exposures of clients The FM team assists clients in creating a complete understanding of: market rates faced by-them in respect ‘of Capital Raising, Investments, Exports, Imports and any other market risks. Your Bank provides innovative and customised solutions to cients to hedge foreign curency and interest rate exposures, enhance: retuns Lreduce, cost of financing ‘through a host of product offerings including Foreign Exchange Forwards, Options and. Swaps. The cent. offerings, are supported. by professionals, comprising of Economists and Research, Analysts, who, provide latest analysis and tools, for generating quality Risk Management ideas and solutions Financial Markets conduct proprietary trading to, maximise earings from rs taking across Key fied income, iquities and sobal foreign exchange markets. Addtionally, the busines is responsible for. Balance Sheet Management, Liguisty Monitoring, maintenance. of Cash, and, Statutory Reserye, requirements and, day-to-day fund management, of your: Bank, wile raising subordinated and, hybrid, debt capital for the Bank, Your Bank was amongst the first.to.implement the MUREX trading a real time online platform and launch Forex Solutions foreign exchange trading solution which provides corporations a medium to hedge their curency risks online through the Bank's Corporate Net Banking platform. Your Bank continues to excel as reflected hereunder 7 (CRA (Moody's afflate in India) has reafirmed your Bank's Alt rating for its Rs. $0 billion Certificate of Deposit programme. Alt rating indicates the highest level Of safety in the short-term 7 FM in association with other business groups successfully raised INR 3645 million (USD 85 million) in a combination of Upper Tier I, 15 years Subordinated Debt (USD 80 million) and Hybrid Tier | (Perpetual Debt) Capital (USD 5 milion) from Rabobank 2 AAA rated Bank, in June 2008, FM further raised INR 2000 million of Upper Tier tl Capital from Life Insurance Corporation of India in September 2008 and INR 1,540 million of Hybrid Tier I Capital in February 2008 7 Your Bank was ranked No. 8 in the Thomson Financials Top Lead Managers of Indian Rupee Bonds for the period starting January 2008 to December 2008, INVESTMENT BANKING Your Bank sees sustainability as a key driver for economic growth and to create a competitive advantage in the market. Through in-depth knowledge on the emerging sectors of the Indian economy, your Bank identifies and hamesses untapped opportunities to deliver long-term value to all its customers. Your Bank has further reinforced its position as a provider Of high quality and knowledge based advisory services in Investment Banking. This fiscal year has witnessed several additions to the client base, taking the total number of deals consummated since inception to over 75 across various product categories within the Financial Advisory (FAylavestment Banking tear. The performance of the 9 , product suite including term loans, loan, syndications and rated, capital. market loan products (pool securitisation, debentures, commercial paper and loan assignments), your Bank aims to catalyse growth of the Indian microfinance industry, ineréasing its access! to a wider pool of investors, reducing ‘costs of funds through a mix of lower cost:of funds and transaction costs to enable scale up. ensuring .provision of affordable, fairly priced and customised financial solutions to the Bottom-ofithe-Pyramid, MIG thus is the primary channel to create an enabling:macts environment through engagements with stakeholders including MFls, investors rating agencies, poliéymakers’ government agencies and ' the regulator. m Direct microfinance lending.- YES SAMPANN isthe first insttuionaly sponsored diredt intervention model for microfinance in Inia. It provides the last mile connectivity at the Bottom-ofthe-Pyrarid fring affordable, customised fnancal services including credit, davings and insurance Leveraging téchnology and sing iinovative’risthodolges such’ credit scoring. YES SAMPANN works’ towards « creating credit histories for an urban population that remains excluded from formal finance. Though _ YES SAMPANN is at a pilot stage with operations out of three urban branches serving more,than 2000+ individual cients, itis strategically positioned to be a full fledged business group with a portfolio size. in excess of USD 100 milion and a, client base of | millon in the next five years 46 Agribusiness, Rural and. Social Banking. (ARSB) Your Bi as 2 srg fgg 0 asthe bins ee ae rer eee eae ee ice gout ‘ARSB is your Bank's specialised group focused on fulfilling the financial needs of the agriculture and allied sector. It extends a range of banking products and services to various stakeholders across the Agribusiness value chain. Despite a limited reach in terms of branch network in rural areas, the group has been able to consistently achieve Priority Sector Lending (PSL) targets and has also generated surplus assets for selling down to other banks. ‘This has been achieved. by developing innovative financial models, some of which have won national and international ‘acclaim at various forums. In 2008) the’ scope of the group was expanded to Social Banking to cater to the banking needs of the un-banked and under-banked sections of society. Sustainable Investment Banking (SIB) SIB is your Bank's specialised investment advisory for sustainable ventures commanding expertise in the areas of: (i) Alternate Energy & Environment Advisory and (i) Social Enterprises & Rural Advisory. The team is one of the few specialised Investment Banking divisions actively involved in supporting initiatives on renewable energy, clean technology and socially sustainable sectors (broadly defined as healthcare, education, livelihood creation, water and sanitation etc), The group also acts as the exclusive Country Advisor for the Global Environment Fund, USA (GEF) one of the largest and oldest private equity firms focused on investing in the environmental space, and are advisors to GEF's Emerging Market Fund Recognising the importance of a global approach to sustainabilty and the potential for cross border deal flow, SIB has developed international alliances, and now acts as the exclusive Country Advisor for clients of Cleantech Australasia, New Equity Services (Israel) and Lahti Science and Business Park (Finland), SERVICE AND TECHNOLOGY CAPITAL Your Bank's Service Capital's seamless operations is key to enabling an environment of Service Excellence and ensures the perpetual running of various functions across the Bank. These critical back-end functions include Key Business Processes, Quality Assurance, External & Internal Service Delivery Standards, Technology Architecture, Risk Management and Internal Audit as well as your Bank’s high quality Human Capital Your Bank has invested significantly in cutting-edge creative technologies to provide greater financial efficiency and an unparallel banking experience. / BUSINESS PROCESS Your Bank incorporates sustainable practices into its business processes to drive added efficiencies and generate long-term growth. These processes ensure an effective maintenance mechanism through ongoing feedback and complaint resolution from employees as well as customers. Prudent internal and external audit policies, effective risk management systems, state-of-the-art technology platforms help ensure implementation of optimum business processes, both internally and externally. Some of the ongoing business process initiatives implemented within your Bank include: 1 Two world-class National Operating Centres (NOC) based out of Mumbai and Gurgaon have been established with 2 focus on providing an immediate response to customer requests, as also to provide Business Continuity Planning. The NOC houses the centralised back office functions of various businesses, including the 47 ‘YES TOUCH Phone Banking Service Centre, which is located within the NOC at Gurgaon. Adherence to, Quality practices such as 5 5, 6 Sigma and Sub Clauses of the ISO 9001:2000 Standards, All business processes at both the NOCs and-five key ioranches are ‘SO, certified Business processes are supported by the synergised efforts of business solutions and information technology, to implement new methods for optimum productivity (based on Time and Motion and Time and Material studies) Benchmarking and critical evaluation of all quality parameters with competition Robust methodology of customer feedback and data collection suchas customer complaint registers, customer satisfaction surveys, mystery shopping and employee feedback ‘The Customer Query Management System (COMS) is used as the one single touchpoint for handling, escalating and resolving customer grievances. The Query Resolution Unit (QRU) formed as a part of the YES TOUCH Phone Banking Service, ensures effective follow-up and resolution of customer queries and complaints End-to-End (E2E) analysis of liability and trade business processes, ‘A favourable response has been obtained from customers across India, through participation in the Customer Satisfaction Survey conducted by The Gallup Organisation, initiated by the Indian Banks’ Association. Adherence to BCSBI, Goiporia Committee recommendations and CPPAPS guidelines. Quality Assurance a " Specific Quality Goals have been classified into the categories of "Process Management" and "External & Internal Service Delivery, in-line. with your Bank's Quality, Policy and Quality Objectives ' Process Management (PM) aims te, continually monitor current processes, benchmark them, against competition, incorporate best practices, knowledge dissemination and introduce robust mechanisms for process improvements, while identifying wastages to drive effective waste management and cost control. PM-evaluates simplification of the laid down standards ahd guidelines’ in lind with’ - regulatory/statutorylstategic requirements, while:driving improvements and: productivity across functions and product sets, by rationalising, streamlining and centralsing processes as appropriate. It also drives standardisation of Dashboards aid MIS formats’ for contro! ‘ahd review purposes, basis the metrics ideftified thrdugh the’ cmplaint resolution feedback méchanism: PM also uses Gi y fools to facitate ease of execution f transactions through automation of manual processes and ensures adequacy, and eeciveness of training forthe eriployees, ‘Your Bank has been accredited with ISO 9001:2000 certification from BVQI for its back office processes and operations, Your Bank has also established high standards in Operational Excellence using process improvement methodologies. ke Six, Sigma, Lean, Five § & Quality Gircles. The Quality Policy at your Bank states - ("YES BANK will strive to ensure 0 Superior Service Expenence through, Operational Excellence, Innovation Cutting-edge Technology , and Bestin-loss Systems & Processes in its mission to. become the Best Quality Bark of the World in, India) External Service Delivery Enhancement of Customer Satisfaction levels at your Bank is measured by Dashboards, Voice of the Customer (VOC), Branch Service Committee Meetings and Sigma Score Cards. These initiatives not only help forge mutualy beneficial customer relationships but also ensure stringent Service Level Agreements (SLAs) with relevant Operations Units across your Bank Additional, it provides an efficient MIS support platiorm for effective decision-making at the management level Internal Service Delivery The external service delivery at your Bank, is a manifestation of the intemal service principles instituted Within the Bank, that seek to align and influence the organizational behaviour of your Bank's Human Capital towards delivering on the stated service value proposition of providing customers with a - ‘Superior Service Experience’ The YES SERVICE Programme - an Internal Service proposition is disseminated through a well-defined and on- going Service Marketing Programme and measured through Mystery Shopping, On/Job Montoring and in Branch Executive Leadership Team (BELT) programmes held periodically across key branches nationally. "NO" to NO INFORMATION TECHNOLOGY As a new generation Bank, your Bank has the advantage of accessing the latest avalable technology. Your Bank effectively uses technology in a cost effective manner to meet its sustainability goals. To support its Responsible Banking Intiative, your Bank uses technology as a strategic business tool across its service arenas, Since inception, your Bank has been at the forefront of leveraging technology to provide better products and service to its customers, in tun helping businesses to expand as well as helping launch new businesses. This philosophy is aso reflected in the five brand pilars of your Bank where technology has been identified as a key pillar and is considered a true differentiator. Appropriately, technology has responded by being a true strategic partner with business. Many frst mover implementations have provided the business long lasting advantages and have also won multiple awards and accolades for the Bank All parts of your Bank use information technology to deliver superior products and services to the customer. Innovations like Money Monitor, Mobile payments, Two Factor ‘Authentication, Mobile Banking, Radio Frequency Identification (RFID) in branches, One View of the customer relationship, and the most advanced Speech Recognition enabled IVR helps in delvering superior products and Addtionally your Bank continues to forge strategic partnerships with some of the best known IT majors globally, to develop innovative system features in order to improve process efficiencies and create sector-specific banking solutions. Additionally the development of a robust Busine’s Continuity Plan in your Bank addresses risks and secures systems that are vital to business operations. 49 ‘This year with special focus on Responsible Banking, the following initiatives were undertaken: 1 Video Conferencing. was deployed in 5 key locations to, help reduce travel costs as also helping. in reducing ‘energy consumption Centralised Branch Sénlefs rollout leading to Ssifcént reduction in thé nue of servers and: operating costs, One of the key benefits & reduction in the consumption of power by servers as well 35 cooling of the servers (more than 8056 savings). « Replacement of conventional monitors, with TFT screens, further reducing the electricity consumption. Financing opportuitiéi't3 the "unbanked! segment of society were backed Tethnology.” 1 * In this year, your Bank also completed the following. key initiatives; : + Canomer Relaonaip Hanagement (Ca) iia launched across the Bank to’ improve effectiveness of sess sence + One View Soluion® infodictin &F "One View" 3 the entre interrelation fo he Sales nd Service department: thas reed in "ocued” and meaning sling both upatng and eons sting, thereby cirecty helping the businesses. to generate revenues and seize opportunities faster due to better information avaiable at the Point of Sie + Your Bank has been at the forefront of Open Source usage. The Knowledge portal KNET ie baséd on an Open source platforin. The CRM systém is an opeh souice appliition, wich is buit dh’top of the open source platform 4 Customer Service, Complaing and Query Management system offers one. view of, customer service request complaints and queries, thus enhancing our employee abiity to respond to customer needs 50 During this period your Bank was also widely recognised for. its technology differentiation, # The Technology team at your Bank was the fist runner-up to’ thé prestigious ‘IT Team of the Year’ award by Indian Banks’ Association (BA), Your Bank has adopted international best practices, the highest standards of service quality and operational excelence. with innovatve sate-ofthe art technology. and offers comprehensive banking ‘and’ financial solutions to all its valued customers."Yotir’Balk has always aimed to offer a” ‘One Bank solution” to customers across the Corporate and Retail segments wing superior technology and Lean processes / PARTNERS A To achieve sustainability goals, your Bank has formed strategic relationships with eminent Indian and global companies. These partnerships. wil, aot only widen business platforms but will also lay the foundation for a sustainable future Organisation _ i Purpose | Agriculcural Insurance Company | Agricultural insurance Bajaj Allianz ~ | General Insurance 4 Bhare Airtel Telecom Connectivity BillDesk Online Bill Payment Facility ~ CashTech ‘ Cash Management and Financial Supply Chain Solutions | ome . NSDL Depository Participation (OP) - cisco. Technology Innovation and Infrastructure | [De La Rue Teller Automation and Cash Dispenser Machines i eFunds ATM and Card Payments Solutions | IBM ; Technology Hardware 7 ~ Ineel Technologies ‘Wireless Fidelity (Wi-Fi) Branch Banking Solutions = |_| P Morgan Chase | International Pre-paid Travel Card - MasterCard International International Gold and Siver Debit Cards Max New York Life : |. Life insurance = ~— | Murex Integrated Risk Management and Treasury Solution = | Microsoft Enterprise Agreement for Servers, Desktops and other products NABARD/NABCONS Strategic Advisory for Food and Agribusiness Sector _ NewGen Software Technologies | Cheque Truncation Solution - NSIC Financial Solutions and Advisory for Small Scale Industries Nuance YES TOUCH Phone Banking Service - Speech Recognition Solution Nucleus Sofeware Retall Assets Platform ‘Obopay Mobile Payments 7 | Oracle Financial Services Core Banking and Internet Banking Solution i “Portwise _[__internet Banking Security Soltions Reliance Infocomm WAN MPLS Backbone and Data Centre Hosting | Reuters Dealing Solution and Online Forex Trading Platform Servion Glabal [Integration Partners for the YES TOUCH Phone Banking Service SIDBI | Financial Solutions for SMEs a Sify Communications Redundant WAN MPLS Backbone and ATM Connectivity VSNL Data Centre Hosting Wipro Total Technology Outsourcing na Wincor Nixdorf "| Self Service Solutions: Automated Teller Machines (ATM) and Financial Kiosks | Yodlee Ine —_[__Money Moritor-Oniine Personal Finance Management ] on Managing and reducing business risks play @ pivotal role in achieving long-term financial security and success. To ensure the same, your Bank has a fullfledged risk management department in place. Through proactive and improved risk management practices, your Bank’s.risk management function continuously works towards achieving financial stabilty”and enhancing stakeholder value Your Bank's risk management function believes jn continual enhancement of its stakeholders! value through proactive and improved risk management practices ‘The Risk Management Architecture, of your Bank is overseen by The Risk Monitoring Committee (RMC), an independent sub-committee that strives to put in place specie policies, frameworks and systems for effectively managing various risks ‘These policies and procedures are constantly reviewed and Updated at regular intervals Credit Risk Your Bank follows @ comprehensive and well-defined cregit approval processes for all proposals to clearly outine the quantum of risk associated with thém’ “These processés encompass a detalled riskvassessmerit and rating of all blgors using the Bank's rating models, These models have bbeen developed in conjunction with 2 reputed external credit rating agency and cover all business segments of your Bank The rating model covers various parimeters lke management risk, industry risk, apart from detailed financial analysis. - ‘The credt approvals happen thrbUgh slib-cormmittees of" RMC ike the Management Credit, Committee/internal Gredit Committee and specified management functionaries vested with the sanctioning power. While exercising their financial powers, these designated domimitiees/iunctiohares exiercise the highest level of due dligence, and ensure adherence to the Bank's Credit policy and other regustory guidelines Your Bank has also'taken pro-active’ measures in the’ current economic scenario to ensure that delinquencies are: ° 52 maintained at minimum level, through robust post sanction monitoring processes. There is an independent and dedicated team of experts-who work towards: ensuring” compliance of the sanction terms and conditions through an intemal deferal tacking sytem: generating portfoio, tevél MIS, Gbvering various aspects lke overdue analjis‘of business'segmentwise, portfolio analysis by ratingWindustry, __ key portfolio indicators and maintaining documentation. standards. Your Bak’ leal department and exer eg counselors have developed a comprehensive set of” standard’ documents for various types of credit products “The Risk Management function of your Bank works in close co-ordination with various business segments to periodically review the iridividual borrower relationships, identify early warning signalsyand assess the overall health: of borrowing units Your Bank hat Successfully migrated %6"BASEL H ptal adequacy norms forthe year ending’ March. 3h 2008. + ‘Your Bank has aso formulated an extensive polcyon, Internal Capital Adequacy Assessment Process (ICAP) commensurate with the Bank's size, level of comply, tsk profle andsscope of operations" " Markee Risk Your 'Bini’s Mirket Rsk management is governed by. & comprehensive Market Rsk Policy, ALM Policy, gui, Policy, Investment Policy and Customer Appropriateness Policy, to erate consistency across business activités and aggregite similar rks, These policies havebeen bendtirked with industry: best practices and RBI regulations. Your- Bark has an integated and straight-through processing, state-of "tear weary sjstem for enabing beter risk managerent, ‘Your Bank measures iquiity, crrency, and interest, cates through various metrics viz EWMA based Value at Risk (VaR), Earrings at Fisk (Ea), Duration of Equity, Senstoity ‘Analysis eke. using internal risk models! YS" Bank Fegulary conducts sires. testing to moritor is vulnerabity towards unfavourable shocks: Your Bark has ako complied with. the requirements of the Basel Il capital accord for Market. Risk Your Bank monitors and controls its risk using various internal and regulatory risk limits for its trading book and banking book which are set according to a number of criteria including economic scenario, business strategy, ‘management experience, peer analysis and the Bank's risk appetite. The risk reporting mechanism of your Bank comprises of disclosures and reporting to the various rmanagerent committees vz. Investment Committee, Asset Liability Committee, Risk Monitoring Committee, etc. Operational Risk Your Bank has in accordance with the regulatory guidelines, implemented a comprehensive operational risk management policy and put in place a framework to identify, assess ‘and monitor risks: strengthen controls; improve customer service: and minimise operating losses. Your Bank has also constituted the Operational Risk Management Committee, which is the primary driver for implementing the best industy practices in Operational Rise Management. Further, to ensure full complance with the requirements of the Basel Il capital accord and Reserve Bank'of India guidelines, your Bank has adopted the Basic Indicator Approach for measurement of Operational Risk INTERNAL AUDIT To ensure that sustainabilty principles are followed across ll employee levels, your Bank's Internal Audit Department performs independent and objective assessment to monitor adequacy, effectiveness and adherence to the intemal controls, processes and procedires instituted by the management. This function supports your Bank's role in safeguarding its assets. The function has adopted a Risk-based approach of Internal Audit (RBIA). The primary focus of the audit is on key risk areas, which are of substantial importance to the Bank The RBIA approach, has been thoughtfully structured taking into account RBI guidelines and international best practices. The Internal Aucit function reports to the Managing Director & CEO for regular activities and to the Audit and Compliance Committee for Aucit Planning & Reporting. ‘Additionally, your Bank also subjects its operations 10 Concurrent Audit by reputable audit firms to complement its internal audit function The Concurent Audit covers core activities such as credit portfolio, financial markets, operations, and branches, All audit reports are circulated to the relevant, Management teams and the Audit and Compliance Committee of the Board HUMAN CAPITAL MANAGEMENT Your Bank étvates an environment where people with diverse backgrounds come together to create long-term value, Your Bank has hired the finest quality Human Capital across ail ts function® and businesses. This young and extremely dynamic workforce has sklle to work effecively across organisational boundaries and to build a culture that shifts the focus from actives to outcomes, Equipped with a team of indusuy and barking experts, your Bank continvouty develops qualty performance while realsng customer service objectives, creating positive employee atttuces through effecve recognition, programs and measuring results through consstent customer feedback ‘The aim is to build a culture and environment that supports Professional Entrepreneurship, The Human Capital engagement practices at your Bank are targeted towards developing the Bank brand as the . Your Bank continues to focus strongly on attracting and retaining the best talent Preferred "Employer of Cho from India and abroad, Within a short span of time, the Management team at your Bank has been regarded as one of the best in the Indian Barking sector, as demonstrated by the several recognitions and awards received over the last five years. Some of the key features of your Bank's policies and practices are Talent Acquisition & Development Your Bank aims to become an "Employer of Choice” for the brightest and best quality Human Capital avaiable in the market. The total employee strength of your Bank, as on March 31, 2009 was 2671 Building superior Human Capital Management frameworks is fone of the key objectives of your Bark This, we believe, will be achieved through co-ordinated efforts, through high 533]

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