DIRECTORS’ REPORT

The Board of Directors of Neelachal Gramya Bank have pleasure in presenting the 4th  Annual Report of the Bank for the Financial Year 2010-2011 together with Audited Balance Sheet as on 31st March 2011 and Profit and Loss Account for the Financial Year 2010-2011, as per provisions of section 20(1) of the Regional Rural Banks Act 1976.

1. Brief Introduction:
   Neelachal Gramya Bank was established on 31st August 2007 with the amalgamation of Puri Gramya Bank and Dhenkanal Gramya Bank as per the Government of India, Department of Financial Services, Ministry of Finance, Notification No. F.1 / 4 / 2006-RRB dated 31.08.2007 issued under sub-section (1) of section 3  of Regional Rural Bank Act 1976. The share capital of the bank is contributed by the Government of India [50%], the Government of Orissa [15%] and the Indian Overseas Bank [35%] which is the sponsor bank.

The bank through its branches provides banking service to its clientele in its command districts of Angul, Dhenkanal, Khurda, Nayagarh and Puri. The Bank is permitted to undertake all types of banking activities under section 5 (B) of Banking Regulation Act 1949.

2. Branch Net Work:
The Bank has a network of 174 branches, 1 Satellite Offices and 1 Extension Counter, as detailed below. The Head Office is at Bhubaneswar  and  the Bank has 3 Regional Offices located at Dhenkanal, Khurda and Pipli.

3.Share Capital:

The Authorised Capital of the Bank is Rs. 5 Crore and subscribed capital is Rs. 2 Crore contributed by Government of India, Sponsor Bank and Government of Orissa in the ratio of 50:35:15 respectively. Further a sum of Rs.33.15 Crores is received as additional equity support under comprehensive restructuring package from the three shareholders. The details of capital are indicated below.
(Rs in ‘000’

4.Deposits:
The Bank has achieved a growth of 11.81% during the year and reached the deposit level of Rs. 2397.99 Crores at the end of the year. The category wise position of deposits for last two years is noted as under.                                                      
(Rs. in ‘000)

5.Borrowings:
Taking into account the cost and importance of refinance as a source of fund, the Bank has made optimum use of available sources of refinance. During the year 2010-2011, Bank availed  refinance to the tune of Rs. 23.30 crore from NABARD and Rs. 36.47 crore from Sponsor Bank as detailed below.

From NABARD                             
(Rs. in ‘000)

It is worthy to note that commitment for repayment of installment and interest has always been honored promptly by the Bank. Cost of borrowing stands at 7.80% as on 31.03.2011.

1. From Sponsor Bank:                                                                                       (Rs. in ‘000)

1. Other Liabilities –

1. Deposit Insurance and Credit Guarantee Corporation(DICGC)

The bank  has paid up to  date premium to DICGC  under  Deposit  Insurance  Scheme, which covers and insures all deposit accounts of our bank  up to Rs1 lac.

1. Credit Guarantee Fund Trust for Micro &Small Enterprises(  CGTMSE).                                                                                                    
   The Bank has been registered as a Member Lending institution (MLI) of credit Guarantee Fund Trust for Micro and Small Enterprises(CGTMSE) since 18-01-2010.The detail particulars of premium paid and claims lodged/settled etc under the scheme during the reporting year is given below.

7. Cash and Balance with Banks:
The Bank has an established system of cash management.  Details of the position for two years are furnished below.
(Rs. in ‘000’)

8. Investments:
The Bank has made an investment of Rs. 1345.15 Crore as on 31/03/2011. The investment pattern as on 31/03/2010 and as on 31/03/2011 is as follows. The average yield / return on investment is 7.59%.
(Rs. in ‘000’)

The investment portfolio of the Bank mainly comprises of Govt. of India Securities, Govt. approved securities, Bonds and debentures of PSUs, and Term deposits with banks.

9. Loans and Advances:
The outstanding loans & Advances as on 31/03/2011 stood at Rs. 1233.16 crores registering 22.00% growth over the previous year. Sector wise details of outstanding are furnished below;        (Rs. in ‘000)

The C.D. ratio of the bank is 51.42% as on 31/03/2011. Out of total credit of Rs.1233.16 Crores, priority sector advance amounts to Rs.952.26 Crores constituting of 77.22% of total advances.  With the deregulation of interest rates the Bank has a system of deciding the interest rates considering demand and market trend. Bank changed interest rates thrice during the year falling in line with market trend.
Loans outstanding under SGSY & OTHER Govt. sponsored schemes are furnished below.
                                                                                                        (Rs. in ‘000’)

10.Income Recognition and Asset Classification:

Asset Classification:
The classification of assets and provisions made is furnished below:
(Rs. in ‘000’)

11. Interest Derecognized
Amount of interest for Rs 8,45,256 is derecognized during the year.

12.Provisions:
Bank has provided fully for the NPAs as per Income Recognition and Asset Classification norms. Besides, provisions for standard assets at required rate has also been made. Details of such provisions are as under:
(Rs. in ‘000’)

13. NPA Management:                                                                       (Rs. in ‘000’)

14. Loans disbursed during the year:

The bank disbursed Rs. 605.15 crores against projection of Rs. 750.00 crores achieving 80.69% of target. The share of NTG lending stood at 38.12% for the year. Sector wise achievement is indicated below.     
(Rs. in ‘000)

15. KISSAN CREDIT CARDS:

During the year 27192 fresh Cards have been issued involving an amount of  Rs.5810.80 Lacs. The total outstanding under KCC as on 31/03/11 is Rs 10191.82 Lacs. 

16. Recovery of Loans:

The Bank recorded a recovery of 79.04% of its total demand during the year. Apart from the traditional method, this year the Bank launched special recovery drive through a multi-pronged strategy comprising of Recovery Camps, One Time Settlements & seizure of vehicles.

The details of sector wise DCB position as on 30/06/2010are indicated below: (Rs. in ‘000)

Age-wise and sector wise classification of overdue loans as on 30/06/2010 is as follows:
(Rs. in ‘000)

13.Risk Fund:
No such fund has been created till now.

14. National Agricultural Insurance Scheme (NAIS):

All the eligible loanee farmers and interested Non-loanee farmers are being covered under the National Agricultural Insurance scheme.

The particulars of premium paid and claims settled under the scheme during the reporting year is given below:
(Amt. in ‘000’)

15. Write Off of Loans: (Rs. in ‘000)

16.Income Earned:                                                                          (Rs. in ‘000’)

17. Expenditure Incurred:                                                                                                                     (Rs. in ‘000)

18.Key Financial Indicators / Ratios: (Rs. in ‘000)

19.Transfer Price Mechanism: 

The Bank follows a policy of reimbursing branches by way of Head Office interest for funds lent / borrowed to/from the branches. This transfer price mechanism enable  the bank to work out a close approximation of profit/loss of the branches on realistic and rational basis. During the year H.O. interest rate was allowed @7.50%.

20. Achievements under DAP / MOU: 

The MOU for 2010-2011 between the Bank and Sponsor Bank was signed at Chennai on 7th May’2010.The performance of the bank as on 31/03/2011 vis-à-vis MOU target is given below.
                    (Rs. in Lac)

21.Self Help Group: 

Financing Self Help Groups is one of the thrust areas of the Bank. During the financial year 4535groups have been financed by the Bank with a credit flow of Rs.2298 lacs. Cumulatively, the Bank has credit linked 34740 SHGs involving cumulative outstanding of Rs.3790 lacs.

23. Interest Rates: 

With deregulation of interest rates of deposits and advances, Bank follows a prudent policy of fixing deposit and advance interest rates determined by the market forces and based upon the market trend. Bank has revised the interest rates from time to time as per decision taken in the meeting of ALCO.

24. Non-fund Business: 

All branches draw Demand Drafts on other branches of the Bank. In addition to this, 78 selected branches of our bank are authorised to issue drafts on 38 Branches of IOB by means of an Agency Arrangement with the Sponsor Bank. Outstation cheques are collected through Branches of Sponsor Bank.

Safe Deposit lockers have been installed at 3 branches namely Dhauli, Nimapara & Dhenkanal.

Collection of Telephone Bills:

  Bank has entered into and agreement with BSNL for collection of telephone bills on commission basis.

Referral Arrangement with The Oriental Insurance Company:

Bank has entered into an agreement with The Oriental Insurance Company Ltd. to market the insurance product of the company on referral commission basis to augment the non-fund income.

Human Resources Development.

As at the end of 31/03/2011 total staff strength of the Bank is 859 excluding Chairman and three General Managers deputed from Sponsor Bank. Details of manpower are as under.

 During this year 51 numbers  of  office attendants(Group C) and  39 numbers of Office Assistant s (Group B)  were recruited.  One(1) office Attendant  was promoted to the post of office Assistant.

Training :

In order to equip the Staff with basic job knowledge and also to up-date skill from time to time necessary training is being provided During the year under report the following staff members were imparted training at different Training Centers as mentioned below.

Besides above ,65 nos of Staff members were imparted in-house training on different parameters during the year 

INDUSTRIAL RELATIONS

The industrial relations in the bank continued to be cordial and harmonious. Meetings were conducted at regular intervals with all trade unions/Associations for bi-lateral talks and consultations.

25.COMPUTERISATION

With the introduction of Information Technology in the banking scenario, our Bank has gone in for computerisation in a phased manner. Head Office functions have already been computerised. Packages such as Reconciliation of Inter Branch Accounts, Draft Reimbursement a/cs, Staff salary, PF Balances etc. have been programmed in computer.

 All the 174 branches of the Bank are computerized, of which 86 are under Core banking, 6 are under total Branch automation and remaining 82are under ALPM.

 Bank has  received  financial  support  for implementation of  CBS from NABARD and the Sponsor Bank at the rate of 40% and 50% respectively of the project cost.

Rs in crores

The balance10% of project cost(Rs2.27crores) is borne by our bank.

26.Others

1. Women Development Cell (WDC):
   Separate women Development Cell has been set up at Head Office with NABARD assistance. It looks after development of women entrepreneurs through bank credit with special focus on Self Help Groups consisting of women members. On the eve of  the “International  Women’s’ Day” on 8th March 2011 the Women Development Cell has organized a special function at our Bhingarpur  Branch  and women beneficiaries who availed loan from our  Bank for different purposes and prospered economically were felicitated in the function.

b)   Customer Services:

Customer Care is given top priority by the Bank. Suggestion/complaints received from customers are being disposed off within shortest possible time. 15th of every month has been declared as the Grievances Redressal Day at Head Office.

Bank has implemented the Right to Information Act,2005 and providing the necessary information sought by  the customer/public   relating to Bank’s functioning ,schemes, services etc.

Up to date information relating to interest rate on Advance/Deposit ,Service charge etc is also made available in Bank’s web site www.neelachalbank.com

       c)   Social Welfare Activities:

As a responsible corporate entity Neelachal Gramya Bank continued social welfare activities in the locality mostly focused on various medical assistance/health awareness programmes. Customer oriented programmes were held on 31.8.2010 when the Bank observed its Foundation day. Diabetes awareness camps were held at Dhenkanal, Khurda, and Pipli .

On the eve of Platinum  Jubilee Year  celebration of Sponsor Bank, donation in shape of  rations like Rice, Dal and Oil etc were donated by our bank to the physically challenged inmates of  the hostel run by VRC, Bhubaneswar.

d)   Internal Inspection and House Keeping:

Internal Inspection of Branches has been taken up on an ongoing basis. During the reporting year 113  branches were covered under regular inspection conducted  by Head Office.  Branches are given ratings based on   performance. Branches with poor rating are kept under close watch for review and monitoring.

Preventive vigilance is given emphasis in the bank’s inspection system. As the bank is in the process of conversion to CBS through TBA from ALPM stage, Migration Audit will be introduced on completion of 100% conversion to CBS.

100% Jewel verifications were conducted in51 branches during the year .

e)   Obligation of Statutory Provisions:

During the reporting year the Bank has complied with the SLR, CRR and Provident fund provisions along with provisions for bad debts/investments as per IRAC norms.

      f) Representation of SC/ST in Staff strength as on 31.03.2011

A SC/ST Cell has been set up at Head Office to help the Liaison Officer, who is looking after Reservation Policy Guidelines.

Meeting with Office bearers of Bank’s SC/ST Employees’ Welfare Council is being conducted regularly in each quarter to discuss regarding implementation of Policy Guidelines relating to reservation Policy and other grievances, if any.

Post Based Roster is being maintained and is placed before Board of Directors every year for necessary action in this regard.

g)   Board Meetings:

In terms of Section-8 of RRB Act 1976, the general superintendence, direction and management of the affairs and business of the bank is vested with the Board of Directors. The present strength of Board of Directors is 9 including Chairman. During the financial year, six  (  6 ) Board meetings have been conducted, where the performance of the Bank was closely monitored, progress reviewed and various policy decisions have been taken to run the Bank on sound business principles.

h)  Change of Directors:

During the financial year Shri T.Srinivas Rao, Nominee Director of RBI was replaced by Shri Biplab Chakraborty , General Manager, RPCD, RBI with effect from 22/04/2010. Similarly Shri  K.K.Soni, Nominee Director of sponsor bank was replaced by Sri S.N.Nayak,CRM Regional Office Bhubaneswar with effect from 26-08-2010.Sri K.Sethu, nominee Director of sponsor bank was replaced by Sri B.P.Mishra, Senior Regional Manager  IOB, Regional Office, Berhampur with effect from 26-08-2010. The Board of Directors placed  on  record its appreciation for the valuable service rendered by the Directors who were  replaced this year.

The list of present Directors of our bank is as follows:
Shri D.K. Nanda, Chairman, Neelachal Gramya Bank
Shri B.Chakraborty, Nominee Director, Reserve Bank of India
Shri B.M. Patnaik, Nominee Director, NABARD
Shri S.N.Nayak, Nominee Director, Indian Overseas Bank
Shri B.P.Mishra, Nominee Director, Indian Overseas Bank
Shri R.K. Mishra, Nominee Director, Govt. of Orissa
Shri A.N. Rath, Nominee Director, Govt. of Orissa
Shri Kishore.Chandra Jena, Nominee Director, Govt.of India
Shri Harish Gouranga, Nominee Director,Govt. of India

Visit of Dignitaries:
During the current financial year the following dignitaries have visited our bank on different dates and while appreciating the Bank for various initiatives taken, they have rendered valuable suggestions for improvement.

Acknowledgement:

The Board of Directors desires to place on record its deep sense of gratitude to Govt. of India, Govt. of Orissa, Reserve Bank of India, NABARD, and the District Administrations of Puri, Khurda Nayagarh, Angul and Dhenkanal districts for their guidance, co-operation and support extended to the Bank.

The Board also wishes to convey its sincere thanks to Indian Overseas Bank (Sponsor Bank) for their valuable guidance and patronage.

The Board also acknowledges with thanks the services rendered by Statutory Central Auditor  M/S B.N. Mohanty & Associates, Puri and other branch auditors in conducting the statutory audit and preparing the Balance sheet for the year 2010-11.

The Board also takes this opportunity to convey its heartfelt thanks to its customers, patrons and well-wishers for their valuable patronage and support extended to the Bank and solicits continued support from them in future also.

The Board also records its profound appreciation for the services rendered by the staff members at all levels and expects the same with greater degree of involvement and commitment to scale new heights of performance in coming years.

The audited accounts for the year ending 31st March 2011 are attached to this report.

For and on behalf of
Board of Directors of Neelachal Gramya Bank

Bhubaneswar

29.04.2011                                                                              (D.K. NANDA)
                                   CHAIRMAN