DIRECTORS’ REPORT 2010-11

The Board of Directors of South Malabar Gramin Bank has great pleasure in presenting the 35th Annual Report on the working results of the Bank for the year 2010-11 along with the Audited Balance Sheet and P&L Account.

Profit after Tax remained at Rs.12.33 Cr. in spite of added provisions and increased cost on wage revision paid to Employees.

Recovery percentage of 92.47% even after the elapse of 34 years since inception. Cash recovery of Rs.49.71 Cr. made during the year, through meticulous planning and recovery efforts.

Formed 250 Farmers clubs in our 235 branches.  Farmers clubs have conducted many image building activities.

SHG linkage was promoted to the maximum by linking 4113 groups during the year extending Credit of Rs.51.94 Cr.

Aiming to boost lending to productive sectors of the economy Bank identified 55 thrust area schemes along with many other professionally developed loan schemes providing the customers an array of customised loan products to choose from.

Helped minority communities  by disbursing a total advance of Rs.184126 lakhs in Financial Year 2010-11 in 447234 loan Accounts. The share of advances to minority community to total advances is 52 % amounting to Rs 1619 Cr.

Gramadeepam project was implemented with a total project out lay of Rs.23.47 lakhs availing assistance from NABARD.  Financial Inclusion and Financial literacy programs were organized at Vallikkunnu, Akathethara, Konnurkkara, Menangadi and Perumanna as a part of the outreach programme of RBI.

CBS implementation processes are in full swing. We have already opened 2 branches under CBS and propose to bring all our branches under CBS by September-2011

Knowledge Management has been identified as a key issue and several initiatives like updating of schemes, policy guidelines etc. and introduction of new and innovative tools for knowledge dissemination has been taken up. Conducted empowerment programs for women, youth, farmers and entrepreneurs in a big way.

SHARE CAPITAL

amount in 000's

BRANCH NETWORK

District-wise break-up

COMPUTERISATION AND INTRODUCTION OF CORE BANKING

As per directives of Government of India all Regional Rural Banks are required to implement CBS in all the branches by Sept 2011. It was decided to implement CBS jointly by the three RRBs sponsored by Canara bank. PGB was authorized to take lead role and given target to complete CBS implementation in all three RRBs by Sept 2011.The DIT Wing and PC Wing of Canara Bank is guiding and monitoring the implementation of CBS Project.

For implementing CBS, M/s Ernst and Young Private Limited was selected as the Technical Consultant.

After due diligent processes of technical and financial evaluation, M/S Wipro Ltd was selected as the System Integrator and Finacle of Infosys was approved as the software platform. The business process definition, gap analysis, customization and parameterization are going on at the Project Management Office, Bangalore, attached to the Canbank Computer Services Ltd, who will also support us by providing space and other technical personnel.

The Data Centre has been housed at Bangalore and Data Recovery Centre at Mumbai. BSNL will provide necessary connectivity between DC, DRC and branches.

Two branches, one at Palode and another at Panavila were opened under Core Banking on 28th March 2011. The remaining branches will be migrated to CBS by 30.09.2011.

Deposits increased by Rs. 98.54 Crore and reached Rs. 2964.16 Crore at a growth rate of 3.44%

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Due to introduction of measures like obtention of land tax paid receipt/ Possession certificate in respect of Agriculture Gold Loans (consequent to NABARD inspection in 2009) there had been a temporary fall/shift in AGL(since major banks in the command area were not insisting for such documentary proof), which had affected the growth under agriculture and priority sector advances as its impact was felt fore nearly six months. However the SMGB Board on 02.12.2010 considered this aspect and permitted to obtain self declaration from the borrowers in lieu of tax paid receipt/ Possession certificate for sanctioning AGL up to Rs.1 Lakh. This was implemented from 13.12.2010 and thereafter there had been increase in AGL lending and consequently the growth under agriculture and priority sector. The Bank had been encouraging SME advances. However, due to certain wrong classification of Gold Loans under SME, the Board directed for re classification and accordingly the SME advances have reached to Rs.412.36 Crores in March-2011.

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Annual Action Plan:  Target and Achievement –      2010-11

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Assets Classification and Provisioning

2009-10

2010-11

Loans written off

Compromise Policy :

Under the set policy, the Bank permitted settlement of  2103  cases involving Rs.1356 lakhs with a sacrifice of Rs. 522  lakhs.

Adalats:

Cash and Balance with Banks
(Rs. In 000’s)

Investments: Investment details as on 31.03.2011
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Other Liabilities:  Details of DICGC claims:
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  National Agricultural Insurance Scheme(NAIS)
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Total Income
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Profitability

Financial Ratios

INTEREST RATES

As at 31.03.2011

*      For deposits above Rs.2 lakhs only.
Incentives for -
Senior citizens                                                       -               0.75%
Employees                                                            -               1.00%

            NRE DEPOSITS.

Reviewed/revised basing on the change in LIBOR/SWAP rates as per RBI directives.

MANPOWER

INDUSTRIAL RELATIONS

The Industrial Relations had been generally cordial.

INTER BRANCH RECONCILIATION

Inter-branch reconciliation is tallied up to February 2011 and DD reconciliation up to February 2011. The Bank has taken all steps including automation to update the reconciliation process.

INSPECTION OF BRANCHES

Regular inspection was conducted at 202 branches/offices/Wings. During the year 86 % of the branches were covered under Inspection.

IS Audit

Inspection Gradation

• “A+ Excellent” & “A Very good” graded branches constitute 54.47% of total branches.
• “C” grade branches: Nil

The Bank had initiated the following action points regarding capacity building requirements of RRBs Personnel based on the guidelines issued by NABARD as per the recommendations of Working Group under the Chairmanship of Shri Amaresh Kumar, Executive Director of NABARD.

• A separate Training Cell was constituted at Head Office exclusively for coordinating and dealing with training and capacity building requirements.
• A budgetary allocation of Rs.25 lakhs was provided for the financial year 2010-11 for meeting expenditure on training programmes
• Training Need Assessment (TNA) was undertaken and we had imparted training to 78% of the total staff members.
• We intend to provide exclusive training programme on CBS to all our staff members during 2011-12.
• In addition to in-house resource persons, expert faculties on specialized subjects from RTC, NABARD, NIRD, NIRB, Sponsor Bank, etc. were involved for customized programmes.

• Conducted classes on Financial Literacy / SHG Linkage / JLG formation & linkage in 14 awareness meetings for women arranged by our various branches.
• Conducted Skill Development Initiative programme on Foot wear upper stitching for 43 women in two batches, with NABARD assistance. 20 women of the first batch selected under our Pallikkal branch is already wage employed in nearby foot wear making units. Second batch selected under our Mankavu branch is preparing project for starting own foot wear upper stitching unit.
• Arranged for One week long Entrepreneurship development programme (EDP) and One month long Skill development programme on Tailoring (SDI) for tribal women at Pattakarimba Tribal Colony, near Pookkottumpadam branch with the help of Subharao Pai Self Employment Training Institute (SUPSETI), Wandoor.
• Documentaries produced on Green Valley Vanitha Farmers club and Souhrida women JLG . The work of another 3 documentaries are in progress.

ACHIEVEMENTS OF THE BANK UNDER FINANCIAL INCLUSION   DURING 2010/2011

            As on 31.03.2011, no frill accounts stand at 232940 with a balance of Rs.2520            
lakhs.

Popularised special loan schemes like Sneha card scheme and Grama Jyothi Loan scheme  for total  debt redemption  and Total Financial Inclusion.

1. Disbursed Rs.72 lakhs  benefiting 255 families under Sneha crad scheme during this year.

1. Under Gramajyothi Loan scheme disbursed Rs.105 lakhs  benefiting 488 families during the year.

1. Promoted Self Help Groups (SHG), Joint Liability Groups(JLG), Kisan Credit Card & SMGB General Credit Card(SMGBCC) in a big way for total financial inclusion.

1. Conducted a “ KCC Contest “ from July 2010 to March 2011 and observed a KCC week during August  for promoting KCC.

1. Formed Farmers Club in almost all branches. We are having 250 farmers Club as on date.

1. Bank got sanction from NABARD during 2009/10  for implementing four projects for promoting financial inclusion with a total project cost of Rs.23.47 lakhs. Grant assistance from NABARD  is Rs.17.60 lakhs(75% of total project cost) and the project period is 2 years from  July 2009 .

So far we have expended Rs.16.98 lakhs under the project and got sanctioned Rs.7.10 lakhs from NABARD.

1. Opened Village knowledge Centres in all the 8 districts of our Command Area.

1. VKCs at Wayanad (Vaduvanchal  ) and Malappuram(Anamangad) was opened during 2009/10. The remaining 6 VKCs in Thrissur (Pattikkad), Kozhikode (Medical College, Mayanad), Pathanamthitta (Pandalam), Palakkad (Ottappalam), Idukki (Muttam) & Thiruvananthapuram (Attingal) districts were opened during this year.

1. Computer and other office furniture provided to VKC. Through VKC, conducted  Farmers training Programme  in Pallikkal Bazar, Edarikode, Anamangad,Perambra, edarikkode, Choondal, Guruvayoor, Chandanappally, Thodupuzha, Vettathur,Karuvarakundu & Pandikkad branches.

1. Conducted Youth Training programme in Meenangadi, Thrissur East Fort, Ariyallur, Olarikkara, Thrissur main, Edarikode,Pookottur, Ottappalam,Medical college, Trippanachy, Perinthalmanna, Alur,& Muttam branches.

1. Three financial literacy advertisements were published in local news papers with the prior approval of NABARD.

1. SLBC has allotted to us three under banked villages having a population of more than 2000 to provide Total financial Inclusion  by 2012.

1. The villages are Ambalavayal and Thariode in Wayanad district and Chengottukavu in Kozhikode district.

1. We have opted for the Business Correspondent model as we are having full fledged branches in these villages.

1.  Individual BCs were selected after detailed survey and started issuing Smart Cards.

1. M/s zenith software ltd is the technological service provider.

We have adopted a Schedule Tribe Colony at Pattakarimbu, near Nilambur  in    association with Kerala Police under their  “AdivasiJanamaithri Programme”.

- The aim of the programme is to provide basic banking facilities to the colony people and also provide them relief from the clutches of private money lenders by swapping their debt.

- Detailed survey was conducted in the colony based on the survey and loans       were granted to the needy inhabitants under DRI scheme.

Savings boxes were distributed to colony residents to inculcate saving habits and facilitate prompt repayments.

Other Income from the non-fund business/ Fee based income has increased by 22.93%.

Bank had procured the Corporate Agency of Canara HSBC OBC Life Insurance Company for marketing of their Life Insurance products.

BOARD MEETINGS

The Board of Directors met 7 times during the year. Mr. G.Rajendran and Mr. M.G.Ajayan (Sponsor Bank Nominees) and Mr.L.M.Ganesan (RBI Nominee), ceased to be the directors of the Bank. The Board places on record its appreciation for their valuable contributions.

The new Directors who joined the Board during the year are  Mr.B.Sambi Reddy and Dr.M.Reddaiah (Canara Bank) and Ms.Booma Santha Kumari (RBI).

ACKNOWLEDGEMENTS

The Board places on record its gratitude to Govt. of India, Govt. of Kerala, RBI, NABARD, and Canara Bank for their total support, guidance and co-operation.

The Board records its appreciation to the dedicated staff members for their continued contribution for the growth of the Bank.

For and on behalf of the Board of Directors.

G.PANDURANGAN
Chairman