Project Report on

In-depth analysis of

Submitted By
Smruti Sradha Tripathy
1st Year MBA
Under the Guidance of
Prof. Sai Kishore Padhi

Department of Business Administration

Gandhi Institute for Technological Advancement
 ACKNOWLEDGEMENTS

I am grateful to Almighty for giving me the strength to

successfully conduct my experiment. I thank him for sustaining my
efforts which many times did oscillate.

I feel deeply indebted to Sai Kishore Padhi Sir without whose

constructive feedback this project would not have been a success.
The valuable advice and suggestions for the corrections,
modification and improvement did enhance the perfection in
performing my job well.

Also thank you for providing the best of facilities and

environment to bring out our innovation, talent and spirit of inquiry
through this project.
 CONTENTS

1. Evolution of Commercial Banks

2. History of Banks
3. Andhra Bank
4. Products and Services by Andhra Bank
5. SWOT analysis
6. Financial Plans and Activities
7. NPAs
8. Future of Banking in India
An in-depth analysis of Andhra Bank

Banking System overview and Banks as business.

The Word Bank itself...
The word bank was borrowed in Middle English from Middle French banque, from
Old Italian banca, meaning "table", from Old High German banc, bank "bench, counter".
Benches were used as makeshift desks or exchange counters during
the Renaissance by JewishFlorentine bankers, who used to make their transactions atop desks
covered by green tablecloths.
The definition of a bank varies from country to country. See the relevant country pages under
for more information.

Under English common law, a banker is defined as a person who carries on the business of
banking, which is specified as :
 conducting current accounts for his customers,
 paying cheques drawn on him/her and
 collecting cheques for his/her customers

Activities undertaken by banks include personal banking, corporate banking, investment

banking, private banking, transaction banking, insurance, consumer finance, foreign
exchange trading, commodity trading, trading in equities, futures and options trading and
money market trading.
We’ll talk about these later. But one thing..why banks became more business oriented?
Simple. To make money. Apart from doing good for the world.
A commercial bank is a type of financial institution that accepts deposits, offers checking
account services, makes business, personal and mortgage loans, and offers basic financial
products like certificates of deposit (CDs) and savings accounts to individuals and small
businesses. A commercial bank is where most people do their banking, as opposed to
an investment bank.

How a Commercial Bank Makes Money

In a fractional reserve banking system, commercial banks are permitted to create money by
allowing multiple claims to assets on deposit. Banks create credit that did not previously exist
when they make loans. This is sometimes called the money multiplier effect.

There is a limit to the amount of credit lending institutions can create this way. Banks are
legally required to keep a certain minimum percentage of all deposit claims as liquid cash.
This is called the reserve ratio.
The reserve ratio in the United States is 10%. This means for every $100 the bank receives in
deposits, $10 must be retained by the bank and not loaned out, while the other $90 can be
loaned or invested.

Evolution of the Commercial Bank

Traditionally, commercial banks are physically located in buildings where customers come to
use teller window services, ATMs and safe deposit boxes. But a growing number of
commercial banks operate exclusively online, where all transactions with the commercial
bank must be made electronically. These “virtual” commercial banks often pay a higher
interest rate to their depositors. This is because they usually have lower service and account
fees, as they do not have to maintain physical branches and all the ancillary charges that
come along with them, such as rent, property taxes and utilities.

For many years, commercial banks were kept separate from another type of financial
institution called an investment bank. Investment banks provide underwriting services, M&A
and corporate reorganization services, and other types of brokerage services for institutional
and high net-worth clients.

This separation was part of the Glass-Steagall Act of 1932, which was passed during the
Great Depression. It was thought that financial markets would be more stable if commercial
banking and investment banking were kept separate. The Glass-Steagall Act was repealed by
the Gramm-Leach-Bliley Act of 1999.

Now, some commercial banks, such as Citibank and JPMorgan Chase, also have investment
banking divisions, while others, such as Ally, operate strictly on the commercial side of the
business.

Now.. where exactly do the banks fit in? They are a part of the Broad Financial System..

A financial system (within the scope of finance) is a system that allows the exchange of
funds between lenders, investors, and borrowers. Financial systems operate at national,
global, and firm-specific levels. They consist of complex, closely related services, markets,
and institutions intended to provide an efficient and regular linkage between investors and
depositors.

Money, credit, and finance are used as medium of exchange in financial systems. They serve
as a medium of known value for which goods and services can be exchanged as an alternative
to bartering. A modern financial system may include banks (public sector or private sector),
financial markets, financial instruments, and financial services. Financial systems allow funds
to be allocated, invested, or moved between economic sectors. They enable individuals and
companies to share the associated risks.
The components of a financial system
Financial institutions

Financial institutions provide financial services for members and clients.

Banks

Banks are financial intermediaries that lend money to borrowers to generate revenue. They
are typically regulated heavily, as they provide market stability and consumer protection.
Banks include

Public banks

Commercial banks

Central banks

Cooperative banks

State-managed cooperative banks

State-managed land development banks

Non-bank financial institutions : We need not talk about these..

The flow of money through the Financial System is represented below.

Now.. how about a brief history of Banking in India?

Pre-Independence phase of Indian Banking:

The first bank in India was established under the European arrangements. It was named as
Bank of Hindustan in Kolkata in 1770

Other banks were Bank of Bengal (1806), Bank of Bombay (1840) and Bank of Madras
(1843). These were called as Presidency Banks

Punjab National Bank was the first purely Indian bank and was set up in 1894. It is also the
oldest existing bank in India

The first bank that was managed with limited liability by an Indian Board was set up in 1881
and named as Oudh Commercial Bank

RBI was set up 1935 under the RBI Act, 1934

Partition and Post-Independence period:

The partition in 1947 adversely affected the economies of Punjab, Bengal paralyzing the
banking activities for months. This was an end to the Laissez-Faire (Babulogy: free market
economy where there is no interference and the market forces are freely allowed to control
the economy) for the Indian banking sector. An industrial policy resolution was passed by the
government in 1948 which resulted in the involvement of the government in the economy,
banking and finance. As a result of this, major steps were taken to regulate the banking
sector. Some more points to be reflected upon are given below:

RBI was nationalized on January 1st 1949 under the RBI Act, 1948 (RBI 2005 b)

The Banking Regulation Act, 1949 was enacted to empower RBI to regulate, control and
inspect the banks

As per the Banking Regulation Act, 1949 no new bank or branch could be opened without a
license from the RBI and no two banks could have a common director

Nationalization (Rashtriyakaran) of banks:

(Babulogy: A process of transforming private assets into public assets by bringing them
under the ownership of the national or state government)

The banks were nationalized in two phases

In the first phase i.e. on 19th July 1969, 14 largest commercial banks were nationalized

In 1980, 6 more banks were nationalized to give the government more control over the credit
delivery

Phase of Liberalization in the 1990s:

(Babulogy: Liberalization of the economy was a period when the license raj and other
barriers in the Indian economy were removed and the economy was opened for the foreign
markets)

New generation tech-savvy banks were allowed in India

The next step was to liberalize or relax the norms for FDI which enabled around 74% voting
rights which were just 10% at that time

A (4-6-4) method of (borrow-lend-go home) was followed

A relaxation in the methods brought a new momentum in the banking sector and the economy
as a whole

Present Set up of Banking in India:

All banks which are included in the second schedule of the RBI Act, 1934 are called as
scheduled banks (Babulogy: Scheduled Banks are those banks which have a paid-up capital
of Rs 5 lakhs and more and must function in the interest of the depositors). They can be
categorized as:-

SBI and its Associates

Nationalized banks

Private sector Banks

Foreign Banks

Regional rural banks

The scheduled commercial banks are growing. Some data pertaining to the last calculation
made in 2013: (The present official figures have not yet been announced)

Number of banks – 151

Number of branches- 1,09,811

Aggregate deposits- (6,70, 454 billion)

The Indian banks were finding it difficult to compete with the international banks in terms of
customer service in the absence of info-tech

The RBI set up various committees to coordinate banking technologies

Committee on Mechanization in the banking industry (1984), Dr. C. Rangarajan was formed
which led to the introduction of the MICR technology

Committee on computerization of banks (1988), C. Rangarajan focused on electronic clearing

of cheques and formation of an electronic clearing house to establish connectivity in the
branches at least in the metros

Committee on technical issues relating to Payment Systems, cheque clearing and Securities
settlement (1994), W.S. Saraf; EFT, BANKNET etc.

Now, lets move on to our bank of concern. The Andhra Bank.

Andhra Bank
 Type Public

Traded as NSE: ANDHRABANK

BSE: 532418

Industry Banking, Financial services

Founded 20 November 1923; 94 years ago

Founder BhogarajuPattabhiSitaramayya

Headquarters Hyderabad

Area served India

Products Consumer banking, Credit

cards, corporate banking, finance and
insurance, private banking, wealth
management, Agricultural Loans

Revenue ₹Rs. 8,027.42

crore(US$2.8 billion)(2016-17)

Operating income Rs. 4,387.95

crore(US$670 million)(2016-17)

Net income Rs.174.32

crore(US$27 million) (2016-17)

Total assets Rs. 222,126.13

crore(US$34 billion)(2016-17)

Number of 20981 (2016-17

employees

Capital ratio 12.38% (2016-17)

Website www.andhrabank.in
Andhra Bank (BSE: 532418) is a medium-sized public sector bank (PSB) of India, with a
network of 2803 branches, 4 extension counters, 38 satellite offices and 3636 automated
teller machines (ATMs) as of 31 Mar 2016. During 2011–12, the bank entered the states of
Tripura and Himachal Pradesh. The bank now operates in 25 states and three Union
Territories. Andhra Bank has its headquarters in Hyderabad, Telangana, India.
The Government of India owns 63.97% of its share capital as on 31 Dec 2015. The state
owned Life Insurance Corporation of Indiaholds 7.66% of the shares. The bank has done a
total business of Rs 3,106 billion(US$48 billion) and has earned a net profit of Rs 5.40
billion (US$83 million) for the Financial Year 2015-16.
Andhra Bank is a pioneer in introducing Credit Cards in the country in 1981.
Andhra Bank has ranked No.1 in terms of number of Life Insurance Policies mobilised
amongst all the agency banks dealing with the Life Insurance Corporation of India. The bank
also has tie-up with United India Insurance Company Limited under Bancassurance (Non-
Life).
History

Bhogaraju Pattabhi Sitaramayya,

founder of Andhra Bank

Bhogaraju Pattabhi Sitaramayya founded Andhra Bank in 1923 in Machilipatnam, Andhra

Pradesh. The bank was registered on 20 November 1923 and commenced business on 28
November 1923 with a paid up capital of Rs 100,000 (US$1,500) and an authorised capital
of Rs 1 million (US$15,000) In 1956, linguistic division of States was promulgated and
Hyderabad was made the capital of Andhra Pradesh. The registered office of the bank was
subsequently shifted to Andhra Bank Buildings, Sultan Bazar, Hyderabad. In the second
phase of nationalisation of commercial banks commenced in April 1980, the bank became a
wholly owned Government bank. In 1964, the bank merged with Bharat Lakshmi Bank and
further consolidated its position in Andhra Pradesh.
IndiaFirst Life Insurance Company is a life insurance company in India. It is a joint venture
between two of India’s public sector banks – Bank of Baroda (44%) and Andhra Bank (30%),
and UK’s financial and investment company Legal & General(26%). It was incorporated in
November 2009. It has its headquarters in Mumbai. IndiaFirst Life made more than Rs 2
billion (US$31 million) in turnover in just four and half months since the insurance company
became operational. IndiaFirst Life insurance company is headquartered in Mumbai.
IndiaFirst is the first life insurance company to be recommended for ISO certification within
7 months of inception.
Andhra Bank Branches in India
 Andhra Pradesh
 Assam
 Bihar
 Chandigarh
 Chhattisgarh
 Dadra And Nagar Haveli
 Delhi
 Goa
 Gujarat
 Haryana
 Himachal Pradesh
 Jammu And Kashmir
 Jharkhand
 Karnataka
 Kerala
 Madhya Pradesh
 Maharashtra
 Meghalaya
 Orissa
 Pondicherry
 Punjab
 Rajasthan
 Sikkim
 Tamil Nadu
 Uttar Pradesh
 Uttarakhand
 West Bengal

Products and Services Provided :

Andhra Bank
Credit Cards
The bank offers the Credit cards which has global acceptance like Visa Platinum, Visa Gold,
VisaCorporate, Visa Classic and Master cards. Cards are issued against the minimum taxable
income of 1.80 lacs.
The credit cards from Andhra Bank hold the following features:
 No admission fee is levied.
 No annual subscription in the first year.
 No finance charges during the interest free period.
 Soft copy of monthly bill is sent on the registered mobile number.
 2 add on cards are provided for spouse/parents/guardians.
 Cards are also issued against deposits.
 Cash withdrawn is limited to 50% of the availed credit limit.
 Cash advance is charged with an interest rate of 3%
 All information regarding billing, purchases, credits received , cards blocking or card
renewal are sent on the registered mobile numbers.
 Unpaid dues attract a service charge of 2.5% in case minimum balance is paid,
otherwise, 2.95% on unpaid amount.

Debit cards
Debit cards cum ATM card are exclusive cards of the bank.
The cards can be used for making any purchases at any merchant outlets.
Andhra bank has stopped issuing any personalized debit cards and is now offering only non-
personalized chip cards along with the PIN on all the bank counters immediately at the time
of opening any new account with the bank.
Debit cards can be used for following purposes:
 Balance inquiry
 Pin change
 Withdrawal of cash

Loans
The Andhra Bank is offering various kinds of loans to its valued customers.
The types of loans offered by the bank are as follows:
 Housing Loan
 Gold Loan
 Car Loan
 Vehicle Loan
 Educational Loan
 Non-Agricultural Gold Loan
 Personal Loans
 AB Professional Loans
 Mortgage Loans
 Reverse Mortgage Loan
 Loan against Rent Receivables
 Loan against NSC’s, KVP’s, LIC Policies
 Doctor Plus

Savings Account
The Andhra bank offers various kinds of savings facility to cater to the needs of different
categories of customers. They have savings account for kids, for pensioners, salaried people,
corporate customers, Govt. sector and Charitable trusts and societies can also have a savings
account with this bank. The rate of interest offered on savings account is generally 4 % for all
categories.
The different types of Savings account offered by the bank are as follows:
 AB Kiddy Bank
 AB Easy Savings (No Frills account)
 AB Super Salary SB Account
 AB Little stars and AB Teens
 AB JeevanAbhaya Double Plus
 AB Abhaya Plus
 AB Abhaya SB Account
 AB JeevanAbhaya Scheme
 AB Abhaya Gold SB Account
 AB Platinum SB Account
 AB Diamond SB Account
 AB Abhaya First Wealth Account
 AB JeevanAbhaya Triple Plus

AB Term Deposits
Andhra Bank offers variety of deposit schemes to its customers. The rate of interest varies
from each and every deposit schemes and it mainly depends upon
The duration of deposits and prevailing rate of interests and the guidelines set by the
government. Senior citizens get an extra benefit of 0.05 % interest for the recurring deposits.
Different types of deposit schemes available are as follows:
 AB Recurring Plus
 AB Freedom (Flexi) deposit scheme
 AB Money Time
 AB Tax Saver
 AB Fixed deposits
 AB Kalpataruvu deposits
 AB Recurring deposits
 AB Smart Choice

NRI Banking
Andhra Bank offers various services to its NRI CUSTOMERS.
The bank offers various kinds of deposits schemes to its NRI customers.
 NREFD
If the customer is interested in conversion of his currency and to avail the tax benefits these
accounts are suitable as the amount in the accounts is totally tax free.
The account is maintained in Indian currency. The normal rate of interest is 4%.
Loan facility is available against these deposits.
 NROFD
This facility is available to the NRI’s who had regular income or assets acquired before
becoming a NRI and like to invest in the fixed assets. But repatriation is not available on this
kind of deposits. Interest is taxable as per the rules.
 NRE ACCOUNT
These accounts are beneficial to the NRI’s who are having regular incomes on assets which
they acquired prior of becoming an NRI and also making some payments in India for their
genuine needs in India.
The account can only be maintained only in Indian currency.Interest rates as per the
prevailing domestic rates.
Various kinds of remittance facility is also available for NRI’s:
 Remit funds to India-through SWIFT
 Remittance facility for NRIs in Gulf
 New arrangement with Bank of America MERRILL LYNCH
Various kinds of loans available for the NRI’s are as follows:
Loans on deposits:
 Against NRE deposits
 Against NRO deposits
 FCNR (B) deposits
Housing loan
 Housing loans to NRI’s
 Housing loans to NRI’s of UAE
Educational loans

Online services
Andhra Bank offers various kinds of online services to its customers which they can avail
after applying for this facility from the bank. The customers need not visit their nearby
branches and can do the banking work from their home itself.
The following online services are provided by the bank:
 AADHAR SEEDING
 AB ONLINE SHOPPE
 BLOCKING ATM/DEBIT CARDS
 CLICK TO PAY
 CREDIT AND ONLINE PORTAL
 INDIA FIRST ONLINE SERVICES
 INTERNET BANKING
 MOBILE BANKING
 ONLINE SAVINGS ACCOUNT OPENING
 PREPAID CARD SELF CARE PORTAL
 SMS BANKING
 TAX PAYMENTS
 TELE BANKING

The Bank and its Financial Position as well as plans and activities:

1.1. MACRO ECONOMIC DEVELOPMENTS

The global economic activity slowed during FY 2015-16, across economies barring few
exceptions. The sluggish global growth has impacted the growth of Indian Economy and
consequent investment and credit demand. The Estimates of GDP that the Central Statistics
Office (CSO) released recently, the growth rate of GDP at constant market prices is at 7.6 per
cent in 2015-16, mainly because private final consumption expenditure has accelerated. In
GVA terms: Agricultural sector growth improved during FY 16 to 1.2% from -0.2% in FY
15; Industry has shown significant improvement primarily on account of the acceleration in
manufacturing (7.4 % vis-à-vis 5.9 % in FY 15). Meanwhile, services sector growth
decelerated to 8.9% from 10.3% in FY15. FY 2015-16 began on a strong positive note
however; the high expectations were moderated during the course of the year tracking global
developments and pace of domestic policy actions. In sum, recovery in the economic activity
and investment cycle has begun in FY 2015-16, but the full effects on output are the matter of
expectations.

1.2 Monetary and Liquidity Conditions

During the financial year 2015-16, the stance of monetary policy has continued to be
accommodative. Barring transient periods of surpluses the liquidity conditions generally
tightened in the second half of the year beginning from mid-October . The Average CPI
inflation rate has come down to 4.9% during FY 2015-16 from 5.9% in FY 2014-15. RBI has
cut repo rates by 75 bps points between April 2015 and March 2016.

1.3 BoP and External Sector

The external position appears robust. The current account deficit is at comfortable levels at
1.4% of GDP. There was an accretion to foreign exchange reserves, taking their level to US$
355.6 billion as on March 25, 2016, equivalent to about 10 months of imports. India was
well-positioned to absorb the volatility. Although the rupee has declined against the dollar, it
has strengthened against the currencies of its other trading partners.

1.4 Equity Markets

During 2015 – 16, the resources mobilized through primary securities market have gone up.
108 companies have accessed the capital market as compared to 88 issues last year. Among
the public issues, there were 74 IPOs and 21 public debt issues. During the year the gains
from secondary market have moderated as compared to the last year. The BSE sensex return
has fallen to -6.2% as compared to 24.9% registered during the last year.

1.5 Bond Markets

The 10-yr Benchmark yield softened during FY 2015-16, the average yield softened to 7.8%
in FY 15-16 from 8.3% in FY 14-15. The yields of G-Secs started to ease ahead of the
monetary policy easing cycle but firmed up through the second half of 2015-16. After the
announcement of the Union Budget, however, yields steadily eased to 7.6% by March’16.

1.6 Trends in Banking Industry

The Banking business muted during the FY 2015-16. Despite a higher real interest rate on
Deposits, the incremental growth in deposits of All Scheduled Commercial Banks was low at
9.9% this year as compared to 10.7% of last year. Credit growth gradually picked up during
the second half led by reduction of repo rates by RBI and consequential base rate cuts by the
Banks. The overall credit growth for the FY 2015-16 was 11.3% as compared to 9.0% in FY
2014-15.

2. PERFORMANCE HIGHLIGHTS OF THE BANK 2.1 Business

For the financial year ended 31st March 2016, Andhra Bank’s Business stood at Rs. 3,10,673
recording an increase of Rs. 26085 Crore from Rs.2,84,588 Crore as on 31.03.2015, with a
growth rate of 9.2% (y-o-y).

2.2 Deposits

Andhra Bank’s Total Deposits stood at Rs. 174302 Crore as on 31.03.2016, recording an
incremental growth of Rs 19290 Crore (12.4 %) over the previous year. The share of CASA
deposits (current and savings) in Total Deposits stood at 26.08%.

v Current Deposits stood at Rs. 7541 Crore as on 31.03.2016 as compared to Rs. 9706
Crore as on 31.03.2015.

v Savings Bank Deposits increased to Rs 37924 Crore as on 31.03.2016, from Rs. 32696
Crore as on 31.03.2015, growing at a rate of 16%.

v Term Deposits increased from Rs. 112610 Crore as on 31.03.2015 to Rs. 128828 Crore as
on 31.03.2016, registering a growth rate of 14.4%.

2.3 Advances

Gross Bank Credit increased by 5.2% from Rs. 129576 Crore as on 31.03.2015 to Rs. 136371
Crore as on 31.03.2016.

Credit to Agriculture Sector (incl RIDF & non priority) stood

at Rs. 24679 Crore as on 31.03.2016 as against Rs. 20338 Crore as on 31.03.2015 registering
a growth rate of 21.3%.

Credit to Micro, Small and Medium Enterprises (MSME) increased from Rs. 20258 Crore as
on 31.03.2015 to Rs. 23278 Crore as on 31.03.2016 registering a growth rate of 14.9%.

2.4 Profitability

2.4.1 Total Income for the financial year 2015-16 increased by 7.4%, from Rs.17,868 Crore
during financial year 2014-15 to Rs. 19,199 Crore. Non-Interest Income increased to
Rs. 1,564 Crore compared to Rs. 1,499 Crore in the previous year. Operating Profit of
the Bank increased to Rs.3,960 Crore compared to Rs. 3,298 Crore in the previous year
 registering a growth rate of 20.1%. Net Profit stood at Rs. 540 Crore for the financial
year 2015-16.

2.4.2 The Total Interest Income recorded a growth rate of 7.7% and increased from Rs.
16,369 Crore during 2014-15 to Rs. 17,635 Crore during 2015-16. Of this, Interest
Income from Advances grew by 5.7% from Rs. 12,742 Crore during 2014-15 to Rs.
13,467 Crore during 2015-16. Interest Income from investments increased by 10.5%
from Rs.3509 Crore during 2014-15, and stood at Rs.3876 Crore during 2015-16.

2.4.3 Out of total Non Interest Income, Fee Based Income for the financial year ended
31.03.2016 stood at Rs.158 Crore.

2.4.4 Total Expenses during the financial year 2015-16 were Rs.15,239 Crore against Rs.
14,570 Crore during the previous year. Of this, Operating Expenses stood at Rs. 2925
Crore. Establishment Expenditure as a percentage of Total Expenditure stood at 11.38%
for the financial year ended 31.03.2016.

Table 1: Highlights of Revenue, Expenditure and Profitability

(` in Crore)

2014-15 2015-16 Absolute Percentage

Growth Growth
Total Interest Income 16368.61 17634.67 1266.06 7.73%

Total Interest Expenditure 11830.57 12313.71 483.14 4.08%

Net Interest Income 4538.04 5320.96 782.92 17.25%

Other Income 1499.84 1564.47 64.63 4.31%

Profit on sale of Investments 366.5 230.97 -135.53 -36.98%

Core Other Income 1133.34 1333.5 200.16 17.66%

Operating Expenses 2739.44 2925.43 185.99 6.79%

Operating Profit 3298.44 3960 661.56 20.06%

Provisions and Contingencies 2660 3420.16 760.16 28.58%

Net Profit 638.44 539.84 -98.6 -15.44%

APPROPRIATIONS

The appropriations made out of Net Profit are shown in Table

2. An amount of Rs. 134.96 Crore was transferred to statutory reserves during 2015-16,
and with this, the statutory reserves now stand at Rs. 2751.91 Crore. Transfer towards
Dividend (including Dividend Tax) amounted to Rs. 41.43 Crore.

Table 2: Appropriations out of Net Profit

(` in Crore)

2015-
16
Appropriation out of Net Profit 539.84
Balance brought forward 94.99
Transfer to Statutory Reserves 134.96
Transfer to Capital Reserve 36.80
Transfer to Revenue Reserves 126.64
Transfer to Special Reserve 200.00
Transfer to proposed Dividend (including
Dividend Tax) 41.43
Profit carried over to Balance Sheet 95.00

KEY FINANCIAL RATIOS

The Bank has done considerably well in key financial ratios, given the performance of the
Industry as a whole. Net Interest Margin (NIM) stood at 3.18% compared to 3.00% in the
previous year. Cost to Income Ratio stood at 42.49%, as compared to 45.37% for the
previous year. Earnings per Share (EPS) stood at Rs.8.60 and Book Value per Share (BVPS)
stood at Rs.150.68

Gross Non-Performing Assets to Gross Advances stood at 8.39% and Net Non-Performing
Assets to Net Advances stood at 4.61% for the financial year ended 31.03.2016.
CAPITAL ADEQUACY

As per the Reserve Bank of India guidelines, the start date for

implementation of Basel III guidelines in India is w.e.f. April 1, 2013. Accordingly, w.e.f.
April 1, 2013, the Bank has been assessing its Capital Adequacy as per Basel III
prescriptions.

The total Capital Funds of the Bank are at Rs.15732.74 as on March 31, 2016 and the Capital
Adequacy Ratio at 11.58% is above the required RBI prescribed norm of 9.625%.

The Bank has in place an “Internal Capital Adequacy Assessment Process” (ICAAP) for
assessing the adequacy of Capital levels keeping in view the expected increase in business
levels and enhanced Capital requirements in the Basel III regime. The assessment process
also includes

a framework for inclusion of Pillar-II risks under Basel-III guidelines, such as Credit
concentration risk, interest rate risk in the banking book, liquidity risk, etc.
CRAR Position (` in crore)
31st March 2016
(Basel III)
CE Tier-1 Capital 10553
Additional Tier-1 Capital 1412
Tier-II Capital 3768
Total 15733
3. BUSINESS REVIEW
The Total Business (Total Deposits plus Gross Bank Credit) of the Bank registered a growth
rate of 9.2%, up from Rs.284588 Crore as on 31.03.2015 to Rs. 310673 Crore as on
31.03.2016.

3.1 Aggregate Deposits

Aggregate Deposits (excluding inter-bank deposits) went up from Rs.154974 Crore as on

31.03.2015 to Rs.174233 Crore as on 31.03.2016, registering a growth rate of 12.4%.
Aggregate Deposits comprised of current deposits of Rs. 7482 Crore, savings deposits of Rs.
37924 Crore and term deposits of Rs. 128828 Crore.
Table 5: Category-wise classification of Aggregate
Deposits (` in Crore)
Sl. Amount Percentage of
 Type of
Deposits
No 31.03.201
. 6 Aggregate
Deposits
1 Current Deposits 7481.54 4.29%
Savings Bank
2 Deposits 37923.89 21.77%
3 Term Deposits 128827.93 73.94%
4 TOTAL (1+2+3) 174233.36 100.00%

Growth rate over previous

year (%) 12.43%

Area-wise distribution of Aggregate Deposits (excl inter-bank deposits) as on 31.03.2016 is

set forth in the following Table.

Table 6: Area-wise classification of Aggregate Deposits

(` in
Crore)

Sl. Category of % to
No. Branches Amount total
13141. (19.4
1 Rural 99 %) 7.54%
30208. (25.4
2 Semi-Urban 16 %) 17.34%
49035. (16.5
3 Urban 35 %) 28.14%
81847.
4 Metro 88 (5.2%) 46.98%
TOTAL 174233.38
5 (1+2+3+4) (12.4%) 100.00%

Note: Figures in ( ) indicate annual growth rate over the previous year
3.2 Gross Bank Credit

For the Financial Year ended 31.03.2016, Bank registered a growth rate of 5.2% in Gross
Bank Credit over the previous year adding Rs. 6794 Crore during the year, to reach Rs.
136371 Crore as compared to Rs.129576 Crore for the Financial Year ended 31.03.2015.

Table 7: Classification of Advances portfolio

(` in Crore)

31.03.201 31.03.20 Varianc

Category 5 16 e
1. Food Credit 1746.73 1877.87 131.14

2. Non-Food Credit (2.1 127829.4 134492.7 6663.3

to 2.4) 1 5 4
2. Agricultural
1 Advances
19797.7 24373.1 4575.3
(Excl. RIDF) 8 2 4

2. Advances to MSME 20257.6 23277.7 3020.1

2 Sector 2 7 5

2. Retail Credit (incl. 19846.1 24428.2 4582.1

3 DLs) 2 9 7

2. Large Industries &

4 Other
67927.8 62413.5 -
Advances 9 7 5514.32

GROSS BANK 129576.1 136370.6 6794.4

CREDIT (1+2) 4 2 8

Of which, Lending to 44960.4 54545.3 9584.9

Priority sector 6 8 2
3.2.1 Priority Sector Lending

Priority Sector advances of the Bank stood at Rs. 54,545 Cr (including Rs.416 Cr Under
RIDF and other funds) at the end of March 2016, registering a y-o-y growth of 21.31% and
absolute increase of Rs.9585 Cr. As against statutory requirement of 40% of ANBC, Bank
recorded 41.88% under Priority Sector as on 31.03.2016.

Table 8: Priority Sector Lending (as on 31.03.2016)

(` in
Crore)
Category 2015 -16
54545.3
1. Priority Sector Advances (2 to 8) 8
24079.9
2. Agriculture-Priority (2.1 + 2.2) 1
23774.0
2.1 Agriculture Loans-Priority 3
2.2 Eligible Investments (RIDF) 305.88
3 Micro, Small and Medium 20988.4
. Enterprises 8
3.1 out of which, Eligible Investment
in SIDBI 24.13
4
. Educational Loans 1780.60
5 Housing Loans (including indirect
. finance) 7650.82
5.1 out of which, Eligible
Investment in NHB 85.67
6
. Social Infrastructure 17.10
7
. Renewable Energy 25.68

8
. Others 2.79
I. Priority Sector Advances (% to
ANBC) 41.88%
 II. Agriculture Advances (% to
ANBC) 18.49%
III. Small & Marginal Farmers (% to
ANBC) 10.24%
IV. Direct Lending to Non-Corporate
farmers (% to ANBC) 14.35%
V. NPA under Agriculture as
on 31.03.2016 (% Gross NPA) 4.44%
3.2.1.1 Credit to Agriculture

Total agricultural (Priority) lending of the bank stood at Rs.24,080 Cr as at the end of March,
2016, which includes eligible investment under RIDF of Rs.306 Cr. as against statutory
requirement of 18% of ANBC, Bank has reached 18.49% as on 31.03.2016.

3.2.1.2 Lending to Self Help Groups (SHGs)

Bank has extended financial assistance to 239133 self help groups with total exposure of
Rs.5,376 Cr as on 31.03.2016.

3.2.2 Lending to Micro & Small Enterprises (MSE)

Total advances to micro & small enterprises of the bank was at Rs.20,988.48 Crores as at the
end of March’16, registering a y-o-y growth of 21.79%. The absolute growth during the
period is Rs.3033 Crores.

3.2.3 Credit to Weaker Sections

Advances to weaker sections stood at Rs.16,054 Crores i.e., 12.33% of ANBC as against
norm of 10%.

3.2.4 Credit to Minorities

Total credit extended to minority communities was at Rs.4983 Crores i.e., 11.08% of Priority
Sector advances as against norm of 15%.

3.2.5 Credit to Women

Total credit extended to women beneficiaries was at Rs.16,203 Crores i.e., 11.88 % of Net
Bank Credit as against norm of 5%.

3.2.6 NPA under Agriculture

Out of Total Agricultural advances of Rs.24679 Cr (including Agri-Non priority) as on
31.03.2016, NPA under Agriculture is Rs.1094.83 Cr i.e., 4.44% of Gross NPA as against
5.29% of Gross NPA as on 31.03.2015

3.2.7 Andhra Bank Rural Development Trust:

Andhra Bank Rural Development Trust is running 13 Rural Self Employment Training
Institutes in A.P (9), Telangana

(1), Odisha (2), Kerala (1) states and imparting need based training for capacity
building/entrepreneurial development and dissemination of knowledge to farmers, SHG
women, Rural unemployed youth and artisans.

Since inception, 148947 candidates have been trained through 5049 programs by the
Institutes and around 79% of the trained candidates are engaged in gainful ventures. During
the year, the institutes imparted training to 11023 candidates through 447 programs.

All our eleven RSETIs (2 RSETIs were recently opened) have been awarded with highest
rating “AA” by Ministry of Rural Development, Government of India for the year 2014-15.

3.2.8 Financial Literacy and Credit Counseling Centres

Bank has established Jana Chetana Financial Literacy and Credit Counseling Trust and
running six Financial Literacy Centres in all Lead Districts. Bank is in the process of opening
another 25 FLC centres at various places in A.P. These centers are promoting financial
literacy activities through campaign mode and providing service related extension services.
All our Rural Branches and RSETIs are organizing Financial Literacy Camps in the villages
by utilizing the services of local artists/ magicians and organizing Kala Jataras.

3.2.9 Village Visits:

Bank has started ‘Village Visits’ (Palle Bata) on every Wednesday in Andhra Pradesh state
w.e.f 06.01.2016 as per the advice of SLBC, AP. All Rural/Semi-urban branches
having service area villages have to visit the villages on every Wednesday and
Urban/Metro/Newly opened branches, having no service area, have to conduct ‘Customer
Meet’ at branch premises. Now it is being implemented across the country in Andhra Bank.
This program is being implemented by all branches to improve their ‘CONNECT’ with the
target group.

3.3 Credit to MSME Sector

MSME Sector is playing a crucial role in the economic development of our country. Our
Bank has accorded high priority in lending to this sector since a long time.

(Rs in crore)
 Growth (March
%of 14-
31.03.1
5 31.03.16
achiev
e March 15)

ment
to
Achie targe Amoun
v- t t % of
Actua growt
ls Target ement h

Micro
&
Small 15936.3 17746.6 85.87 1810.3 11.35
En 6 20665 8 % 2 %
terprise
s

20257.6 23277.7 88.19 3020.1 14.90

Total 2 26395 7 % 5 %
MSM
E

• As on 31.03.2016 216094 MUDRA loans are sanctioned and an amount of Rs. 1569.36
crores is disbursed.
• Keeping in view of the importance of MSME sector in the economy our Bank introduced
the following:
• 25% of assessed turnover can be allowed as working capital credit limit under turnover
method up to Rs. 6.00 crores instead of the existing 20% of the projected turnover.
• ABHIVRUDHI Scheme “Financing to MSEs (Micro and
Small Enterprises) up to Rs. 3.00 crore against property” wherein assessment of credit
limits is simplified and obtention of CMA data is waived.

• To bring down the Turnaround Time (TAT), our Bank has established SMExpress for
centralized processing of MSME proposals in eight places i.e. at Hyderabad, Chennai,
Pune, Coimbatore, Visakhapatnam, Guntur Bangalore and Hyderabad.
• There are 19 Specialized MSME branches operating in the states of Andhra Pradesh,
Telangana, Orissa, Tamilnadu, Punjab and Chattisgarh to tap the potential business in
MSME sector.
Our performance under CGTMSE scheme:

Year No of A/cs Amount

(Rs.
Crores)
31.03.15 13212 543.59
31.03.16 23427 740.31

3.4 Retail Lending

The Bank’s Retail Credit portfolio stood at Rs. 24,428 crore as on 31.03.2016 as against
Rs.19846 crores as on 31.03.2015, with year on year growth of Rs.4582 crs. The segment has
registered a growth of 23% on YOY basis including deposit loans and credit card.

Housing loans portfolio has increased from Rs 9688 Crs as on 31.03.2015 to Rs.11,811 Crs
as on 31.03.2016 with absolute

growth of Rs 2123 crs registering a growth rate of 22%.

Vehicle Loans portfolio has increased from Rs 819 Crs as on 31.03.2015 to Rs.1046 Crs as
on 31.03.2016 with absolute growth of Rs 227 crs registering a growth rate of 28%.

Education loans portfolio has increased from Rs.1831 Crores as on 31.03.2015 to Rs.2234
Crores as on 31.03.2016 with absolute growth of Rs.403 Crores registering a growth rate of
22%

Loans against property (Mortgage Loans) portfolio has increased from Rs.331 Crores as on
31.03.2015 to Rs.1027 Crores as on 31.03.2016 with absolute growth of Rs.696 Crores
registering a growth rate of 210%.

Bank has waived processing charges on Housing Loans and Vehicle Loans from 14.09.2015
to 30.06.2016.

Bank has reduced rate of interest on Loans against property (Mortgage Loans) portfolio from
12.90% p.a to 12.15% p.a.

3.5 Advances – Industry wise Exposure

Bank has loan exposure to various sectors like Power, Housing Loans, NBFCs, Iron & Steel,
textiles, etc. Exposure to top 10 industries constitutes 51.53% of gross bank credit as on
31.03.2016, signifying a diversified loan portfolio.
Table 9: Industry wise Exposure of Advances

(` in
Crore)
Ceilings Exposure
as Actual as
% of
% of Fund Total
Advances
Sl. Total based of
No. Industry Advances exposure Previous
of Quarter
previous as on i.e.
31.03.201 31.12.201
Quarter 6 5

14382.6 10.58
1 Power 22.00% 3 %
14388.1 10.58
2 Housing Loans 15.00% 8 %
11316.0
3 NBFC 10.00% 5 8.32%

4 Iron & Steel 10.00% 7403.05 5.44%

5 Textiles 9.00% 6042.85 4.44%

Construction &
6 Contractors 10.00% 4618.57 3.40%

Commercial Real
7 Estates 7.00% 3786.14 2.78%

8 Rice Mills 6.00% 3494.62 2.57%

Engineering (Heavy &
9 Light) 5.00% 2564.44 1.89%

Drugs &
10 Pharmaceuticals 5.00% 2279.84 1.68%
 70276.3
Total 7

3.6 Area-wise position of Gross Bank Credit

The population group wise distribution of Credit as on

31.03.2016 is as under:

Table 10: Gross Bank Credit-Population Group Wise as on 31.03.2016

Sl.
No. Category Amount % to total

15173.01
1 Rural (1.9%) 11.13%

Semi- 30835.91
2 Urban (69.9%) 22.61%

20801.95 (-
3 Urban 26.1%) 15.25%

69559.75
4 Metro (1.7%) 51.01%

136370.62
5 TOTAL (5.2%) 100.00%

Note: Figures in ( ) indicate annual growth rate over the previous year
4. INVESTMENTS

In terms of RBI guidelines, the Bank is required to invest in SLR securities to the extent of
21.50% of NDTL. Bank’s investment decisions are based on risk-return trade-off and bank is
scrupulously following the regulatory and internal guidelines. Statutory prescriptions relating
to Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) are complied with and
being monitored on a continuous basis. Risk Management in treasury operations has been
strengthened further by undertaking stress testing and back testing of the investment portfolio
at quarterly intervals, besides daily monitoring of Duration and Value-at-Risk (VaR).
External rating migration of the bonds and debentures portfolio is also being monitored on
quarterly basis.
As on 31.03.2016, the Investments (net of depreciation) increased by 15.84% and stood at
Rs.53864.19 Crore, up from Rs. 46499.43 Crore as on 31.03.2015. SLR maintained as on
31.03.2016 was Rs. 45623.95 Crore, which constituted 25.41% of Net Demand and Time
Liabilities (NDTL). Interest income from investments increased from Rs. 3508.55 Crore in
2014-15 to Rs. 3875.86 Crore in 2015-16. Profit on sale of investments stood at Rs. 230.55
Crore during 2015-16, while it was Rs.374.07 Crore during 2014-15.

Table 11: Classification of Investments

(` in
Crore)
2014- Var
15 2015-16 (%)
1 Government 42504. 49671. 16.86
. Securities 78 88 %
2 Other Approved
. Securities 0.00 0.00 --
3 -
. Shares 315.77 312.52 1.03%
4 1966.4 2027.1
. Debentures & Bonds 5 7 3.09%
5. Subsidiaries and / or 14.20
Joint Ventures 316.79 361.79 %
6 1395.6 1490.8
. Others 4 3 6.82%
46499.4 53864.1 15.84
TOTAL (1 to 6) 3 9 %

4.1 Strategic Investments

4.1.1 Joint Venture Insurance

Our Bank is having Joint venture in insurance with Bank of Baroda and Legal and General
Plc of UK christened India First Life Insurance Co. Ltd. Our stake in the venture is 30%
while Bank of Baroda holds 44% and Legal and General Plc holds 26% stake. Both the banks
have commenced sale of insurance policies through their branch outlets. Our investment in
the life insurance venture is Rs. 187.50 Crore.

4.1.2 Banking subsidiary in Malaysia

The Bank, along with Bank of Baroda and Indian Overseas Bank, has entered into a tie up for
setting up a banking subsidiary in Malaysia. The Bank’s stake in the venture is 25%,
amounting to RM 82.50 Million (book value Rs. 143.28 Crore), in a total subscribed capital
of RM 330 Million (approximately Rs.559.35 Crore @ 1 RM = Rs. 16.9500 as on
31.03.2016).

The joint venture viz. INDIA INTERNATIONAL BANK (MALAYSIA) BHD commenced
business on 11.07.2012. The joint venture bank has a business of Rs 328.58 Crore at the end
of 31.12.2015.
4.1.3 Bombay Stock Exchange

United Stock Exchange of India Ltd which was promoted by a consortium of banks, Canara
Bank, Bank of Baroda,
Allahabad Bank, Bank of India, Indian Overseas Bank and Oriental Bank of Commerce of
which our bank is also a partner. The Bank’s Investment in United Stock Exchange of India
Ltd. is ` 3 Crore. During the year, USE is amalgamated with Bombay Stock Exchange and we
were allotted 77922 shares of BSE with a Face Value of ` 1 per share @ Rs 385 per share
amounting to Rs 3 crore.

4.1.4 Metropolitan Stock Exchange of India Ltd. (MCX Stock Exchange Ltd.

The Bank’s investment in the equity of MSEI is Rs 25 Crore. The Exchange commenced
trading in Equity Cash and Equity Derivatives from February 11, 2013.

4.2 Treasury & Forex Business

The Bank is an ‘Authorised Dealer’, to deal in foreign exchange business through 56

designated B category branches of the Bank. The Bank has speed remittance arrangements
with two Exchange Houses based in Gulf.

Systems have been put in place for management of country risk, exchange risk and other
foreign exchange risks. The country risk exposures for single country risk limit and aggregate
risk limits for the group of countries under each risk category are fixed and are being
monitored on daily basis.

During the year 2015-16, the Bank recorded a merchant turnover of Rs 34,059.08 Crore in
Forex. The bank achieved Inter- Bank turnover of Rs 4,94,560.91 Crore as on 31.03.2016
compared to Rs 4,83,250.08 Crore as on 31.03.2015. Export finance of the Bank stood at Rs
4467.02 crore as on 31.03.2016.

5. CREDIT CARD BUSINESS

Our Bank is a Pioneer in Credit Card Business, both as Issuer and Acquirer (Merchant
Business) since 1981. Excluding SBI, among other Public Sector Banks, our Bank is having
major Market Share in the Credit Card Business.
Card Issuance: At present, our card base is 1.49 lakh cards.

No. of No. of
Cards Cards %
Increas
Sl. Card Type issued in issued in e
2015 2016
1 Credit Cards 11513 15930 38%

Prepaid
2 Cards
Gift Cards 15716 18210 16%
Travel Cards 1882 2869 52%
A.P./Telanga
3 na
Govt., ART
Cards 77919 89335 15%

(Rs. In
Crs.)
Card Dues %
outstanding 2015 2016 Increase

At the year
ending 165.18 177.83 8.00
31st March
Gross Income 60.14 67.06 11.50
Card Turnover 614.00 663.00 8.00
7. BANCASSURANCE & FEE-BASED PRODUCTS

The Bank has been constantly focusing on augmenting non-interest income through
diversification of income streams by taking up marketing of life and non-life insurance
products, Mutual fund products, Depository Services, Direct taxes, Commercial taxes,
Municipal taxes, utility payments, Payment gateway services, Auto-Debit facilities etc.

7.1 Insurance
The Bank along with Bank of Baroda and Legal & General Group Plc of UK has formed a
joint venture life insurance company named IndiaFirst Life Insurance Co Ltd and it was
formally launched in the month of March 2010. The Bank has shareholding of 30% in the
company, while Bank of Baroda has 44% and 26% is held by Legal and General Group Plc.

During the FY 2015-16, total New Business premium (including Retail and Group business)
of Rs. 131.38 Cr was mobilized. Renewal premium of Rs. 114.70 Cr was collected up to
31.03.2016. Bank earned commission of Rs. 16.17 Cr from sale of Life Insurance Policies.

7.2 Mutual Fund Business

The Bank is having tie ups with Mutual Fund companies, namely, UTI Mutual Fund, SBI
Mutual Fund, Principal Mutual Fund, Tata Mutual Fund, Sundaram Mutual Fund, Reliance
Mutual Fund, Birla Sun Life Mutual Fund, Fidelity Mutual Fund, Kotak Mutual Fund, LIC
Mutual Fund and Baroda Pioneer Mutual Fund.

7.3 Depository Services

Bank is offering depository Services to the public under the brand name of “AB Demat”. The
Bank is a Depository Participant (DP) with Central Depository Services (India) Limited
(CDSL) as well as with National Securities Depository Limited (NSDL).

7.4 Government Business Department

• Interface with Website of Central Board of Excise and

• Customs to facilitate collection of Excise duty, Customs and Service Tax for our Net
Banking constituents is completed and is in live operation Customization of online
payment system for VAT and Commercial Tax in the State of Uttar Pradesh is completed
and the module is in live.

• Collection of Delhi VAT in the NCT of Delhi through e-mode is completed and the
module is in live.

• Collection of all TamilNadu Govt. taxes – Online is completed and the module is in live.

• Government of Madhya Pradesh & Chhattisgarh have approved our Bank for collection of
Commercial Tax viz. Central Sales Tax, VAT, Entry Tax, Trade Tax through E-mode.
Customisation is in progress.

• Government of Karnataka & Gujarat have approved our Bank for collection of
Commercial Tax viz. Central Sales Tax, VAT, Entry Tax, Trade Tax through E-mode.
Customisation is in progress.
• E-mode for collection of fees for online citizen services using Payment Gateway under e-
Panchayat initiative in the State of Andhra Pradesh. – In Live.

• Electronic Fund Management System (EFMS) for

Aarogyasri Trust (AP) to enable bulk upload of payments to various beneficiaries
including hospitals. –Testing is completed and will go live shortly.

• Online upload of e-receipts of both the States of AP and

Telangana pertaining to Govt Treasury to the portal of RBI E-Kuber.

• Direct fund transfer to the beneficiaries under Swachha

Andhra Corporation and Swachha Bharat Mission.

• Collection of fees for AP Skill Development Corporation under Personnel Management

Skill Development and general trainings.

• Online collection of processing fee/EMD and other receipts using NEFT/RTGS for AP
Industrial Infrastructure Corporation Ltd.

• Distribution of welfare grants to beneficiaries from Labour

Welfare Commissioner, Andhra Pradesh.

• CBDT- Approval received for collection of Direct Taxes for 521 Branches additionally
(earlier 817 Branches) – Total 1338 branches were enabled with CBDT module.

• COLLECTION OF DIRECT TAXES – Total of 41 Focal

Point Branches have been authorized by RBI.

• Govt. Business during 2015-16 has witnessed a y-o-y growth of 19%.

• Income on Govt. Business is to the tune of Rs. 11.24 cr for the year (2015-16).

• Large Govt. corporate like A.P. Pollution Control Board,

AP Waqf Board, AP Labour Welfare Dept.,NREGS are in our fold.

Customs Duty/Excise/Service Tax payment:

Bank is authorized to collect different types of Indirect tax payments like Customs duty,
Excise and Service tax online. The feature is now made available on Internet Banking for
retail and corporate customers which will allow the users to pay the tax using IEC
code/Assesse code assigned by the department.

Payment Gateway Integration with SBIePay, Payu, Citrus, EBS, and Times of Money:
Bank has tied up with Payment Gateway services provider like SBIePay, Payu, Citrus, EBS,
and Times of Money and integrated the same with Internet Banking through which Internet
Banking Retail customers can pay different types of utility bills to the merchants enabled at
the payment gateways.

Online IB Transaction password resetting:

A new feature has been introduced to retail and corporate Internet Banking customers to
allow them to set transaction password on their own. Retail customers can use ATM debit
card and reset where as corporate customer should have registered and activated Hardware
Token. User can also enable/disable the transaction password using the option provided under
Manage tab in Internet Banking.

PMJBY/PMSBY request seeding through Internet Banking / ATM :

Internet Banking Retail customers can give a request for PMSBY and PMJBY insurance
schemes using the option provided under PM Jan Dhan’s Jan Suraksha Scheme Enrollment
link provided in Home page of Internet Banking. This facility is enabled in Banks ATMs /
SMS / Internet Banking Channel.

PMJDYTOD through SMS Mode

For enrolment to Pradhan Mantri Jan Dhan Yojana TOD, a new module is developed for
receiving request from customer through SMS / ATMs. The customer mobile number should
be registered with the bank for SMS alerts and should be eligible for the scheme. Customer
will receive two SMS i.e confirmation SMS on enrollment and on TOD Approval.

Online RD opening through Net Banking:

Retail customers can now open online Recurring deposit through Internet banking using the
option provided under REQUESTS tab. Once the account is opened the same will appear in
self funds transfer to allow further credits.

Online Standing Instructions:

This facility is enabled for retail customers in Internet Banking. Under ‘Standing Instructions
Request’ module customer can place request for Modify / Delete / Inquire a standing
instruction through NetBanking. Standing instructions can be created by the retail customers
for periodical transfer of funds to RD account, Loan account and other accounts of self/third
party.

Online e-TDR & Online Term Deposit / Recurring Deposit Closure:

Retail customers can give a request for closure of term deposit and recurring deposits using
the option provided under REQUESTS tab of Internet Banking. The accounts opened through
online will only come for closure. In case the deposit receipt is printed at the branch end,
those accounts will not appear for closure even though the account is opened
Mobile Banking Registration/Deregistration/mPIN Generation:
Internet Banking Retail customers can give a request for registration, deregistration and
MPIN using requests tab. The requests will be processed offline and the facility is not
available for the users having VIEW only facility in Internet Banking.

Immediate Payment Service (IMPS) through Branches:

New module is developed in Finacle to enable IMPS transaction at branches. Using IMPS
through Branch module, customer can remit funds to other bank customers instantly using
account number and IFSC. Facility is enabled for both walkin customer and our Bank
customers. Walkin customer can remit funds through cash upto Rs. 49,999/- and our Bank
customers can remit through account upto Rs. 2 lacs per transaction.

Utility Bill Payments For Retail Customers Through M/S Paytm PG Services Provider:
PayTM payment gateway services was integrated with our internet banking on 30/12/2015.
With this facility our Bank retail internet banking customers can make payments online for
merchandise purchased from the merchants enrolled by PayTm.

Andhra Bank Cube:

Bank has launched cobranded wallet with M/s Citrus. Using this digital personal finance
manager Mobile App, Customers can perform following activities

a. Create payment reminders for Digital, Cash and Cheque payments.

b. Integrated Payment Gateway supporting Card based, Account based and Citrus’ Digital
Cash based payments.
c. The Wallet capability in the app supports Saved Cards and Prepaid Cash payments
seamlessly.
d. Payment tracker by account presents 6 month view of the payments made through AB
Cube or Offline.
e. Ability to replace cash collection – education, P2B (Merchant Payments), P2G (Govt
Taxes) type payments using AB Cube
f. Now available in Android version; iOS version will be launched shortly.
Speedpay:

Bank in association with BSNL and Pyro has successfully launched the cobranded prepaid
card SpeedPay. SpeedPay is an open loop mobile wallet which can be used by customers for
Airtime Recharges, DTH Recharges, Postpaid Bill Payments, Landline Bill Payments &
Utility Bill Payments. Its a open loop mobile wallet which allows transfer of funds from
wallet to bank account and also cash withdrawals.
Sukanya Samridhi Yojna
The Sukanya Samridhi Yojna, also known as girl child prosperity scheme was introduced by
Govt of India. Sukanya Samridhi account is to ensure a bright future for girl children in India.
This yojna is to facilitate them proper education and carefree marriage expenses. This scheme
offers a small deposit investment for the girl children. One of the key benefits of the scheme
is that it is quite affordable and offers one of the highest rates of interest. Interest rates are
fixed and will be communicated by GOI every year. The module was developed in Finacle
wherein branches which are designated for PPF & SCSS can open accounts under this
scheme.

Rupay Platinum Debit Card

Rupay Platinum Debit Card was launched by Bank on NPCI platform which is loaded with
premium usage offers. The cash withdrawal limit on ATMs is Rs. 50,000.00 and purchase
limit on POS terminals is Rs. 1,00,000.00. The card carries a personal accident insurance
coverage of Rs. 2.00 lacs.

Online validation of Customer details with CFT list

The United Nations periodically circulates the following two lists of individuals and entities,
suspected of having terrorist

links, and as approved by its security council (UNSC). Banks are required to update the
lists and take them into account for implementation of Section 51A of the Unlawful
Activities (Prevention) (UAPA) Act 1967. Banks should ensure that they do not have any
account in the name of individuals/entities appearing in the above lists. Details of accounts
resembling any of the individuals/entities in the lists should be reported to FIU-IND
invariably.

To meet the above regulatory requirement, Bank has customized CBS system such that
whenever branch goes for creation of new customer master, the customer name is checked
against CFT database on real time basis. When the customer name is present in the CFT list
a warning message is prompted to the branch user along with matched names from the CFT
list. If no matching record are found then no message will be displayed and the branch user
can go ahead to onboard the customer.

Offsite Monitoring – Alert Management

A new facility is provided for the alert mechanism wherein the Branches can directly
access alerts online and respond the same, without sending and receiving any mails.
Presently, the facility is available for 12 types of daily alerts.

Integrated e-surveillance system for ATMs

Bank is implementing centralized integrated security surveillance system to prevent ATM

related physical crimes which include Intrusion detection sensors, Fire detection,
Smoke/Heat Detection, Intrusion alarm, Hooter/Burglar Alarms, User Alarm activation
switch, Speaker, Microphone, other sensors to raise alerts during various contingencies.
 Purchase order placed on the 3 vendors for all the 2500 sites for implementation of the
solution. Implementation under progress.

ATM Switch migration to FSSnet Switch:

Hitherto Bank was maintaining its own ATM switch. To save on cost, Bank decided to take
ATM switch service on Opex model. Accordingly Bank has successfully migrated ATM
Switch Services to FSS Switch on opex model on 20.02.2016.

Online Booking of lockers:

On Banks website now option is provided to prospective customers to view the details of
the vacant lockers available at different branches. The customer can then book locker based
on the availability and can approach the branch for further processing of the request.

Dashboard for Top Management using SAS tools:

Bank in-house team has developed different 15 dashboards on various important

parameters giving details of the performance of the Bank using SAS tools. These
dashboards are being used by Top Management to take informed decisions.

Kisan Vikas Patra scheme

Govt Of India has launched Kisan Vikas Patra (KVP)2014 scheme which is available to the
investors in the denomination of Rs. 1000, 5000, 10,000 and 50,000. Kisan Vikas Patras
have unique liquidity feature, where an investor can, if he so desires, encash his certificates
after the lock-in period of 2 years and 6 months and thereafter in any block of six months
on pre-determined maturity value. The certificate can also be pledged as security to avail
loans from the banks and in other.
Last but not the least, the NPAs of Andhra Bank

The bank reported a Rs51 crore net profit during the same quarter in FY 17, Andhra Bank
said in a statement. Total income for the quarter under discussion was marginally down to
Rs5,005 crore against Rs5,043 crore during the corresponding quarter last year.

The bank allotted Rs1,680 crore towards provisioning and contingencies for the July-
September quarter against Rs992 crore for the second quarter of 2016-17. “The Gross NPA
of the bank stood at Rs19,839 crore (GNPA ratio 13.27%) for (as on) September 2017 as
compared to Rs16,263 crore (GNPA ratio 11.49%) for September 2016,” it said.

The Net NPA stood at Rs10,574 crore (NNPA ratio 7.55%) for September 2017 as compared
to Rs9,411 crore (NNPA 6.99%) for September 2016. The provision coverage ratio of the
bank stood at 55.25% (Sept 2017) as compared to 50.41% (Sept 2016), the lender said.

Net interest margin for the quarter stood at 3.21%. Retail credit portfolio registered a growth
of 28% year-on-year from Rs25,414 crore to Rs32,526 crore.
What is the future of banking in india?
The banking sector plays a crucial role in the economic development of a country. Research
has proved that there has been a shift from the traditional model of economic growth from
function of labour, technology, capital and entrepreneuship to the new model like Rate of
Savings. cost and return on investment which has a direct connection to the financial sector of
the economy. And to be in the race banking industry are highly revolving around digital
innovation to stay competetive.

After decades of rigorous control, the Indian banking industry is opening up in a big way.
First, it was the introduction of a new category of banks, namely the Payments Bank, in
August 2015. A month later, the Reserve Bank of India issued 10 Small Finance Bank
licenses. And sometime in the future, the regulator hopes to give out banking licenses “on
tap”.

The non-bank front has seen even more action, with a host of payment providers, wallet
operators, and online lenders entering the fray. In March 2017, Amazon became one of the
biggest international names to bring a payments product to India, in the form of Amazon Pay.
A crucial factor is the strong regulatory push in favour of open and inclusive banking. The
Indian government launched the JAM trinity – Jan Dhan Yojana, Aadhar and Mobile – to
give a huge boost to financial inclusion, and the results have not disappointed: Aadhaar
registrations now number more than 1 billion, Jan Dhan opened 200 million new bank
accounts in seventeen months, and smartphone usage is well on its way to reach 700 million
by 2020. The government is also the driving force behind the creation of a revolutionary
payments interface in the form of UPI (Unified Payments Interface), which promises to be a
real game changer.
These developments have piled the competitive pressure on banking incumbents, who are
fighting hard to differentiate themselves amidst a field of new rivals. Also, as more and more
Indians, including those who were previously unbanked, start using financial products and
services, it is imperative that banks reimagine their offerings, and particularly their customer
experience, to stay in the market.
The ideal banking experience is as seamless and intuitive as to be nearly invisible. This is
only possible by going all out digital. Here are some ideas on how to get there:
Smartphones are packed with features that can take out the friction from simple transactions.
For instance, when a customer opens a new account, the bank should ensure that all the
processes, including verification, are completed on digital channels.
That being said, there is no point is loading various services on a website or mobile app in the
hope that customers will come. Today’s consumers want banking to be woven within the
fabric of day-to-day activity. The banks have understood this is apparent from their iMobile
SmartKey feature, which allows customers to make fast, secure payments via any mobile
activity – chatting, messaging, gaming, and browsing - without leaving the current
application.
A seamless experience calls for banks to be present on all existing and emerging channels
and platforms. The risk is that the model can turn unwieldy and unviable very quickly unless
there is a robust digital banking platform underneath, which centralizes channel rules and
business processes so that new products, services and channels can be rolled out with ease.
Banking should be so in-sync with customers that they forget about its existence. For that to
happen, the banking experience must have an intuitive understanding of the customers it
serves. With Artificial Intelligence technologies, such as predictive analytics, machine
learning and natural language processing evolving rapidly, developing this sixth sense, so to
speak, is easily possible. A good example is how banks like DBS are using smart virtual
assistants to enhance the experience. At digibank, its mobile-only bank in India, a virtual
assistant named KAI talks to customers, and stores away the learning from those
conversations for future use. Over time, the assistant starts to anticipate the questions a
customer will ask, and is ready with the answers. Besides providing customer service, the
assistant can even match a customer’s financial information with behavioural aspects to make
personalized suggestions.
Last but not least, the banking experience should be on top of the latest trends to be relevant
always. This means that banks must be able to spin out new offerings quickly when required.
Since internal teams are unlikely to have the bandwidth for this job, the solution is to
collaborate with Fintech partners and other members of the ecosystem to keep the wheels of
innovation turning. Here, APIs are the key. Many banks are taking this route to open up their
development environment to third parties so they can build innovative services and
experiences on top. In fact, this is the run up to the new future of banking, where a large
financial ecosystem, rather than a single monolithic institution, will fulfil the needs of
customers, and the goal of every bank will be to maximize value and experience for clients
by offering not just their own products, but the best ones available in the market.

Apart from all these banks should always act in interest of the common mass and always look
towards creating a better society, a better world.