Dear Stakeholder,
I am privileged to present before you the highlights of our Bank’s performance during the financial year 2021-22.
The details of the achievements and initiatives taken by us are enclosed in the Annual Report.
Economic Overview
The Financial Year 2021-22 has witnessed continued strong progress on economic reforms covering aspects such as fiscal consolidation, passage of the Goods and Services Tax (GST) Bill, the Insolvency and Bankruptcy Code, infrastructure particularly in building Smart Cities, continued deep progress on renewable energy, record agriculture, focus on outcomes such as doubling farm income, continued ease of doing business, Aadhar enabled payment of direct transfer benefits. Given the expectations of a good monsoon in India and global economic growth, the near term growth opportunities look promising.
In 2021-22, GDP recovered to 8.7 per cent, taking GDP 1.5 per cent above its pre-pandemic level. For the current financial year, i.e., 2022-23, the RBI has projected GDP to grow by 7.2 per cent, which places India among the fastest growing economies of the world. For the year 2022, the International Monetary Fund (IMF) projects global growth at 3.2 per cent in 2022, lower than 6.1 per cent in 2021. India is projected to grow by 7.4 per cent in 2022. In spite of the pandemic and the war in Europe, India is going to contribute about 14 per cent of global growth. In fact, India is likely to be the second most important driver of global growth in 2022 after China.
Currently, India is the third largest economy in the world in terms of purchasing power parity (PPP) terms, with a share of 7 per cent of global GDP [after China (18 per cent) and the US (16 per cent)]. The Economy of India is the seventh-largest in the world by nominal GDP. GDP per Capita PPP in India is expected to reach 6700.00 USD by the end of 2022, according to Trading Economics global macro models and analysts expectations. In the long-term, the India GDP per capita PPP is projected to trend around 7400.00 USD in 2023 and 8000.00 USD in 2024.
Purchasing power parity conversion factor is the number of units of a country’s currency required to buy the same amounts of goods and services in the domestic market as U.S. dollar would buy in the United States. This conversion factor is for GDP. In 2021, purchasing power parity for India was 23.1 LCU per international dollars. Purchasing power parity of India increased from 10 LCU per international dollars in 2002 to 23.1 LCU per international dollars in 2021 growing at an average annual rate of 4.55%.
The financial year 2021-22 (FY22) saw gradual improvement in the growth outlook. A number of factors supported this that includes political stability, improved policy environment, increasing pace of reforms, and firm commitment towards fiscal consolidation. Further, the sharp fall in international crude oil prices has had a positive effect on growth, easing of inflationary pressures, reducing imports and lowering current account deficit. Even so, the macroeconomic environment remained weak during FY23 primarily due to subdued agriculture and industrial growth.
In FY22, the India’s GDP is estimated to have grown by 7%, a shade lower than the government’s earlier projection but above 6.9.
The RBI has initiated a slew of measures to address the issue of NPA resolution which would benefit the entire banking system in India. The Bankruptcy Code has provided the architecture for time bound resolution and is expected to preserve the economic value of assets and give an impetus to economic growth.
Our economy has the unique potential to achieve higher growth rates backed by the favourable demographic mix, drive to promote the entrepreneurial spirit and the proactive reform orientation of the Government. The improvement in global growth and trade outlook is also going to support India’s growth. Meeting the capital needs of the banking system is one key area which requires focused attention from all stakeholders for achieving higher sustainable growth. The banking system will also have to prepare itself for implementation of Basel-III that would require changes in the applicability of liquidity coverage ratio as well as counter cyclical buffer. The stringent regulations pertaining to risk weighting of the unrated exposures would also have an impact the capital needs of banks. Going forward, the banking sector would have to grapple with technology and accounting challenges emerging from the implementation of GST and IndAS accounting standards. With greater acceptance of digital payment modes, cyber security is another area where banks will have to build deep expertise.
In view of the emerging challenges before us, our Bank is working towards the execution of several strategic initiatives that are expected to give a competitive advantage. I would like to share with you a snap shot of some of the key initiatives currently underway.
Some of the new business initiatives aligned with the transformation that were undertaken in 2021-22 are as below:
• Alliance-led strategy of ecosystem financing to support innovation and entrepreneurship in Agriculture and Rural Banking and thereby help farmers augment their income
• Integrated Enterprise Risk Management with focus on strengthening risk and compliance self-assessment, internal audit and risk management processes, policies and procedures across the Bank
• Optimisation in the use of capital, risk based pricing and extensive use of bureau data
• Digital transformation, aimed at promoting a cashless economy through efforts such as promotion of digital villages and digital-only branches, early participation in Aadhar enabled banking, UPI, Bharat Bill Payment and comprehensive mobile banking
• People transformation, aimed at increasing employee motivation and engagement
• Societal transformation through Financial Inclusion: Our Bank views financial inclusion as an opportunity to bring about societal transformation while pursuing a beneficial business proposition.
We have taken a number of initiatives to ensure that the banking services are extended across the geographic breadth of the Islands in a sustainable manner by leveraging technology. Some efforts in this direction include Aadhar seeding through alternate delivery channels and organizing camps, creation of dashboards to monitor the performance of BCs, hosting financial literacy camps, organising in-house training and certification programme for Banking correspondents and other innovative propositions
The interplay of the macroeconomic scenario, emerging challenges and the various initiatives underway has made us stronger as revealed from the financial performance this year. Our Bank reported profit in FY 2022 on a net basis. Let me share with you the key highlights of the Bank’s performance in FY 2022.
The Banking sector faced multifarious challenges in FY22 with a subdued credit growth, heightening asset quality concerns amidst weakening corporate balance sheets and maintaining capital. Apart from this, the banking sector participated actively in the Pradhan Mantri Jan Dhan Yojana, the biggest financial inclusion initiative of the World. Besides this, the banking space is set to widen with the introduction of newer market participants such as small banks and payment banks in near future.
Banking done through the digital platform, doing away with all the paperwork like cheques, pay-in slips, Demand Drafts, and so on. It means availability of all banking activities online. These branches operated with minimum human intervention, allowing customers to use the self-assisted mode for printing their pass books, opening accounts, availing loans, etc.
Types of Digital Payments
• Banking Cards.
• USSD (Unstructured Supplementary Service Data)
• UPI (United Payment Interface)
• AEPS (Aadhaar enabled Payment System)
• Mobile wallets.
• Point of Sale Machines (PoS)
• Mobile Banking.
• Internet Banking.
Through Digital Banking, individuals can now easily make transactions, check their account balance or even make transfers just with a single click of a button on their smartphone, desk top or any other digital device. No more requesting or looking over paper statements or withdrawal slips, any longer. This technology still in its primitiveness has a global market size of 5.92 billion dollars in 2021 and is anticipated to grow at a compounded annual growth rate of 85.9% from 2022 to 2030. There are several advantages to this technology and its abilities can help propel the digital-only banking industry
The bank resolves to achieve continuous and meaningful growth by making effective use of its human resources and leveraging its large network of branches and technology amidst the competitive and challenging environment in the industry in order to expand our market share and to improve values and returns to all our stakeholders.
Our Way Forward
Our focus areas as discussed and agreed internally for the financial year 2022-23 include:
• Driving inclusive, high-quality and profitable growth and thereby build our market share
• Continuing to accelerate recovery and collection efforts to minimize the impact of stressed assets
• Enhancing customer and employee satisfaction with increased customer centricity and addressing financial needs through a multi-pronged digital transformation strategy
• Ensuring compliance with all systems, processes and procedures
• Strengthening our Subsidiaries and Associates through technology up gradation, complementary new products, talent and capability up gradation so as to provide alongside with the Bank, a full range of products and services
I would like to acknowledge and thank the Chairman of the Board Mr Bhagat Singh and the Vice Chairman Shri Kuldeep Rai Sharma (Member of Parliament) and all the Board members for their valuable support and inputs to the Management in all our endeavours.
The Management team is confident that our collective effort and teamwork will help us as we channelize our energies to surpass the expectations of all stakeholders – our customers, our people and our shareholders. We look forward to your continued support and goodwill in this journey.