DIRECTORS’ REPORT

The Board of Directors of Neelachal Gramya Bank have pleasure in presenting the 5th  Annual Report of the Bank for the Financial Year 2011-12 together with Audited Balance Sheet as on 31st March 2012 and Profit and Loss Account for the Financial Year 2011-2012, 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 of the Bank is located at Bhubaneswar. 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. During the Financial Year 2011-12, additional Recapitalization support for Rs 31 crores is received by the Bank from Central Government, Govt of Odisha and the Sponsor Bank in respective ratio of 50:15:35 for meeting the CRAR requirement. The details of capital are indicated below.
(Rs in ‘000’)

4. Deposits: 

The Bank has achieved a growth of 11.93% during the year and reached the deposit level of Rs. 2684.18 Crores at the end of the year. The category wise position of deposits for last two years is  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 2011-2012, Bank availed refinance to the tune of Rs. 30.00 crore from NABARD and Rs. 43.98 crore from Sponsor Bank as detailed below.

From NABARD                                                                                               (Rs. in ‘000)

From Sponsor Bank:

                                                                                               (Rs. in ‘000)

1. Other Liabilities –
   Deposit Insurance and Credit Guarantee Corporation(DICGC)

1. Credit Guarantee Fund Trust for Micro &Small Enterprises(  CGTMSE). 

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’)

1. Investments:

1. Income Recognition and Asset Classification:

1. Interest Derecognized

1. Provisions:

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

• Loans disbursed during the year:

• KISSAN CREDIT CARDS:

• Recovery of Loans:

• Risk Fund:

• National Agricultural Insurance Scheme (NAIS):

• Write Off of Loans:                                                                               (Rs. In ‘000)

• Income Earned:                                                                                 

• Expenditure Incurred:

• Key Financial Indicators / Ratios:

• Transfer Price Mechanism:

• Achievements under DAP / MOU:

• Self Help Group:

1. Interest Rates:

1. Non-fund Business:

1. Referral Arrangement with The Oriental Insurance Company:

1. Human Resources Development.

1. 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.

28. COMPUTERISATION CBS:
In order to provide efficient and prompt service to its customers, the bank took up implementation of Core Banking Solution (CBS). On 30th September 2011, the Bank could successfully complete migration of all branches to CBS platform with support and guidance of NABARD and Sponsor Bank.Bank has received financial support for implementation of CBS from NABARD and the Sponsor Bank at rates of 40% and 50% of the project cost respectively. The details of funds received for project implementation is as under:
Rs in crores

*Share of the Sponsor Bank transferred to Tier II capital29. NEFT:
The Bank has joined the National Electronic Fund Transfer System through its Sponsor Bank and made all its branches NEFT enabled.

30. Others

Women Development Cell (WDC):
Women Development Cell has been set up at Head Office with financial assistance from NABARD since inception. As per the commitment, Bank is making all out effort to increase its customer base particularly from women entrepreneurs. Endeavour of the cell is to organize, educate and encourage women entrepreneur for taking up different economic activities. 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 2012, the Women Development Cell has organized functions to encourage and motivate women entrepreneurs
.b)   Customer Services:
Bank has a well laid out policy for redressal of customer grievances. 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 ) Financial Inclusion Programme (FIP)
Considering Financial Inclusion as a national priority, the bank took up the challenge of Covering all the village assigned to it under FIP.All the 114 indentified villages allotted to the bank have been covered under Financial Inclusion Programme.As at the end of March 2012, 175996 number of S.B. Accounts have been opened for providing financial inclusion services, through ‘Smart Cards’ based on ICT solution.The bank has plans to enroll more & more number of people under the banking net through the business correspondent route.A function was conducted in Mahadevbasta village in Kakatpur Block for distribution of Smart Cards to account holders in which the Honorable Deputy Governor, RBI Mr H.R.Khan participated as the Chief Guest.      
d)   Social Welfare Activities:As a responsible corporate entity Neelachal Gramya Bank continued social welfare activities. To help the people affected by the recent flood in Odisha, the bank donated Rs, 3,00,000/-(Rupees three lacs only) to Chief Minister relief fund on 20.09.2011.
e)   Internal Inspection and House Keeping: Internal Inspection of Branches has been taken up on an ongoing basis. During the reporting year 75 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 covered all branches under CBS, migration audit was conducted.100% Jewel verifications were conducted in23 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 31.03.2012