Annual Report Financial Year 2011-2012

7/28/2019 Annual Report Financial Year 2011-2012

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The Art of the Possible

A N N U A L R E P O R T 2 0 1 1 - 1 2

DCB BANK


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DCB Bank

Branch

Network

# Map not to scale.

Only or graphical representation

Chennai

Mumbai

Daman

Bengaluru

Goa

Hyderabad

Warangal

Kolkata

Pune

AurangabadNashik

Surat

Ank leshwar Dediapada Itarsi

Bargarh

New Delhi

Ahmedabad

Rajkot

Bhuj

SilvassaVapi

Nanded

GandhinagarSidhpur

Jodhpur

Gurgaon

Vadodara

Mandvi

Netrang

States

N

Andhra Pradesh Goa

Gujarat

Haryana

Karnataka

Madhya Pradesh

Maharashtra

Odisha

Rajasthan

Tamil Nadu

West Bengal

Union Territories

Daman

Dadra & Nagar H

National Capital R

(NCR)

New Delhi

Contents

Attendance & Proxy Form 03

DCB Bank Company Inormation 06

Chairmans Statement 07

Directors Report 12

Corporate Governance 20

Auditors Report

Balance Sheet

Proft & Loss Account

Cash Flow Statement

Schedules

Basel II


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2 ANNUAL REPORT 2011-12

DCB BANK

The Art

of the Poss ible

The theme of this years annual report is The Art of th

Possible. The Art of the Possible is knowing where y

are headed and focusing your attention and energy on

making that journey possible. Without clarity of object

most of us are buffeted by the winds and gales blowin

from every direction and we happen to land up where

these forces are taking us. We have failed to point ou

and to set our sails according to where we would like

But the really interesting idea is the very opposite: Th

Art of the Impossible. Impossibility is the limited ability

our brains to imagine something completely different.

thought in the 1960s and 1970s that the break up of t

Soviet Union peacefully was impossible. Nobody wouhave believed at that same time that instant wireless

personal communication was possible nor that the en

stock of world knowledge would be available instantly

a world wide network called the internet. Or that we w

capable of flying 450 people near the

speed of sound across the globe no

stop. Or that we would see a space

exiting the solar system. Or that we

would identify the God Particle or

Boson. Yet it all came to pass.

Hence the blue leaves embedded

in a pure white background. Truth

and transparency provides th

background to achieveme

the unexpected.

DCB Bank is reinve

itself in a comple

different way. T

impossible is

possible.


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ANNUAL REPORT 2011-12ANNUAL REPORT 2011-12

ATTENDANCE SLIP

Regd. Folio/DP ID & Client ID

Name and address o the Shareholder

1) I hereby record my presence at the SEvENTEENTH ANNUAL GENERAL MEETING o the Bank being held on Friday, June 1, 2012, at 2.30 p

Watumull Auditorium, K.C. College, Dinshaw Wacha Road, Churchgate, Mumbai 400 020.

2) Signature o the Shareholder/Proxy Present

3) Shareholder/Proxy holder wishing to attend the meeting must bring the Attendance Slip to the meeting and handoer at the entrance duly signed.

4) Shareholder/Proxy holder desiring to attend the meeting may bring his/her copy o the Annual Report or reerence at the meeting.

Note: PLEASE CUT HERE AND BRING THE ABOvE ATTENDANCE SLIP TO THE MEETING.

Registered Ofce: 601 & 602, Peninsula Business Park, Tower A, 6th foor, Senapati Bapat Marg, Lower Parel, Mumb

PROXY FORM

FOR OFFICE USE ONLY

REGD. FOLIO / DP ID & CLIENT ID

PROXY NO.

NO. OF SHARES

I/We ______________________________________________________________________________ o ____________________________________________ i

o _________________________ being a member/members o DEvELOPMENT CREDIT BANK LIMITED, hereby appoint ____________________________

_____________________________ in the district o __________________________ or ailing him/her __________________________ o ___________________

in the district o _________________________________ or ailing him/her ________________________________ o ___________________________ in th

________________________________ as my/our proxy to attend and ote or me/us on my/our behal at the SEvENTEENTH ANNUAL GENERAL ME

Bank to be held on Friday, June 1, 2012, at 2.30 p.m. at Rama Watumull Auditorium, K.C. College, Dinshaw Wacha Road, Churchgate, Mumbai 400

adjournment thereo.

Signed this _____________________ day o ___________________ 2012.

Signature ______________________

Note:The Proxy Form must be deposited at the Registered Oce o the Bank not less than 48 hours beore the time or holding the meeting.

Registered Ofce: 601 & 602, Peninsula Business Park, Tower A, 6th foor, Senapati Bapat Marg, Lower Parel, Mumb

Ax

reenue

stamp

DEVELOPMENT CREDIT BANk LIMITED

DCB BANK

DCB BANK

DEVELOPMENT CREDIT BANk LIMITED

#

#


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Aunique current

account that rewards

you with cash and also

helps you save cash

each time you spend

using your DCB Debit

Card.

Asecured card

against a xed

deposit that brings

you a host o

benets and servic

with international

acceptance, more

savings, more fexi

and exciting oers

DCB NRI Servic

provides com

nancial solutions

customers residing

overseas. We oer

host o products a

services, rom DCB

/ NRO Accounts a

Term Deposits to D

Wealth Manageme

Solutions or Non

Resident Indians.

Indias 1st multi-purpose reloadable prepaid card has been

voted best in the world

in its category. An easy

alternative to cash, no

bank account is required

unlike other cards. It is

accepted at more than

500,000 Visa merchant

establishments, 10,000

ItzCash merchants and

or cash withdrawal at

over 65,000 ATMs.

DCB BANK

Products for our

times



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Instant loans rom

`25,000 to

`1,000,000 are available

against gold jewellery /

ornaments with tenures

ranging rom 1 year to 3

years. The loan amount

can be as high as 80%

o the appraised gold

value.

Unlocking the value o

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easy and convenient.

Simpler, aster and

convenient online

share trading at the

click o a ew buttons.

A 3-in-1 account that

integrates Online Trading

and Demat Account with

DCB Savings Account.

DCB Elite Savin

Account is a u

account or a privil

ew, loaded with

powerul benets a

services. This acco

allows you to choo

your lucky number

your bank account

number.

Instant Mobile Ban

service that helps

you perorm banki

transactions rom

regular enquiries to

nancial transactio

your savings and c

account on your m

phone. This servic

currently oered FR

o cost to DCB Ba

customers.

DCB B

ANNUAL REPORT 2011-12


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DCB BANK

Board o Directors

Mr. Nasser Munjee

Chairman

Mr. Murali M. Natrajan

Managing Director & CEO

Ms. Nasim Deji

Mr. A. A. Sabuwala

Mr. D. E. Udwadia

Mr. Narayan K. Seshadri

Mr. R. A. Momin

Mr. Suhail Nathani

Mr. Sukh De Nayyar

Mr. Amin Manekia

w.e.. January 12, 2012

Mr. Alta Jiwani

w.e.. January 12, 2012

Mr. Shabir Suleman Kassam

Up to January 12, 2012

Senior Management Team

Mr. Murali M. Natrajan

Managing Director & CEO

Mr. Bharat Sampat

Chie Financial Ofcer

Mr. Abhijit Bose

Head Retail Assets & Strategic Alliances

Mr. J. K. vishwanath

Chie Credit Ofcer

Mr. Praeen Kutty

Head Retail & SME Banking

Mr. Rajesh verma

Head Treasury, Correspondent Banking &

Trade Finance

Mr. Rai Kumar

Chie Internal Auditor

Mr. R. venkattesh

Head HR, Technology & Operations

Mr. Sachin PatangeChie Compliance Ofcer

Mr. Sridhar Seshadri

Financial Controller

COMPANY INFORMATION

Company Secretary

Mr. H. v. Bare

Statutory Auditors

S.R. Batliboi & Co.

Chartered Accountants, Mumbai



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DCB B

ChAIRMANS STATEMENT 2011-2012

The nancial year 2011-12 was a stormy one or the nancial sector in India.

Monetary policy was progressiely tightened ostensibly to rein in infation

but had the negatie consequence o slowing growth, capital expenditure in

the economy and discouraging inestment and stimulating saing. The last

quarter o the nancial year was characterized by extremely tight liquidityconditions with interest rates, as a consequence, not showing any signs o

easing. At the margin, banks were raising deposits at 10% per annum and

paying een higher rates or CDs. The macro-economy, as a consequence

showed underperormance, restrained oreign inestment and led to a

dramatic dealuation o the rupee.

DCB Bank has had a solid year o perormance

I am happy to report that the Bank, despite these dicult circumstances,

continued to show positie growth in all its ital parameters. While Operating

Prot stayed almost fat at `83.82 crore, the Bank registered a Net Prot o

`55.08 crore and grew its Balance Sheet to `8,676.85 crore as o March

31, 2012. Despite ery dicult conditions with respect to both Liabilitiesand Assets, the Bank grew its Customer Deposits by ` 765 crore and

Adances by `1,002 crore earning a Net Margin o 3.25%. The CASA ratio

remains high at 32%.

Raising capital was a major objectie during the year. Trying economic

circumstances made capital raising a dicult exercise. I am happy to report

that despite a dicult enironment, the Bank raised capital in March through

a QIP `94.01 crore and a Preerential Issue o Capital to three inestors o

`98.75 crore totaling `192.76 crore and taking the Capital Adequacy Ratio

(CAR) under Basel II to 15.41%.

Gien the strong perormance o the Bank oer the past 15 months, RBI

permitted DCB Bank to open 12 branches in major cities in the country

and also permitted the Bank to open branches in Tier 2 to Tier 6 locations

without prior approal. Branch expansion will help the Bank to improe its

key parameters (CASA deposits, retail loans and priority sector lending) as it

goes orward. Our ATM network increased substantially this year enhancing

the Banks isibility and ee income. During the year, the Bank installed 182

new ATMs taking the total number o ATMs to 320.

Oer three years ago, the Bank adopted a strategic thrust towards

neighborhood banking and creating an innoatie and responsie approach

ocusing attention on local communities. I am happy to report that, with

consistent eort, we are now achieing results with respect to this strategy.

Our branches and back oce capabilities hae been steadily enhancedto proide best-in-class serices in each o our adopted segments. Our

target market was Retail Lending (Mortgages), Micro SME and SME, and

mid Corporates. This year we hae demonstrated our ability to grow each

segment and to maintain a quality portolio in all new lending oer the past

three years.

On the liability side o the Balance Sheet, the Bank has been ex

innoatie and energetic. We hae introduced seeral new deposit pr

(Smart Gain, Elite Saings or HNIs), deeloped a ibrant Non R

Indian portolio, succeeded in establishing our wealth manag

serices and introduced the DCB ITZ Cash Freedom Card which r

won an international award. Our traditional community banking s

hae thried in both Deposits and Adances.

People

None o this achieement would hae been possible without the

eort o our sta and management at all leels. Drien by stro

determined leadership, eery internal system and process has

combined to produce an outcome which enhances the holistic prog

the Bank. Synergy is the orce that leerages results: it produces mo

the sum total o its constituent parts. The Bank is achieing synergy t

a disciplined people management system and an ownership by sta

tasks beore us as we moe orward.

The complexity within is refected in one single outcome: the Ban

rst bank in India to announce annual results within thirteen days

end o the nancial year. In order to achiee this all the ery elem

eeryday housekeeping has to be up to date with no serious cha

that need to be resoled. We are committed to being the best in

whateer we do.

The Art o the Possible

This phrase is oten associated with Bismarks quip that Po

the art o the possible. The Banks emergence in the past e y

a demonstration o the Art o the Possible. It seemed almost imp

and yet it has emerged. Both concepts o possibility and impo

are intertwined. At DCB Bank we set ourseles a goal well beyo

reachable in the immediate uture ollowing Arnold Toynbees adice

It is a paradoxical but prooundly true and important principle o

that the most likely way to reach a goal is to be aiming not at that

itsel but at some more ambitious goal beyond it.

This coupled with Cynthia Clarks comment:

To imagine the unimaginable is the highest use o the imaginatio

We rmly beliee that setting our goals and objecties clearly

consistent with them and moing in rhythm with the enironment

us is the surest way o making our journey successul. We cannot o

pace o change we will conorm to what is reasonable with respec

own capacities and the enironment we ace.

Nasser Munjee

Chairman

April 13



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Notice to MeMbers

NOTICE is hereby given that the Seventeenth Annual General Meeting o

the Members o DEVELOPMENT CREDIT BANK LIMITED (the Bank)

will be held at Rama Watumull Auditorium, K.C. College, Dinshaw Wacha

Road, Churchgate, Mumbai 400 020 on Friday, June 01, 2012 at 2.30 p.m.to transact the ollowing business:

Ordinary Business:

1. To receive, consider and adopt the Audited Balance Sheet as at March

31, 2012 and the Audited Prot and Loss Account o the Bank or the

nancial year ended on that date and the Reports o the Directors and

Auditors thereon.

2. To appoint a Director in place o Mr. D. E. Udwadia, who retires by

rotation and being eligible, oers himsel or re-appointment.

3. To appoint a Director in place o Mr. Sukh Dev Nayyar, who retires by

rotation, and, being eligible, oers himsel or re-appointment.

4. To appoint Statutory Auditors o the Bank and authorize the Board o

Directors o the Bank to x their remuneration and in that connection

to consider and, i thought t, to pass with or without modication, the

ollowing Resolution as an Ordinary Resolution:-

RESOLVED THAT pursuant to approval o Reserve Bank o India (RBI)

and pursuant to Section 224 and other applicable provisions, i any, o the

Companies Act 1956 including any statutory modication or re-enactment

thereo or the time being in orce, M/s. B S R & Co., Chartered Accountants,

(Regn. No.101248W) be and are hereby appointed as the Statutory

Auditors o the Bank, to hold oce rom the conclusion o this Annual

General Meeting until the conclusion o the next Annual General Meeting o

the Bank at a remuneration and on the other terms and conditions as may

be xed by the Board o Directors.

Special Business:

5. Appointment o Branch Auditors

To consider and, i thought t, to pass, with or without modication, the


RESOLVED THAT pursuant to the provisions o Section 228 and other

applicable provisions, i any, o the Companies Act, 1956, including any

statutory modication or re-enactment thereo or the time being in orce,

(the Act) the Board o Directors o the Bank be and is hereby authorized

to appoint, in consultation with the Statutory Auditors, such person who is

qualied to be appointed as Auditor o the Bank under Section 226 o the

Act, as the Branch Auditors as and when required, to audit the Accounts

in respect o the Branch Oces o the Bank; at a remuneration and on the

other terms and conditions as may be xed by the Board o Directors.

6. Appointment o Director Mr. Amin Manekia

To consider and, i thought t, to pass, with or without modication, the


RESOLVED THAT Mr. Amin Manekia, who was appointed as an Ad

Director o the Bank by the Board o Directors pursuant to Section

the Companies Act,1956 and who holds oce only upto the date

Annual General Meeting and in respect o whom a notice in writing

Section 257 o the said Act has been let at the Registered Oce

Bank by a member signiying his intention to propose him as a candi

the oce o Director, be and is hereby appointed as a Director o the

7. Appointment o Director Mr. Alta Jiwani

To consider and, i thought t, to pass, with or without modicat


RESOLVED THAT Mr. Alta Jiwani, who was appointed as an Ad

Director o the Bank by the Board o Directors pursuant to Section

the Companies Act,1956 and who holds oce only upto the date

Annual General Meeting and in respect o whom a notice in writing

Section 257 o the said Act has been let at the Registered Oce

Bank by a member signiying his intention to propose him as a candi

the oce o Director, be and is hereby appointed as a Director o the

8. Remuneration to Chairman

To consider and, i thought t, to pass with or without modication

ollowing resolution as a Special Resolution:-

RESOLVED THAT pursuant to the provisions o all applicable laws in

in particular the Banking Regulation Act, 1949, and the Compani

1956 and subject to the approval o the Central Government, c

be and is hereby granted to the payment o a monthly remunera

`100,000/- (Rupees One lakh only) with eect rom August 19, 20

club membership and reimbursement o actual business related ex

to Mr. Nasser Munjee, Part-time Chairman o the Bank until Aug

2014, and that the Board o Directors (to mean and include any com

thereo constituted by the Board) be and is hereby authorised to

acts, deeds, matters and things as may be necessary and to acce

terms and conditions as may be prescribed by the Central Governm

his behal.

Place: Bengaluru By Order o the Board o Direct

Date: April 13, 2012 For Development Credit Bank L

Registered Oce: H. V. Barve

601 & 602, Peninsula Business Park, Company Secretary

6th foor, Tower A, Senapati Bapat Marg,

Lower Parel, Mumbai 400 013.


DCB BANK


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DCB BDCB B

NOTES:

1) A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS

ENTITLED TO APPOINT ONE OR MORE PROXIES TO ATTEND AND

VOTE INSTEAD OF HIMSELF/HERSELF AND SUCH PROXY NEED

NOT BE A MEMBER OF THE BANK.

2) The instrument appointing the proxy, in order to be eective, should be

duly stamped, completed and signed and deposited at the Registered

Oce o the Bank not less than 48 hours beore the commencement o

the meeting.

3) MEMBER / PROXY SHOULD BRING THE ATTENDANCE SLIP SENT

HEREWITH, DULY FILLED IN, FOR ATTENDING THE MEETING.

4) An Explanatory Statement required under Section 173(2) and other

applicable provisions, i any, o the Companies Act, 1956 in respect o

the businesses at item nos. 5 to 8 o the Notice is annexed hereto.

5) The Register o Members and Share Transer Books o the Bank will

remain closed rom Friday, May 25, 2012 to Friday, June 01, 2012 (both

days inclusive).

6) All correspondence relating to change o address, transer/transmission

o shares, issue o duplicate share certicates, bank mandates, dividend

and all other matters relating to the shareholding in the Bank may be

made directly to M/s. Link Intime India Private Ltd., the Registrars and

Share Transer Agents (RTA).

7) GO GREEN initiative o the Ministry o Corporate Aairs (MCA) :

The Ministry o Corporate Aairs (MCA) has vide Circular No.

17/2011 dated 21.04.2011 and Circular No. 18/2011 dated

29.04.2011 announced a Green Initiative in Corporate Governance

allowing companies paperless compliance by sending documents

to shareholders through electronic mode to the registered e-mail

addresses o shareholders.

This is a welcome move as it will benet the society at large through

reduction in paper consumption and contribution towards a greener

environment. The Bank has started sending correspondence and

documents such as Notices o General Meetings, Annual Reports and

other shareholder communications to the shareholders in electronic

orm to their respective e-mail address registered with Depository

Participant.

The shareholders who are holding shares in demat orm and h

yet registered their e-mail IDs, are requested to register their e-m

with their Depository Participant at the earliest, to enable the B

use the same or serving documents to them electronically, here

Shareholders holding shares in physical orm may kindly provide-mail IDs to the RTA sending an e-mail at dcbbankgogreen@link

co.in or to the Bank at [email protected] .

Please note that as a member o the Bank, you will be entitled

urnished, ree o cost, a printed copy o the Annual Report an

documents o the Bank, proposed to be sent through e-mai

receipt o a requisition rom you, at any time. The Annual Report

Bank and other documents proposed to be sent through e-ma

also be made available on the Banks website:

http://www.dcbbank.com/about/nancials.html and http:

dcbbank.com/about/investor_relations.html respectively.

We are sure you would appreciate the Go Green Initiative ta

MCA. We solicit your patronage and support in helping the B

implement the e-governance initiatives o the Government.

Those shareholders who have though registered e-mails with D

written to the Bank / RTA or receipt o communication in physic

will be sent this notice physically.

8) Members holding shares in physical orm are requested to add

their correspondence including change o address, mandates

the RTA viz. M/s. Link Intime India Private Limited, C-13, Panna

Mills Compound, L.B.S. Marg, Bhandup (West), Mumbai 40

and Members holding shares in dematerialised orm should ap

their respective Depository Participants or the same


12/76

Details o Directors seeking Re-appointment / Regular Appointment in the Annual General Meeting scheduled on June 01, 2012

(Pursuant to Clause 49 (IV) (G) (i) o the Listing Agreement)

Name o Director Mr. D. E. Udwadia Mr. Sukh Dev Nayyar Mr. Amin Manekia Mr. Alta Jiwani

Date o Birth 27/09/1939 15/04/1942 16/06/1961 23/01/1967

Date o Appointment27/01/2007 09/08/2007 12/01/2012 12/01/2012

Expertise in Specifc Law Banking & Finance Co-operation, Finance, Industry and Finan

Functional area Marketing & Banking

Qualifcation M.A. LL.B. (Hons.) M. Sc. (Hons.) MBA, Babson College, B.E. (Production),

(USA), B.Com. M.M.S. (Finance)

Board Membership o other

Public Limited companies

as on March 31, 2012 12 1 1 NIL

Chairman/Member o the Chairman: Chairman: Chairman: Chairman:

Committee o the Board o NIL (i) Credit Committee NIL NIL

Directors o theBank Member: Member: Member: Member:

as on March 31, 2012 (i) Audit Committee (i) Risk Management (i) Credit Committee (i) Audit Committ

(ii) Executive Committee Committee (ii) Risk Management (ii) Fraud Reportin

(iii) Capital Raising (ii) Fraud Reporting & Committee Monitoring

Committee Monitoring Committee (iii) Shareholders Grievance Committee

(iii) Shareholders Grievance Committee

Committee

(iv) Customer Service

Committee

Chairman/Member o the

Committee o Directors o the

other Companiesin which he is

a Director as on March 31, 2012

a. Audit Committee Member: Chairman: Member: NIL

1. ABB Ltd. Greaves Cotton Ltd. IVP Ltd

2. AstraZeneca Pharma

India Limited

3. The Bombay Burmah

Trading Corporation Ltd.

4. ITD Cementation

India Ltd.

5. MPS Limited

6. Wyeth Ltd.

7. WABCO India Limited

8. Nitesh Estates Limited

b. Shareholders Grievance Chairman: NIL NIL NIL

Committee ABB Ltd.

c. Other Committees NIL NIL NIL NIL

Number o Shares held in the NIL NIL 17,303 NIL

Bank as on March 31, 2012.

10 ANNUA L REPORT 2011-12

DCB BANK


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DCB B

ANNexure to the Notice

Explanatory Statement as required by section 173(2) o the Companies Act,

1956, annexed to and orming part o the Notice dated April 13, 2012.

ITEM NO. 5

Section 228 o the Companies Act, 1956, requires that where the

Company in General Meeting decides to have the accounts o a BranchOce audited other than by the Statutory Auditors, the Company in that

meeting shall or the audit o those accounts appoint a person(s) qualied

or the appointment as auditors o the Company under Section 226 o the

Companies Act, 1956 or shall authorise the Board o Directors to appoint

such person(s) in consultation with the Statutory Auditors. For operational

convenience, it is proposed to authorise the Board o Directors to appoint

such Branch Auditors in consultation with the Statutory Auditors or audit o

accounts o the Branches o the Bank and to x the terms and conditions,

and remuneration, o such Branch Auditors.

ITEM NO. 6

Mr. Amin Manekia was appointed as an Additional Director o the Bank by

the Board o Directors at the meeting held on January 12, 2012 pursuant to

Section 260 o the Companies Act, 1956 read with Article 122 o the Articles

o Association o the Bank. He holds oce as Director only upto the date

o the orthcoming Annual General Meeting. It is proposed to appoint him

as a Director o the Bank at the orthcoming Annual General Meeting. The

Bank has received a notice in writing rom a member signiying his intention

to propose Mr. Amin Manekia as a candidate or the oce o Director along

with a deposit o`500/- in accordance with Section 257 o the Act, which

will be reunded to the member i Mr. Manekia is elected as a Director.

Mr. Amin Manekia is an MBA rom (Babson College, USA) apart rom his

graduation in Commerce. He is having more than 30 years o experience,

and has specialized in the elds o marketing, nance, co-operation and

banking. He has pioneered the concept o Automatic Beverage VendingMachines in India. He has more than a decade o experience on the Boards

o listed entities in India. He has worked or more than 20 years in various

capacities in dierent institutions o the Aga Khan Development Network

(AKDN) or the social-economic uplitment o the poor. Earlier Mr. Manekia

has served on Banks Board or 8 years rom September 30, 2000.

The Board is o the view that the Bank would benet rom the experience

o Mr. Amin Manekia and accordingly recommends his appointment as a

Director.

Mr. Amin Manekia is not related to any other Director o the Bank. The

relevant particulars concerning Mr. Amin Manekia as required by Clause

49 o the Listing Agreement are set out in the statement attached to the

Notice.

Mr. Amin Manekia is interested in the Resolution at Item No.6 o the Notice

since it relates to his appointment as a Director.

ITEM NO.7

Mr. Alta Jiwani was appointed as an Additional Director o the Bank by

the Board o Directors at the meeting held on January 12, 2012 pursuant

to Section 260 o the Companies Act, 1956 read with Article 122 o the

Articles o Association o the Bank. He holds oce as Director only u

date o the orthcoming Annual General Meeting. It is proposed to a

him as a Director o the Bank at the orthcoming Annual General M

The Bank has received a notice in writing rom a member signiy

intention to propose Mr. Alta Jiwani as a candidate or the oce o D

along with a deposit o`500/- in accordance with Section 257 o t

which will be reunded to the member i Mr. Jiwani is elected as a D

Mr. Alta Jiwani is qualied as BE (Production) and MMS (Finance

having more than 20 years o experience in Corporate Finance in

industries viz. Electrical, Textile and Automobile. He has developed ex

in the areas o Foreign Exchange, Risk Management and Trade Fina

his role as CFO o the Company he had signicantly contributed

risking business model o Philips Carbon Black Ltd. During 2007-08

received Outstanding Achiever Award within RPG Group. He is pr

in-charge o power and carbo-chemical business in Philips Carbon

Limited.

The Board is o the view that the Bank would benet rom the exper

Mr. Alta J iwani and accordingly recommends his appointment as a D

Mr. Alta Jiwani is not related to any other Director o the Bank. The r

particulars concerning Mr. Alta Jiwani as required by Clause 49

Listing Agreement are set out in the statement attached to the Notic

Mr. Alta Jiwani is interested in the Resolution at Item No.7 o the

since it relates to his appointment as a Director.

ITEM NO.8

Remuneration to Chairman

The re-appointment o Mr. Nasser Munjee as Part-time Chair

the Bank or a urther period o three years with eect rom Aug

2011 at the remuneration stated in the Resolution at Item No.8

Notice was approved by the Reserve Bank o India vide its letter

No.857/29.03.001/2011-12 dated July 15, 2011.

Mr. Munjee is a proessional and an eminent personality well kn

India as well as internationally or his expertise in the nancial servic

inrastructure sectors. He is on the Board o several reputed compan

also consultant to international/multilateral agencies including World

Despite his other business commitments Mr. Munjee spends consi

time and attention on the aairs o the Bank and has rendered inv

service to the Bank. The Board considers the remuneration pay

Mr. Munjee as Part-time Chairman o the Bank to be eminently

reasonable and recommends the Special Resolution or approval

members. The approval o the Central Government to the pro

remuneration will be sought post Shareholders approval.

Mr. Nasser Munjee is interested in the Resolution at Item No.8 o the

since it relates to his remuneration as Part-time Chairman o the Ba

Place: Bengaluru By Order o the Board o Direct

Date: April 13, 2012 For Development Credit Bank L

Registered Oce: H. V. Barve

601 & 602, Peninsula Business Park, Company Secretary

6th foor, Tower A, Senapati Bapat Marg,

Lower Parel, Mumbai 400 013.


14/76

Directors rePort

Your Directors are pleased to present the seventeenth Annual Report o

your Bank together with the audited accounts or FY 2012.

In FY 2012, the Bank has posted an Operating Prot o` 83.82 crore

(Previous year:`86.06 crore) and a Net Prot o`55.08 crore (Previous

year:`21.43 crore).

Total Assets have increased by `1,263.98 crore and reached`8,676.85

crore as on 31st March 2012. (`7,412.87 crore as on 31st March 2011).

Customer Deposits have increased by`764.77 crore and Advances have

increased by`1,002.73 crore. The Bank has achieved the Priority Sector

Lending (PSL) target as required by Reserve Bank o India (RBI).

The Net Interest Margin (NIM) has improved to 3.25% in FY 2012 rom

3.13% in FY 2011 and the CASA ratio remains high at 32.12%.

Cost to Income Ratio has increased to 74.63% in FY 2012 rom 71.43% in

FY 2011. This was on account o Sta Costs, ATM expansion, Service Tax

and general infation in cost o services.

Provisions Other Than Tax have reduced to`28.71 crore in FY 2012 rom

`56.81 crore in FY 2011.

Capital Adequacy Ratio (CAR) under Basel II as on 31st March 2012 stood

at 15.41%.

Gross and Net NPAs have decreased to `241.80 crore and`30.24 crore

respectively as on 31st March 2012 rom`263.57 crore and`41.23 crore

respectively as on 31st March 2011. The overall NPA Provision Coverage

Ratio as on 31st March 2012 was 91.17%.

The market conditions continued to be challenging. Infation remained

high or most o the year and liquidity remained tight. Cost o Funds went

up substantially and the Bank had to revise the Base Rate to partly oset

the margin pressure. The banking industry came under pressure due torising NPAs especially rom airlines, telecom and inrastructure. Towards

the end o third quarter o the year some relie was seen in infation data.

The Reserve Bank o India (RBI) reduced Cash Reserve Ratio (CRR) by 125

bps in two tranches to improve liquidity. However, deposit interest rates

remained very high and liquidity pressure continued unabated. Thereore,

there was no opportunity to reduce the Base Rate. The situation required

the Bank to remain cautious and be selective in pursuing Advances growth.

The Bank opened 4 new branches in FY 2012 (Netrang, Mandvi, Bargarh

and Itarsi) taking the total tally o branches to 84. The Bank received 2

branch licenses in FY 2011 and 10 in FY 2012. Out o these, 4 branches

have been installed and the balance 8 will be completed in FY 2013. The

Bank received a communication rom RBI permitting the Bank to openbranches in Tier 2 to Tier 6 locations without prior approval rom RBI.

This permission was not previously available to the Bank. Going orward,

the Bank plans to periodically open branches especially in Tier 2 to Tier 6

locations. This will help in growing CASA deposits, retail loans and Priority

Sector Lending (PSL).

The Bank embarked on ATM expansion plan in order to improve ee

income, obtain more visibility or the Bank and support CASA growth. In FY

2012, the Bank installed 182 new ATMs taking the total tally to 320

o March 31, 2012.

The Management Team had been working or the past ew months

Tier I capital to continue its growth journey as per new strategy. H

since September 2010, the market was not conducive and investo

generally risk averse. In the early part o the ourth quarter o FY 2012was a window o opportunity and the Bank has raised Tier I capita

extent o`94.01 crore through QIP and `98.75 crore through Pr

Allotment. This capital raising has vastly improved the Capital Ad

Ratio o the Bank.

FINANCIAL SUMMARY

(`i

For the year

ending 31

March 2012

For the year

ending 31

March, 2011

Incr

(Dec

Balance Sheet

Deposits 6,335.56 5,610.17Customer Deposits 6,114.79 5,350.02

(including CASA) (2,034.67) (1,975.46)

Inter Bank Deposits 220.77 260.15

Advances 5,284.42 4,281.69 1,

Non Perorming Assets (Gross) 241.80 263.57

Non Perorming Assets (Net) 30.24 41.23

Provision or Standard Assets 25.25 25.31

Total Assets 8,676.85 7,412.87 1,

Proft & Loss

Net Interest Income 227.70 189.14

Non-Interest Income 102.73 112.10

Total Operating Income 330.43 301.24

Operating Cost 246.61 215.18

Operating Prot 83.82 86.06

Provisions 28.71 56.81

Net Prot / (Loss) Beore Tax 55.11 29.25

Tax 0.03 7.82

Net Proft / (Loss) Ater Tax 55.08 21.43

DIVIDEND

In view o the provisions o Section 15 o the Banking Regulation Act

your Directors are not able to recommend payment o any dividend

2012 (Previous year NIL).

MANAGEMENT DISCUSSIONS AND ANALYSIS

Vision

Our vision is to be the most innovative and responsive neighb

community bank in India serving entrepreneurs, individuals and busin

In line with our vision, we began implementing a new strategy in FY

We have completed three years under the said new strategy and cle

are seeing improvement in the Banks perormance.


DCB BANK


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DCB B

Target Market

MSME / SME sector plays an important role in the economy o any country.

They are small and usually labour intensive. This segment caters to the

market needs with limited and indigenous capital outlay. MSME / SME play

a vital role in the growth o the Indian economy. It is estimated that MSME

/ SME segment contributes around 45% o the industrial output and 40%

o exports. MSME and SME need to be nurtured as they have the highestpotential to provide employment. The Bank has chosen MSME / SME as its

main target market keeping in view the opportunity and the Banks inherent

strengths, capital position, branch distribution and expertise.

Business Strategy

GrowMSME,SME,RetailMortgagesandmid-Corporateadvances.

The emphasis will be on creating a diversied and secured portolio and

providing a comprehensive range o products and services.

FocusonCASAandRetail TermDepositstomanage/improvethe

Cost o Funds. Retail Banking using branch banking and outbound

sales team will be the key channels or CASA and Retail Term Deposits.

Bancassurance, Wealth Management and Trade Finance products will

be cross sold to improve Fee income and customer loyalty.

Treasury will bemainly responsible for liquidity and Balance Sheet

management and will look or opportunities in Foreign Exchange and

SLR trading gains within acceptable risk levels.

Productivity across all units to be actively managed with a strong

perormance management discipline.

Continueto strengthenCredit and Operationalrisks tosupportthe

Balance Sheet growth.

Usingsophisticatedprocessimprovementtechniques,atleast3 key

processes to be improved every year, which in turn will improve Service

Quality.

Focus on Training especially in Sales and Service to improve the

rontline quality and eectiveness.

ImproveHumanResourceprocessestoattractandretaintalent.

RETAIL BANKING

The Bank operates a network o 84 branches across 38 locations with

a strong presence in Maharashtra, Gujarat and Andhra Pradesh. In FY

2011, the Bank received two branch licenses and in FY 2012 the Bank has

received 10 branch licenses. Out o the total o 12, our branches have been

opened in FY 2012 and the balance branches are expected to be opened in

FY 2013. During the year, the Bank added 182 ATMs taking the tally to 320

ATMs. The Bank has tie ups with the Cashnet and Innet networks. This

allows customers to access more than 35,000 ATMs across the country.

The Bank is a pioneer in providing ree ATM access (VISA ATMs) to itscustomers with no limit on the number o transactions.

The main task o Retail Banking is to generate CASA balances and

Retail Term Deposits through its branches and outbound sales teams.

Perormance o Retail Banking rontline sta is managed using scorecards.

Due to high Term Deposit rates, CASA growth was sluggish in FY 2012.

While the new CASA acquisitions were strong, the balances in CASA

kept getting shited to Term Deposits due to attractive interest rates. RBI

de-regulated the Saving Account interest rates. While some bank

increased the Saving Accounts interest rate, your Bank has cho

continue with the current interest rate o 4% per annum.

New Deposit products

Your Bank continued its ocus on launching and innovating cu

centric solutions in CASA. The Bank launched DCB SmartGain C

Account with a special ocus on traders. DCB SmartGain oers two

benets to customers. First, it rewards the customers or every pu

made using DCB Debit Card at any merchant establishments

orm o cash back into the account and, second, it saves cash o

since the customers can bank at any DCB Bank branch ree o

or cash deposit/withdrawal and clearing transaction acilities. DCB

Gain remains one o the most sought ater Current Account prod

customers given its unique benets.

The Bank also re-launched the innovative DCB Elite Savings Acco

HNIs. This product gives customers the fexibility to choose an a

number o their choice (example a lucky number) that suits their per

and refects their style. DCB Elite Savings Account oers cus

quarterly cash back on every purchase using the DCB Debit Card (

to a monthly and yearly limit) at any merchant establishment. It also

new look DCB platinum Debit Card while retaining the attractive cho

account number charm. DCB CashBack launched in FY 2011 conti

be a popular Savings Account product or customers who use the

cards requently.

Continuing its commitment to oer long term saving solutions

customers, the Bank created DCB Pragati, a recurring deposit tha

attractive interest rates and acilitates creation o big savings by

small monthly deposits.

Non Resident Indian (NRI) business

The Bank made rapid progress in NRI business in FY 2012. DCestablished marketing tie ups with various organizations in India

value added services to NRI customers. The correspondent bank

with Diamond Trust Bank (DTB) (also promoted by Aga Khan F

Economic Development) has enabled your Bank to source custome

East Arica or deposits and remittances. DTB has a strong branch n

and brand in Arica.

Wealth Management

Wealth Management is an integral part o our strategy to grow

business. Your Bank has set-up a robust Wealth Management serv

covers the ull spectrum o nancial planning including, risk proling

allocation and portolio selection. The Bank has tied-up with ICRA

Limited, enabling the customers to benet rom the quality researnancials service expertise o its partner. DCB Smart Trade, an onl

ofine trading acility or those who are keen to trade in the nancial m

in association with our partner India Inoline, has been a big succes

2012.

Bancassurance

The Bank also distributes lie insurance, general insurance and

und products through its marketing tie-ups with insurance com


16/76

and mutual und companies in the country. It continued the relationship

with United India Insurance Company Ltd or distributing general insurance

products and Birla Sun Lie Insurance (BSLI) or Bancassurance. Insurance

industry continues to be in a state o fux and thereore Bancassurance

volumes were lower in FY 2012 than FY 2011.

Retail Advances

As part o building secured advances, the Bank continued to register strong

growth in the Mortgages portolio through Home Loans, Loan Against

Property (Business Loans) and Gold Loans. The Bank recently re-launched

the Commercial Vehicle business.

DCB ITZ Cash Freedom Card

In FY 2012, in alliance with ITZ Cash and Visa, the Bank launched Indias

rst co-branded open loop prepaid card. This is a strategic initiative that

will greatly support nancial inclusion especially or the urban under banked

and unbanked population. DCB ITZ Cash Freedom Card can be used

across all Visa merchants and ATMs. The Bank received the The Best

Value Proposition Award at the Paybeore Awards 2012, Las Vegas, United

States o America.

Traditional Community Banking

With a vision o strengthening the neighborhood banking, the Bank set up a

separate vertical in FY 2010 with the aim o providing personalized attention

to the community customers and winning back lost relationships. This unit

has been delivering strong results every year and once again in FY 2012

high growth was achieved in both Deposits and Advances.

Non Branch Channels

In the new age banking, the Bank strives to provide best-in-class technology

and service platorm. It oers a number o innovative convenient acilities

such as Phone Banking, Mobile Banking and Internet Banking ree o

charges. Customers may use these non branch channels rom the comort

o their home or oce. The Phone Banking unit is skilled, courteous and

proessionally committed to providing the best o attention at all times.

DCB On The Go Instant Mobile Banking provides reedom to customers

to conduct anywhere banking including the instant und transer acility

through Inter Bank Mobile Payment System (IMPS).

MSME and SME

The importance o MSME and SME to Indias economy and the Banks

strategy o pursuing this segment have already been mentioned earlier

in this discussion. The Bank has created robust sales, underwriting and

portolio monitoring capability or growing the MSME and SME business. It

oers a wide range o products and personalized services including Cash

Management, Trade Finance, Internet Banking and Bancassurance. TheBank aims to become the business partner o this vibrant entrepreneurial

segment o the economy. Your Bank has again this year achieved strong

growth in MSME and SME Advances. The MSME and SME sales teams

have been continuously acquiring new relationships while the dedicated

portolio team has been deepening existing relationships. Over time with

the opening o new branches, the Bank aims to be one o the best MSME

and SME bank in India.

CORPORATE BANKING

Corporate Banking is present across India with Regional oces in M

Ahmedabad, Bengaluru, Chennai, Hyderabad, Delhi and Kolkata. Th

strategy is to provide complete range o commercial banking so

including structured Trade Finance and Cash Management Service

Bank has a strong underwriting and credit administration support to a

sustainable growth in Corporate Banking business. The emphasibuilding a secured advances portolio and building a long term relat

with high quality large and mid-corporate houses. The business is

managed by a team o experienced Relationship Managers, Credit A

and Product Specialists in Trade Finance and Cash Management Se

The Bank targets emerging Corporates and in FY 2012 the unit ad

new customers.

AGRI AND INCLUSIVE BANKING (AIB)

Indias rural and semi urban areas have large untapped potential or b

opportunities. In order to meet the objectives o business grow

nancial inclusion, the Bank has set up a separate unit named as A

Inclusive Banking (AIB). This unit is also responsible or coordinat

eorts to meet the Priority Sector Lending (PSL) targets set by R

stated earlier in this report, the Bank met its PSL target prescribed

in FY 2012.

AIB oers a wide range o products to cater to the various ne

rural and semi urban India or example unding against pledge o

mentioned in warehouses, term loans and portolio buyout rom

Finance Institutions (MFIs) and NBFCs, working capital or agri proc

and term loans or warehouse construction.

In FY 2012, AIB launched Crop Loan, Animal Husbandry Loan

Improvement Loans, JLG Loans and Small Business Loans. A

launched Tractor Financing in a ew locations. Your Bank was amon

rst banks to re-start lending to MFIs.

In FY 2012, AIB opened 4 new branches namely Netrang and

(Gujarat), Bargarh (Odisha) and Itarsi (Madhya Pradesh). These br

ocus on products like Value Savings Account and Kisaan Mitra A

(mini recurring deposit scheme) besides providing Gold Loans an

Retail Agri loans.

TREASURY

Treasury actively manages liquidity, Fixed Income Securities T

Equity Investment IPOs, FX Trading and Customer Sales. Treasury e

compliance with regulatory requirements such as CRR and SLR.

In FY 2012, the main ocus o the Government and RBI was to

growth and simultaneously tame infation. This was indeed a dicu

While India has a strong vibrant domestic economy, still the costrongly impacted by the situation prevailing in the West. Interes

remained high and liquidity was tight. RBI increased the Repo ra

6.75% to 8.50%. The high interest rate environment had an imp

economic growth.

The liquidity in the banking system remained in decit mode thro

the year going up rom `50,000 crore to `190,000 crore on acc

Government borrowing and RBI intervention in the FX market. RB


DCB BANK


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DCB B

Repo rate rom 6.75% to 8.50% to contain infationary pressure and the

overnight call rates remained above Repo rate and moved up rom 7.00%

to 9.50%. RBI inused liquidity by way o Open Market Operations (OMOs)

and reduced the Cash Reserve Ratio (CRR) by 125 bps. The 10 year G-sec

yields moved up rom 8.00% to 9.00% in the rst hal FY 2012 but ell

towards the end o the year on account o regular OMOs. The GDP and IIP

gures did not inuse much condence and the markets remained volatile.The Sensex came down sharply until December 2012 and recovered

somewhat rom January 2012.

The Foreign Exchange (FX) market was extremely volatile. The INR

weakened sharply against the US Dollar rom around `43.85 to `54.30

requiring RBI intervention in the FX market. FIIs were also net sellers in

the equity market till December 2011 beore turning net buyers in January

2012. This has led to an infow o US Dollars and slight strengthening o

INR. However, given the scal decit, high oil prices, infation and global

uncertainties, the situation looks weak.

The Bank remained cautious in trading both in FX and Money markets.

Despite adverse liquidity situation in the system, the Banks liquidity was

managed well throughout the year. Taking advantage o rising yields,

Treasury regularly invested in high yielding Government bonds and

improved the yield rom the previous year. In order to reduce the cost o

unds on available excess liquidity created by unds fow mismatch, the

Bank deployed the surplus unds in various money market instruments.

CREDIT & RISK

Risk Management

Your Bank has an independent Risk Management unction. The Credit

Committee o the Board (CCB) guides the direction or development o

policies and procedures in managing credit risk and implementing the

credit strategy. The objective o risk management is to have a dynamic

and an optimum balance between risk and return and ensuring regulatorycompliance and conormity with the Board approved policies. It entails

the identication, measurement and management o risks across the

various businesses o the Bank. Risk is managed through dened policies

and procedures approved by the Board o Directors and monitoring

and corrective actions are taken on a continuous basis. The Bank has

invested in building a strong talent base with deep risk expertise while also

successully recruiting and retaining that expertise. The Risk Management

unction strives to anticipate vulnerabilities through reviews o quantitative

and qualitative data / MIS o both external and internal risks.

The Banks risk management processes are guided by policies appropriate

or the various risk categories namely Credit Risk, Market Risk (including

asset liability management and liquidity risks) and Operational Risk. The

Board sets the overall risk appetite and philosophy or the Bank. The Risk

Management Committee (RMC), which is a committee o the Board, reviews

various aspects o risk arising rom the businesses undertaken by the Bank.

At the operating level, risk committees namely Asset Liability Management

Committee (ALCO), the Operational Risk Management Committee (ORCO)

and the Credit Risk Management Committee (CRMC) oversee specic risk

areas. These committees provide inputs or review by the Risk Management

Committee (RMC) o the Board.

Credit Risk

The credit risk policy supports and is aligned with the Banks co

priority o achieving growth and at the same time maintaining asset

to ensure long term sustainable protability over business cycles. Th

strives to maintain a healthy balance between risk and reward. Th

also undertakes the exercise o measuring the credit risks involved

composition o its present portolio and realigning them to have arisk-reward composition. The Bank endeavors to continuously enha

internal risk assessment capabilities.

The Risk Function over time has developed capabilities to assess

associated with various products and business segments (MSME

Mortgages, Corporate etc). The eort is to standardize the credit a

process so that the outcomes are predictable. The Bank has imple

a rating model or obligors. This model takes into account both quan

and qualitative actors as inputs and produces a rating that becom

o the key inputs to credit decisions.

The Credit Administration Department (CAD) is responsible or disburs

documentation and security creation, database managemen

generating various advances related reports and MIS.

The Credit Risk Analytics & Monitoring (CRAM) unit monitors key cu

exposures centrally to spot early warning signals based on the c

o account and other qualitative inputs which may aect credit qu

customer. The Bank has developed strong credit monitoring mech

by building a comprehensive Early Warning Process or accoun

monitoring.

Concentration Risk

Concentration risk is monitored and managed both at a custom

and at the aggregate level. The Bank continuously monitors p

concentrations by segment, ratings, borrower, group, sensitive s

unsecured exposures, industry, geography etc. Your Bank ad

conservative approach within the regulatory prudential exposure no

Market Risk

Besides the usual monitoring o Structural Liquidity, Interest Rate S

Gap limits and Absolute Holding limits, the Bank also monitors inter

risks using Value at Risk limits. Exposures to Foreign Exchange and

Markets are monitored within pre-set exposure limits, margin requir

and stop-loss limits.

Country Exposure Risk

The Bank has established specic country exposure limits capped a

o Total Assets are based on rating o individual countries. The Ban

the mitigant o insurance cover available through the Export Cre

Guarantee Corporation (ECGC), where appropriate.

Liquidity Risk

As part o the liquidity management and contingency planning, th

assesses potential trends, demands, events and uncertainties tha

result in adverse liquidity conditions. The Banks Asset Liability Mana

(ALM) policy denes the gap limits or the structural liquidity and the

prole is analyzed on both static and dynamic basis by tracking cas

and outfow in the maturity ladder based on the expected occurre


18/76

cash fow. The Bank undertakes behavioral analysis o the non-maturity

products, namely CASA, Cash Credit and Overdrat accounts on a periodic

basis to ascertain the volatility o balances in these accounts. The renewal

pattern and premature withdrawals o Term Deposits and drawdowns o

un-availed credit limits are also captured through behavioral studies. The

liquidity prole is estimated on an active basis by considering the growth

in Deposits, Advances and investment obligations or a short-term periodo three months. The concentration o large deposits is monitored on a

periodic basis. Emphasis has been placed on growing Retail deposits and

avoid as ar as possible bulk deposits. The Bank periodically conducts

liquidity stress testing.

Operational Risk

Operational risk is the risk o loss resulting rom inadequate or ailed

internal processes, people or systems, or external events. The Banks

operational risk management ramework is dened in the Operational Risk

Management Policy approved by the Board o Directors. While the policy

provides a broad ramework, Operational Risk Management Committee

(ORCO) o Management oversees the operational risk management in the

Bank. The policy species the composition, roles and responsibilities o the

ORCO. The ramework comprises identication, assessment, management

and mitigation o risks through tools like incident reporting, loss reporting,

Key Operational Risk Indicators (KORI), Risk and Control Sel-Assessment

(RCSA) and Periodic Risk Identication and Controls Evaluation (PRICE).

Each new product or service introduced is subject to a risk review and sign-

o process so that relevant risks are identied and assessed independently

rom the unit proposing the product. There is a separate Process

Management Team to document, maintain and conduct periodic review

o all the processes or the Bank. Management Committee or Approval

o Process (MCAP) has been constituted to approve and develop various

processes in the Bank. The said committee consists o highly experienced

bankers and subject matter experts. Internal Audit inspects the processesthat are implemented.

Reputational Risk

The Bank pays special attention to issues that may create a Reputational

risk. Events that can negatively impact the Banks position are handled

cautiously ensuring utmost compliance and in line with the values o your

Bank.

Implementation o Basel II guidelines

The Bank has taken the opportunity o implementation o the Basel II

ramework to systematically review and align its risk management systems

and practices with best international practices.

In accordance with the guidelines issued by the Reserve Bank o India onBasel II, the Bank has successully migrated to Standardized Approach or

Credit Risk, Standardized Duration Approach or Market Risk and Basic

Indicator Approach or Operational Risk rom March 31, 2009. The Bank

adheres to the extant New Capital Adequacy Framework (NCAF) or

computation o eligible capital, Risk Weighted Assets and CRAR.

INFORMATION TECHNOLOGY (IT)

The Bank continues to leverage technology or supporting its business

strategy and to improve the level o customer service. The app

landscape consists o a blend o packaged products as well as som

grown applications.

The Bank has created a robust inrastructure architecture with

oces connected using Multi Protocol Label Switching (MPLS) tech

backbone to provide a better, reliable and ecient network in lin

business priorities.

With a view to strengthen inormation security, the Bank has implem

appropriate solutions, which are continually upgraded based on the p

reviews, vulnerability analysis and penetration testing.

In order to reduce the number o ATM complaints and improve cu

satisaction, in FY 2012, IT completed the migration o card manag

and switch to Euronet rom the existing vendor. It was a complex

which was smoothly completed with minimum errors. During FY 20

Banks Disaster Recovery (DR) was relocated to Bengaluru in a much

acility.

As a part o the on-going upgrade o IT inrastructure, the

implemented an enterprise storage platorm that is expected to

ecient processing capabilities.

The IT operations are managed with a judicious mix o in-hous

outsourced manpower, comprising a strong in-house team combin

outsourced resources.

The Bank will continue to implement appropriate, cost-ecient techn

to support the business plan in the coming nancial year.

OPERATIONS

Operations is the backbone o the Banks internal and external

delivery which is centralized at Vikhroli in Mumbai. Operations end

to adopt an empathetic approach to drive eciencies and best-i

customer service. Internal controls are constantly reviewed to

that risks are well managed. End to end process reviews are con

periodically and automation is introduced wherever possible to

errors and cycle time.

INTERNAL AUDIT (IA)

Internal Audit is an independent unit that perorms regular au

evaluate the adequacy and eectiveness o internal controls and

risk management. The Audit Committee o the Board (ACB) p

direction and monitors the eectiveness o the audit unction. IA

comprehensive risk based approach taking into account the guide

RBI and international best practices. IA reviews include snap aud

thematic reviews o key unctions and projects. IA also uses expe

audit rms or concurrent audits.

As a result o the improvements initiated last year, IA is conti

emerging as a unit providing valuable inputs or improving the ove

management and controls. Corrective Action Trackers (CATs) have

showing results as they are now part o regular management u

and orm a basis o tracking improvements. IA has initiated a e

improvements in FY 2012 that are expected to urther assist in pro

identiying risks in changing business dynamics and assist in imp

overall control environment. IA continues to appraise the Board, th


DCB BANK


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DCB B

Committee o the Board (ACB) and the Management teams in terms o

newer emerging threats and recommend appropriate mitigating measures.

HUMAN RESOURCE (HR)

In FY 2012, once again HR played a key role in transormation journey o

Your Bank. The main ocus was on upgrading o skills, providing career

progression, employee engagement to improve pride, belonging, talent

hiring and nurturing. A lot o hard work went into developing and delivering

unctional training. The Bank continued to pay special attention to employee

communication through High Decibel (in-house sta magazine), DCB

acebook page or employees, Being DCBian workshops, open orums,

MD & CEO audio calls and skip level meetings.

HR launched Career First, a career planning and development program

or employees that provide them the opportunity to have a one-on-one

discussion with the HR team who provide them with counseling and career

planning. Psychometric tool was used to help the employee improve sel-

awareness. A unique panel discussion with the Management Committee

was organized where a set o employees could directly get inputs rom the

management committee on how to build ones career and skill set. The

Bank also initiated Grow with us program to prepare aspiring employees

to ll up critical roles as and when the need arises.

In FY 2012, numerous employee activities and social events were

conducted. This greatly helped improve team building and bonding. The

Bank participated in the Mumbai marathon, celebrated the global `Joy

o Giving Week through blood donation drives, visits to old age homes,

donation o books, clothes and toys to the needy as well as auction o

senior management memorabilia or charity. The annual Movers & Shakers

event to celebrate success, recognize the achievers and also give an

opportunity to the Banks talent was once again a remarkable success.

Besides the annual event, HR conducted inter corporate photography

competition, `Biggest Loser an in-house challenge or weight loss and

getting t and healthy, `Rangoli competition during Diwali, `Carol singing

during Christmas and `Antakshari contests. DCB Bank Premier League -

an annual cricket tournament was held across regions and the tournament

was keenly contested amongst the various teams. HR organized bone

density camp or employees to help them understand early signs o

osteoporosis, `Nutrition Talk and Yoga or employees to make them more

t in todays stressul lie.

The Bank has a culture o learning through the Individual Learning &

Development Scorecard (ILDS) and over 80% o the Banks employees

have undergone various training programs.

Our key area o concentration this year was to create cross unctional

synergies by sharing inormation on the unctioning o select business

units. A rst o its kind cross unctional learning program was RISE

completed over a period o six months or 23 employees. This program

would clearly help job mobility in the Bank or talent as it equips them with

working knowledge o various unctions. HR completed LEAP Season II

(Leadership Excellence and Acceleration Program) which was launched in

FY 2010. In this program 20 employees go through training, project work

and presentation.

In terms o resourcing, the Bank launched the Budding Bankers program

by hiring resh graduate trainees. These reshers will be provided on

intensive training across various units or 6 months and will be depl

suitable openings at the end o the training. The Bank expects to

strong talent pool using this program.

CUSTOMER SERVICE

The Bank believes that customer satisaction is at the core o its exand customers must be served proactively beyond their expec

The Bank has a dedicated Service Quality (SQ) team that is sup

by the MD & CEO along with Senior Management. The SQ team in

is responsible or identiying problems aced by customers, coord

speedy rectication o issues, actively looking or process improv

opportunities, scientically tracking customer satisaction and ac

implementation o customer riendly automation.

The Bank has installed Centralised Complaint Management s

customer queries and complaints are not inadvertently missed out a

to provide uniorm quality service. All complaints are tracked rigoro

timely closure and delays i any are escalated to the senior manage

The Bank oers personal and corporate Internet Banking services w

at par with the best in the industry. DCB Bank mobile alerts are con

to be one o the best in the industry. On an ongoing basis, more al

added to provide convenience that reduces the need or customers

a branch.

In FY 2012, a major revamp o the Account Opening process or C

and Savings Accounts was completed. The new process helped to i

rontline and customer satisaction. The second process that is

improvement is the loan sanctioning and disbursal process or

and SMEs. Several areas or improvement across Credit, Operatio

Sales have been identied and implementation o recommendations

process improvement team has already begun.

DCB 24 Hour Customer Care phone banking unit has been

customers or a long time. The idea is to eliminate the need or custo

visit the branches or their banking needs. This unit handles approx

71,000 calls per month. Incoming calls are monitored to provide

eedback and training to the phone banking executives so that th

improve the quality o interaction with the customers.

The Customer Care unit runs programs such as `Voice o the Cus

or eective complaint resolution and process improvement.

2012, some key measures taken up by the Bank include a orma

customer rst team which is designed to ensure end-to-end cu

complaint resolution. A separate retention calling team has been c

to call customers who have stopped banking with the Bank. The id

understand the issues and win back these customers. The retention

team gives valuable eedback to various unctions and the produc

The customer satisaction and complaint levels are regularly revie

the Customer Service Committee (CSC) o the Board. Your Bank h

set up a robust training mechanism; both on the online platorm as

using conventional class room sessions, to enable its employees im

the quality o customer service.


20/76

STATUTORY DISCLOSURES IN ANNUAL REPORT 2011-12

PARTICULARS OF EMPLOYEES

The particulars required under Section 217(2A) o the Companies Act, 1956

and the rules made there under, as amended, are given in the annexure

appended hereto and orms part o this report. In terms o Section 219(1)(b)

(iv) o the Act, the Report and Accounts are being sent to the shareholders

excluding the aoresaid annexure. Any shareholder interested in obtaining

a copy o the said annexure may write to the Company Secretary at the

Registered Oce o the Bank. The Bank had 7 (seven) employees who

were employed throughout the year and were in receipt o remuneration

o more than ` 60.00 lakh per annum and 1 (one) employee who was

employed or part o the year and was in receipt o remuneration o more

than`5.00 lakh per month.

EMPLOYEE STOCK OPTIONS

The inormation pertaining to the Employee Stock Options is given in an

annexure to this Report.

PARTICULARS REGARDING CONSERVATION OF ENERGY AND

TECHNOLOGY ABSORPTIONThe provisions o Section 217(1)(e) o the Companies Act, 1956 relating

to conservation o energy and technology absorption do not apply to the

Bank. However, as mentioned in the earlier part o the Report, the Bank has

been extensively using technology in its operations.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with Section 217(2AA) o the Companies Act, 1956, your

Board o Directors conrms that: a) in the preparation o the annual

accounts, the applicable accounting standards have been ollowed along

with proper explanation relating to material departures; b) the directors had

selected such accounting policies and applied them consistently and made

judgments and estimates that are reasonable and prudent so as to give a

true and air view o the state o aairs o the Bank at the end o the nancialyear and o the prot or loss o the Bank or that period; c) proper and

sucient care has been taken or maintenance o adequate accounting

records as provided in the Companies Act, 1956, or saeguarding the

assets o the Bank and or preventing and detecting rauds and other

irregularities; and d) the annual accounts o the Bank have been prepared

on a going concern basis.

CORPORATE GOVERNANCE

The Bank continues to believe in observing the best corporate governance

practices and benchmarking itsel against each such practice on an ongoing

basis. A separate section on Corporate Governance and a Certicate rom

the Statutory Auditors M/s. S. R. Batliboi & Co., Chartered Accountants

regarding compliance o the conditions o Corporate Governance asstipulated under Clause 49 o the Listing Agreements with the Stock

Exchanges orm part o this Annual Report.

DIRECTORS

In accordance with the Companies Act, 1956 and the Articles o Association

o the Bank, Directors Mr. D.E. Udwadia and Mr. Sukh Dev Nayyar are

retiring by rotation and, being eligible, oer themselves or reappointment.

The Board recommends the re-appointments o Mr. D.E. Udwadia and

Mr. Sukh Dev Nayyar as Directors at this Annual General Meeting.

resume relating to the Directors who are to be reappointed is u

in the report on Corporate Governance. None o the above men

persons is disqualied rom being appointed as a Director as spec

terms o Section 274(1)(g) o the Companies Act, 1956.

Mr. Amin Manekia and Mr. Alta Jiwani were appointed by the

as Additional Directors o the Bank on January 12, 2012. Se

notices alongwith deposits o`500/- each have been received ro

shareholders signiying their intention to propose Mr. Amin Manek

Mr. Alta Jiwani as Directors o the Bank at the ensuing AGM. The B

Directors o the Bank also has recommended their appointments.

During FY 2011-12, Mr. Shabir Kassam has resigned rom the Boar

Bank. The Board o Directors has placed on record its sincere appre

o the valuable services rendered by Mr. Kassam as a Director o th

since January 2006.

STATUTORY AUDITORS

Messrs M/s. S.R. Batliboi & Co., Chartered Accountants, were ap

as Statutory Auditors at the last Annual General Meeting. Thecompleted a continuous term o our years as the Banks Statutory A

and as required under the Banking Regulation Act, 1949 they can

reappointed at the ensuing Annual General Meeting.

The appointment o the Banks Statutory Auditors requires prior a

o RBI. Accordingly, the approval o RBI or appointing M/s. BSR

Chartered Accountants, as Statutory Auditors o the Bank has

received. Appointment o M/s. BSR & Co., Chartered Accounta

Statutory Auditors o the Bank or FY 2012-13 has been included

Agenda or the ensuing AGM.

ACKNOWLEDGEMENTS

Your Board wishes to thank the principal shareholder, the pro

Aga Khan Fund or Economic Development (AKFED), and all thshareholders or the condence and trust they have reposed in the

Your Board also acknowledges with appreciation the RBI or its v

guidance and support to the Bank. Your Board similarly expresses gr

or the assistance and co-operation extended by SEBI, BSE, NSE,

CDSL, Central Government and the Governments o various States

the Bank has its branches.

Your Board acknowledges with appreciation, the invaluable s

provided by the Banks auditors, lawyers, business partners and inv

Your Board is also thankul or the continued co-operation o

nancial institutions and correspondents in India and abroad.

Your Board wishes to s incerely thank all its customers or their pat

Your Board records with sincere appreciation the valuable cont

made by employees at all levels and looks orward to their con

commitment to achieve ambitious organizational goals that the Ba

set or the uture.

On behal o the Board o Dire

Bengaluru Nasser Munjee

April 13, 2012 Chairman


DCB BANK


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DCB B

ANNexure to Directors rePort For the YeAr eNDeD MArch 31, 2012

EMPLOYEES STOCK OPTIONS

Details o the stock options granted, vested, exercised, oreited and lapsed during the year under review are as under:

Category Options in Force-

Op. Bal. as on01.04.2011

Options Granted

during the year2011-12

# Options

Exercised andShares allotted

during the year

2011-12

Options Lapsed/

Cancelled duringthe year 2011-12

Total Options

in Force as on31.03.2012

Total Op

VesExercisable

31.03

Pre-IPO 125,000 0 50,000 0 75,000 7

Post -IPO 9,711,795 0 152,860 680,515 8,878,420 2,48

Total 9,836,795 0 202,860 680,515 8,953,420 2,56

# One (1) share would arise on exercise o one (1) stock option.

Other details are as under:

Money realized by exercise o options The Bank received ` 2,028,600/- towards share capita`4,850,631.25 towards share premium on account o 202

stock options exercised and shares allotted during the year u

review.

Pricing Formula or the options granted during the year Not Applicable. (No Options were granted during the nancia

2011-12)

Details o options granted during the year to:

i. Directors & Senior managerial personnel None

ii. Other employee who receives a grant in any one year o option

amounting to 5% or more o option granted during that year

None

iii Identied employees who were granted option, during any one year, equal to or

exceeding 1% o the issued capital (excluding outstanding warrants and conversions)

o the company at the time o grant

None

Variation o terms o Options None

Diluted Earnings Per Share (EPS) pursuant to issue o shares on exercise o options

calculated in accordance with Accounting Standard (AS) - 20 (Earnings Per Share).

`2.71

Where the company has calculated the employee compensation cost using the intrinsic

value o the stock options, the dierence between the employee compensation cost so

computed and the employee compensation cost that shall have been recognized i it had

used the air value o the options, shall be disclosed. The impact o this dierence on

prots and on EPS o the company shall also be disclosed.

Had the Bank ollowed air value method or accounting the

options, compensation expense would have been higher by`

crore. Consequently, prot ater tax would have been lower by

extent. The basic EPS o the Bank would have been`2.7

share and the Diluted EPS would have been`2.71 per share

Weighted-average exercise prices and weighted-average air values o options shall be

disclosed separately or options whose exercise price either equals or exceeds or is less

than the market price o the stock options

Not Applicable

(No Options granted during FY2011-12)

A description o the method and signicant assumptions used during the year to estimate

the air values o options, at the time o grant including the ollowing weighted-averageinormation

Not Applicable


i. Risk-ree interest rate,

ii. Expected lie,

iii. Expected volatility,

iv. Expected dividends, and

v. The price o the underlying share in market at the time o option granted

Not Applicable



22/76


23/76


DCB B

including JM Financial Limited, ABB Limited, The Bombay Burmah Trading

Corporation Limited, Eureka Forbes Limited, ITD Cementation India

Limited, Wyeth Limited, AstraZeneca Pharma India Limited, MPS Limited,

IRD Mechanalysis Ltd., Nitesh Estates Limited and WABCO India Limited.

Mr. Udwadia obtained a masters degree in arts and a bachelors degree in

law rom the University o Mumbai.

Mr. Udwadia does not hold any equity shares in the Bank as on March 31,

2012.

Sukh Dev Nayyar has been a non-executive independent director o the

Bank since August 2007. He is an independent director on the boards o

Greaves Cotton Limited and Diamond Trust Bank Kenya Limited. He was

the Chairman & Managing Director o ING Asset Management Company

rom 1998 to 2002. He has vast experience in banking and has previously

worked in various senior positions with Grindlays Bank rom 1962 to

1994 and with ING Bank as Chie Executive Ocer rom 1994 to 1998.

Mr. Nayyar obtained an M.Sc. degree in Physics (Hons.), and was an

Associate o the Institute o Bankers, England.

Mr. Sukh Dev Nayyar does not hold any equity shares in the Bank as onMarch 31, 2012.

Suhail Nathani has been a non-executive independent director o the Bank

since January 2009. He is a ounder Partner o Economic Laws Practice,

a law rm with oces in Mumbai, New Delhi, Ahmedabad and Pune. His

areas o legal practice include corporate and commercial matters, private

equity and international trade. He has represented the Government o India

at the World Trade Organization (Panel and Appellate Body). He serves as

an independent director o Phoenix Mills Limited and is part o the India

Advisory Board o Duke University. Mr. Nathani obtained an M.A. in Law

rom Cambridge University, United Kingdom, and an LL.M. degree rom

Duke University in the United States. He is enrolled as an advocate in India

and is admitted to the New York State Bar.

Mr. Suhail Nathani does not hold any equity shares in the Bank as on March

31, 2012.

Amin Manekia has been a non-executive independent director o the

Bank since January 12, 2012, and was earlier a director rom September

2000 until September 2008. He has approximately 30 years o experience,

and has specialized in the areas o marketing, nance, co-operation and

banking. He has worked or more than 20 years in various capacities in

dierent institutions o the Aga Khan Development Network. Mr. Manekia is

a director o IVP Limited. Mr. Manekia has obtained an M.B.A. degree rom

Babson College in United States o America, and a B.Com. degree rom

University o Mumbai.

Mr. Manekia holds 17,303 equity shares in the Bank as on March 31, 2012.

Alta Jiwani has been a non-executive independent director o the

Bank since January 2012. He has approximately 20 years o experience

in corporate nance in the electrical, textile and automobile industries

and expertise in oreign exchange, risk management and trade nance.

He received the Outstanding Achiever award in the RPG Group during

2007-2008 and has served as the Chie Financial Ocer o Philips

Black Limited. He is currently in charge o the power and carbo-ch

business segment. Mr. Jiwani obtained a B.E. (Production) degre

V.J.T.I, Mumbai, and an M.M.S. (Finance) degree rom Welingkar Ins

Management, Mumbai.

Mr. Alta Jiwani does not hold any equity shares in the Bank as on

31, 2012.

Murali M. Natrajan, who became our Managing Director & Chie Ex

Ocer in April 2009, has approximately 27 years o banking exp

across India and other countries in Asia. Prior to joining us, Mr. N

served in various roles at Standard Chartered Bank rom 2002 to

including as the Global Head or SME banking in Standard Chartere

Singapore, where he was responsible or providing strategic conte

business development capabilities to drive a distinctive and con

business model across 27 markets in Asia, Arica and the Middle Ea

as Head o Consumer Banking or India & Nepal overseeing busine

included mortgages, wealth management, branches, ATMs, credit

personal loans and SME and as head o the mortgage and auto bu

He previously worked with American Express TRS in India or v

in business planning, nance and operations and then with Citib

14 years in various disciplines such as operations, credit, nance, p

management and business management o consumer banking, in

as the Cards Business Director in Citibank India, Hong Kong and Ind

Mr. Natrajan obtained a Bachelor o Commerce (Honours course) de

1982 at Delhi and qualied as a chartered accountant in 1986.

Mr. Murali M. Natrajan does not hold any equity shares in the Bank

March 31, 2012.

Composition o Board o Directors as on March 31, 2012

Names o Director Executive / Non-

Executive Director

Independent / No

Independent Dire

Chairman (Part-time)

Mr. Nasser Munjee Non-Executive Independent

Managing Director

Mr. Murali M. Natrajan Executive Non-Independent

Directors

Ms. Nasim Devji Non-Executive Non-Independent

Mr. Narayan K.

Seshadri

Non-Executive Independent

Mr. Rajab A. Momin Non-Executive Non-Independent

Mr. Amir Sabuwala Non-Executive Independent

Mr. D. E. Udwadia Non-Executive Independent

Mr. Sukh Dev Nayyar Non-Executive Independent

Mr. Suhail Nathani Non-Executive Independent

Mr. Amin Manekia Non-Executive Independent

Mr. Alta Jiwani Non-Executive Independent


24/76

BOARD MEETINGS

During the year ended March 31, 2012, 11 (Eleven) Board Meetings were held on 13th April 2011, 1st June 2011, 14th July 2011, 24th August 201

October 2011, 15th December 2011, 12th January 2012, 10th February 2012, 21st February 2012, 23rd February 2012 and 28th March 2012.

Details o attendance at the Banks Board Meetings, Directorship, Membership and Chairmanship in other companies or each director o the Ba

as ollows:

Name o DirectorAttendance at

the Banks Board

Meetings

Directorship o other

Indian public limited

Companies

Directorship o

other Companies

Membership o

other Companies

Committees

Chairmanship

other Compan

Committee

Mr. Nasser Munjee 10 14 4 5 4

Ms. Nasim Devji 3 None in India None in India None in India None in Indi

Mr. Shabir Kassam* 4 N.A. N.A. N.A. N.A.

Mr. R. A. Momin 9 1 None None None

Mr. A. A. Sabuwala 11 None 1 None None

Mr. Narayan K. Seshadri 7 7 6 4 4

Mr. D.E. Udwadia 5 12 5 9 1

Mr. Sukh Dev Nayyar 8 1 None in India None 1

Mr. Suhail Nathani 6 1 8 None None

Mr. Murali M. Natrajan 9 N.A. N.A. N.A. N.A.

Mr. Amin Manekia** 5 1 2 1 None

Mr. Alta Jiwani** 1 None None None None

*resigned w.e.. January 12, 2012 ** appointed w.e.. January 12, 2012

Disclosure o Chairmanship & Membership includes only two committees viz. Audit Committee and Shareholders Grievance Committee.

All Directors then on the Board o the Bank, except Mr. Shabir Kassam and Mr. Sukh Dev Nayyar attended the last Annual General Meeting h

June 01, 2011.

COMPOSITION OF COMMITTEES OF DIRECTORS AND THEIR

ATTENDANCE AT THE MEETINGS

Various Committees o Directors appointed by the Board or taking inormed

decisions in the best interest o the Bank. These committees monitor the

activities alling within their respective terms o reerence. The Boards

Committees are as ollows:

AUDIT COMMITTEE OF BOARD (ACB)

Mr. Narayan K. Seshadri chairs the Audit Committee o Board (ACB) o

the Bank. The other members o the Committee are Mr. D.E. Udwadia,

Ms. Nasim Devji, Mr. Suhail Nathani and Mr. Alta

Documents

Annual Report Financial Year 2011-2012