" A Credible
Show in Tough
S. S. Mundra
Chairman & Managing Director
I am delighted to report that during the year 2013-14
(FY14), Bank of Baroda delivered a healthy performance
that is consistent with our guidance and promise to our
stakeholders. With the help of our well crafted business
model, we reaffirmed our standing as the largest nationalised
bank of India in terms of total business. Moreover, we
continued to make strong progress in our financial
soundness indicators that are at the heart of our business
At this point, I deem it most appropriate to review the
macroeconomic environment, within which Bank of Baroda
operated during FY14.
Indian Economic Review
India’s underlying economic growth trends remained weak
during FY14. The Central Statistical Organisation has
estimated Indian economy to have grown by 4.9% in FY14,
a shade lower than the government’s earlier projection but
marginally above 4.5% clocked in FY13. While the farm
sector has registered a healthy growth of 4.6%, a deep
slowdown continued in the mining and manufacturing
sectors that suffered from low investment sentiment, weak
demand and policy bottlenecks. This is the first time since
1991-92 that India’s manufacturing sector has contracted,
reflecting the stress confronting the sector. The services
sector that accounts for nearly 60% of the economy, is
expected to grow 6.9%, slightly slower than the previous
year’s expansion of 7.0%.
High and persistent inflation remained a key macroeconomic
challenge facing India throughout the year FY14. While the WPI-based inflation averaged at 5.92% in FY14, the
CPI-based (retail) inflation averaged at 9.49%. The high
inflation was a result of a number of factors, including
elevated food prices feeding quickly into wages and core
inflation, entrenched inflation expectations, sector-specific
supply constraints particularly in agriculture, energy and
transportation, the pass through from a weaker rupee and
continuous upward adjustment in fuel prices.
Around June-July, 2013, India was faced with significant
debt capital outflows and pressures on its currency, equity
and bond markets, as global liquidity conditions tightened.
Investor concerns were amplified with India’s high current
account and fiscal deficits, persistent inflation and weaker
macroeconomic fundamentals. The Reserve Bank of India
(RBI) controlled the situation by tightening liquidity, relaxing
limits on foreign direct investments (FDI) and external
commercial borrowings (ECBs), encouraging non-resident
Indian remittances and sharply increasing gold import duties.
Persistent inflation worries and external sector vulnerabilities
prompted the RBI to raise the key policy rate – Repo rate by
75 bps between early May, 2013 and end Jan, 2014 despite
growing industrial weaknesses.
On the reforms front, India’s parliament passed the land
acquisition, pension and companies bills during FY14 and
the Cabinet Committee on Investments (CCI) approved
a sizeable quantum of previously stalled infrastructure
projects. On the fiscal front, measures were implemented to
raise diesel prices and reduce the financial losses of state
India’s external vulnerabilities fell significantly in the second
half of FY14, helped by policy actions to shrink the current
account and strengthen capital flows.
The Interim Budget presented by the government for FY15,
reflected continued fiscal consolidation, with a fall in the
fiscal deficit from 4.9% of GDP in FY13 to 4.6% of GDP in
FY14 (as per the revised estimates) and further to 4.1% of
GDP in FY15. While the revised estimate of fiscal deficit is
lower in FY14, it is achieved by a reduction in plan revenue
expenditure and capital expenditure. The subsidies, interest
payments and pension have overshot the budgeted target.
Against the backdrop of a slowdown in the domestic
economy and tepid global recovery, the growth of Indian
banking sector too remained under pressure in FY14. Both
deposits and credit grew at a slower pace of 14.6% and
14.3%, respectively on account of high inflation and subdued
loan demand. The elevated deposit rates combined with
lower credit volumes suppressed the net interest income of
commercial banks. Moreover, as a result of the challenging
macroeconomic environment and worsened repayment
capacity of borrowers, banks’ asset quality deteriorated
further in FY14 with a swollen pipeline of restructured assets.
However, banks with relatively stronger systems of credit
monitoring and cash recovery were better equipped to
shoulder this challenge and delivered a sound performance
during FY14 despite stressful macroeconomic environment.
Bank of Baroda: A Credible Show in Tough times
During FY14, your Bank was able to post strong growth
of 20.4% (y-o-y) in global business supported by 20.1%
in global deposits and 21.0% growth in global advances
despite sluggish economic environment. A major part of this
growth was driven by two initiatives in the past one year – a)
set up of a new vertical for mobilization of deposit resources
and b) focused efforts to diversify its loan-book in favour
of retail, MSME and agriculture credit, as opportunities in
large-sized corporate segment had dried up.
Your Bank’s international business too grew at a stronger
pace of 33.3% (y-o-y), partly driven by massive rupee
depreciation during FY14. Healthy mobilization of domestic
CASA deposits at the rate of 16.0% (y-o-y) and shedding of
high-cost preferential deposits helped your Bank defend its
NIM in domestic operations at 2.87% in FY14.
Supported by healthy Net Interest Income (at Rs 11,965
crore), Core Fees (Rs 2,117 crore), Treasury Gains (Rs
1,783 crore) and Recoveries from Written-Off Accounts
(Rs 563 crore) combined with prudent control over Total
Expenses (up 14.4%, y-o-y), your Bank posted Gross Profit
at Rs 9,291 crore (up 3.2%, y-o-y) and Net Profit at Rs 4,541
crore (up 1.3%, y-o-y) during FY14.
Your Bank’s incremental slippages and additions to
restructuring pipeline kept on declining sequentially
throughout the year FY14 in line with the Bank’s guidance
at the beginning of the year. Between the third quarter
and the fourth quarter of FY14, your Bank’s Gross NPA
declined from 3.32% at end-December, 2013 to 2.94%
at end-March, 2014 and Net NPA declined from 1.88% to
1.52%. Improvement in asset quality was broad-based and
partly driven by asset sales worth Rs 671.93 crore in Q4, FY14. Restructuring activity too remained low in FY14 as
compared to its level in FY13.
The Bank’s Provision Coverage Ratio (PCR) too improved
sequentially from 61.68% in Q2, FY14 to 62.22% in Q3,
FY14 to 65.45% in Q4, FY14. As you know, PCR is a macroprudential
measure, with a view to augmenting provisioning
buffer in a counter-cyclical manner, when the banks are
making good profits.
Your Bank’s Capital Adequacy Ratio continued to reflect its
capital strength. The CRAR was 12.87% in terms of Basel II
and 12.28% in terms of Basel III at end-March, 2014.
In nutshell, your Bank further strengthened its financial
position in the Indian banking space during FY14 supported
by its cautiously optimistic business model, lower risks on
asset quality, focus on CASA deposits and strong capital
Strategic Initiatives during FY14
The year FY14 was marked by low credit appetite by the
corporate sector on account of weak investment sentiment.
Your Bank had to think innovatively to garner relevant
corporate business opportunities. During FY14, your Bank
introduced a new product christened as “Top-Up Facility”
for meeting the working capital requirements of corporates.
Additionally, your Bank also reviewed and revisited the
features of existing products to make them more competitive
such as Corporate loans, Bid Bond Guarantees, Loans
against future receivables etc. Moreover, your Bank
rationalized the interest rate structure so as to spur the
overall investment sentiment.
As a strategic business decision, your Bank’s Project
Finance Department was hived off during FY14 and merged
with Baroda Capital Markets Ltd, which has a dedicated team
of professionals. Baroda Capital Markets Ltd. now supports
the Bank’s Corporate Credit Division by undertaking Techno
Economic Viability (TEV) studies and arranging funds for
corporates by way of Loan Syndication, etc.
With the purpose to place special emphasis on deposits as
an important resource, your Bank created a new business
vertical “Deposit Resources” so as to create a strong liability
franchise and generate synergy in business models. This
new vertical focuses on ensuring consistent and significant
growth in Low-cost Deposits (CASA) and Retail Term
Deposits. A number of initiatives were undertaken during
the year FY14 for strengthening and reviving the relationship
with existing customers for improving CASA deposits and
promoting debit cards. Furthermore, some special drives
were launched for activation of dormant accounts.
From the assets side also, your Bank placed added thrust
on retail business to make its loan-book more balanced.
To achieve this, your Bank reduced the rate of interest
on Baroda Housing Loan so as to make it attractive and
competitive. The Baroda Housing Loan was made available
at Base Rate, i.e., at 10.25% for any amount and any tenure
to new as well as existing borrowers. The rates were also
reduced and made attractive on products like Loan against
Future Rent Receivables, Car Loans, etc.
Encouraged by the success of its novel business model
– Retail Loan Factory (RLF) - your Bank opened five New
RLFs at Bharuch, Junagarh, Visakhapatnam, Meerut and
Moradabad during FY14 taking the total strength of RLFs
A number of initiatives were taken by your Bank to support
the MSME sector, given its potential to generate employment
and growth. First of all, the rate of interest on MSME loans
was rationalized in June 2013 to make such loans more
attractive and competitive. Your Bank also introduced a
new product named as “MSME Capex Loan and Capex
Card'' during FY14 to take care of this sector’s specific
requirements. To further promote its MSME business, your
Bank celebrated MSME Festival from 1st November 2013 to
28th February 2014. In the larger interest, to deliberate on
the issues facing the MSME sector, your Bank organized
the MSME Conclave with heads of its SME Loan Factories
and also arranged the MSME Round Table conference at
Your Bank has a rich set up of 52 SME Loan Factories
(SMELFs), which sanctioned loans to the tune of Rs 17,230
crore during the financial year under review.
Considering the significance of agriculture in the socioeconomic
fabric of India, your Bank launched Agriculture
Loan Factories (in line with the Retail and SME Loan
Factories) in FY14 for bettering customer service and
improving the volume and quality of agriculture advances.
These factories are expected to help your Bank to lay
specific focus on agriculture loans. As in the past years,
your Bank conducted Special Campaigns during FY14 to
augment agriculture advances in both the Rabi and Kharif
Furthermore, your Bank introduced tailor-made area specific
schemes to cater to the specific needs of the local farming
community. Appropriate concessions in interest rates and
charges were given to retain its attractiveness. Your Bank
strongly supported the growth and development of social
sectors through its various outfits like Baroda Swarojgar
Vikas Sansthan (BSVS), Baroda R-Seti Centres, Financial
Literacy Centres and Micro Loan Factories.
Your Bank has been a frontrunner in the Financial Inclusion
efforts. It looks at it not just as a social commitment but as
an effective and profitable business proposition. As per the
targets set under the three-year plan period i.e. for 2013-
14 to 2015-16, your Bank has achieved the annual targets
of village coverage well ahead of its timeline for the FY14.
Moreover, it launched the Kiosk Banking Model by virtually
inaugurating 1,000 Kiosks on its 106th foundation day, i.e.
20th July 2013. It may be noted that your Bank has
arrangements with Common Service Centers (CSCs) to
avail their services as Business Correspondents for running
the Kiosk centers. These centers are ICT enabled frontend
service delivery points at the village level and urban
centers for delivery of government, financial, social and
private sector services in the areas of agriculture, health, education, entertainment, banking, insurance, pension,
utility payments, etc.
During FY14, your Bank began addressing the issue of
urban financial inclusion by launching Urban Kiosks at
Abgaonkala in Harda district of Madhya Pradesh on 19th
January 2014. As on 31st March 2014, your Bank set up
more than 1,000 Urban Kiosks at various locations across
Depressed macro-economic environment for more than two
years continued to haunt the productive sectors during FY14
also, as a result of which, the asset quality in the banking
Industry remained under stress. However, your Bank with
its rigorous credit monitoring and NPA recovery systems
was able to arrest effectively the rising trend in slippages
during the year under review.
From day one of the year FY14, your Bank kept a close
watch on potential NPAs. For this, it constituted a Slippages
Prevention Task Force (SPTF) at the regional level to keep
a tab on stressed accounts. Each and every borrower’s
account was tracked closely to avoid any last minute rise
in NPAs. Besides this, the nodal officers at each DRT (Debt
Recovery Tribunal) centre were assigned the role of a
follow-up of legal case on day to day basis so as to minimize
delays in obtaining decrees and execution thereof in order
to expedite and maximize recoveries.
Your Bank organized a number of Lok Adalats and Recovery
Camps at village/ town level to provide special focus on
recovery of small accounts. Your Bank also launched an
incentive-linked recovery scheme “Sankalp VI”, to enlist
personalized attention of each and every staff member in
pursuing recovery efforts in small value accounts with an
outstanding up to Rs 25 lakh and recovered Rs 155.19 crore
during FY14 under the said scheme.
As a part of its strategy of NPA management, your Bank
put for sale of NPL accounts under individual as well as
portfolio sale categories during the last quarter of FY14 and
elicited good response from the market. In fact, it could sell
23 accounts (with outstanding dues at Rs 671.93 crore) and
realized against them Rs 522.21 crore in a combination of
cash and security receipts.
In Bank of Baroda, we believe in providing worldclass
customer service with a personal touch and we
continuously strive towards improvement. Towards this
goal, your Bank has been effectively using technology.
For instance, your Bank has a web-based online
complaint registration and redressal system in the name of
Standardized Public Grievance Redress System (SPGRS).
An icon is provided on your Bank’s website through which
the Bank’s customers can lodge complaints online. The
system not only facilitates a speedy redressal but also
enables the Bank to maintain centralised data-base of all
complaints. Recently, your Bank has modified the SPGRS
so that even non-customers can lodge their complaints
and/or suggestions. Moreover, your Bank’s customer can
re-open their complaints within 15 days, if they are not
satisfied with the redressal system.
Information Technology Structure
Your Bank has been using Information and Communication
Technology (ICT) not only to improve its own internal
processes but also to increase facilities and services for
To enhance the customer experience in alternative delivery
channels, your Bank revamped its Internet Banking, viz.,
Baroda Connect to a great extent during FY14 to enhance
its look and feel, user-friendliness and also added more
facilities. Thus, the Baroda Connect now offers a host of
facilities ranging from creation of online FDR, recurring
deposits to tax payments, online donations to various
institutions, payments of premiums, aadhaar seeding through
internet banking, IMPS (Immediate Payment services)
among the others. Moreover, Internet Banking facility was
made available on all smart-phones/ tablets offering comfort
of anywhere banking to its customers. Internet Banking is
now extended to your Bank’s 14 overseas territories viz.
Tanzania, Uganda, Kenya, Mauritius, Seychelles, Botswana,
New Zealand, UAE, Fiji, UK, Oman, Ghana, Australia and
USA. Internet banking is also provided in all the RRBs
sponsored by your Bank.
Mobile Banking - one more alternate delivery channel
that offers various facilities to your Bank’s customers,
viz., balance enquiry, mini statement, fund transfer,
stop payment, cheque status, debit card blocking, and
other services. To widen the usage of Mobile banking
application, your Bank made it available in all i-Phones
and i-Pads in addition to Blackberry, Android, and Windows
devices. Immediate Payment Services (IMPS) was also
implemented in FY14 covering Person to Account (P2A),
Merchant Payments (P2M), Aadhaar based remittance
Through e-Lobbies, your Bank has moved on to the next
level of customer engagement by enabling 24 X 7 services
for its customers by installing devices like Bunch Note
Acceptors, Self-Service Pass Book Printers, Cheque
Deposit Kiosk, Internet Banking Kiosks in these e-Lobbies.
To ensure the safety of transactions through alternate
delivery channels, with the cyber-attacks being unpredictable
and electronic payment systems vulnerable to new types
of misuse, your Bank initiated various additional security
measures such as issuing debit and credit cards only for
domestic usage unless international usage is specifically
sought by the customers, converting existing MagStrip
Cards to Europay MasterCard and Visa (EMV) Chip card,
installation of PIN enabled POS machines and introducing
additional security in the form of Digital signatures for
Corporate Internet Banking.
During the year FY14, your Bank installed 3,624 new ATMs,
opened 45 e-Lobbies and provided a number of Bunch
Note Acceptors, Self-service Pass book Printers, etc. to its
branches. Your Bank also provided Note Counting Machines
to almost all its branches and strengthened the structure of
its Retail and SME Loan Factories – to mobilise business
with quality. In short, Information Technology has made a
visible difference in the functioning of your Bank and conduct
of its banking operations.
H. R. initiatives
Your Bank has been pursuing a balanced and comprehensive
Human Resources policy in view of various challenges faced
by the public sector banks in the form of large retirements,
massive induction of talent, and huge training requirements.
Your Bank has launched “Career Portal” on its website
which projects the unique aspects of working at Bank of
Baroda. This has helped in providing a huge impetus to the
“Employer Branding” of your Bank.
During FY14, your Bank further strengthened its “Onboarding
Programme” which aims at cultural assimilation of
new recruits into this institution by introducing a Mentoring
programme “Baroda Sarthy”. Under “Baroda Sarthy”, a
senior employee – the Mentor handholds the new entrant to
enable his or her smooth transition into the Bank and helps
him or her adapt to the value system and working of your
Bank. Besides, your Bank has also implemented Talent
Management System. This system proactively identifies
future potential leaders based on various criteria and also
grooms them through a systematic developmental plan.
To enhance the “Employee Engagement”, your Bank
undertook various initiatives like conduct of satisfaction
surveys and workshops for interaction between juniors
and seniors. These workshops were conducted to improve
the employee connect with HR and top management.
Furthermore, to reward the top performers, your Bank very
recently launched a revised performance linked incentive
scheme for its employees.
Against the backdrop of massive recruitments in view of
large retirements, training and developments of new recruits
has assumed significant importance. In the context of the
growing competition, your Bank created a new functional
position as Chief Learning Officer (CLO) in the Bank. The
CLO is of the level of a General Manager and supports the
organization through learning interventions.
A good number of innovative steps were taken by your
Bank in training as well. The training system of your Bank
bagged the National Award for Innovative Training Practices
in various industries by securing third position, awarded by
the Indian Society for Training & Development (ISTD) during
the current year.
Your Bank has a Board approved comprehensive training
policy so that it covers the entire spectrum of training
activities. The training is imparted for improving the
understanding of different products of the Bank. The
training is conducted either within the Bank or through
external training programmes so that employees are able
to learn and adopt best industry practices with a wider
perspective. During FY14, the external training programmes
were organized at various prestigious organizations such
as International School of Business (ISB) Hyderabad;
International Management Institute (IMI), New Delhi; Centre
for Organization Development, Hyderabad; University of
Mumbai; Manipal Academy of Banking, Bangalore and
other such institutes.
Significant emphasis is placed in your Bank on improving
risk assessment standards and credit monitoring process to identify stressed borrower at an early stage. Your Bank
has well-defined policies to address various risks – Credit
Risk, Market Risk, Operational Risk, Liquidity Risk, etc., and
the Bank sees to it that all these risks remain well within the
risk appetite defined by its Board of Directors.
By taking a series of measures, including building bank-wide
risk management systems, streamlining business processes,
innovation and improving management tools and methods,
your Bank further solidified its management of all types of
risks during the year FY14 to support the needs of its various
In the year under review, your Bank reviewed its risk
management architecture to prepare for advanced
approaches under the Basel II framework. Your Bank applied
for moving to Foundation IRB approach (i.e. foundation
internal ratings based approach) of Credit Risk and received
approval from the RBI for a parallel run. For Market Risk, your
Bank has been developing a Global Mid Office in Mumbai,
which will facilitate a cost-efficient and more effective way
of measuring, monitoring and reporting the Market Risk
positions in its global operations as per the Internal Modelbased
approach under the Basel II norms. In the area
of Operational Risk, your Bank is implementing the best
available solutions, which will enable the Bank to analyze
and control its Operational Risk in a more sophisticated and
effective manner. On implementation of the said Solution,
your Bank’s preparedness for the quantitative and qualitative
requirements of “Advanced Measurement Approach for
Operational Risk” will be fully met.
In order to rationalise Transfer Price Mechanism, your Bank
has initiated the process of switching over from the existing
manual procedure to a new system-based solution using
the software OFSAA V 6.X Module, which will make the
exercise more scientific and realistic.
You may be aware that in India, with effect from April 1, 2013,
Basel-III capital regulations have begun to be implemented.
Your Bank has already made all transitional arrangements
for a smoother transition to this new capital framework by
March 31, 2019.
The overseas business of your Bank continued to contribute
significantly to its overall (global) business. Your Bank’s
wide-spread overseas presence provides it with significant
risk diversification benefits across the globe. Your Bank’s
large network of branches in overseas territories and its
continued thrust on overseas expansion helped exploit rich
business opportunities even during FY14. As of 31st March
2014, it had operations in 24 countries with 102 offices.
These 102 offices comprised of 60 overseas branches of
your Bank, 41 branches of its overseas subsidiaries and
one representative office. During the year under review,
your Bank opened three new branches/offices, i.e. an
Electronic Banking Unit at Shabiya, UAE and two branches
of the overseas subsidiaries at Kariakoo in Tanzania and
Kololo in Uganda.
Key Achievements in FY14
In spite of the challenging business environment, your Bank
ended the year under review with a strong set of results.
Your Bank’s Global Business expanded by 20.4%
(y-o-y) to Rs 9,65,900 crore by end March 14. Within
this, Domestic Business expanded by 15.1% to Rs
6,51,223 crore and Overseas Business increased by
33.3% to Rs 3,14,677 crore.
Global Deposits registered a growth of 20.1 %
(y-o-y) to Rs 5,68,894 crore by end March 14. Within
this, Domestic Deposits expanded by 10.9% to Rs
3,79,054 crore and Overseas Deposits rose by 43.6%
to Rs 1,89,840 crore.
Amidst aforementioned challenges, Your Bank’s CASA
Deposits increased by 22.19% (y-o-y) to Rs 1,46,488
Share of Domestic CASA as on 31st March 2014 stood
Global Advances increased by 21.0% (y-o-y) to Rs
3,97,006 crore by end-March 14. Within this, Domestic
Advances rose by 21.3% to Rs 2,72,169 crore and
Overseas Advances surged by 20.2% to Rs 1,24,837
Retail Credit of your Bank increased by 21.0% (y-o-y)
to Rs 46,019 crore during FY14, of which Home Loans
increased by 21.9% to Rs 19,558 crore.
Your Bank’s SME Credit portfolio increased by 21.2%
(y-o-y) to Rs 56,634 crore by end- March 2014. Farm
Credit increased by 2.8% and reached the level of
Rs 28,432 crore and Credit to Weaker Sections
increased by 20.9% to Rs 20,599 crore.
Your Bank’s Operating Profit stood at Rs 9,291 crore
(up 3.2%, y-o-y) and Net Profit at Rs 4,541 crore (up
1.3%, y-o-y) in FY14.
Return on Average Assets (ROAA) stood at 0.75%
in line with market expectations.
Despite capital infusion, Return on Equity (ROE) was
protected at 13.0% as on 31st March 2014.
Your Bank managed to protect its NIM at 2.87%
in Domestic Operations and at 2.36% in Global
Operations during FY14 despite sluggish credit
Given your Bank’s prudent approach, its Provision
Coverage Ratio consistently improved throughout the
year and stood at 65.45% as on 31st March 2014 – much
higher in relative terms compared to its peers.
Your Bank’s Capital Strength gets reflected in its
Capital Adequacy ratios. Its CRAR (Basel II) was at
12.87% and Tier I capital at 9.54% as on 31st March
2014. Its CRAR (Basel III) was at 12.28%, Tier 1
Capital at 9.28% & Core Tier 1 Capital at 8.95% as on
31st March 2014.
Your Bank’s Cost-Income Ratio continued to be at a
relatively lower level of 43.44% for FY14.
While its Earning per Share stood at Rs 107.38, its
Book Value per Share stood at Rs 813.50.
Awards & Accolades
During the year FY14, your Bank received several awards for its noteworthy performance across various business
and financial parameters. The major ones were as follows.
Best Public Sector Bank under the category ‘Global
Business Development’ by Dun & Bradstreet – Polaris
Financial Technology Banking Awards 2013.
Banking Technology Excellence Award 2013 among
PSBs by IDRBT.
Your Bank was awarded 1st Rank in the Public Sector
Bank Category in Financial Express-Ernst & Young
Best Banks Survey 2012-13 published in The Financial
Express Magazine March 2014 issue.
MSME Banking Excellence Award-2013 as the Best
Bank in MSME by the Chamber of Indian Micro Small
and Medium Enterprises.
The Sunday Standard Best Banker’s Award – Best
Banker-HR constituted by The New Indian Express
ASSOCHAM 9th Annual Banking Summit –cum-Social
Banking Award 2013-Winner in Public Sector Banks
Category in the field of ‘Social Banking’.
“Excellence in Home Loan Banking” Award by My FM
Stars of the Industry.
The ‘Global Excellence and Leadership Award’ in the
category of 50 most talented CSR Professionals of
India by the World CSR Congress.
These awards and recognition are particularly valuable,
as they acknowledge the merits of your Bank’s successful
business model that made a difference to the nation’s
We expect India’s economic growth to revive during FY15 on
the back of political stability and likely stepping up of economic
reforms. The growth in FY15 is expected to be spurred by the
revival of investment, a boost to investment and consumer
sentiment, continuing gains in employment and incomes and
a firming in exports. With GDP growth expected to pick up,
banking business is likely to witness higher optimism during
FY15. According to India’s largest credit rating agency CRISIL
– credit quality pressures are bottoming out for the Indian
banking industry, even though improvement will be gradual
due to continued economic uncertainties.
During FY14, Bank of Baroda made significant progress
towards building a preferred bank for its stakeholders. Despite
challenging environment, its earnings remained resilient; its
fresh slippages started easing and its strong funding position
enabled it to continue to support its borrowers.
During FY15, Bank of Baroda will continue to focus on further
strengthening its capital and funding position so as to grow
its business sustainably. Your Bank is confident that with its
strategic focus on people, processes and technology, it will
remain in the leadership position in the emerging business
Bank’s Corporate Goals and Strategy
Supported by its achievements during FY14, your Bank
has selected a motto that aptly described its commitment
to move ahead in the global banking space. The Bank has identified “RACE AHEAD” as its motto for the FY15. The
word RACE denotes the following:
R for – Retail Leaning
A for – Asset Quality
C for– Capacity Building
E for – Earnings
Your Bank believes that focusing on these four aspects
should help it in not only achieving a significant business
growth but also improve its profitability and soundness
To strengthen the approach towards Retail Leaning, your
Bank will emphasize on aggressively canvassing low-cost
current and saving deposits plus retail term deposits as
against the high-cost bulk deposits. Simultaneously, the
focus will be on Retail Credit, MSME and Agriculture credit
to make the loan-book more diversified.
Similar to its efforts to improve Asset Quality management
in FY14, your Bank will focus on credit monitoring, NPA
recovery and up-gradation in a big way and further arrest
the fresh slippages.
Capacity Building is another area where your Bank has
been investing significantly. During FY14, your Bank opened
601 new Branches, installed 3,624 new ATMs, opened 45
e-Lobbies and provided a number of Bunch Note Acceptors,
Self-service Pass book Printers, etc. to its branches. Your
Bank also provided Note Counting Machines to almost all
its branches and strengthened the structure of Retail and
SME Loan Factories – its innovative business model - in the
country. Your Bank will continue to give high priority to this
aspect during FY15 to make its processes more efficient
and customer service more prompt.
To respond to increasing competition and other challenges,
your Bank will make its business model more cost-efficient
and try to improve its Earnings through an optimum mix
of interest income and non-interest income. To achieve
this, it will constantly optimise the use of technology as the
Additionally, your Bank proposes to launch ‘Adarsh
Grameen Branches’ shortly. These branches will be
constructed by your Bank on its owned plot of land in
rural areas and will include branch premises, manager’s
residence and assembly areas. The assembly area will be
having audio-visual facilities to enable various activities like
agri-clinic, vocational education, medical camp etc. This
endeavour will not only provide your Bank to take forward
the mission of Financial Inclusion, but also generate a lot
of goodwill for your Bank.
With its intrinsic strengths in the form of capital, human
resources, technology and iconic brand, your Bank is well
positioned for growth during FY15.
We are encouraged by and grateful for the ongoing support
of all our shareholders. I solicit your continued cooperation
and patronage in future also.
Chairman & Managing Director