New Bank. New Mission. New India
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New Bank. New Mission. New India. IDFC FIRST BANK LIMITED ANNUAL REPOrt 2018-19 Index Overview Key Numbers 1 Vision, Mission, Values of IDFC FIRST Bank 2 A New Bank 3 Message from Non-Executive Chairman 4 Message from the Managing Director & CEO 8 A New Identity 14 Road Leading to the Merger 16 New and Expanded Reach 41 New Value Proposition 42 Putting Customers First 44 Corporate Social Responsibility 48 Board of Directors 62 Management Discussion & Analysis 65 Directors' Report 86 Corporate Governance Report 121 Financial Statements 158 Explore online www.idfcfirstbank.com Follow us and join the conversation 2018-19 Key Numbers Funded Retail Net Worth Assets Assets/ Total Funded Assets K1,10,400 K18,159 Cr. 37% Cr. (standalone) CASA Capital GNPA Ratio Adequacy Ratio 12.9% 15.5% 2.4% (as % of Total Deposits) No. of live No. of NNPA customers branches 7.3 242 1.3% MILLION 2 IDFC FIRST BANK | ANNUAL REPORT 2018-19 Our Vision Mission We want to create the world’s We want to touch the lives of millions of best bank, right here in India, Indians in a positive way by providing for aspiring Consumers high-quality banking products and and Entrepreneurs. services to them, with particular focus on aspiring consumers and entrepreneurs of our new India, using contemporary technologies. Innovative We constantly strive to innovate in the customer interest. Action-Oriented Collaborative We consistently demonstrate We develop, maintain and focus, initiative and energy strengthen relationships to deliver our promise of with both internal and delighting customers. external stakeholders. Values Our Cultural Tenets to guide every action we take: Empowered We trust our employees' ability to be successful, Decisive especially at challenging We exercise best new tasks; delegating judgement by responsibility and authority. making sound and well-informed decisions. Customer Focussed We put the customer's interest first by putting ourselves in the customers' situations and viewing things from their perspective. NEW BANK. NEW MISSION. NEW INDIA. 3 A New Bank Growth is real only when it is segment. Its quarterly annualised Net underserved and first-time borrowers. sustainable and serves the long-term Interest Margin has expanded from The underserved segments are interest of stakeholders. 1.9% to 3.0% post merger. The Bank important to us. We also have the now enjoys a leading position in some opportunity to bring these customers An aspiration for accelerated and of the retail asset segments. into the financial mainstream and sustained growth paved the way for touch their lives in a positive way. the merger of erstwhile IDFC Bank The Bank’s tech-driven liabilities Ltd and erstwhile Capital First Ltd platform is ready to grow exponentially Serving the new aspiring India on December 18, 2018. Thus, a new with a new focus on expanding We believe an immense opportunity bank with a new DNA was born – footprint across the nation. awaits us, as IDFC FIRST Bank IDFC FIRST Bank. The combined customer base is starts to invest in customer-driven now 7.3 million and growing, with innovation that will create new liability The merger is a milestone in the a significant share of it in India’s products, new credit markets and history of the two institutions and booming hinterland. new jobs – keeping in view the needs marks the end of one journey and of a New India. beginning of a new one. Customer-focussed & analytics-driven By financing the growth of business Renewed focus on retail As a Bank, our approach is to keep and consumption, we not only IDFC FIRST Bank is born to be banking simple, easy to know and participate in the growth of the country distinctly different from what it was easy to understand. We enable but also generate employment for earlier. It has a renewed focus on retail people to save, borrow, invest, millions. This, we believe, will lead to business with an intent to fast-forward grow and protect their wealth. greater domestic production, greater its growth trajectory, and to serve Our service is characterised by consumption and will contribute to the many more customer segments that digitisation, personalisation and virtuous cycle of growth of the nation. are seen as growth-drivers of the customer-centricity, in addition to Indian economy. extensive physical reach. IDFC FIRST Bank is confident and ready to chart out its own destiny. Our new bank fuses state-of-the-art In addition to the exceptional strengths It is now better positioned for growth technology and the superior liability of erstwhile IDFC Bank, we derive the in its business, deploy new digital platform of erstwhile IDFC Bank with required expertise from the unique channels, enter new markets and analytics-led lending capabilities, business model of erstwhile Capital serve more customers. the retail DNA and strong profitability First, which deploys its greenfield track record of erstwhile Capital First. method of assessing credit risk – a It enables both the institutions to strength that has enabled it to lend It is now geared to expand capabilities and reach and to extensively to first-time borrowers and seize tomorrow’s better serve customers. yet maintain a healthy asset quality that has withstood the challenges of opportunities, today. Thus, the merger sets the stage economic cycles and policy changes. for the creation of a financially and strategically stronger entity. We are a people’s bank – for the IDFC FIRST Bank now has a strong salaried and self-employed, small funded asset base of more than businesses and micro-enterprises. ` 1,10,400 crore with 37% in the retail With a specific emphasis on the 4 IDFC FIRST BANK | ANNUAL REPORT 2018-19 Message from the Non-Executive Chairman A landmark year Dear Shareholders, The fiscal year 2019 turned out to Provided the monsoons are about be an eventful year for the Indian normal, one might expect some economy and also for the banking renewed buoyancy to consumption sector. Economic growth faced some demand. That said, we must recognise headwinds in the form of enhanced that challenges do remain in the form global protectionism, volatility in the of headwinds from slowing global global financial markets, as also economic growth and also problems some domestic issues such as weak that the NBFC sector in India has consumption and decelerating private been going through. investment demand. It is encouraging to note that Domestic sentiment was also hit government and regulatory efforts due to problems faced by the NBFC to address the “twin balance sheet segment and uncertainties related problem” of the financial sector as to the elections. Consequently, GDP well the corporate sector continue. growth that was reported in the first Within banking, the three-way quarter at 8%, fell off to 5.8% in the amalgamation of public sector banks fourth quarter. However, full year is a step in the right direction towards growth was at 6.8%, and by that strengthening the sector. metric, India continued to be the world’s fastest growing economy. As a result of the slowing growth momentum, inflation dipped through the year and opened up space for the RBI to reduce interest rates. The merger with Capital First has been transformational Despite a challenging year, the for the Bank. It greatly accelerates the Bank’s plans to economy although weakening retailise the book and bring profitability to the franchise. has remained resilient with the outlook looking positive into FY20. It is thus value accretive for all shareholders. Importantly, uncertainties pertaining to elections are behind us and the Dr. Rajiv B. Lall majority mandate for the incumbent Non-Executive Chairman, IDFC FIRST Bank Limited government provides hope for a faster pace of economic reforms in the coming years. NEW BANK. NEW MISSION. NEW INDIA. 5 OVERVIEW Our merger with Capital First was transformative because it brought together the exceptional and complimentary strengths of IDFC Bank and Capital First. DIRECTORS' DIRECTORS' R EPORT During the year, RBI has also (IBC) continues to hold the key to As part of the demerger, the Bank sought to ease out the problems timely resolution of stressed assets inherited the large infrastructure for the NBFC sector whereby it and a credit repayment culture. book of its parent IDFC Ltd. In order announced relaxation of liquidity to diversify the balance sheet, C norms for NBFCs and also permitted A significant year for IDFC we took a call to build a retail GOVERNANCE ORPORATE banks to lend to non-banking FIRST Bank banking franchise. finance companies (NBFCs) facing IDFC Bank launched operations on asset-liability mismatches. October 1, 2015, with 23 branches By FY19, the Bank had successfully and a state-of-the-art digital platform. expanded its reach to serve new The other big development for the It was formally inaugurated by Prime customer segments both on the retail banking sector in FY19 was related Minister Shri Narendra Modi at 7 Race as well as the wholesale side of the to RBI’s February 12 circular, which Course in New Delhi. Within 35 days of business, and was well on course to was a turning point for asset quality starting operations, IDFC Bank listed build a sustainable banking franchise. recognition. Under this circular, banks on the Bombay Stock Exchange and had to classify an asset as being in National Stock Exchange. default if repayments were missed The Bank rolled out its retail even by a day. This has now been businesses, both on the liabilities As part of our evolution, we wanted to FINANCIAL STATEMENT replaced by a revised prudential front as well as on the retail assets framework for stressed asset be able to provide financial services side and the business was growing resolution that allows banks 30 days to a larger segment of the population, well.