“Building the Best Quality Bank of the World in India”
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AnnuA l RepoR t 2013-14 “Building The BesT QualiTy Bank Of The WOrld in india” PDF processed with CutePDF evaluation edition www.CutePDF.com Contents Corporate Overview ................... 1-38 Statutory Reports ................... 90-142 About Us ...................................................................2 Management Discussion and Analysis .....................90 Highlights 2013-14 ...................................................3 Directors’ Report ................................................. 116 Message from the Non-Executive Chairman ...............4 Report on Corporate Governance ......................... 126 Managing Director and CEO’s communiqué...............6 Business excellence .................................................12 Financial Statements ............ 143-223 Enduring relationship .............................................14 Standalone Financial Statements Human capital management ..................................16 Independent Auditors’ Report .............................. 144 Processes and quality excellence ..............................18 Balance Sheet ...................................................... 146 Technology .............................................................20 Profit and Loss Account ....................................... 147 Robust risk management ........................................22 Cash Flow Statement ........................................... 148 Responsible banking ...............................................24 Schedules ............................................................ 150 Financial inclusion ..................................................26 Consolidated Financial Statements Awards and Accolades ...........................................28 Independent Auditors’ Report .............................. 195 Non-Executive Chairmen ........................................30 Consolidated Balance Sheet ................................. 196 Board of Directors ..................................................31 Consolidated Profit and Loss Account .................. 197 Management Team .................................................32 Consolidated Cash Flow Statement ...................... 198 Sustainability Review ................ 39-89 Schedules ............................................................ 200 Statement Related to Subsidiary Companies ......... 223 Sustainability Disclosures ........................................39 Annual Business Responsibility Report .....................80 Disclourses under Basel III ............................... 223 02 Corporate Overview | About Us About us At YES BANK, our differentiation begins with a simple word called ‘Yes’. YES BANK represents the true spirit of business excellence, encompassing facets of knowledge, human capital, trust & transparency, technology and responsibility. We are India’s fourth largest private sector bank. We have steadily built a full-service commercial bank with Corporate, Retail and SME Banking platforms, and with a comprehensive product suite encompassing Financial Markets, Investment Banking, Corporate Finance, Branch Banking, Business Banking and Transaction Banking, as well as Wealth Management offerings. Vision YES BANK has a vision to ‘Build the Best Quality Bank of the World in India‘ by 2020 and to concurrently evolve its organizational character as the ‘Professionals’ Bank of India’. Corporate Overview | Highlights 2013-14 Annual Report 2013-14 03 Highlights, 2013-14 430 560 951 1,139 7,024 8,798 2012-13 2013-14 2012-13 2013-14 2012-13 2013-14 Number of Number of ATMs Number of branches (new 188) employees (new 130) (new 1,774) 18.9 22.0 46,999 55,633 66,955 74,192 99,104 109,016 2012-13 2013-14 2012-13 2013-14 2012-13 2013-14 2012-13 2013-14 CASA (in %) Loan book Deposits Balance Sheet size (in H crore) (in H crore) (in H crore) Stock information Bombay Stock Exchange (BSE) National Stock Exchange (NSE) ISIN BSE Code 532648 NSE Code YESBANK INE528G01019 04 Corporate Overview | Message from the Non-Executive Chairman Message from the Non-Executive Chairman The Reserve Bank of India (RBI) stepped in to address the currency instability through the introduction of several measures including the increase in interest rates and tightening liquidity. The RBI also provided unconventional dollar swap windows to public sector oil marketing companies (for oil imports) and In FY 2013-14, the Indian economy banks [for FCNR (B) deposits and Tier I Capital] for a showed signs of cautious optimism. limited period till November 2013. In the second half of the fiscal year The Indian banking industry faced corresponding under review, the Indian economy challenges due to the economic slowdown, as a result of which asset quality preservation took received an impetus through precedence over growth requirements. Though the infrastructure project approvals by the warning signals subsequently subsided following Cabinet Committee on Investments expectations of improved policy measures and robust (CCI) and moderating trajectory of government initiatives, commercial banks engaged in inflation. cautious lending. With the US economy gaining momentum, the YES BANK sustained its growth through an enduring Federal Reserve gradually reduced the economic commitment to Business Excellence, while improving stimulus program in 2013 which impacted emerging quality and customer delivery models. This resulted in market countries with a high current account deficit. healthy and balanced growth across all parameters The result was that India witnessed a capital outflow including non-interest income, stable cost-to-income of US$12.6 billion from its domestic equity and ratios, increasing branch and ATM footprint, human bond markets between May 2013 and August 2013, capital and best-in-class asset quality even as the the rupee depreciating by about 16%. external environment remained challenging. Co r p o r at e Over vi ew | Message from the Non-Executive Chairman Annual Report 2013-14 05 Since inception, it has been YES BANK’s constant endeavor to establish a robust Corporate Governance framework was in fullest conformity with the The newly-appointed Directors regulatory requirements of the RBI, the BR Act and bring significant experience the Companies Act, among others, helping establish in the area of policy making, best-in-class practices within the Indian banking supervision and st rat egic system. Towards the foregoing, the Bank also direction, having worked expanded the constitution of its Board by appointing with international and Indian two additional Independent Directors Mr. Saurabh firms across technology/ audit Srivastava and Mr. Vasant V Gujarathi. The newly- appointed Directors bring significant experience and stakeholder relationship in the area of policy making, supervision and management. strategic direction, having worked with international and Indian firms across technology/ audit and stakeholder relationship management. We are During the year under review, the Board of Directors optimistic that these inductions will add considerable endeavoured to extensively engage with the top to YES BANK’s Board of Directors on the one hand and senior management leaders of the Bank and increase the presence of Independent Directors during various committee meetings of the Board. on the Board to 70% on the other, strengthening the Such engagements have provided the Board with Bank’s governance commitment. an opportunity to mentor and groom the Bank’s leadership to take on additional responsibilities, and The Board, in accordance with the provisions also align them strategically with the Vision of the of the Companies Act, constituted a Corporate Bank. Social Responsibility Committee comprising a majority of Independent Directors. The functions All the above steps taken during the year under of the Committee comprise the formulation and the overall guidance of the Board of Directors recommendation of a CSR policy, which indicate the ensured that YES BANK continued in its chosen activities to be undertaken by the Bank; and also path of evolving its organizational character as the institute a transparent monitoring mechanism for ‘Professionals’ Bank of India’. the implementation of recommendations. Best w i shes, Technology has been a key differentiator at YES BANK , and the Bank has received many awards & recognitions in this regard. In conformity with M. R. Srinivasan extant RBI circulars, an IT Strategy Committee was Non-Executive Chairman constituted to provide strategic inputs to review and YES BANK Limit ed amend the aligned corporate and IT strategy and ensure that the IT architecture complemented the Bank’s business model. 06 Co r p o r at e Over vi ew | Managing Director and CEO’s communiqué Managing Director and CEO’s communiqué Rana Kap oor, Managing Director & CEO Co r p o r at e Over vi ew | Managing Director and CEO’s communiqué Annual Report 2013-14 07 When I wrote to you last, the global economy was witnessing some green shoots of recovery led by the advanced economies of the US, the EU and Japan. With signs of sustainable recovery in the US, the Federal Reserve had begun preparing the market for the eventual tapering of US bond purchases. A lot has changed since the summer of 2013 when the Federal Reserve first hinted at a gradual reduction of its quantitative easing (QE) program. Following initial gyrations in the emerging markets during the first half of FY 2013-14 in response to the Federal Reserve’s tapering, the global economic outlook has since remained stable.