Delighting through Digital Banking · Noida 135 : WA 68, Sector 135, Noida Branch Code: 1016 Mobile: 99901 06135 Email id: [email protected] Muzaffarnagar Branch: South

Shivalik Mercantile Co-operative Bank Limited19th Annual Report 2015-16

Delighting through Digital Banking

Shivalik Mercantile Co-operative Bank LimitedRegd. Office: 13/1207, Ansari Road, Saharanpur - 247001, Uttar Pradesh

Head Office: Hakikat Nagar, Saharanpur - 247001, Uttar Pradesh

Telefax: (0132) 2726125, 2726147, 9927135550

E-mail: [email protected]

Visit us at: www.shivalikbank.com

Like us at: www.facebook.com/shivalikbank

A [email protected]

Contents Vision ........................................................02

Highlights 2015-16 ....................................03

Corporate information ...............................04

About us ....................................................08

5 year financial highlights...........................10

Board of Directors & Senior Management Team ..........................12

Theme pages .............................................13

Chairman’s message ..................................24

Report of Board of Directors’ ......................27

Corporate Governance Report ....................31

Financial inclusion: microfinance ................34

Statutory reports ........................................35

Appropriation of profit for 2015-16 ...........53

Annual operation plan and long-term perspective plan .........................53

Notice ........................................................55

Amendment to bye-laws ............................56

Vision

To serve the lowest strata of society with the best products at the best prices and the best technology-driven customer service, at the same time being a model employer for the national industry and emerging as a global role model in the small banking sector.

Shivalik Mercantile Co-operative Bank Limited2

Highlights 2015 - 16

602Advances (H cr)

1411 Total business (H cr)

809Deposits (H cr)

35Microfinance

disbursements (H cr) to Self Help Groups (SHGs)

61.16Percentage of small loans (sub H25 Lacs, other than

those against Bank’s own Deposits) to total advances

13.03Percentage of Yield

on Advances

0.60Percentage of Net Non-Performing Assets (Net NPA)

1.75Percentage of Return

on Average Assets

Annual Report 2015-16 3

Corporate informationRBI License No. UBD.UP.1468 P, dated 20th Sept. 1997.

Date of Commencement 5th Sept. 1998

Registered Under Multi-state Cooperative Societies Act, 2002

Regn. No. L11016/10/2010-L&M dated 14th Sept. 2010

Area of Operation Uttar Pradesh and five districts of Madhya Pradesh

Acquisitions 1. In 2010 – Bhoj Nagarik Sahakari Bank Maryadit, Dhar, MP.

2. In 2012 – Malwa Commercial Coop. Bank Ltd., Indore, MP.

Regd. Office 13/1207, Ansari Road, Saharanpur-247001 (U.P.)

Telefax: 0132-2612381; 2612382; 9927145550

Head Office Hakikat Nagar, Saharanpur – 247001 (U.P.)

Telefax : 0132-2726125; 2726147; 992713550

[email protected]

www.shivalikbank.com

www.facebook.com/shivalikbank

IFS Code SMCB000 1001 till 1021 where last 4 digits represent the relevant

branch code

No. of Branches 21 branches in 3 clusters

1. Cluster 1 : 07 branches in NCR (Noida, Ghaziabad, Meerut &

Muzaffarnagar)

2. Cluster 2 : 12 branches in District Saharanpur

3. Cluster 3 : 02 branches in M.P. (Dhar & Indore)

Business Correspondent Offices 12 - Affiliated with and working under various branches.

Banking hours 10 a.m. ~ 4.00 p.m. – Mondays to Saturdays

Holiday on 2nd and 4th Saturdays

No. of ATMs 25 (all branches and 4 BC offices)

No. of CDMs 25 (all branches and 4 BC offices)

CBS Platform in use CBS solution, ‘Profile’ by FIS, a Fortune 500 company.

ATM-cum-Debit Cards Rupay powered cards can be used anywhere in India at all

Rupay enabled ATMs.

Online shopping through Bill-Desk enabled.

Card can be used at all merchant establishments equipped with

Point of Sale (PoS) terminals.

Free Accidental insurance on each active card is available.

Statutory Auditors M R S & CO., Chartered Accountants, Ghaziabad.


At Shivalik Mercantile Co-operative Bank Limited, there were a number of options available to us to grow in spirit, scale and scope.

Employee increase. Larger geographic footprint. Faster branch rollout.

We selected to invest in digital banking, with the objective to create a profitably scalable foundation.

And emerge as the modern face of India’s co-operative banking sector.

Shivalik Mercantile Co-operative Bank Limited.

One of the fastest growing co-operative banks in India.

One of the most technology-driven banks in India.

Uttar Pradesh’s largest co-operative bank.


Corporate backgroundShivalik Mercantile Co-operative Bank was registered as a

co-operative society in 1997 as per the tenets of the Uttar

Pradesh Co-operative Societies Act, 1965. The Bank was

granted the license to conduct banking business as a primary

urban co-operative bank in the district of Saharanpur by

the Reserve Bank of India in September 1997. The bank

commenced operations in September, 1998. The Bank was

converted to a multi-state urban co-operative bank in October,

2010 following merger of the erstwhile Bhoj Nagrik Sahakari

Bank Maryadit at Dhar, Madhya Pradesh. The Bank was de-

registered under Uttar Pradesh Co-operative Societies Act,

1965 and re-registered under the Multi-state Co-operative

Societies Act, 2002.

Shivalik Mercantile Cooperative Bank Limited, having

registered itself under Uttar Pradesh Cooperative Societies Act

1965, commenced banking operations on 5th September,

1998 limited to the district of Saharanpur. After attaining Tier-

II status in 2010, it was expanded to cover all of Uttar Pradesh.

In 2010, the bank became the first Multi-state Cooperative

Bank of Uttar Pradesh upon de-registering from Uttar Pradesh

and re-registering under Multi-state Cooperative Societies Act,

2002.

FocusShivalik Mercantile Co-operative Bank offers loan products

(personal use, professional use, business use, micro-finance),

deposit products (savings account, current account, fixed

deposit among others) and services like remittances, lockers,

ATM cards, insurance, forex and modern payment systems,

among others.

PresenceShivalik Mercantile Co-operative Bank is headquartered in

Saharanpur (Uttar Pradesh) and operates through 21 branches

across two states. In UP, the bank has presence in the districts

of Saharanpur (12 branches), Muzaffarnagar (2 branches),

Meerut (1 branch), Ghaziabad (2 branches) & Noida (2

branches). In MP, the bank is present in the districts of Dhar (1

Our differentiated business model has translated into attractive growth

19 98

20 10

20 12

19 99

Shivalik Bank’s

first branch starts

functioning in

Saharanpur

Achieves a deposit base of more than H100

Cr and becomes a Tier-II bank covering the

entire State of Uttar Pradesh

Becomes the first and only multi-state

cooperative bank of Uttar Pradesh

Opens a branch in Dhar, Madhya Pradesh

after acquisition of Bhoj Nagarik Sahakari

Bank Maryadit

Achieves complete Core Banking (CBS)

status

Opens a branch in Indore, Madhya Pradesh

after acquisition of Malwa Commercial

Cooperative Bank Limited

Achieves

full branch

computerisation,

first in Saharanpur

district


20 13 20

15

Starts issuing Rupay ATM cum Debit cards

Installs ATMs at all branches

Starts opening business correspondent

offices in remote areas in Uttar Pradesh

and Madhya Pradesh

Changes CBS platform to world-class

Profile software, developed by FIS, a

Fortune 500 company and a world leader

in banking technology

Launches net

banking and

Mobile Banking

20 14

20 16

Completes installation of CDMs and ATMs

across branches and BC offices

Becomes the first co-operative bank in

North India to issue debit cards for online/

PoS shopping

Collaborates with merchants to offer in-

house PoS devices for electronic payments

Launches SMS-based enquiry application

Became the first bank to launch cloud

based RTGS/NEFT services

Launches NACH and NECS to improve the

Bank’s payment system

Implemented Anti-Money Laundering

package (AML)

Launches Green PIN - Paperless ATM PIN

Became compliant with Direct Benefit

Transfer (DBT)

Installed solar panels at ATMs in remote

locations to maintain uptime and to

reduce the carbon footprint

branch) & Indore (1 branch).

Differentiators The first and largest multi-state urban cooperative bank of

Uttar Pradesh

An urban co-operative bank with the best technology in

North India

Among the top 15 co-operative banks with regards to

technology

The only UCB with more than 5% lending towards micro-

finance through women SHGs

Running a highly successful micro-finance program in

western Uttar Pradesh and parts of Madhya Pradesh

Products and offeringsThe Bank offers state-of-the art banking solutions to

customers in line with contemporary technologies and

facilities. The Bank offers customers various deposit schemes

(savings/current accounts, fixed and recurring deposits). The

Bank meets credit requirements of clients by offering demand

loans, term loans, overdrafts and financial guarantees against

tangible securities. The Bank also offers additional financial

services like insurance, remittances through NEFT and RTGS as

well as ATM/CDM facilities.

The Bank has partnered Janhit Foundation to provide micro-

finance services to self-help groups of women.


About usProducts and Services Deposits Savings Deposits

Fixed Deposits Flexi Recurring Deposits

Current Deposits Daily Deposits

Loans Home Loans Loans against Property Gold Loans Retail Auto Loans Commercial Vehicle Loans Demand Loans (Against FDR / NSC / KVP /LIC) Reverse Mortgage Loans Roof Top Solar Loans Loans to Professionals & Self Employed

Loans for Micro/SSI Units Retail Traders Loans Commercial Building Loans Microfinance

• Self Help Groups (SHG)• Mini SHG Loans Against Warehouse Receipts Agriculture Loans

• Shivalik Green Card (Kisan Credit Card)• Agriculture Term Loans

Digital Services Rupay Debit cum ATM Card SMS Banking NET Banking Cash & Cheque Deposit Machines Fund Transfer (RTGS/NEFT/IMPS/NACH)

Online Bill Payments Electronic Clearing Services ATMs and CDMs at all Branches Bulk Note Acceptors

Other services Insurance• General Insurance• Life Insurance• Health Insurance Lockers

Forex Services• Foreign Currency Sale and Purchase • Foreign Exchange Remittances (inward outward) PAN Card

Our Branch & ATM Network All branches are equipped with ATMs and CDMs

Cluster 1: NCR RegionNoida 27: Bhoja Mkt., Nr. Vinayak Hospital, Sector 27, Noida-201301 Branch Code: 1007

Telefax: (0120) 2555333/5334, 09540407222 Email id: [email protected]

Meerut Branch : C-2/6, Nai Sadak, Shastri Nagar, Garh Road, Meerut-250001 Branch Code: 1008

Telefax: (0121) 2604364, 9690563000Email id: [email protected]

Ghaziabad : G.T. Road, Nr. Bhatia Mod, Ghaziabad-201001 Branch Code: 1015

Telefax: (0120) 2860003, 8750037222 Email id: [email protected]

Noida 135 : WA 68, Sector 135, Noida Branch Code: 1016

Mobile: 99901 06135 Email id: [email protected]

Muzaffarnagar Branch: South Bhopa Road, Nai Mandi, Muzaffarnagar-251001 Branch Code: 1018

Mobile : 98374 00037Email id: [email protected]

Indirapuram Branch : Raison Shopping Complex, Ahinsa Khand-II, Indirapuram, GhaziabadBranch Code: 1019

Tele : (0120) 2651717, 9717490952 Email id: [email protected]

Khatauli Branch: Ward No. 8, Ganeshpuri, G.T. Road, Khatauli-251201, Distt. Muzaffarnagar Branch Code: 1020

Mobile : 95689 25000Email id: [email protected]

BC Offices: Ghizore, Sadarpur (affiliated to Noida 27 Branch)Mawana, Hastinapur, Maliyana (affiliated to Meerut Branch)


Cluster 2: District SaharanpurAnsari Road Branch: 13/1207, Ansari Road, Saharanpur-247001

Branch Code: 1001

Telefax: (0132) 2612381, 2612382,

9927145550

Email id: [email protected]

Gangoh Branch: Rambagh Road, Gangoh-247341

Branch Code: 1002

Telefax: (01331) 234437, 234438,

9927116660


Hakikat Nagar Br. : Hakikat Nagar, Nr. Old Sales Tax Office,

Saharanpur-247001 Branch Code:1003

Telefax: (0132) 2726125, 2726147,

9927175550

Email ID: [email protected]

Deoband: Subhash Chowk, Railway Road, Deoband-247554

Branch Code: 1004

Telefax: (01336) 222808, 9568880001


Ambehta Branch: Main Road, Ambehta, Saharanpur-247340

Branch Code: 1005

Telefax: (01331) 225311, 9927165550


Chilkana Road Branch: Chilkana Road, Saharanpur-247001

Branch Code: 1009

Mobile : 9690990033


Nagal Branch: G.T. Road, Nagal Branch Code: 1011 Telefax: (01336) 231112, 9690004794


Sarsawa Branch: Main Market, Sarsawa Branch Code: 1012 Telefax: (01331) 246125, 9690004994


Nanauta Branch: Deoband Road, Nanauta Branch Code: 1013 Telefax: (01336) 253125, 9927986125


Rampur Branch: Moh. Mahajanan, Rampur Maniharan Branch Code: 1014 Telefax: (01336) 252125, 9927007125


Sharda Nagar: 1/1245 Wake Mohalla, Khalasi Line, Sharda Nagar,

Saharanpur-247001 Branch Code: 1017

Mobile: 84770 06125


Madhav Nagar: Nr. Telephone Exchange, Madhav Nagar, Saharanpur-247001

Branch Code: 1021

Mobile: 9837060380


BC Offices: Nakur (affiliated to Ambehta Branch)

Chutmalpur (affiliated to Hakikat Nagar Branch)

Cluster 3: M.P. RegionDhar Branch: Mandi Samiti Road, Opp. Dhareshwar Temple, Dhar - 454001

Branch Code: 1006

Telefax: (07292) 222413, 9644165550


Indore Branch: Bhagwati Palace, Pooja Dairy Lane, 100 Jaora Compound,

Indore-452001 Branch Code: 1010

Telefax: (0731) 2704268, 7354115550


BC Office: Patnipura (affiliated to Indore Branch)


Amount H Crores* 2011-12 2012-13 2013-14 2014-15 2015-16

Share Capital

11.63 22.37 41.33 44.66 43.89

Deposits

245.78 318.46 398.86 775.59 809.60

Interest Income

21.72 31.31 42.60 58.67 94.97

Capital Adequacy Ratio (CRAR %)

13.52% 14.28% 16.15% 13.75% 13.85%

Cost of Deposits (%)

7.40% 8.13% 7.98% 8.20% 7.85%

Interest Expenses

15.90 22.47 28.14 40.37 62.10

Ratio of Tier I to Tier II Capital 97:3 96:4 98:2 96:4 95:5

Advances

145.18 220.08 283.96 557.09 602.22

Net Interest Income

5.82 8.84 14.46 18.30 32.87

Growth in Capital Funds (%) (Tier I + Tier II)

39.38 63.06 76.18 11.49 5.3

Yield on Advances (%)

12.01% 12.85% 13.50% 13.65% 13.03%

Net Interest Margin (%)

2.81 3.20 4.28 4.22 3.88

Reserves

3.64 5.17 6.78 9.78 12.83

CD Ratio (%)

59.07 69.11 64.85 71.83 74.38

Net worth

18.86 30.59 51.94 57.13 61.22

CAPITAL

DEPOSITS & ADVANCES

INTEREST

5 year financial highlights

*Unless stated otherwise


Amount H Crores 2011-12 2012-13 2013-14 2014-15 2015-16

Non-Interest Income

1.70 2.43 4.74 5.71 5.01

Investments

69.01 77.61 116.43 212.34 184.8

Gross NPA %

0.24% 0.23% 1.50% 0.48% 1.26%

Operating Profit

2.84 3.23 8.51 9.21 15.09

Total Nos. of employees (on-roll)

97 156 194 247 256

Average Assets

228.89 301.50 392.05 554.60 862.43

Return on Equity (ROE) (%)

13.16 7.88 10.85 10.01 12.69

Operating Profit per Employee (in lacs)

2.93 2.07 4.39 3.73 5.89

Dividend (%)

12% 12% 12% 8% 9%*

Yield on Investments %

8.59% 8.77% 9.33% 9.63% 8.32%

Net NPA %

0.20% 0.00% 1.10% 0.14% 0.60%

Net Profit After Tax and Provisions

2.02 2.18 5.22 4.95 7.35

Business per Employee (in lacs)

403.06 345.22 351.97 539.55 551.49

Total Business

390.96 538.54 682.82 1,332.68 1,411.82

Return on Avg. Assets (Operating Profit / Avg. Assets) (%)

1.24 1.07 2.17 1.66 1.75

OTHER INCOME

INVESTMENTS

NPA’s

PROFITABILITY

EMPLOYEE PRODUCTIVITY

OTHERS

*Proposed subject to approval in ensuing AGM.Annual Report 2015-16 11

Senior Management Team

Board of Directors

Mr CP Agarwal General Manager

Mr Suneet Kumar Gupta General Manager (Resigned with effect from August 31, 2016)

Mr Gaurav Mittal General Manager

Mr Harsh Mittal, CA General Manager (Joined with effect from April 11, 2016)

Mr Vijay Dubey Operations (Joined with effect from July 11, 2016)

Mr Divya Sethi Cluster Head

Mr Vivek Kansal Cluster Head

Mr Himanshu Garg Cluster Head

Mr Arpit Sharma IT

Mr Gaurav Kumar Gupta Finance and Accounts

Mr PK Mittal Credit

Mr Rajan Asthana Audit

Mr Sumeet Garg HR

Mr Yashvir Kumar Gupta Chairman

Mr Shiv Puran Gulati Vice-Chairman

Mr Sudhakar Agarwal

Mr Vijay Kumar Dhingra

Mr Sanjay Gupta, CA

Dr. Sanjeev Mittal

Mr Sarvesh Singhal

Dr. Kamal Kant

Mr Arun Kumar Malik

Mr Satyasheel Rao Pawar

Mr K C Mishra (Co-Opted Director)

Mr Suveer Kumar Gupta MD and CEO


Technology-enabled banking here to stay

More importantly, it is not a trend that is likely to transform the world in the future;

it has begun to do so already.

Consider the sweeping sectoral changes that have transpired in the last couple of

decades: bank branch visits have declined; bank branches have reduced in number

and size; an increasing number of banking transactions are being conducted on

the smartphone; cheque writing is becoming history; the proportion of cash-based

transactions is being replaced by virtual currency.

The big message is that technology-enabled banking is not a fad. This is a long-term trend projected to stay.


NFC (contactless payments) and biometrics: medium adoptionNFC payment adoption has been moderate, primarily for

low value transactions, but with a higher frequency. Biometric services are slowly gaining popularity as a safeguard against identity threats.

Mobile Banking: high adoptionMobile Banking enjoys extensive use in developed economies and is growing rapidly in developing economies. Almost every bank now enjoys a mobile banking application. fixed deposit among others) and services like remittances, lockers, ATM cards, insurance, forex and moder

Social media and analytics: high adoptionGlobally, banks are using social media to engage, cross-sell and promote offerings. Almost all major banks have Facebook pages and accounts on Twitter.

Personal finance management: medium adoptionA variety of PFM applications have been launched by banks

and new players in the BSFI sector over 36 months. Intense competition prevails in this profitable vertical.Emerging

global banking

technology trends

Contextual banking: medium adoptionAdoption of this trend is moderate, but increasing mobile application usage is being perceived as an opportunity, making it possible to offer the right product to the right customer at the right time.


Cloud services: medium adoptionRoughly three-fifths of the banking sector has adopted cloud services. Inter-operability, regulatory compliance and confidentiality concerns are barriers to widespread adoption.

P2P funding digital platforms: high adoptionDigital P2P platforms have been around for almost a decade, with the volume of such platforms almost doubling each year. They enjoy a higher adoption due to a lower turn-around time and cheaper rates.

Wearable technology: medium adoptionMillennials are projected to drive the

offtake of wearables to an estimated 130 million units by 2018. Banks are looking at ways they can build relevant applications and functionalities to capitalise on the industry boom.

Digital wallets: high adoptionThe profitable mobile wallet is marked by diverse offerings from banking and non-banking players. Growth in this segment has been catalysed by relaxed regulation and infrastructure support.

Block chain technology: low adoptionThis relatively untapped technology was introduced approximately three years ago. It has been estimated that spending on block chain technology, which currently stands at $75 million, is expected to increase to $400 million by end 2019.


NFC (contactless payments) and biometrics: medium adoptionContactless payments are nascent in India. However,

biometrics is rising, with banks offering biometric verification for customers. The biometrics market is estimated to grow at a CAGR of 35% till 2020.

Mobile Banking: high adoptionMobile banking enjoys widespread use in India. A sharp rise in smartphone users is promoting mobile banking application use. Even as private banks led the movement, almost all public banks now offer this application. Social media and

analytics: low adoptionThe use of social media is only beginning to catch up in India, again with private banks taking to Facebook for promotion and marketing. The analysis of customer sentiment is beginning to be conducted through social media.

Personal finance management: medium adoptionAlthough a host of PFM applications have been launched in

India, customer adoption has been moderate due to customer inhibition. Most major banks have their PFM software on Android and iOS platforms.

Emerging Indian

banking technology

trends

Contextual banking: low adoptionContextual banking is yet to popularise in India. Portals like ‘CIBIL Xpress Acquire’ make it possible for customer interest to lead to real-time loan offerings and usage-based insurance, which matches premium rates on auto insurance based on driving behaviour


Cloud services: low adoptionCloud service adoption is low in India, with hardly any banks utilising the framework. Shivalik Bank is a pioneer in implementing a cloud-based payment clearing system.

P2P funding digital platforms: high adoptionCrowd funding is nascent in India, marked by just four or five start-ups.

Wearable technology: low adoptionThe wearables market in India is

witnessing substantial growth, but this technology adoption has been low at the bank level. The trend is likely to accelerate once wearables market penetration increases.

Digital wallets: medium adoptionThe concept of digital wallets has caught up in India, with the adoption rate being moderate. The current market size for m-wallets is estimated at H3,500 million, expected to rise to H12,100 million by 2019.

Block chain technology: low adoptionJust as elsewhere in the world, the block chain technology is yet to be tapped in India. The RBI endorsed this technology in December 2015, and analysts predict this technology will soon be adopted in the BSFI sector.


Banking marries technology

…where a success driver, apart from

basic banking principles, is completely

different and complementary – the

power of technology.

There are a few reasons why technology

is proving to be the sectoral game-

changer.

With basic banking services having

commoditised, technology adoption

and innovation are leading change in

the BSFI sector. Even within this area,

there is a premium on graduating

from plain technology to cutting-edge

interfaces like Payments, Personal

Finance Management and Lending.

Technology interface is extending from

desktop intervention in banking services

to smartphones, making services virtual,

instant and accessible.

Besides, the use of technologies is

evolving from legacy to cloud services,

digital cum biometric verification, web

analytics and mobile app development.

The outlook for technology-led banking

is robustly optimistic:

Mobile banking user base is

expected to grow globally from

0.8 billion in 2014 to 1.8 billion in

2019.

Even as India enjoys around 77%

For once, the centuries-old banking industry has arrived at an inflection point…

mobile subscriber penetration,

mobile internet penetration is

estimated at only 6.5%.

Customer experience forms 24%

of all new analytics initiatives

undertaken by global financial

institutions.

Global spending on risk

management and compliance

technology is expected to increase

to $97.3 billion by 2018.

Distributed ledgers, the most

popular technology of which

is known as the ‘block chain

technology’ is expected to reduce

banks’ infrastructure costs by $15-

$20 billion annually.

National Payments Corporation

of India (NCPI) announced the

development of united payments

interface (UPI) which is likely to

revolutionise fund transfers. Linked

to an Aadhaar card and a mobile

device, it offers safety along with

ease of use. UPI will move the

country closer to becoming a

cashless economy.

The bottomline: technology-led banking

is at a nascent stage facing decades of

growth, benefiting the early movers.




Transforming India through technology investments

This trend is being catalysed by national

structural developments that are likely

to transform the technology game in

India.

The Government of India announced

a ‘Digital India’ programme, which

aims to transform the country into a

digital state. In this environment, the

government interfaces digitally with

citizens, businesses and within its

own departments. The programme is

based on three separate parameters:

digital infrastructure as a utility,

governance and services on demand

and digital empowerment of citizens.

The programme comprises important

projects like National Optical Fibre

Network, National e-Governance Plan,

National Knowledge Network and

digital cities, etc. The impact: economic,

social and environmental.

Economic: As per World Bank, a 10%

One of the most encouraging sectoral developments is that growing digitisation is not only a global concept benefiting customers and companies in western countries. It is a trend whose benefits are likely to touch the common Indian as well.

increase in mobile and broadband

penetration in developing countries

increases the per capita GDP by 0.81

and 1.38% respectively. With the

urban market having a tele-density of

160%, it is the rural markets (45% tele-

density) where economic opportunities

exist. Some analysts indicate that the

Digital India initiative could enhance

the country’s GDP by an additional $1

trillion by 2025.

Social: The social impact of Digital India

will be in the elimination of barriers

limiting the national reach of education,

healthcare and banking. Digital literacy

in India is just 6.5% of the total

population. Obstructions exist in the

form of middlemen, illiteracy, ignorance

and poverty. A digitally connected

nation will make it easier for citizens

to obtain access to information, and

for sectors (education and banking) to

achieve higher penetration in rural and

under-developed markets. Ultimately it

will lead to the modernisation of social

thought and help improve quality of

life.

Environmental: Digitisation of services

will moderate carbon footprint by

lowering fuel consumption, better

waste management and modernisation

of workplaces. An increased use of

telepresence, and the flexibility of

bringing one’s own device will not

only reduce operating costs, but also

lower the carbon footprint and reduce

electronic waste. A study done in the

UK found that an employee using

telepresence can save 1,175 miles of

driving every year, and reduce 364.7kg

of carbon emissions by working from

home 1.5 days every week.

Source: www.capgemini.com, www.

kpmg.com and www.ey.com


Shivalik. Tomorrow’s co-operative bank today

Digital Banking Focus AreasEmployee Digital Enablement

Human Resource Management

System (HRMS),

Enabling Sales force through digital

assets for customer facing and

internal process fulfilment

Learning Management System

for Training and Development

integrated with HRMS.

Internal Processes:

Paperless account opening via

micro ATM

Validation of CIBIL report via CBS;

Validation of KYC documents such

as PAN and Voter ID via CBS;

Implementation of Loan Origination

System (LOS);

Document Management System

Online Internal Complaint

Management System

At Shivalik Bank, the central point that we wish to communicate is that we invested proactively in technology with the objective to empower (and delight) customers on the one hand and enhance our operating efficiency on the other.

Customer experience

Creation of e-lobbies at all large

branches equipped with ATM,

CDM, Bulk Note Acceptor, Passbook

Printer, Self Service Kiosks

Video Conferencing facilities for

customer interaction with Head

Office staff

Channel banking to enable 24*7

banking such as integration with

social networking websites, UPI,

NFC, cardless transactions, Value

added services on m-ATM.

Customer literacy centres supported

by digital technology

Compliance, Risk and Reporting:

e-KYC

Anti-money laundering (AML)

software

Audit Management Software (AMS)

Asset Liability Management

Software

Risk based Capital Allocation

Software

Automated Tracking Tool to report

deviations in real time

Digital process to handle Exception

Reporting

Cyber and Data Security

Data and Analytics:

Customer Relationship

Management Software (CRM)

Lead Management Solution

Risk Analysis and Credit Evaluation

Software

Real time trend and exception

reporting

Predictive analysis of Employee

deviant Behaviour


Our digital banking roadmap to enhance Customer Experience Balance inquiry through a missed call E-Lobby Concept E-KYC Mobile Banking and Mobile Wallets Online locker

enquiry and booking service Account Opening through Micro ATM on branches Fund Transfer facility through Micro

ATM Bill payment facility through Micro ATM PIN PAD/AEPS services in SHG segment Target to install 1000 POS by

2016 - 2017 Automation of School fees payment by customers Increase ATM/CDM hits per month to 1lac and 40,000

by 2016 - 2017 Increase the use of E commerce via launch of Pay Secure in 2016 - 2017 Target of 15,000 net banking

customers by 2016 - 2017.


C h a i r m a n ’ s m e s s a g e

“A combination of digital banking, financial inclusion and scale can generate substantial growth for Shivalik Bank across the foreseeable future.”By Mr Yashvir Kumar Gupta, Chairman

At Shivalik Bank, we stand at one of the most exciting

junctures in the history of the banking sector in India.

India is the fastest growing large economy in the world and

likely to sustain this momentum across the foreseeable future.

India’s banking sector is under-penetrated; the number of

branches per 10,000 of India’s population is approximately

9.7 compared with a benchmark of 30 in developed countries.

India has embarked on a correction of this skew through an

unconventional route, providing licenses to a number of small

banks, convinced that this will address the needs of small

borrowers and build the country from the grassroots upwards.

India is focused on graduating the bottom of the country’s

pyramid into an economically productive class through growth

in small businesses.

At Shivalik Bank, a co-operative bank with a growing presence

in Tier 2 and semi-urban locations, this represents an attractive

opportunity for providing timely and affordable credit.

I would go step further; India’s co-operative banking system is

equipped to play this national grassroots transformation role

better than any other banking format.

There are a number of reasons for this.

One, co-operative banks are localised with roots in the areas

Retail Lending Portfolio (2015-16)(Without Loans against Banks own deposits)

Loans Up to H25 lacs

61.16 %Loans Above H25 lacs

38.84%


of their presence, which enhances their ‘insider’ perception, a

competitive advantage for any financial intermediary.

Two, co-operative banks take decisions closer to ground

realities, resulting in customised responses to local needs.

Three, co-operative banks work on first-hand knowledge of

their customers through a unique prism (social, cultural and

financial), resulting in minimal loan defaults, which is a critical

advantage at a time when the country’s mainstream banking

system has proved vulnerable to loan integrity.

Four, we combine the best of NGO and banking practices that

enhance financial discipline and the capital productivity.

Five, co-operative banks enjoy low start-up costs and modest

overheads that makes it possible for them to achieve break-

evens quicker than their larger equivalents.

The result: co-operative banks have a critical role to play in

the area of financial inclusion in the second most populous

country in the world.

At Shivalik Bank, we invested in technology not as a fringe

consideration but as a core focus.

We did so because we recognised from the day we went

into business that the right combination of cutting-edge

technologies could emerge as the single biggest driver of our

business success.

The reason for this is derived from the nature of our business.

In a business that addresses small customers (and hence, small

amounts per transaction), one needs to work a considerably

large number of customers to achieve the critical mass

necessary for viability and profitability. This critical mass can

only be addressed through proactive technology investments.

Besides, in a banking business adequately invested with

prudent technologies, the costs arising out of errors are

negligible, systemic leakages are minimal, apprehension at the

last mile of customer engagement can be transformed into

delight and technology is the most potent driver of financial

inclusion.

ACCOLADES IN 2015 - 2016

• The Bank has been adjudged India’s Top 100 Co-

operative Banks 2015 Awards and received ‘Certificate

of Excellence’ by BitStreamMediawoks, one of the fastest

growing technology media, events and integrated

marketing companies in the Asia Pacific region

• The Bank has received ‘Young Achiever’s Award’ by

Hindustan Media Ventures, a leading newspaper in North

India

• Shri Suveer Kumar Gupta, the MD & CEO of the Bank

has been awarded with the Best CEO under Mid –Sized

Co-operative Bank category by Banking Frontiers, one of

the leading magazines in the coop- banking sector.

H1,411 Cr.

Business Size

as on March 31, 2016

H15 Cr.

Operating Profit

2015-2016

29.30%

CAGR over five years

39.70%

CAGR over five years


Shivalik’s technology playAt Shivalik, we have been prudent in our technology selection

and application.

We have invested in cutting-edge solutions ahead of the

industry curve;

We are the first bank in India’ to offer RTGS / NEFT service on

Cloud.

Launched NACH / NECS.

Enhanced net banking by adding features such as request for

Term deposits, interest certificates for Term Deposits.

Installed Solar panels at ATMs / CDMs particularly in rural areas

where electricity supply is erratic.

Initiated Aadhar updation and seeding for subsidies. Bank

completed the ground work for implementing e-KYC in 2016-

17 which will remove the manual effort of Aadhar updation

and automatically link to UADI to verify customer credentials.

We have invested in technology solutions for a fraction of the

prevailing costs (one-time and recurring) by going for SAAS

model instead of traditional outright purchase model.

We have invested in solutions that have had a visible

impact on customer service: 24x7 SMS banking, enhancing

convenience of access.

We have made technology investment key to our business

success and sustainability. Our IT team keeps abreast of

emerging global technology introductions with the objective

of integration and trains professionals within continuously.

When you combine growth with profitability, you get the basis

of why we are optimistic that we possess the DNA to graduate

our co-operative bank into full-fledged commercial status over

the coming years.

OptimismThe basis of my optimism is that we are not just another

co-operative bank; we are a modern technology-driven co-

operative bank focusing on the highest efficiency standards.

These standards are reflected in superior productivity per

person, scalable foundation that makes it possible to

moderate costs (in proportion terms) even as the bank

becomes larger, stronger disbursement integrity and world-

class service.

I am optimistic that a combination of digital banking, growth

in scale and correction of banking under-penetration can

generate substantial growth for Shivalik Bank across the

foreseeable future.

Yashvir Kumar Gupta, Chairman

The results in numbers and influence

Total business grew by 5.94% to

H1411.82 crore (H809.60 crore in

deposits, H602.22 crore in advances)

in 2015-16 compared to H1332.68

crore in 2014-15

Operating profit

grew by 63.84%

from H9.21 crore in

2014-15 to H15.09

crore in 2015-16.

Investments decreased

by 12.97% from

H212.34 crore in

2014-15 to H184.80

crore in 2015-16.

Gross NPA

was 1.26%

in 2015 -16

well below

the sectoral

average.


Report of Board of Directors

We are proud to present, on behalf of

the Board of Directors, the 19th Annual

Report for the operations of Shivalik

Mercantile Co-operative Bank Limited,

and audited financial statements for the

year ended 31st March, 2016.

In India, there is a growing space

available for smaller banks and

microfinance companies that is not

presently being addressed by the large

banks. In fact, there is a growing

section of customers who are either

intimidated by the largeness of the

conventional banks or not entirely

satisfied by the kind of service offered

by them. These customers represent an

attractive target segment for our kind of

bank: the small marketing to the small,

which represents a closer understanding

of customer needs and a meeting

of mindsets. During the year under

review, we commenced an initiative

called ‘customer se milo’ across all

our branches. We organised camps

where we interfaced with customers

whose growing needs of finance were

being overlooked by the country’s

banking system. During our meetings,

we envisaged the need for financial

inclusion, advocated the need for

accounts for all members of the family

and engaged in up-sell and cross- sell

of diverse products and services. This

resulted in opportunities in all segments

- deposits, advances, and non-interest

income.

The year under review was successful

from an operational and financial

standpoint, with the total business

at H1411.82 crore as on 31st March,

2016. The Bank grew its business in

almost all segments, with deposits

increasing from H775.59 crore in the

previous financial year to H809.60

crore in 2015-16. Shivalik Bank is a

co-operative bank that inspires trust

– public deposits increased 4.38% in

2015-16; gross non-performing assets

of 1.26% (78 bps increase over the

previous year) were among the lowest

within its sector.

When we embarked on the year

under review, we recognised that in a

competitive business like ours where

larger banks enjoyed access to a lower

cost of funds, it was imperative to

improve the CASA segment. I am

pleased to report that in 2015-16, we

not only mobilised a larger quantum

– H256.72 cr as against H138.54 cr in

the previous year but also increased

the proportion of CASA deposits as a

proportion of total deposits - 31.71% as

against 17.86%.

Advances increased as well from

H557.09 crore in the previous year to

H602.22 crore in 2015-16. The Bank’s

net worth stood at H61.22 crore at the

Over 3.6 LacCustomers served

in 2015-16

12.70%Return on Equity

H7.35 Cr.Net profit

(after tax & provisions)


close of the year. For any small bank,

the challenge lies in staying true to

one’s focus of servicing the needs of

small borrowers without compromising

profitability. This is precisely the

challenge that Shivalik Bank successfully

addressed during the year under review:

the proportion of sub-H25 lac loans

disbursed by us increased from around

25 per cent of all our disbursements

in 2014-15 to 50 per cent in 2015-16.

A large part of our loans were made

as productive growth capital to small

store keepers, one of the first occasions

that an organised bank addressed this

segment of customers in an organised

manner.

In addition to servicing the needs

of smaller loan seekers, this also

strengthened our de-risking by

broadening downsides across a larger

number of loan seekers. Besides, the

impact of any slowdown is usually the

last to reach retail loan-seekers, so

we believe that our lending will prove

economically productive. Focusing on

this segment also helped the bank

meet the Priority sector lending (PSL)

requirements of RBI which were 40% of

the total advances;

In addition, the bank focused on the

disbursement of Gold Loans for the first

time during the year under review –

Gold Loan Portfolio increased by 13.99

crore to 18.05 crore.

In addition, the bank reinforced the

national agenda of financial inclusion

through long-standing partnership with

Janhit Foundation to address the growing

microfinance needs of small help groups

resulting in partnerships with more than

7000 SHGs. Lending to microfinance

increased by 6.82% in 2015-16 as

compared to the previous year.

We must report that this growth was

not achieved at the cost of business

quality. NPAs moderated to H7.62

crore; with gross and net NPAs at

1.26% and 0.60% respectively much

below the RBI mandated level of 7%

and 3% respectively. Business per

employee increased by 2.03% from

H5.40 crore to H5.51 crore in 2015-

16. The capital adequacy ratio was

consistently above the RBI mandate of

9% - 13.85% for the year under review.

The Capital to Risk Assets Ratio of the

Bank was consistently above 12%. The

Bank’s targets for SLR maintenance

were addressed with corresponding

investments in securities as per RBI the

credit-deposit ratio was 74.38% in

2015-16. The Board of Directors have

proposed a dividend of H9 per share

(9%).

0.60%Net NPA

49.33%Total credit extended to

the priority sector of total advances

61.16%Credit to sub H25 lacs of total

advances (without Loans against Bank’s own Deposits)


OperationsHighlights 2015 – 2016 Implementation of AML software

to generate and monitor Suspicious

Transactions in real time

Implementation of Exception Reports

to observe any irregularity with respect

to the specified banking norms and

parameters

Implementation of Entry Passing

and Verification, (EPV) model of Core

Banking Solution to ensure safety and

security of all Banking transactions,

whether it is customer-induced or bank-

induced.

Internal AuditHighlights 2015 – 2016 Implementation of paperless

e-audit software being used by several

top banks in the country including

ICICI Bank, Axis Bank, IDFC Bank, Bank

of Baroda, and Corporation Bank.

Internationally, Pentana is being used at

BBVA, which is a large Spanish banking

group, serving 50 million customers in

over 30 countries.

Roll out of Risk based audit frequency

instead of a fixed time period: Seven

out of our 21 branches are subjected

to concurrent audits. Other branches

are either audited on a quarterly or

half yearly basis based on their risk

assessment and track record. This is

more stringent than the RBI circular

which mandates that all branches must

be audited at least once a year.

Contribution to Profit: Internal audit

aims to serve a number of stakeholders

one of whom is the bank and its

shareholders. A number of revenue

leakage instances were identified which

directly contributed to the bottom line

over the course of the year.

Linking Audit to Performance Pay

(PP): Traditionally, PP of employees is

based solely on their ability to generate

business. At Shivalik Bank, we believe

business and compliance go hand in

hand. Therefore, a component of PP

of relevant branch employees is linked

to the internal audit ratings of the

branches which are given after each

audit.

Human Resources and TrainingHighlights 2015 – 2016 Implementation of HRMS

Selection and implementation of

Learning Management Solution

Implementation of automatic

employee help desk and internal query

resolution system

Roll out of Online performance

appraisal and management

Inclusion of Parents under the

employee group health insurance plan

Roll out of profitability based annual

contest with international travel as a

reward

Over 60 trainings conducted during

the year for various levels of staff

Improvement in gender diversity

across the bank

256Employee strength

(On-roll)

1%Increase in women recruits

over previous year

33.6 YearsAverage age of

employees


IT and Digital Banking initiativesHighlights 2015 – 2016 Launch of SMS Banking

Launch of E-commerce enabled debit

cards (RuPay based)

Launch of POS devices for traders and

retailers

Implementation of the NACH package

Implementing Adhaar Enabled

Payment System (AEPS)

Piloting of Bulk Note Acceptor (BNA)

at select branches. (BNA accepts cash

up to Rupees 2 lacs)

Launch of Green PIN (paperless ATM

PIN generation)

Ground work for launching Micro

ATMs a hand held tablet which runs on

the Android operating system equipped

with a fingerprint scanner, card swiping

slot, printer and a digital camera

Implementing an Audit Management

System

Implementation of Anti-Money

Laundering (AML) package

Implementation of electronic registers

replacing manual registers

Automation of Aadhaar based subsidy

payouts

Implemented NACH (National

Automated Clearing House) to

automatically debit or credit accounts.

Encouraging customers to use net

banking

New email solution

Customer ServiceHighlights 2015 – 2016 Separate helpdesks for senior citizens and

for digital banking

‘Customer se milo’ initiative

Branch staff assists in floor management

during rush hours and also in ATMs and CDMs

Mobile banking app with features such as

Balance enquiry, cheque book request, mini

statement, mmid generation, ATM card hot

listing etc.

Net banking features introduced

73%Increase in ATM transactions

2,47,896Customers of Shivalik bank

served through ATMs during the year

80,000Number of ATM cum

Debit Cards Issued

3,93,397Customers of other banks

served through ATMs during the year

90%Increase in CDM transactions

96%Increase in Green PIN generation

23.40%Increase in ATM cum Debit

card issue from previous year

285%Increase in net banking users

from previous year


Corporate Governance Report Corporate Governance is essentially

a set of standards, systems, and

procedures aimed at effective, honest

and transparent management of a Bank

within the applicable statutory and

regulatory structures. The Corporate

Governance framework at Shivalik Bank

takes into account the relevant statutory

provisions of the Banking Regulations

Act, 1949 (AACS), Multi State Co-

operative Societies Act, 2002 and

Reserve Bank of India (RBI) directives

and guidelines.

Shivalik Bank considers corporate

governance as a cornerstone of

conducting business in an ethical and

responsible manner which is fair to all

the stakeholder groups. The following

principles are embedded in our

governance framework:

Strategic and critical review of the

past, current and future performance of

the bank by the Board of Directors and

its sub-committees.

Transparent approach to decision

making by Executive Management and

Board.

A sound system of internal controls

to mitigate and monitor internal and

external risks.

Accuracy and transparency in

disclosures to all stakeholders for all

material information.

Compliance of laws, rules and

regulations in true letter and spirit.

1. Board of Directors

1.1 CompositionThe Bank is managed by the Board of

Directors, which formulates strategies,

policies and reviews its performance

periodically. The composition and

election of the Board of Bank is

governed by the Multi-State Co-

operative Societies Act, 2002 and

the Bye-Laws of the Bank. As per the

Bye-Laws of the Bank, the maximum

strength of the Board of Directors

shall be twelve directors including

two Co-opted directors. The Board of

Directors are elected by the members

of the Bank and tenure of Board of

Directors is five years from the date of

their appointment. The tenure of the

Board of Directors for the year 2011to

2016 ended in the month of February

2016 and election to the Board of

Directors for the year 2016-2021 was

held on February 14, 2016 under the

supervision of Mr Anil Kumar, who

had been appointed as a Returning

Officer to conduct the election. As on

March 31, 2016, the Board of Directors

comprised of 11 members (10 Elected

and 1 Co-opted Directors) in addition

to MD & CEO. The Board includes

eminent persons including a Chartered

Accountant and a former banker,

both having professional expertise

in banking, management, finance,

accountancy and audit systems. The

MD & CEO is the ex-officio member of

the Board and all the committees of the

Board.

Responsibility for day-to-day

management of the Bank is entrusted

with senior management personnel

under the leadership of the MD & CEO

who operates under the guidance

and control of the Board. The Board

is responsible for reviewing the

performance of the bank including

steps taken by senior management and

approving future strategic vision with

the aim of enhancing stakeholder value.

1.2 Chairman of the BoardMr. Yashvir Kumar Gupta, a graduate in

Mechanical Engineering from IIT – BHU,

is the Chairman of the Board, and has

been at the helm of Shivalik Bank since

1998 turning what was then a small

start-up bank into close to a `1,400

Crore businesses with a presence in two

states having 21 branches currently.

He has a rich experience of close to

five decades in the field of trading,

agri-business and banking industries

and worked at Hindustan Aeronautics

Limited (HAL) prior to taking on

entrepreneurial ventures. Troubled by

the poor quality of customer service

in nationalised banks at that time, he

set up Shivalik Mercantile Co-operative

Bank in 1998 to provide a rich and

delightful banking experience to

customers.


1.3 Roles & Responsibilities of Board of DirectorsThe primary responsibility for good

corporate governance of the Bank rests

with its Board of Directors. The Board

has been entrusted by the shareholders

with the responsibility of overall

direction, supervision and control

of the Bank. The Board’s fiduciary

responsibility to the shareholders

requires that the Board should act in

their shared corporate interest, in good

faith, and with due diligence. At the

same time, the Board should recognise

and take into account the interests of

other stakeholders in the Bank, such as

depositors, other creditors, employees,

the government, and the community in

which it functions.

In addition to the Multi State Co-

operative Societies Act, 2002 read with

MSCS Rules, 2002 and Bye-Laws of

the Bank, Master Circular on Board of

Directors for Urban Co-operative Banks

(UCBs) issued by Reserve Bank of India

is also apply to the Board of Directors of

the Bank mutatis mutandis.

During April 1, 2015 to March 31,

2016, Fifteen Board meetings were

held and were instrumental in driving

the strategic vision and rigorous

performance management of the bank.

Except Mr. Yashvir Kumar Gupta,

Chairman, Mr. Sanjeev Mittal, Director

and Mr. Suveer Kumar Gupta, MD&CEO

of the Bank, no other directors are

related to each other.

Directors’ RemunerationShivalik Bank being a Co-operative

Society does not remunerate its

Directors. However, expenses related to

travelling and lodging are borne by the

Bank for attending Board/Committee

meetings. MD & CEO is an employee of

the bank and the remuneration paid to

him is disclosed as a part of mandatory

disclosures each year.

2.2 BOARD COMMITTEES The Bank has the following Committees

of the Board of Directors:

Audit Committee of Board (ACB)In order to ensure and enhance the

effectiveness of internal audit/inspection

as a management tool, an Apex Audit

Committee of Board has been set up

at the board level for overseeing and

providing directions to the internal

audit/inspection machinery and other

executives of the bank.

CompositionThe Committee is headed by Mr. Yashvir

Kumar Gupta, Chairman of the Bank.

All members of the Committee have

requisite financial and management

experience including a Chartered

Accountant. General Manager (Risk

Management) and Audit Controller of

the Bank are the permanent invitees.

Other members of management and

representatives of statutory auditors are

also invited to attend and participate

in the meetings, whenever required.

The MD & CEO of the Bank acts as the

Secretary to the Committee.

Board Loan & Share Committee This committee has been constituted

by merging existing Share Allotment

Committee of the Bank the Board Loan

Committee (management committee)

and rechristened as Board Loan Share

Committee of Board of Directors of

the Bank with effect from February 14,

2016.

The major functions will be:

a) To ensure the compliance of Loan

Policy approved by the Board;

b) To consider, approve and sanction all

the loan proposals;

c) To form different committees of

bank functionaries and delegate loan

sanctioning powers to them;

d) To consider and approve the waiver

and settlement cases of all kind;

e) To approve applications for new

membership (Regular and Nominal) for

both borrowers and non-borrowers;

f) To allot shares to new as well as

existing members;

g) To approve share refunds and

transfers.


Members comprise of Mr. Yashvir Kumar

Gupta, who is also the Chairman of this

Committee, Mr. S P Gulati, Mr. Sarvesh

Singhal, Directors and Mr. Suveer Kumar

Gupta, MD & CEO of the Bank are the

members of the Committee. Credit

(Head) and Credit Manager of the Bank

are the permanent invitees.

Special Committee of the Board For Monitoring Large Value FraudsThe RBI mandates the constitution of

a Board Committee which would be

exclusively dedicated to the monitoring

of large value fraud cases including

detection procedures, reporting to

regulatory and enforcement agencies

and action against the perpetrators

of the frauds at the highest level. This

committee monitors all cases of fraud

with a direct financial impact of H1

Crore and above and includes five

members of the Board of Directors

including Chairman, two members

from ACB. No meetings were held

during the financial year 2015-16 as

the meetings are only held on an as

required basis.

Nomination & Human Resource CommitteeThis committee was constituted on

November 6, 2015 to look into the

matter of policies related to human

resource development. The terms of

reference include consideration of

all issues/areas concerning Human

Resource Planning & Management,

all HR Policies and initiatives. The

composition of the Committee

includes 3 members of Board including

Chairman, MD& CEO and General

Manager (HR & Marketing) and HR –

Head are the permanent Invitees.

Other Functional CommitteesApart from the above, the Board has

delegated its power to MD & CEO of

the Bank to constitute such Functional

Committees with specific terms of

reference as it may deem fit on time to

time. These include the following:

1) Asset Liability Committee (ALCO)

2) Investment Committee

3) KYC and AML Committee

4) Purchase and Expenditure Committee

Annual General Meetingsand Special General Meetings

Location, date and time of the AGMs held during the preceding 3 years are as under:

Year Location Date Time (IST)

2012-13 Hotel Royal Residency, Opp. Kalpana Talkies, Ambala Road,

Saharanpur – 247001, Uttar Pradesh

Sunday, June 30, 2013 10:00 AM

2013-14 Hotel Oasis, Delhi Road, Saharanpur – 247001, Uttar

Pradesh

Sunday, August 24, 2014 10:00 AM

2014-15* Hotel Royal Residency, Ambala Road, Saharanpur – 247001,

Uttar Pradesh

Sunday, September 27, 2015 10:00 AM

During the Financial Year 2015-16, Two Special General Meetings were held on May 12, 2015 and December 23, 2015 to

transact and approve the Merger proposal of HCBL Co-operative Bank Limited, Lucknow and Khargone Nagrik Sahakari Bank

Limited, Khargone, Madhya Pradesh respectively.

*During 18th AGM, Bank has increased its Authorised Share Capital to C100 Crore from existing C50 Crore.


Financial inclusion: microfinance

Branch led model: In this model,

a branch is set up at each block

headquarters and a NGO works with

the bank as a Business Correspondent

(BC) for extension services like formation

and nurturing of SHG. Micro ATMs

(mATMs) have been made available

to field staff for account opening and

all cash transactions of groups and its

members. This is being practiced

in Saharanpur district with over 300

SHGs.

Branch, BC and ATM/CDM model:

In this model, the branch of the bank

is located at district head quarter (HQ)

and a BC office is located at block HQ

with ATM and CDM. mATMs have

been made available to field staff for

account opening and cash transactions

of groups and members. This model has

been implemented at Meerut and Dhar

and ATM and CDM will be installed

after necessary approvals from the RBI.

There are over 3,000 SHGs in Meerut

and over 350 in Dhar.

Mini SHG model for Urban areas:

This is a new model where SHGs

comprising 5-6 members are formed

in urban areas. mATMs have been

made available to field staff for account

opening and cash transactions of

groups and members. This model has

been implemented at Noida and Indore.

About 200 SHGs have been formed

under this model so far.

2011-12

2012-13

2013-14

2014-15

2015-16

2011-12

2012-13

2013-14

2014-15

2015-16

515

1675

3113

4813

6130

179

597

1885

3284

3508

Number of micro-finance accounts

Loans disbursed under micro-finance (H lac)

SHIVALIK BANK HAS DEVELOPED THE FOLLOWING MODELS FOR REACHING OUT TO RURAL AND URBAN WOMEN:

KEY FINANCIAL METRICS - MICRO-FINANCE


StatutoryReports

36

Shivalik Mercantile Co-operative Bank Limited Annual Report 2015-16

Report on the Financial Statements1. We have audited the accompanying financial statements

of M/s SHIVALIK MERCANTILE CO-OPERATIVE BANK LTD, having registered office at Ansari Road, Saharanpur- 247001 which comprise the Balance Sheet as at March 31, 2016 and also the Profit and Loss Account for the year ended on 31st March 2016.

Management’s Responsibility for the Financial Statements2. Management of the Bank is responsible for the preparation

of these financial statements that give a true and fair view of the financial position and financial statements of the Bank in accordance with the Accounting Standards issued by the Institute of Chartered Accountants of India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility3. Our responsibility is to express an opinion on these financial

statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risk of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Bank’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion6. In our opinion and to the best of our information and

according to the explanations given to us, the financial statements subject to our comments and observations contained in Audit Memorandum, give the information so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) In the case of the Balance Sheet, of the state of affairs of the Bank as at March 31, 2016;

(b) In the case of the Profit and Loss Account, of the profit for the year ended on that date.

Report On Other Legal and Regulatory Requirements7. As required by section 143(3) of the Companies Act, 2013

we report that:a. We have obtained all the information and explanations

which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. In our opinion, proper books of account as required by law have been kept by the Bank so far as appears from our examination of those books and proper returns adequate for the purpose of our audit have been received from the branches not visited by us;

c. The Balance Sheet, the Profit and Loss Account dealt with by this report are in agreement with the books of account and returns.

d. In our opinion and according to information given to us, there has been no material impropriety or irregularity in the expenditure or in the realisation of money due to the bank;

e. In our opinion and according to information given to us, the transactions of the Bank, which have come to our notice, have been within the competence of the Bank.

Memorandum of Changes:- Nil

For M R S & CO.Chartered AccountantsFirm Registration Number:- 016610N

Ram Kumar DhimanPartnerMembership No. 096852

Place: SaharanpurDate: 12th May, 2016

INDEPENDENT AUDITOR’S REPORT

To,

The Members,

Shivalik Mercantile Co-operative Bank Ltd.

37

Shivalik Mercantile Co-operative Bank Limited Annual Report 2015-16Annual Report 2015-16

Balance Sheet as at 31st March 2016

(Amount in H)

ScheduleCurrent Year31.03.2016

Previous Year31.03.2015

CAPITAL & LIABILITIES

(1) CAPITAL 1 438,900,200.00 446,606,300.00

(2) RESERVE FUND & OTHER RESERVES 2 128,290,413.18 97,832,720.00

(3) DEPOSITS & OTHER ACCOUNTS 3 8,090,566,451.30 7,755,873,272.21

(4) BORROWINGS - - -

(5) BILLS FOR COLLECTION BEING BILLS RECEIVABLE AS PER CONTRA - 3,932,931.31 23,044.00

(6) BRANCH ADJUSTMENTS - - -

(7) OVERDUE INTEREST RESERVES (ON NPA) - 11,833,778.61 5,395,509.67

(8) INTEREST PAYABLE (ON TERM DEPOSITS) - 3,965,537.32 9,636,430.37

(9) OTHER LIABILITIES & PROVISIONS 4 141,106,825.44 92,384,380.37

(10) PROFIT & LOSS 5 74,653,420.71 40,677,851.79

GRAND TOTAL 8,893,249,557.87 8,448,429,508.41

CONTINGENT LIABILITIES - 5,160,800.00 9,398,600.00

PROPERTY & ASSETS

(1) CASH IN HAND & BALANCE WITH RBI - 92,920,404.66 37,969,952.00

(2) BALANCES WITH OTHER BANKS 6 501,325,666.01 480,790,715.34

(3) MONEY AT CALL & SHORT NOTICE - 150,069,041.00 -

(4) INVESTMENTS 7 1,847,982,944.00 2,123,432,289.00

(5) ADVANCES 8 6,022,231,442.27 5,570,905,071.42

(6) INTEREST RECEIVABLE 9 116,885,480.81 94,918,896.23

OF WHICH OVERDUE (ON NPA) 11,833,778.61 5,395,509.67

(7) BILLS RECEIVABLE BEING BILLS FOR COLLECTION AS PER CONTRA - 3,932,931.31 23,044.00

(8) FIXED ASSETS LESS DEPRECIATION 10 64,779,858.79 62,751,311.00

(9) OTHER ASSETS 11 93,121,789.02 77,638,229.42

GRAND TOTAL 8,893,249,557.87 8,448,429,508.41

As per our report of even date attached

For M R S & Co. Sd/- Sd/-

Chartered Accountants Suveer Kumar Gupta Sarvesh Singhal

(Firm Regn. No. 016610N) MD & CEO DIRECTOR

Sd/- Sd/- Sd/- Sd/-

Ram Kumar Dhiman Sudhakar Agarwal Shiv Puran Gulati Yashvir Kumar Gupta

Partner (M. No. 096852) DIRECTOR VICE CHAIRMAN CHAIRMAN

Saharanpur: 11th May, 2016

38


Statement of Profit & Loss for the Year ended 31st March 2016

(Amount in H)

Current Year31.03.2016


EXPENDITURE

(1) INTEREST ON DEPOSITS, BORROWINGS ETC.

i) INTEREST ON DEPOSITS 617,735,146.31 401,789,791.52

ii) INTEREST ON BORROWINGS 3,246,312.00 1,927,089.00

TOTAL 620,981,458.31 403,716,880.52

(2) SALARIES, ALLOWANCES, PROVIDENT FUND, BONUS & GRATUITY ETC. 102,919,871.76 76,040,204.32

(3) RENT, TAXES, INSURANCE, LIGHTING ETC.

i) BUILDING RENT 14,918,555.68 12,327,802.00

ii) TAXES 5,087,162.36 3,331,833.50

iii) INSURANCE 9,759,606.19 5,830,530.67

iv) LIGHTING 7,126,674.41 6,685,380.03

TOTAL 36,891,998.64 28,175,546.20

(4) LAW CHARGES 524,625.00 548,804.10

(5) POSTAGE AND TELEPHONE CHARGES

i) POSTAGE 445,980.68 370,438.56

ii) TELEPHONE 1,313,814.24 949,371.57

iii) COMPUTER NETWORKING, CONNECTIVITY & HOSTAGE 7,995,284.00 6,940,399.76

TOTAL 9,755,078.92 8,260,209.89

(6) AUDIT & CONSULTANCY FEES 31,336,774.21 21,835,193.17

(7) DEPRECIATION AND REPAIRS

i) DEPRECIATION 11,360,604.00 10,654,130.51

ii) WRITTEN OFF/ IMPAIRED ASSETS - 1,214.00

iii) REPAIRS 5,532,603.34 4,305,667.87

TOTAL 16,893,207.34 14,961,012.38

(8) STATIONERY, PRINTING AND ADVERTISEMENT

i) PRINTING & STATIONERY 4,013,687.81 3,173,128.72

ii) ADVERTISEMENT 2,440,816.00 3,193,190.75

TOTAL 6,454,503.81 6,366,319.47

Contd...

39



Contd… from previous page (Amount in H)



EXPENDITURE

(9) OTHER EXPENDITURE

i) SUBSCRIPTION 1,150,753.12 590,668.04

ii) TRAINING & DEVELOPMENT OF STAFF 46,193.00 45,765.00

iii) AGM & CONFERENCE 802,068.00 227,398.00

iv) SECURITY 3,450,050.19 3,406,106.62

v) BUSINESS PROMOTION & GIFTS 510,187.00 1,629,912.16

vi) STAFF WELFARE 2,538,780.77 1,720,093.57

vii) TRAVEL & TRANSPORT 4,379,533.01 3,057,841.53

viii) COMMISSION ON DAILY DEPOSIT/DSA 2,054,595.50 1,387,902.72

ix) BANKING CORRESPONDENT EXPENDITURE 3,967,423.44 2,557,329.00

x) CHARGES PAID TO OTHER BANKS 664,207.98 667,247.92

xi) AMORTIZATION ON INVESTMENTS 2,893,498.00 945,572.00

xii) INTEREST & PENALTIES 101,860.16 1,040.00

xiii) PROVISION ON STANDARD ASSETS 4,116,090.18 4,526,779.00

xiv) MISCELLANEOUS EXPENSES 661,487.53 1,017,509.49

TOTAL 27,336,727.88 21,781,165.05

(10) LOSS FROM SALE OF NON-BANKING ASSETS - -

(11) PROVISIONS FOR CURRENT YEAR

i) PROVISION FOR BAD & DOUBTFUL DEBTS (NPA) 21,346,315.22 7,090,848.00

ii) SPECIAL RESERVE U/S 36(1)(viii) OF INCOME TAX ACT 3,892,979.00 2,352,098.00

iii) PROVISION FOR CURRENT INCOME TAX 45,168,430.00 28,073,398.00

iv) PROVISION FOR DEFERRED TAX 1,381,999.00 600,115.00

TOTAL 71,789,723.22 38,116,459.00

(12) PRIOR PERIOD ADJUSTMENTS

i) PRIOR PERIOD EXPENSES 257,929.00

ii) ADUSTMENT FOR INCOME TAX (1,452,740.00)

iii) ADJUSTMENT FOR DEFERRED TAX 2,715,134.00

TOTAL 1,520,323.00

(12) BALANCE OF PROFIT 73,470,706.92 49,485,072.86

GRAND TOTAL 999,874,999.01 669,286,866.96

EXPLANATORY NOTE:

TRANSFERRED TO INVESTMENT FLUCTUATION RESERVE - 1,783,645.00

Contd...

40



Contd… from previous page (Amount in H)



INCOME

(1) INTEREST & DISCOUNT

i) INTEREST ON LOANS & ADVANCES 760,793,870.50 458,403,988.72

ii) INTEREST ON INVESTMENTS 168,926,358.82 128,338,819.22

iii) INCOME ON INVESTMENT IN MUTUAL FUNDS 20,025,075.37 25,445,552.76

TOTAL 949,745,304.69 612,188,360.70

(2) COMMISSION, EXCHANGE & BROKERAGE 991,987.58 539,228.63

(3) PROFIT FROM SALE OF NON-BANKING ASSETS - 38,214.00

(4) PROFIT ON SALE OF SECURITIES 6,031,907.00 25,434,136.00

(5) OTHER RECEIPTS

i) LOAN PROCESSING CHARGES 19,594,806.24 17,295,959.79

ii) INCIDENTAL CHARGES 1,770,294.33 2,172,523.99

iii) LOCKER RENT 2,588,021.23 2,428,174.69

iv) DIVIDEND FROM MUTUAL FUNDS - 60.00

v) BAD DEBTS RECOVERED 730,000.00 2,159,000.00

vi) COMMISSION FROM INSURANCE BUSINESS 1,701,198.29 520,187.00

vii) MISCELLANEOUS INCOME 16,721,479.65 6,511,022.16

TOTAL 43,105,799.74 31,086,927.63

GRAND TOTAL 999,874,999.01 669,286,866.96

EXPLANATORY NOTE:

CONTINGENT PROV. AGAINST DEPRECIATION IN INVESTMENTS - 1,783,645.00





Sd/- Sd/- Sd/- Sd/-




41


Schedule to Balance Sheet as at 31st March 2016

Schedule 1: CAPITAL (Amount in H)



i) AUTHORIZED CAPITAL 1,000,000,000.00 500,000,000.00 1,00,00,000 shares of `100/= eachii) SUBSCRIBED CAPITAL 438,900,200.00 446,606,300.00 43,89,002 shares of `100/= each (Previous Year 44,66,063 Shares of `100/- each)iii) AMOUNT CALLED UP 438,900,200.00 446,606,300.00 On 43,89,002 shares at `100/= each Of (iii) above, held by (a) Individuals & Others 438,900,200.00 446,606,300.00 (b) Co-operative institutions - - (c) Government - -


Schedule 2: RESERVE FUND & OTHER RESERVES (Amount in H)



i) STATUTORY RESERVE 66,638,425.00 54,138,308.00 ii) INVESTMENT FLUCTUATION RESERVE 16,343,728.00 6,343,728.00 iii) OTHER FUNDS AND RESERVES (a) SHARE TRANSFER FUND - 5,000,000.00 (b) PROVISION ON STANDARD ASSETS 16,594,490.18 12,478,400.00 (c) SPECIAL RESERVE U/S 36(1)(VIII) OF I.T. ACT 11,881,018.00 7,988,039.00 (d) CONTINGENCY RESERVE 16,832,752.00 11,884,245.00

TOTAL 45,308,260.18 37,350,684.00 GRAND TOTAL 128,290,413.18 97,832,720.00


Schedule 3: DEPOSIT & OTHER ACCOUNTS (Amount in H)



i) FIXED DEPOSITS a) INDIVIDUALS & OTHERS 5,523,440,044.56 6,370,454,281.17 b) CENTRAL CO-OPERATIVE BANKS - - c) OTHER SOCIETIES - -

TOTAL 5,523,440,044.56 6,370,454,281.17 ii) SAVINGS BANK DEPOSIT a) INDIVIDUALS & OTHERS 2,325,459,736.31 1,160,518,489.54 b) CENTRAL CO-OPERATIVE BANKS - - c) OTHER SOCIETIES - -

TOTAL 2,325,459,736.31 1,160,518,489.54 iii) CURRENT DEPOSITS a) INDIVIDUALS & OTHERS 241,666,670.43 224,900,501.50 b) CENTRAL CO-OPERATIVE BANKS - - c) OTHER SOCIETIES - -

TOTAL 241,666,670.43 224,900,501.50 iv) MONEY AT CALL AND SHORT NOTICE - - GRAND TOTAL 8,090,566,451.30 7,755,873,272.21

42



Schedule 4: OTHER LIABILITIES & PROVISIONS (Amount in H)



i) BILLS PAYABLE (DDs/POs ISSUED BUT NOT YET PRESENTED FOR PAYMENT) 16,187,097.08 10,135,411.31

ii) UNCLAIMED DIVIDENDS 3,322,636.00 7,901,305.00

iii) SUNDRIES 19,239,828.26 19,326,512.02

iv) PROVISION FOR BONUS - 1,846,633.00

v) PROVISION FOR INCOME TAX 45,168,430.00 28,073,398.00

vi) DEFERRED TAX LIABILITY 5,429,004.00 1,331,871.00

vii) TAX DEDUCTED AT SOURCE 9,882,648.68 3,246,133.84

viii) PROVISION FOR AUDIT FEES 261,250.00 202,500.00

ix) PROVISION FOR BAD & DOUBTFUL DEBTS (NPA) 39,903,431.42 18,557,116.20

x) PAID-UP CAPITAL (COLLECTION ACCOUNT) OF ERSTWHILE BHOJ NAGRIK SAHAKARI BANK

LTD., DHAR, & ERSTWHILE MALWA BANK, INDORE

1,712,500.00 1,763,500.00

xi) INVESTMENT DEPRECIATION RESERVE - -

TOTAL 141,106,825.44 92,384,380.37


Schedule 5: PROFIT & LOSS (Amount in H)



i) PROFIT AS PER LAST BALANCE-SHEET 40,677,851.79 59,971,672.93

ii) LESS: APPROPRIATIONS OF PROFIT FOR LAST YEAR

STATUTORY RESERVE 12,371,268.00 13,050,373.00

CO-OPERATIVE EDUCATION FUND 494,851.00 522,015.00

SHARE TRANSFER FUND (5,000,000.00) -

CONTINGENCY RESERVE 4,948,507.00 5,220,149.00

INVESTMENT FLUCTUATION RESERVE 10,000,000.00 3,000,000.00

FINAL DIVIDEND @ 4% 16,670,512.00 28,017,096.00

MOC ADJUSTMENT FOR FY 2013-14 - 1,818.00

INCOME TAX ADJUSTMENTS - 2,227,331.00

SHARE CAPITAL OF BORROWERS/GUARANTORS OF ERSTWHILE MALWA BANK RECREATED 10,000.00 69,600.00

TOTAL (39,495,138.00) (52,108,382.00)

iii) ADD: PROFIT OF THE YEAR B/F FROM P&L A/C 73,470,706.92 49,485,072.86

LESS: INTERIM DIVIEND PAID - (16,670,512.00)

GRAND TOTAL 74,653,420.71 40,677,851.79

43



Schedule 6: BALANCES WITH OTHER BANKS (Amount in H)



i) CURRENT DEPOSITS

a) DISTRICT CO-OPERATIVE BANK LTD 47,777,211.43 76,338,068.43

b) SBI & SUBSIDIARY BANKS 21,639,858.77 9,190,102.59

c) OTHER PUBLIC SECTOR BANKS 140,740,227.98 164,828,957.52

d) OTHER SCHEDULED BANKS 3,968,367.83 8,233,586.80

TOTAL 214,125,666.01 258,590,715.34

ii) SAVINGS BANK DEPOSITS - -

iii) FIXED DEPOSITS

a) DISTRICT CO-OPERATIVE BANK LTD. - -

b) SBI & SUBSIDIARY BANKS - -

c) OTHER PUBLIC SECTOR & SCHEDULED BANKS 287,200,000.00 222,200,000.00

TOTAL 287,200,000.00 222,200,000.00

GRAND TOTAL 501,325,666.01 480,790,715.34


Schedule 7: INVESTMENTS (Amount in H)



i) IN CENTRAL & STATE GOVERNMENT SECURITIES 1,825,508,944.00 1,725,958,289.00

MARKET VALUE: 1,830,253,800.00 1,730,781,450.00

FACE VALUE: 1,805,000,000.00 1,710,000,000.00

ii) OTHER TRUSTEE SECURITIES - -

iii) SHARES IN CO-OPERATIVE INSTITUTIONS 2,000.00 2,000.00

Iv) OTHER INVESTMENTS 22,472,000.00 397,472,000.00

GRAND TOTAL 1,847,982,944.00 2,123,432,289.00

44



Schedule 8: ADVANCES (Amount in H)



i) SHORT TERM LOANS, CASH CREDITS, OVERDRAFTS AND BILLS DISCOUNTED OF WHICH SECURED AGAINST

2,931,929,299.61 3,305,725,173.28

a) GOVT. & OTHER APPROVED SECURITIES - -

b) OTHER TANGIBLE SECURITIES 2,931,929,299.61 3,305,725,173.28

OF THE ADVANCES, AMT. DUE FROM INDIVIDUALS 2,931,929,299.61 3,305,725,173.28

OF THE ADVANCES, AMOUNT OVERDUE 42,265,266.50 14,371,492.05

CONSIDERED BAD & DOUBTFUL OF RECOVERY (FULLY PROVIDED FOR) 11,708,052.25 10,863,571.00

ii) MEDIUM TERM LOANS OF WHICH SECURED AGAINST

460,046,901.98 454,254,269.18


b) OTHER TANGIBLE SECURITIES 460,046,901.98 454,254,269.18

OF THE ADVANCES, AMT. DUE FROM INDIVIDUALS 460,046,901.98 454,254,269.18


CONSIDERED BAD & DOUBTFUL OF RECOVERY (FULLY PROVIDED FOR) 3,948,558.66 949,173.55

iii) LONG TERM LOANS OF WHICH SECURED AGAINST

2,630,255,240.68 1,810,925,628.96


b) OTHER TANGIBLE SECURITIES 2,630,255,240.68 1,810,925,628.96

OF THE ADVANCES, AMT. DUE FROM INDIVIDUALS 2,630,255,240.68 1,810,925,628.96


CONSIDERED BAD & DOUBTFUL OF RECOVERY (FULLY PROVIDED FOR) - -

GRAND TOTAL 6,022,231,442.27 5,570,905,071.42


Schedule 9: INTEREST RECEIVABLE (Amount in H)



i) INTEREST RECEIVABLE ON INVESTMENTS (ACCRUED)

a) GOVERNMENT SECURITIES 31,928,288.00 18,096,451.00

b) BANK FDRs 72,834,768.20 69,720,395.56

c) OTHER INVESTMENTS 288,646.00 1,706,540.00

ii) INTEREST RECEIVABLE ON NPA (OVERDUE) 11,833,778.61 5,395,509.67

TOTAL 116,885,480.81 94,918,896.23

45


Schedule 10: FIXED ASSETS (Amount in H)



AS ON 01.04.2014 62,751,311.00 44,298,750.35

ADDITIONS DURING THE YEAR 15,338,346.79 29,503,891.49

LESS: SALE/ADJUSTMENTS (1,949,195.00) (397,200.33)

LESS: DEPRECIATION FOR CURRENT YEAR (11,360,604.00) (10,654,130.51)

WRITTEN DOWN VALUE AS ON 31.03.2015 64,779,858.79 62,751,311.00



Schedule 11: OTHER ASSETS (Amount in H)



i) REFUNDABLE SECURITIES 1,275,417.00 1,245,095.00

ii) STOCK OF PRINTED STATIONERY 1,163,560.67 1,201,331.98

iii) MISCELLANEOUS RECEIVABLES 29,589,234.35 33,200,778.44

iv) TAX DEDUCTED AT SOURCE 774,537.00 144,208.00

v) INCOME TAX REFUNDABLE 1,679,000.00 5,806,776.00

vi) ADVANCE INCOME TAX PAID 49,000,000.00 26,400,000.00

vii) NON-BANKING ASSETS ACQUIRED UNDER SARFAESI 9,640,040.00 9,640,040.00

TOTAL 93,121,789.02 77,638,229.42





Sd/- Sd/- Sd/- Sd/-




46


(A) BACKGROUND AND OPERATIONS:1. Shivalik Mercantile Co-operative Bank Ltd. was registered in 1997 under Uttar Pradesh Co-operative Societies Act 1965 and started

operations in September, 1998. After achieving a deposit base of ̀ 100 crores on 31.03.2010, the Bank became a Tier II bank and expanded

its area of operation to whole of the state of Uttar Pradesh. Subsequently Bhoj Nagrik Sahakari Bank Maryadit, Dhar, Madhya Pradesh

was merged into Shivalik Bank with effect from 1st November, 2010. Consequent upon this inter-state merger, Shivalik Mercantile Co-

operative Bank Ltd. was deregistered under Uttar Pradesh Co-operative Societies Act, 1965 and was re-registered under the Multi State

Co-operative Societies Act 2002, in September 2010, as a Multi-State Urban Co-operative Bank. The Bank again merged erstwhile Malwa

Commercial Co-operative Bank Ltd., Indore with effect from 1st September, 2012. The Bank also continues to open new branches and

presently has twenty one branches, twelve in District Saharanpur, two in District Muzaffarnagar, one in Meerut, two in Ghaziabad & two

in Noida, U.P., and one each in Indore & Dhar, M.P. The Bank provides complete retail and corporate banking services. Bank has applied

to RBI for license to open seven more branches, five in UP & two in MP.

2. Merger of Malwa Commercial Co-operative Bank Ltd. with our bank: Malwa Commercial Co-operative Bank Ltd., Indore, M.P. (Target Bank) merged with Shivalik Mercantile Co-operative Bank Ltd. (Acquirer

Bank) with effect from 1st September, 2012. In accordance with the scheme of merger, the Share Capital of the Target Bank was kept

in Collection Account in the books of the Acquirer Bank for a period of 1 year from the date of merger. On the expiry of the period

of one year the balance amount (less, held by borrowers & guarantors) remaining in collection account was transferred to General

Reserve. During the year only an amount of `24,600 remains in the books of the bank that pertains to share capital held by borrowers &

guarantors.

3. Merger of Bhoj Nagrik Sahakari Bank with our bank:a. Bhoj Nagrik Sahakari Bank Maryadit, Dhar, M.P. (Target Bank) merged with Shivalik Mercantile Co-operative Bank Ltd. (Acquirer

Bank) with effect from 1st November, 2010. As per the scheme of merger, the Share Capital of the Target Bank is being treated as

Collection Account in the books of the Acquirer Bank and will remain so for a period of 10 years from the date of merger. During

this period any share-holder of the Target bank desiring to withdraw his/her shares shall be paid back the amount at par. After the

expiry of 10 years’ period, the amount remaining unpaid shall be converted to the share capital of the equivalent amount of Shivalik

Bank. The current balance in the said account is `16,87,900.

b. As a part of the prudential practice the non-performing loans of the Target Bank which remained unrealized till 31st March, 2012

were written off as bad debts in the F.Y. 2011-12. During the current year, `7.30 lakhs has been recovered and credited to current

year’s Profit & Loss Account. The further efforts for recovery of these loans will continue and recoveries, if any, shall be considered as

income for the year in which the recoveries are made.

(B) SIGNIFICANT ACCOUNTING POLICIES:-

1. Accounting Convention The financial statements have been prepared in accordance with the historical cost convention and on going concern concept and

in accordance with the generally accepted accounting principles and the statutory provisions prescribed in Banking Regulation Act

1949, the Multi State Co-operative Societies Act 2002, circulars and guidelines issued by the Reserve Bank of India from time to time, the

Accounting Standards issued by the Institute of Chartered Accountants of India and practices prevailing within the banking industry in

the country, except as otherwise stated.

2. Use of estimates The preparation of the financial statements, in conformity with generally accepted accounting principles, requires management to

make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and disclosure of

contingent liabilities at the date of the financial statements. Actual results could differ from those estimates. Management believes that

the estimates used in the preparation of the financial statements are prudent and reasonable. Any revisions to the accounting estimates

are recognized prospectively

Significant Accounting Policies, Disclosures and Notes on Accounts(Schedule annexed to and forming part of the Balance Sheet as on 31st March, 2016 and Profit & Loss Account for the year ended 31st March, 2016)

47


3. Foreign Exchange Transactions The bank holds Foreign Exchange Authorized Dealer Category-II license & has entered into transactions related to exchange of foreign

currency on behalf of customers during the year. The bank does have any foreign exchange assets/liabilities.

4. Investments 4.1. In accordance with the extant instructions issued by Reserve Bank of India for the purpose of valuation of Investments, the Bank has

classified its Investment portfolio as at 31st March 2016 into the following three categories:

(a) Held To Maturity (HTM): Investments under this category are carried at their book value. Any premium on acquisition of a

security is amortized over the balance period to maturity.

(b) Available For Sale (AFS): Investments in the category are valued at market rate and net depreciation in the category, if any, is

provided for. Net appreciation, if any, is ignored.

(c) Held For Trading (HFT): Investments in the category are valued at market rate and net depreciation in the category, if any, is

provided for. Net appreciation, if any, is ignored.

4.2. The Investments have been disclosed in the Balance Sheet as under:

SLR:(a) Central and State Government Securities

Non-SLR:(a) Other Trustee Securities

(b) Shares of Co-operative Institutions

(c) Other Investments

4.3. Market Value of Central and State Government Securities is determined in terms of Yield to Maturity method indicated by Fixed

Income Money Market Dealers Association (FIMMDA).

4.4. The Amortization of premium on investments in HTM category is calculated on days basis to maturity.

4.5. No provision is required to be made for depreciation on Investments under AFS & HFT categories as on 31st March, 2016 (previous

year also NIL).

4.6. Investment Fluctuation Reserve is being created as per the extant instructions of RBI.

5. Loans and Advances 5.1. (a) The classification of advances into Standard, Sub-standard, Doubtful & Loss assets as well as provision on non-performing

advances has been arrived at in accordance with the extant instructions issued by the Reserve Bank of India with regard to Income

Recognition and Assets Classification (IRAC) from time to time and as applicable for preparation of this Balance Sheet.

(b) In addition to this, a general provision on standard assets is also made as per the extant instructions issued by Reserve Bank of

India i.e. @ 0.40% of the outstanding amount on a portfolio basis except in the case of direct advances to agricultural and SME sector

which has been made @0.25%, advance under Commercial Real Estate sector for housing needs, which attract provisioning @0.75%

and advance under Commercial Real Estate sector for commercial needs, which attract provisioning @1%. Further, advances against

bank’s deposits/NSCs/KVPs/LIC Policies do not attract any provision.

5.2. The overdue interest in respect of non-performing advances is provided separately under “Overdue Interest Reserve” in accordance

with the extant instructions issued by Reserve Bank of India.

6. Fixed Assets and Depreciation 6.1. Fixed Assets are stated and carried in the Balance Sheet at written down value, purchase/ additions during the year less depreciation

for the year thereon. Cost includes incidental expenses incurred on acquisition of assets.


48


6.2. Fixed Assets are depreciated at the rates mentioned below:

(a) Furniture and Fixtures: 15% (W.D.V.)

(b) Office Equipments: 15% (W.D.V.)

(c) Office Vehicles: 15% (W.D.V.)

(d) Safe, Locker Steel Almirah: 2.5% (W.D.V.)

(e) Computer Hardware & Software: 33.33% (Straight Line)

(f ) Temporary Structures: 100%

6.3. Depreciation on assets purchased in the first 6 months of the year is provided at full rates. Depreciation at 50% rates is provided for

fixed assets purchased in the last 6 months of the financial year. Depreciation on assets sold during the year is charged up to the

date of sale.

6.4. Depreciation on assets, where cost of each item is below `5,000/- is provided @ 100% in the year of purchase itself.

6.5. There has been no change in method and rates of providing depreciation as compared to the previous year.

7. Revenue Recognition (Accounting Standard AS-9)7.1. Items of income and expenditure are generally accounted for on accrual basis.

7.2. Income from non-performing assets is recognized to the extent realized, as per the extant instructions issued by Reserve Bank of

India.

7.3. Dividend received from shares of co-operative institutions is accounted on receipt basis.

7.4. Interest on overdue fixed deposits is provided on ad-hoc basis in accordance with the extant instructions of RBI. Actual interest

expense is accounted for at the time of renewal of FDR

7.5. There are no material prior period item’s included in Profit and Loss account.

7.6. Certain items of income such as Locker Rent, loan processing fee are recognized on cash basis. The quantum of such income is not

material.

8. Non-Performing Assets 8.1. Non-Performing assets of the bank have been identified and provision thereon has been made as per the extant instructions of

Reserve Bank of India.

8.2. Any advance including Bills Discounted, which became Non Performing Assets at the close of the year, interest accrued and credited

to income account is reversed or provided for, if the same is not realized.

8.3. Interest accrued on NPA is not shown as income but shown as “Overdue Interest Reserve” in the Balance-sheet.

9. Employee Benefits (Accounting Standard AS-15)9.1. The liability towards gratuity is assessed and calculated on actuarial valuation and paid every year to L.I.C. of India as Employees

Group Gratuity Scheme.

9.2. Bank’s Contribution & Employees’ contribution towards provident fund is paid every month to Commissioner of Provident Fund in

accordance with the provisions of Employees Provident Fund Scheme, 1952 and Employees Pension Fund Scheme, 1995.

9.3. Leave encashment is accounted on actual payment basis.

9.4. The bank does not have any scheme of LTC for its employees, however a regular taxable allowance in this regard is being paid as a

part of salary.


49


10. Reserve Fund and Other Reserves 10.1. Dividend remaining unclaimed over 3 years are transferred to Statutory Reserve Fund a/c.

10.2. Nominal Membership and Entrance Fees are transferred to Statutory Reserve Fund every year.

11. Taxation 11.1. Income Tax expense comprises of Current Tax. Current Tax is provided on the Taxable Income using applicable Tax Rates and Tax

Laws.

11.2. Deferred Tax Liability in accordance with AS-22 (Accounting for Taxes on Income) has been recognized, as per the details given

below:

Due to Depreciation Due to creation of Reserve U/s 36(1)(viii) of IT Act

Total

For period up to 31st March, 2015 13,31,871 *27,15,134 40,47,005

For the year 2015-16 (14,649) 13,96,648 13,81,999

As on 31st March, 2016 13,17,222 41,11,782 54,29,004

* Deferred Tax Liability for an amount of `27,15,134, for the period up to 31.03.2015, pertaining to creation in respect of Reserve U/s

36(1)(viii) of Income Tax Act, was recognized in this year, as per the stipulations of RBI.


1. Disclosure As Per the extant instructions of Reserve Bank of India: (Amount in Rs. Lacs)

Sr. No. Particulars 31.03.2016 31.03.2015

1.1. Capital to Risk Asset Ratio (CRAR) 13.85% 13.75%

1.2. a. Movement of CRAR (Basis Points) 10 -240

b. Risk Weighted Assets 43448.22 41542.17

1.3. Values of Investments are as under:

A. Government /Approved Securities (SLR)

a. HELD TO MATURITY

Face Value 16340 11390

Book Value 16533.52 11547.43

b. AVAILABLE FOR SALE

Face Value 210 1710

Book Value 210.82 1682

Market Value 217.75 1698.79

c. HELD FOR TRADING

Face Value 1500 4000

Book Value 1510.75 4030.15

Market Value 1515.23 4034.96

B. Other Investments (Non-SLR)

Shares of Co-operative Institution 0.02 0.02

Others (Book Value) 224.72 3974.72

Others (Market Value) 229.66 3977.67

1.4. Advances against Shares & Debenture NIL NIL

(C) DISCLOSURES AND NOTES ON ACCOUNTS:

50



1.5. Advances of `6,02,22.31 Lakhs (Previous year `5,57,09.05 Lakhs) shown in the Balance Sheet include: (Amount in Rs. Lacs)

Particulars FUND BASED NON-FUND BASED

31.03.2016 31.03.2015 31.03.2016 31.03.2015

i) Advances against Real Estate, Construction Business, Housing 11,807.91 14,055.30 Nil Nil

ii) Advance to Directors Nil Nil Nil Nil

iii) Advances to Relatives of Directors & Companies/ firms in

which they are interested

Nil Nil Nil Nil

iv) Advances to Chairman Nil Nil Nil Nil

(Amount in Rs. Lacs)

Sr. No. Particulars 31.03.2016 31.03.2015

1.6. Average Cost of Deposits 7.85% 8.20%

1.7. a. Gross NPAs 761.68 266.10

b. Net NPAs 362.64 80.53

1.8. Movement in NPA

Opening Balance 266.10 424.69

Add : Additions during the year 1,172.36 260.01

Less : Closed/ Recovered /Written off 676.78 418.60

Closing Balance 761.68 266.10

1.9. a. Interest income as a percentage of working funds 11.01% 11.04%

b. Non-Interest income as percentage of working funds 0.58% 1.03%

c. Operating profit as a percentage of working funds 1.88% 1.77%

d. Return on Assets 1.36% 1.49%

e. Business (Deposits + Advances) per employee 445.20 539.55

f. Profit per employee (Before Tax) 3.70 3.14

g. Profit per employee (After Tax) 2.27 2.00

1.10. a. Provision on NPAs required to be made

b. Provision on NPAs actually made 294.03 135.57

c. Provisions on depreciation in investments required to be made 399.03 185.57

d. Provisions on depreciation in investments - -

e. Provision on Standard Assets required to be made 165.94 124.78

f. Provision on Standard Assets actually made 165.94 124.78

1.11. A total of 7 Loans & Advances accounts involving a sum of H 444.61 lakhs have been restructured during the year.

1.12. No fixed assets were revalued during the year.

2. Related Party Disclosure (Accounting Standard AS-18)

A. List of the related parties and their relationship

Name of the Party Relationship

a. Key Managerial Personnel

1. Shri Yashvir Kumar Gupta Chairman

b. Relatives of the Key Managerial Personnel

1. Shri Suveer Kumar Gupta Son of Shri Yashvir Kumar Gupta

2. Smt. Swarn Lata Gupta Wife of Shri Yashvir Kumar Gupta

3. M/s Yashvir Kumar Gupta HUF HUF of Shri Yashvir Kumar Gupta

51



B. Details of transactions with the related parties carried out on an arm’s length basis (Amount in H)

Sr. No.

Nature of the transactions Relatives of Key Managerial Personnel

Relatives of Key Managerial Personnel

31.03.2016 31.03.2015

1. Salary paid 24,16,308 19,09,666

2. Rent paid 16,71,000 14,13,000

3. Leases (Accounting Standard AS-19) The bank has cancelable operating lease and the disclosures under AS 19 on ‘Leases’ issued by ICAI are as follows:

i) Lease rent payments of H 1,52,78,555.68 (Previous Year H 1,23,27,802/-) have been recognized in the statement of profit and loss for

the year ended March, 2016.

ii) The lease agreements entered into pertain to use of premises & electricity generator by the bank. The lease agreements do not have

any undue restrictive or onerous clauses other than those normally prevalent in similar such agreements.

4. Intangible Assets (Accounting Standard AS-26) Details of Computer Software included in Other Assets in accordance with AS-26 on Intangible Assets issued by the ICAI are as under:

(Amount in H Lakhs)

Opening balance as on 01.04.2015 9.49

Additions during the year 23.39

Less: Amortization/Depreciation 14.22

Closing balance as on 31.03.2016 18.66

5. Impairment of Assets (Accounting Standard AS-28) In accordance with Accounting Standard 28 the bank has written off a sum of ‘NIL’ (last year H 1,214/-) to its profit and loss account on

account of Impairment of assets.

6. Provisions, Contingent Liabilities & Contingent Assets (Accounting Standard AS-29)(Amount in H Lakhs)

Particulars 31.03.2016 31.03.2015

Bank Guarantees 51.61 93.99

(Bank Guarantees are 100% secured against tangible securities.)

7. Segment reporting (Accounting Standard AS-17): There is only one reportable segment namely “Banking”.

8. Details of Other Investments:8.1. Details of Non-SLR investments: (Amount in H Lakhs)

S. No.

Issuer Amount Extant of ‘below investment grade

securities’

Extant of ‘unrated securities’

Extant of ‘unlisted securities’

(1) (2) (3) (4) (5) (6)1. PSUs (NHAI) 24.72 - - -2. FIs - - - -3. Public Sector Banks - - - -4. Mutual Funds - - - -5. Others 200.02 N/A 0.02 200.026. Provision held towards Depreciation - - - -

52



8.2 Non-SLR Investments of the bank comprise the following items:

S. No. Name of Investment (Amount in H)

1. Shares of District Co-operative Bank Ltd., Saharanpur 1,000

2. Shares of Indore Premier Central Co-op. Bank Ltd., Indore 1,000

3. 8.30% Tax-free Bonds issued by NHAI. 24,72,000

4. Mannapuram NCD Bonds 2,00,00,000

TOTAL 2,24,74,000

8.3. All the investments under this head are within limits defined as per the extant instructions of RBI.

8.4. Investments under this head have been valued at the lower of book value and market value.

8.5. Non performing non-SLR investments are Nil.

9. Borrowings: The Bank has taken overdraft limits from other banks, against the security of its Fixed Deposits in these banks, to meet short term liquidity

requirements during the year. The details of the limits sanctioned are as under:

S. No.

Name of Bank from which limit has been availed Limit Amount (H in Crores)

Amount of FDRs pledged to secure the

limit (H in Crores)

1. IDBI Bank 18.89 25.35

10. Statutory Liability 10.1. The Bank had a statutory liability, towards Education Fund of `4,94,851/- which had to be paid to The National Co-operative Union

of India Ltd., New Delhi under The Multi-State Co-operative Societies Act, 2002 towards appropriation made for the same during

the year. The payment was made on 8th October, 2015.

10.2. DICGC Premium has been paid up-to-date & the next payment due date will fall in May, 2016.

10.3. No penalty has been imposed by RBI till date.

11. Others An amount of `1,95,62,850 is outstanding against Janhit Foundation as an advance given to support them in carrying out Microfinance

activity. The advance is being adjusted each month from the monthly consultancy fees paid to Janhit Foundation by the bank.

12. Previous year figures have been regrouped and recasted wherever considered necessary to make them comparable with those of

current year.





Sd/- Sd/- Sd/- Sd/-




53


Annual Operational Plan 2017-18Description Proposed Targets

Branches 28

Deposits `1200 Crore

Loans & Advances `800 Crore

Share capital `50 Crore

Net Profit `12 Crore

Membership 22,000

New Initiatives Area of operation to adjoining states, getting scheduled status and

technological enhancement.

Income Amount (` Crore)

Expenditure Amount (` Crore)

Interest on loans 102.00 Interest on Deposits & Borrowings 81.50

Interest on Investments 32.50 Operating Expenses 30.00

Miscellaneous Income 8.00 Depreciation & Repairs 2.50

Miscellaneous Expenses 4.00

Tax & Provisions 12.50

Net profit 12.00

Total 142.50 Total 142.50

Appropriation of Profit 2015-16Opening Balance

Amount (in H)

Closing Balance

Remarks

Accumulated Profit of previous years 1,192,713.79

Less: Adjustments during the year (10,000.00)

Profit for the year 2015-16 73,470,706.92

Total Profit 74,653,420.71

Proposed Appropriation:

Statutory Reserve 66,638,425.00 18,367,677.00 85,006,102.00 25% of current year's Profit (Mandatory as per

Multi-State Co-operative Societies Act, 2002)

Education Fund - 734,707.00 734,707.00 1% of current year's Profit (Mandatory as per


Contingency Reserve 16,832,752.00 7,347,071.00 24,179,823.00 10% of current year's Profit (Mandatory as per


Proposed Dividend @ 9% 39,454,789.50 Last year's dividend amount was

H3,33,41,024 @8%.

Total Appropriation 65,904,244.50

Accumulated Profit C/F to next year 8,749,176.21

54


Long Term Perspective Plan

1. Expansion of Area of Operation In addition to being a Multi-State Co-operative Bank, the Bank is also looking to extend its Area of Operations to adjoining states. Bank

has submitted a proposal to RBI for expansion of area of operations in the states of Uttarakhand, Himachal Pradesh, Haryana, Delhi,

Punjab, Chandigarh and Rajasthan.

2. Expansion of Branch Network The Bank has submitted a proposal to RBI in December 2015 to open 7 (Seven) new branches as below:

1. Hapur, District Hapur, U.P.

2. Shamli, District Shamli, U.P.

3. Noida, District Gautam Budh Nagar, U.P.

4. Lucknow, District Lucknow, U.P.

5. Lucknow, District Lucknow, U.P.

6. Ujjain, District Ujjain, Madhya Pradesh.

7. Dewas, District Dewas, Madhya Pradesh.

3. Operational• Review,reviseandredesignallaccountopeningformsandShareCapitalforms

• Centralizeaccountopeningprocess.

• LinkingAdhaarnumberwitheverycustomer

• MaximiseuseofATMandCDMs

• Maximisenetbanking

• PopularizeGreenPINoption(paperlessATMPIN).

4. Digital Banking• Implementationofe-KYCandAdhaar-basedaccountopeningthroughMicroATMs

• Implemente-Registerstoreplacephysicalregistersforallprocesses

• AddmoreservicestoMobileBankingdomain

• FullyimplementLoanOriginationSystem

5. Other A Scheduled Bank status will alter our identity momentously. It will facilitate access to sizeable CASA (Current Account and Savings

Account) funds that help widen our footprint and sustain our financial growth. It will provide us the opportunity to forge ties with

government institutions and make institutional business accessible. It will further enhance access to various agencies that provide

refinance to scheduled banks. The Bank has not only achieved its deposit target of `750 Crore in 2014 - 2015 but also successfully

maintained the deposit base the same throughout the 2015 - 2016 and closed the fiscal 2015 - 2016 with a deposit base of `809 Crore.

The report of the High Powered Committee on Urban Co-operative Banks (UCBs) in June 2015 had suggested options for conversion of

UCBs to Commercial banks. Shivalik Bank intends to make an application for conversion at an opportune time.

55


NOTICE

Notice is hereby given that the 19th Annual General Meeting (AGM) of the Members of SHIVALIK MERCANTILE CO-OPERATIVE BANK LIMITED will be held on Sunday, September 18, 2016 at 10:00 hrs. at Hotel Royal Residency, Ambala Road, Saharanpur - 247001, Uttar Pradesh, to transact the following business:

1. To confirm the quorum of the 19th Annual General Meeting (AGM).

2. To grant Leave of Absence to members of the Bank other than those whose names appear in the Attendance Register of this 19th Annual

General Meeting.

3. To confirm the Minutes of the 18th Annual General Meeting and Minutes of the Special General Meeting of the members of the Bank

held on September 27, 2015 and December 23, 2015, respectively.

4. To consider and approve the Annual Accounts, which consist of the Report of the Board of Directors, the Report of the Statutory Auditors,

the Balance Sheet and the Profit & Loss Account, for the year ended 31st March, 2016.

5. To appropriate net profit and to declare Final Dividend as recommended by the Board of Directors for the Financial Year 2015-16.

6. To review actual utilisation of reserve and other funds for the year 2015-16.

7. To take note of the Loans & Advances outstanding against the Directors and their relatives during the year 2015-16.

8. To appoint the Statutory Auditors for 2016-17 and to authorize the Board of Directors to fix their remuneration.

9. To consider and approve the Budget for 2017-18.

10. To consider and approve the Long Term Perspective Plan and Annual Operation Plan of the Bank for Financial Year 2017-18.

11. To present the list of employees who are relatives of members of the Board of Directors and MD & CEO of the Bank.

12. To consider and approve the amendments to Objects Clause in the Bye-Laws of the Bank.

13. To consider and approve the amendments to Clause 45 of the Bye-Laws of the Bank.

14. Any other items with the permission of Chair.

By Order of the Board of Directors

Sd/-

(Suveer Kumar Gupta)

MD & CEO

Regd. Office:

13/1207, Ansari Road,

Saharanpur – 247001, Uttar Pradesh

Date: August 16, 2016

56


Clause Proposed Amendment Provisions after proposed Amendment

6 Objects Clause of the Bank be and is hereby altered by

inserting the following sub-clause, after the existing

sub-clause 6.26 and the remaining sub-clauses be re-

numbered accordingly:

6.1 To promote the interest of all its members to attain their

social and economic betterment through self-help and

mutual aid in accordance with the co-operative principles.

“6.27. To solicit and procure Insurance business as Corporate Agent in respect of all classes of insurance and to undertake such other activities as are incidental or ancillary thereto.”

6.2 To encourage thrift, self-help and co-operation among

members.

6.3 To accept deposits of money from the public, repayable

on demand or otherwise, and withdrawable by cheque,

draft, order or otherwise, for the purpose of lending or

investment.

6.4 To borrow or raise money.

6.5 To lend or to advance money either upon or without

security to members and others as decided in the Annual

General Meeting.

6.6 To draw, make, accept, discount, buy, sell, collect and deal

in bills of exchange, hundies, promissory notes, coupons,

drafts, bills of lending, railway instruments and other

securities whether transferable or negotiable or not.

6.7 To grant and to issue letters of credit, travellers cheque and

circular notes.

6.8 To buy and to sell foreign exchange including foreign bank

notes.

6.9 To acquire, to hold, to issue on commission, to underwrite

and to deal in stocks, funds, shares, debentures, debenture

stock, bonds, Treasury Bills, Central and State Government

securities, obligations, other securities and investment of

all kinds.

6.10 To purchase and to sell bonds, scrips or other forms of

securities on behalf of constituents.

6.11 To receive all kinds of bonds, scripts, valuables on deposit

or for safe custody or otherwise.

6.12 To provide safe deposit vaults.

6.13 To collect and transmit money and securities.

6.14 To negotiate loans and advances.

6.15 To carry on and to transact, every kind of guarantee and

indemnity business on behalf of constituents.

Amendments to Bye-Laws

57



6.16 To effect, to insure, to guarantee, to underwrite, to

participate in managing and carrying out any issue, public

or private, of State Municipal or other loans or of shares,

stocks, debentures, debenture stock of any company, co-

operative society, corporation or association and to lend

money for the purpose of any such issue.

6.17 To acquire, to construct, to maintain and to alter any

building or works necessary or convenient for the

purposes of the bank.

6.18 To manage, to sell and to realise any property, that may

come into the possession of the bank in satisfaction or

part satisfaction of any of its claims.

6.19 To open branches and pay offices, with the permission of

the Reserve Bank of India within the area of operation of

the Bank so as to provide banking services to the public.

6.20 To acquire, to manage and to undertake the whole or part

of business of any other cooperative society.

6.21 To establish, to support or to aid in establishment and

support of associations, institutions, funds, trusts and

conveniences calculated to benefit members, employees,

ex-employees, persons and to grant pensions.

6.22 To prepare and to finance schemes for amelioration of the

financial condition of members.

6.23 To provide financial and technical assistance to self-

employed person for setting up their own business.

6.24 To enter into participation arrangement/arrangements

with any other bank or banks or financial institutions with

the object of making loans and advances.

6.25 To do any other form of business as specified in clause

(1) of Section 6 of the Banking Regulation Act, 1949 (as

applicable to Co-operative Societies.)

6.26 To do all such other things as are incidental and conducive

to the promotion or advancement of these objects and of

the business of the Bank.

6.27 To solicit and procure Insurance business as Corporate Agent in respect of all classes of insurance and to undertake such other activities as are incidental or ancillary thereto.

6.28 To undertake any other form of business which the central

Government may specify as a form of business in which it

is lawful for a co-operative banking institution to engage.

45 Meeting of the Board of Director and Notice of the

Meeting:

45.1 The majority shall decide any question brought forward

for discussion at the meeting of the Board of Directors. In

case of equality of votes, the Chairman shall have a casting

vote.

58

Shivalik Mercantile Co-operative Bank Limited


Sub-clause 45.6 of the Bank’s Bye-Laws regarding Notice

of the Meeting, be and is hereby altered by substituting a

new sub-clause and inserting the following sub-clauses,

after the existing sub-clause 45.7 and the remaining

clauses be re-numbered accordingly:

45.2 The proceedings of the meetings of the Board shall be

recorded in the minute book to be kept for the purpose.

“45.6. A meeting of the Board shall be called by giving not less than seven days’ notice in writing to every director at his address registered with the Bank and such notice shall be sent by hand delivery or by post or by electronic means.”

45.3 Managing Director/Chief Executive shall convene the

meetings of the Board at the instance of the Chairman of

the bank.

“45.8. The participation of directors in a meeting of the Board may either be in person or through video/audio conferencing, as may be approved by the Chairman. The attendance of such members shall be recorded by via email/postal confirmation from the respective board members”.

45.4 The meeting of the board shall be held at the principle

place of the business of the bank or at any other place

within the area of operation of the bank as decided by the

Board.

45.5 The board shall meet regularly at least once in a quarter to

manage the affairs and to dispose the business, pertaining

to the functions of the bank. However, there shall be a

minimum of six (6) meetings in a financial year.

45.6 A meeting of the Board shall be called by giving not less than seven days’ notice in writing to every director at his address registered with the Bank and such notice shall be sent by hand delivery or by post or by electronic means.

45.7 The meetings of the Board of Directors shall be presided

over by the Chairman or in his absence by the Vice

Chairman and in the absence of both Chairman & Vice-

Chairman; the Directors present in the Meeting shall elect

a Chairman for the Meeting from among themselves.

45.8 The participation of directors in a meeting of the Board may either be in person or through video/audio conferencing, as may be approved by the Chairman. The attendance of such members shall be recorded by via email/postal confirmation from the respective board members.

Annual Report 2015-16

Notes

Notes

A [email protected]

Shivalik Mercantile Co-operative Bank Limited19th Annual Report 2015-16

Delighting through Digital Banking

Shivalik Mercantile Co-operative Bank LimitedRegd. Office: 13/1207, Ansari Road, Saharanpur - 247001, Uttar Pradesh

Head Office: Hakikat Nagar, Saharanpur - 247001, Uttar Pradesh

Telefax: (0132) 2726125, 2726147, 9927135550

E-mail: [email protected]

Visit us at: www.shivalikbank.com

Like us at: www.facebook.com/shivalikbank

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