REPORT ON CORPORATE GOVERNANCE
1. Corporate Governance Philosophy of the Bank :
UCO Bank's Corporate Governance Philosophy is to maintain high standards of ethical practices in conduct of its business. The Bank's Corporate Governance policies are woven around the core values of transparency and professionalism. The Bank constantly endeavors to ensure implementation of best practices aimed at enhancing the corporate governance that optimize the value of all its stakeholders and the society, at large.
2. Board of Directors
The constitution of the Board of Directors is governed by the provisions of the Banking Regulation Act 1949, Banking Companies (Acquisition & Transfer of Undertakings) Act 1970, Nationalised Banks (Management & Misc. Provisions) Scheme 1970 and The Banking Companies (Acquisition & Transfer) & Financial Institutions Laws (Amendment) Act 2006. The requirements of Corporate Governance as envisaged in the Listing Agreement with the Stock Exchanges are to be read along with these statutes.
The Directors are experienced and have requisite expertise in the field of Banking, Finance, and Management so as to provide appropriate directions and exercise effective control in the functioning of the Bank.
2.1.0 The Chairman & Managing Director and two Executive Directors are the whole time directors appointed by the Govt. of India while the other Directors are appointed/nominated under different sections of 9(3) (a) to 9(3) (h) of the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970 (hereinafter referred as Act).
Besides, under Section 9(3) (i) of the same Act, the shareholders of the Bank are entitled to elect two directors (other than the Central Government) from among themselves.
2.2.0 Composition of the Board of Directors as on 31.03.2014:
The Board is constituted in accordance with the provisions of Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970.
ACB = Audit Committee of the Board, CHR = Committee on HR related issues of the Bank, CSC = Customer Service Committee, MCB = Management Committee of the Board, NCB = Nomination Committee of the Board, RCB = Remuneration Committee of the Board RMCB = Risk Management Committee of the Board, SGRCB = Shareholders' Grievance Redressal Committee of the Board, STCB = Share Transfer Committee of the Board, SMLVF = Special Committee of the Board for Monitoring Large Value Frauds, ITSC = IT Strategy Committee, BLCRNPA = Board Level Committee for Monitoring Recovery in NPA Accounts, BLCAC= Board Level Credit Approval Committee.
.2.2 The details of the attendance of each Director at the Board Meetings held during the year, no. of other Board Committees where he/she is a member or Chairperson during the year and directorship of other companies/corporations are furnished hereunder :
.2.3 Dates of Board Meetings
During the period of review 13 Board Meetings were held on following dates, as against minimum of 6 prescribed under Clause 12 of Nationalised Banks (Management & Miscellaneous Provisions) Scheme 1970 and minimum of four meetings stipulated in Clause 49 of Listing Agreement :
2.2.4: Brief Profiles of new Directors on the Board :
Shri Jai Kumar Garg, Executive Director
Born on 10.01.1960. Shri Jai Kumar Garg joined UCO Bank as the Executive Director with effect from 05.08.2013. He is a professional Chartered Accountant and also Associate Member of Indian Institute of Banking and Finance. He started his career at Corporation Bank in 1986 and served at various Branches including Industrial Finance Branches at Mumbai, New Delhi and Pune. He also worked at various Zonal Offices in Ahmedabad, New Delhi, Pune and Kolkata and headed the Kolkata and Delhi Circles of Corporation Bank. Shri Jai Kumar Garg has a wide experience in Credit Management, Recovery, Forex Operations, Retail Banking and Administration.
Shri Jai Kumar Garg has undergone many training programmes at prestigious institutes like NIBM (Pune), BTC (Mumbai) and ISB (Hyderabad). He has also travelled abroad for training programmes in Germany, France, Italy, Thailand and Vietnam.
Shri Sunil Kumar Maheswari, Director
Professor Maheshwari, an Alumni of IIT Delhi and IIM Ahmedabad, worked with BHEL and Indian Railways before getting into academics in 1998. He took voluntary retirement from IIM Ahmedabad in February, 2012 to set up Wone Management Systems Pvt. Ltd. He is the Managing Partner of the company. He continues to serve as Adjunct Professor at IIM Ahmedabad. He has also worked as Advisor to Minister of HRD from Jan, 2009 to Jan, 2013. His research, consulting and teaching interests are strategic human resource management, international human resource management and business turnaround. His book titled "Turnaround Excellence," is published by Penguin Books India. The book is based on his research study of six turnaround cases. He has widely published his research articles in both national and international journals of high repute. He has written more than 25 cases. He has been a consultant to many large national and international organizations. He has served on the boards of many organizations. He is currently the Chairman of Board of Governors of Academy of HRD.
Md. Salahuddin Ansari, Director
Born on 30th July 1946, Shri Salahuddin Ansari is a holder of M.Com & B.Com(Hons) degree. He was director of SBI for 4 years and also was principal, Dean at Faculty of Commerce , SKM University , Dumka. On being appointed by the Govt. of India, Shri Ansari joined the Board of UCO Bank on 26th June, 2013.
3.0 Committees on the Board:
Pursuant to the instructions/guidelines/directives issued by the Reserve Bank of India, Government of India, various committees of directors have been constituted with the objectives of streamlining the decision making process, effective monitoring and follow up of various activities falling within the terms of references of such committees. Particulars of the various standing committees are as under:
3.1.0 Audit Committee of the Board (ACB):
As per directives of RBI, the Bank constituted the Audit Committee of the Board with six directors as against minimum of three directors stipulated in Clause 49 of the Listing Agreements entered with Stock Exchanges. All the Directors in the committee are financially literate and CA Manoj Kumar Gupta, Chairman of the Committee, is a senior fellow member of the Institute of Chartered Accountants of India (ICAI).
3.1.1. Primary objectives:
It overseas, reviews and provides directions to the internal audit/ inspection function in the Bank in order to ensure and enhance the effectiveness of the audit and inspection function as a strong management tool. In respect of internal audit, the Audit Committee of the Board reviews the internal inspection/audit function of the Bank - the system, its quality and effectiveness in terms of the objectives. As regards external audit, the committee reviews all the issues raised in the Long Form Audit Report. Besides, it interacts with the external auditors before finalization of reviewed/audited accounts with special reference to change in accounting policies, practices, qualification in the draft audit report and compliance with the accounting standards. It also addresses all issues/concerns raised in inspection report of RBI. The committee also reviews the internal control system, the areas of house keeping, reconciliation, fraud and other related matters.
3.1.3 Dates on which ACB Meetings were held:
During the year under review, 9 meetings of the Committee were held vis-a-vis minimum of four meetings in a year, stipulated in Clause 49 of the Listing Agreement. The meetings were held on following dates:
3.2.0 Management Committee of the Board (MCB) :
The Committee is constituted as per Provisions of Nationalised Banks (Management & Miscellaneous Provision) Scheme 1970. Its members are Chairman & Managing Director, Executive Directors, Chartered Accountant Director and directors referred to under clauses (b), (c) of sub-section (3) of Section 9 of Banking companies (Acquisition & Transfer of Undertaking) Act 1970., and two Directors nominated by the Board from amongst the Directors referred to Clauses (d), (e), (f), (h) and (i) of Section 9(3) of the Banking companies (Acquisition & Transfer of Undertaking) Act 1970. The Directors nominated by the Board shall hold office for not more than six months at a time. The Chairman & Managing Director is the Chairman of MCB.
3.2.1 The objectives of the committee are to consider and approve:-
i) high value credit/loan, compromise and write off proposals.
ii) high value proposals for capital and revenue expenditure and those relating to acquisition and hiring of premises including deviation from prescribed norms for acquisition/ hiring of premises.
iii) Proposal for high value investments in Govt. and other approved securities including investment in shares/ debentures of companies as well as high value proposals of underwriting, making donations and
iv) Any other matter of similar nature referred to it by the Board from time to time.
3.2.2 Composition of the Management Committee (MCB) of the Board and the number of meetings attended by the members of MCB during the year 2013-14
3.3.0. Risk Management Committee of the Board (RMCB)
3.3.1. The Committee identifies, evaluates, monitors and guides the Bank on various categories of risks to which the Bank's business is exposed and devices, based on periodical review and monitoring, such strategies as would ensure stability and efficiency of the National and International business operations of the Bank. It also supervises and monitors the functioning of Asset Liability Management (ALM) System in the Bank.
3.3.2 The composition of RMCB and details of the meetings held during the year 2013-14 and attendance are as under :
3.4.0 Shareholders Grievances Redressal Committee (SGRCB) :
3.4.1 The Committee was constituted under the Chairmanship of the Non-executive Director for speedy redressal of shareholder/investors' complaints/grievances, like, non receipt of refund orders, share certificate, dividend warrant etc., with due care and to the satisfaction of the complainants. All the complaints received during the year were redressed.
3.4.2 The composition of the SGRCB as on 31st March, 2014 and details of the attendance of the members are as under :
3.4.3 During the year 3 meetings of SGRCB was held on10.04.2013, 07.11.2013, & 29.03.2014.
3.5.0 Share Transfer Committee of the Board (STCB):
3.5.1. The committee has been constituted to approve and effect transfer/transmission/transposition etc. of Bank's shares, held in physical form, as also approval on the requests/proposals for issuance of duplicate shares in lieu of originals lost/misplaced/stolen. It is also ensured that all such requests/proposals for transfer and transmission are completed within the period stipulated from the date of submission of the requests for transfer/ transmission complete on all respects.
3.5.2 The composition of the STCB and details of the meetings attended by its members during the period 2013-14 are as under:
3.6.0 Remuneration Committee (RCB) :
3.6.1 The whole time directors of the Bank i.e. the Chairman & Managing Director and the Executive Directors are being paid remuneration and provided reimbursement of traveling and halting expenses as per rules framed by Govt. of India but none of them are paid sitting fees for attending the Board meetings and other committee meetings of the Board.
3.6.2 In compliance with the directives of Ministry of Finance, Government of India, Remuneration Committee of the Board (RCB) was formed during the year for the sole purpose of evaluation of the performances of the whole time directors of the Bank for payment of "Performance Linked Incentives", annually.
3.6.4 Date of RCB Meeting : 18.06.2013
3.7.0 Special Committee for Monitoring of Large Value Frauds (SMLVF)
3.7.1 In compliance with the guidelines issued by Reserve Bank of India, Special Committee for Large Value Frauds has been constituted with the objective of monitoring and follow up of frauds involving Rs. 1 crore and above. Chairman & Managing Director of the Bank acts as the Chairman of the Committee.
3.7.2 Composition of the SMLVF Committee and details of the meetings held & attended by the members during the year 2013-14 :
3.7.3 During the period under review 3 meetings of the Committee were held i.e. on 10.04.2013, 18.07.2013 & 07.11.2013
3.8.0 Nomination Committee of the Board (NCB) :
In compliance with the directives of Reserve Bank of India, Nomination committee of the Board (NCB) was constituted so as to undertake the exercise of 'due diligence' for determining 'fit and proper' status of the existing elected directors / persons to be elected as director under Section 9(3)(i) of Banking Companies (Acquisition & Transfer of Undertakings) Act 1970.
3.8.2 During the period under review one meeting of the committee was held on 24.05.2013.
3.9.0 Customer Service Committee (CSC)
3.9.1 In compliance with the directives issued by Reserve Bank of India, Customer Service Committee of the Board has been constituted:
i) to ensure implementation of and adherence to the recommendations of Committee on Procedures and Performance Audit of Public Services as well as compliance with its recommendations;
ii) to bring upon improvement in the level of customer satisfaction for all categories of clientele at all times;
iii) to consider innovative measures to enhance the quality of customer service
3.9.2 The Chairman & Managing Director of the Bank is the Chairman of the Committee.
3.9.4 During the period under review, 4 meetings of the committee were held i.e. on 18.06.2013, 17.09.2013, 9.12.2013 & 29.03.2014.
3.10.0 Committee on HR Related Issues (CHR)
3.10.1 In the light of the directive of Govt. of India on Managerial Autonomy to the Public Sector Banks (PSB), the Board of Directors of the Bank is granted with freedom and responsibility for deciding on managerial issues within the broad framework of the Government policies. One of the areas of autonomy relates to framing of HR policies and procedures.
3.10.2 Objective of the Committee:
i) to decide all Human Resource issues relating to the Bank including staffing pattern, recruitment, placement, transfer, training, promotions, pensions etc.
ii) to frame HR policies and procedures for recruitment including eligibility criteria, mode of selection, levels of entry etc.
iii) to take decisions on remuneration and compensation of officers and staff
iv) -to lay down policy of accountability and responsibility of Bank officials
v) to prescribe standards for categorization of branches
3.10.3 Composition of the CHR Committee and details of the meetings held during the year 2013-14 and attended by the members of the Committee.
3.10.4 During the period under review, 2 meetings were held on 24.01.2014 & 14.03.2014
3.11.0 IT Strategy Committee of the Board (IT)
The Committee has been constituted to formulate strategies in the matters relating to technology upgradation and other IT initiatives.
3.11.1 Composition of the IT Committee and details of the meetings held during the year 2013-14 and attended by the members of the Committee.
3.11.2 During the period under review 3 Meetings of the committee was held on 06.08.2013, 10.12.2013 & 23.01.2014.
3.12.0 Board Level Committee for Monitoring of Recovery in NPAs (BLCRNPA)
In compliance with the directives of Ministry of Finance, Government of India, to have a robust monitoring mechanism in the Bank, a Board Level Committee for Monitoring of Recovery in NPAs has been constituted on 07.12.2012 to monitor progress in recovery of Non Performing Assets on regular basis.
3.12.2 During the period under review 4 Meetings of the committee was held on 18.06.2013, 16.09.2013, 07.11.2013 & 07.01.2014.
4.0 Shareholders Meetings held during the last three years;
4.1.1 Attendance of the Directors in the last Annual General Meeting :
The last i.e. 10th Annual General Meeting was held on 28th June, 2013 at National Library Auditorium, Belvedere Road, Alipore, Kolkata 700 027. Shri Arun Kaul, Chairman & Managing Director, Shri N R Badrinarayanan, Executive Director, Shri S. Chandrasekharan, Executive Director and Shri D.N. Thakur, Director attended the meeting.
4.1.2 New Directors on the Board after the last Annual General Meeting :
Shri Jai Kumar Garg, Executive Director, Shri Sunil Kumar Maheswari, Director and Md. Salahuddin Ansari, Director became the members of the Board subsequent to the date of the last Annual General Meeting held on 28th June, 2013.
4.1.3 Special Resolutions passed during last three years
i) In the Extra Ordinary General Meeting of the shareholders held on 17th March, 2011, a special resolution was passed in terms of which the shareholders of the Bank accorded its approval to the Board enabling it, interalia, to issue and allot upto 7,90,00,000 equity shares on preferential basis to Government of India. Bank had allotted 7,81,57,479 equity shares of ?10/- each on 25.03.2011 at x 120.27 per share determined in accordance with Regulations 76 (1) of SEBI ICDR Regulations, 2009.
ii) In the Extra Ordinary General Meeting of the shareholders held on 23rd March, 2012, a special resolution was passed in terms of which the shareholders of the Bank accorded their approval to the Board enabling it, interalia, to issue and allot upto 6,06,13,407 equity shares to Government of India and 3,13,75,874 equity shares to Life Insurance Corporation of India on preferential basis. Bank had allotted 58,18,887 equity shares to Government of India and 3,13,75,874 equity shares to LIC of India on 30.03.2012 at an issue price of X82.49 per share determined in accordance with Regulations 76 (1) of SEBI ICDR Regulations, 2009.
iii) In the Extra Ordinary General Meeting of the shareholders held on 4th March, 2013 a special resolution was passed in terms of which the shareholders of the Bank accorded their approval to the Board enabling it, interalia, to issue and allot of 8,79,16,343 equity shares to Government of India on preferential basis at an issue price of X77.46 per share determined in accordance with Regulations 76 (1) of SEBI ICDR Regulations, 2009.
iv) In the Extra Ordinary General Meeting of the shareholders held on 11th February, 2014, a special resolution was passed in terms of which the shareholders of the Bank accorded their approval to the Board enabling it, interalia, to issue and allot (i) 2,59,10,092 equity shares of X10/-each to Government of India against contribution of X200 crore and (ii) 23,61,70,488 equity shares of X10/- upon conversion of Perpetual Non Cumulative Preference Shares (PNCPS) held by Government of India aggregating to Rs.1823 crore to Government of India, on preferential basis at an issue price of X77.19 per share determined in accordance with Regulations 76 (1) of SEBI ICDR Regulations, 2009.
v) No special resolution was passed through postal ballot since IPO.
5.0 Disclosures :
The Bank is governed under the Banking Regulations Act 1949, Banking Companies (Acquisition & Transfer of Undertaking) Act 1970, Nationalised Banks (Management & Miscellaneous Provisions) Scheme 1970 and The Banking Companies (Acquisition & Transfer) & Financial Institutions Laws (Amendment) Act 2006. Reserve Bank of India, has clarified that for Listed Public Sector Banks, Clause 49 of the Listing Agreement will apply only to the extent that it does not violate the relative statutes applicable to them and the guidelines issued by Government of India/Reserve Bank of India from time to time in this regard.
5.1 Remuneration of Directors :
Other than "Productivity Linked Incentives" payable to the whole time directors, the remuneration of the Chairman & Executive Director is fixed by the Central Government. The Bank does not pay any remuneration to the part time directors except sitting fees at the following rates.
For Board Meeting : Rs. 10,000/- per sitting
For Committee Meeting : Rs. 5,000/- per sitting
5.2 Disclosure of Material Transactions and Pecuniary relationship:
Other than those in the normal course of banking business, the Bank has not entered into any materially significant transaction with its promoters, directors or the management etc. that may have potential conflict with the interest of the Bank at large. There was no pecuniary relationship or transactions of the non-executive director vis-a-vis the Bank during the year.
In compliance of the Code of Conduct for Directors and Senior Management of the Bank, Directors do not take part in the deliberations of the Board and its sub-committees when the matters relating to them or their relatives are discussed.
5.3 Proceeds from Public Issues etc.
During the financial year ended on 31st March, 2014, the Bank did not raise any Equity Shares by way of Public/Right Issue. However, Bank allotted 26,20,80,579 equity shares to Government of India on preferential basis at an issue price of Rs.77.19 per share determined in accordance with Regulations 76 (1) of SEBI ICDR Regulations, 2009. The funds so received by the Bank were utilized/would be utilized for augmenting Bank's working capital resources and expansion of banking assets.
5.4 The Bank has formulated a Code of Conduct for the Board of Directors and Senior Management on the lines of draft circulated by Indian Bank's Association. The text of the same is available on the website of the Bank www.ucobank.com <http://www.ucobank.com> All the Directors and Senior Management have affirmed their compliance of Code of Conduct during the period under review.
5.5 During the year, there is no instance of non-compliance, penalties, strictures imposed on the Bank by the Stock Exchanges or SEBI or any other statutory/regulatory authority on any matter related to Capital Markets transactions.
5.6 The related party transactions of the Bank are disclosed in the Note on Accounts of the Balance Sheet as on 31.03.2014.
0 Complianceto Mandatory/Non-Mandatory Requirements :
The Bank has complied with all the applicable mandatory requirements as provided in Clause 49 of the Listing Agreement entered into with the Stock Exchanges. The extent of implementation of non-mandatory requirements is furnished as under :
The Bank should set up a remuneration committee to determine on their behalf and on behalf of the shareholders with agreed terms of reference, the Bank’s policy on specific remuneration packages for executive directors including pension rights and any compensation payment.
Remuneration Committee of the Board has been formed to determine the remuneration package in terms of the Government of India guidelines.
The Bank may establish a mechanism for employees to report to the management concerns about unethical behaviour, actual or suspected fraud or violation of the Bank’s code of conduct or ethics policy and provide for adequate safeguards against victimization of employees.
The Bank has put in place a Whistle Blower policy.
The business transacted did not require any special resolution be put through postal ballot.
7.0 Means of Communication :
7.1 The information about the operational and financial performance of the Bank are communicated to the Stock Exchanges, where the securities of the Bank are listed immediately on the date of Board meeting approving/reviewing the financial statements of the Bank, besides posting of quarterly/half-yearly/annual financial results in Bank's website (www.ucobank,com <http://www.ucobank,com>). Such results are also made public through press releases/advertisements as well as by presentation made to the representatives from print and electronic media and other interested members of the public.
7.2 As per the Listing Agreement with the stock exchanges Unaudited but Reviewed financial results of the Bank for the quarters ended on 30.06.2013, 30.09.2013 & 31.12.2013 were published within the prescribed time limit in widely circulated dailies.
8.0 General Shareholders Information:
8.1.0 Annual General Meeting (AGM) of the Shareholders :
Before the Initial Public Offer, as the entire Equity Capital of the Bank was held by the Govt. of India, no Annual General Meeting was held till 2002-03. Subsequent to IPO, the Bank has been holding Annual General Meetings of the shareholders every year, as prescribed in the statute and within the stipulated time limit. The details of last three general meetings of the shareholders have been indicated under point no.4.0.
8.2.0 Listing on Stock Exchanges:
The equity shares of the Bank are listed on the following stock exchanges :
1 . National Stock Exchange of India Limited
Stock Code- UCO BANK
Date of listing -09.10.2003
2. Bombay Stock Exchange Limited
Date of listing -09.10.2003
8.5.0 Dematerialisation of the Shares
8.5.1 The equity shares of the Bank are available for trading compulsorily in Demat form. The Bank has entered into an agreement with NSDL and CDSL for dematerialisation of shares. Shareholders can get their shares dematerialised with their Depository Participants maintaining their account either with NSDL or CDSL. The ISIN Code for the Bank's equity share is INE691A01018. The ISIN Code for Bank's Preference Shares i.e. PNCPS is INE691A04012.
The Annual Custodial Fees (2013-14) for the securities have been paid to NSDL and CDSL.
8.5.3 The Bank is functioning as a Depository Participant (D.P) of National Securities Depository Ltd. (NSDL) through D.N. Road Branch, Mumbai. The D.P. Services have since been extended to cover wide range of customers through select branches namely, India Exchange Place Branch, Kolkata, Ashram Road Branch, Ahmedabad, Parliament Street Branch, New Delhi and KG Road Branch, Bangalore, Chennai (Main) Branch and Banjara Hills Branch, Hyderabad.
8.5.4 The Bank has not issued any GDRs/ADRs/Warrants or any convertible instruments during the period under review.
8.7 Share Transfer System & Redressal of Investor's Grievances :
The Bank takes every care to ensure that all valid requests for Transfer of Shares are duly complied within the period of 15 days from the date of lodgement of the completed forms. The Board of Directors has constituted the Share Transfer Committee to consider Transfer/Transmission and requests for issuance of duplicate Shares. The Bank has also constituted Shareholder's Grievance Redressal Committee to review the status of redressal of Shareholder's grievances and related matters.
10.0 Address for correspondence with Bank :
For any assistance regarding dematerialisation of shares, transfer of shares, change of address, non-receipt of dividend, issuance of duplicate share certificates etc., the investors can mail their request/complaint to the Bank in the following address :
Shri N Purna Chandra Rao, Company Secretary Telephone No. (033) 44557227, Fax No. (033) 2248-5625 UCO Bank : Head Office, Finance Department 2, India Exchange Place, 3rd Floor, Kolkata - 700 001
10.1 Exclusive e-mail ID for Investors' Complaints :
In compliance with the SEBI guidelines, a dedicated e-mail ID has been created for any complaints by the Investors/ Shareholders regarding UCO Bank Equity Shares/Payment of Dividends etc. Any complaint by the Investors shall be responded expeditiously along with necessary action taken by the Compliance Officer. The e-mail ID is: firstname.lastname@example.org . The e-mail ID is also been posted in the website of the Bank.
11.0 Auditors Report on Corporate Governance
As required under Clause 49 of the Listing Agreement with the Stock Exchanges, the Audit Certificate on Corporate Governance for year 2013-14 issued by the Statutory Central Auditors is submitted to the Board of Directors and the same is part & parcel of the Corporate Governance Report 2013-14. (Annexure-I)
12.0 CEO & CFO CERTIFICATE The Certificate of CEO & CFO under Clause 49 of the Listing Agreement is submitted to the Board of Directors and the same is part & parcel of the Corporate Governance Report 2013-14. (Annexure -II)