Corporate Overview Statutory Reports Financial Statements

Directors’ Report
To the Members,
Your Directors take pleasure in presenting the 90th Annual Report on the business and operations of The Federal Bank Limited (“the
Bank”), together with the audited accounts for the Financial Year (FY) ended March 31, 2021.

Financial Results
Financial results are presented in the table below: (` in crores)
Financial Parameters for the year ended March 31, 2021 March 31, 2020
Net Interest Income 5,533.70 4,648.90
Fee and Other Income 1,944.91 1,931.41
Net Revenue 7,478.61 6,580.31
Operating Expense 3,691.71 3,375.61
Operating Profit 3,786.90 3,204.70
Net Profit 1,590.30 1,542.78
Profit brought forward 2,616.67 2,174.28
Total Profit Available for appropriation 4,206.97 3,717.07
Appropriations:
Transfer to Revenue Reserves 229.57 147.46
Transfer to Statutory Reserves 397.57 385.70
Transfer to Capital Reserves 153.45 135.83
Transfer to Special Reserve 120.99 96.00
Dividend pertaining to previous year paid during the year - 278.22
Tax on dividend - 57.19
Balance Carried over to Balance Sheet 3,305.39 2,616.67
Financial Position (as on)
Deposits 172,644.48 152,290.08
Advances 131,878.60 122,267.91
Total Business (Deposits + Advances) 304,523.08 274,557.99
Other Borrowings 9,068.50 10,372.43
Investments 37,186.21 35,892.68
Total Assets (Balance Sheet Size) 201,367.39 180,638.05
Equity Capital 399.23 398.53
Ratios
Return on Total Assets (%) 0.85 0.94
Return on Equity (%) 10.38 11.10
Earnings Per Share (` ) 7.97 7.76
Book value per share (` ) 80.77 72.86
Operating cost to Income (%) 49.36 51.30
Capital Adequacy Ratio (%) Basel (III) 14.62 14.35
Previous year figures have been regrouped / reclassified, where necessary to conform to current year’s classification.

HIGHLIGHTS OF PERFORMANCE
During the year 2020-21, your Bank delivered steady performance amidst the disruptions caused by the pandemic. Total business of
your Bank improved by 10.91% to reach ` 304523.08 Cr as on March 31, 2021. 13.37% growth in deposits and 7.86% growth in advances
(net) helped your Bank to clock this number. Total deposits reached ` 172644.48 Cr and advances (net) reached ` 131878.60 Cr and on

Annual Report 2020-21 35

Directors’ Report (Contd...)
averages, deposit portfolio of your Bank grew by 13.31% to reach SPREAD
` 156016.40 Cr and advance portfolio grew by 8.10% to reach During the fiscal year, the Bank’s spread on advances (gross)
` 123337.38 Cr. stood at 3.75% and spread on investments (gross) increased
to 3.28%. The Spread (net of provisions) on advance stood
On the NR side, NRE deposits had a growth rate of 11.77% to at 2.52%.
reach ` 63958.84 Cr and NRE Savings clocked a growth of 18.61%
to reach ` 18310.99 Cr. The total NR business of your Bank stood
ASSET QUALITY
at ` 68083.20 Cr with a growth of 12.19%.
The Gross NPA of your Bank as on March 31, 2021 stood at
GROWTH IN BUSINESS ` 4602.39 Cr. Gross NPA as a percentage to Gross Advances is
On CASA front, Savings deposit touched ` 47686.29 Cr with 3.41%. The Net NPA stood at ` 1569.28 Cr and this as a percentage
21.66% growth and Current deposits stood at ` 10684.19 Cr. to Net Advances is 1.19%. The Provision Coverage Ratio (including
Your Bank registered a healthy CASA growth of 25.66% to reach technical write-offs) stood at 77.65%.
` 58370.48 Cr. CASA ratio of your Bank stood at 33.81%.
NET WORTH & CAPITAL ADEQUACY
The investment portfolio of your Bank has reached ` 37186.21 Cr The Net Worth of your Bank grew by 11.06% to ` 16123.61 Cr
as on March 31, 2021. The average investment as on March 31, as against ` 14517.61 Cr in the previous year. Historically, your
2021 is ` 35731.82 Cr. Bank has been strong on capital adequacy. CRAR of the Bank
calculated in line with Basel III norms stood at 14.62% which is
PROFITABILITY considerably higher than the RBI stipulation. Of this, Tier 1 CRAR
The Operating Profit of your Bank increased by 18.17% to is at 13.85%.
` 3786.90 Cr and Net Profit of your Bank is up by 3.08% to
` 1590.30 Cr. Healthy traction in core business streams has BUSINESS OVERVIEW
helped your Bank to have a good momentum in core operating Your Bank continued its consistent performance during FY 2020-
performance. Net Interest Income improved by 19.03% 21 with the total business of the Bank increasing by 10.91% to
to ` 5533.70 Cr while the Non-Interest Income stood at ` 304523.08 Cr.
` 1944.91 Cr.
There is no change in the nature of business of the Bank for the
Total income of your Bank during the fiscal year 2021 recorded
year under review. Further information on the business overview
3.70% growth to reach ` 15702.81 Cr. Income from advances
and outlook and state of the affairs of the Bank is discussed in
increased by 1.16% to reach ` 10795.12 Cr. The yield on advances
detail in the Management Discussion & Analysis Report.
stood at 8.75% and the yield on Investments (excluding trading
gain) at 6.57%. The Net Interest Margin for the fiscal year is at
3.16% as against 3.05%, in the previous year. EMPLOYEE PRODUCTIVITY
Business per employee of your Bank during the period stood at
Return on Average Equity and Return on Average Total Assets ` 24.28 Cr, an improvement of 9.32% for the year and the profit
stood at 10.38% and 0.85% respectively. Earnings per Share (face per employee of the Bank stood at ` 12.68 Lakh during the fiscal.
value of ` 2 each) of the Bank, as on March 31, 2021 were ` 7.97.
Book value per share had increased to ` 80.77 during FY 21. EXPANSION OF NETWORK
The Bank has 1272 branches, 1947 ATMs/Recyclers and 10
EXPENDITURE Mobile ATMs as on March 31, 2021. The Bank also has its
The total expenses of your Bank reduced by 0.18%, to reach Representative Office at Abu Dhabi & Dubai and an IFSC Banking
` 11915.91 Cr and by a reduction of 3.94%, interest expenses Unit (IBU) in Gujarat International Finance Tec-City (GIFT City).
reduced to ` 8224.20 Cr in FY 21. Operating Expenses of the Bank
during the fiscal year grew to ` 3691.71 Cr. SHARE VALUE
Earnings per Share (face value ` 2 /- each) of your Bank have
The cost of deposits of the Bank reduced to 5.00% as on March improved to ` 7.97 from ` 7.76 during the year under review.
31, 2021. The Interest expenses as percentage to total income Return on Equity during the year reached 10.38% in the fiscal year
stood at 52.37%. ended March 31, 2021.

36 Federal Bank
 Corporate Overview Statutory Reports Financial Statements

Directors’ Report (Contd...)

APPROPRIATIONS Dividend
(` in Thousands) Continuing the Bank’s policy of striking a fine balance between
FY 2020-21 FY 2019-20 retained earnings and dividend distribution, the Board of Directors
Transfer to Revenue Reserve 2,295,718 1,474,611 have recommended a dividend of 35% i.e. ` 0.70 per Equity Share
on face value of ` 2/- each for the year 2020-21 (previous year:
Transfer to Statutory Reserve 3,975,743 3,856,953
Nil) subject to the approval of the members in the ensuing Annual
Transfer to Capital Reserve 1,534,458 1,358,289
General Meeting. Protecting shareholders’ value has always been
Transfer to Special Reserve 1,209,900 960,000
a guiding philosophy of the Bank.
Dividend pertaining to 0.00 2,782,229
previous year paid during the
Credit Rating
year
The details of Credit Ratings of your Bank as on March 31, 2021
Tax on dividend 0.00 571,895
are as follows;
Balance carried over to 33,053,829 26,166,675
Balance Sheet • CRISIL A1+ (Reaffirmed) for the Certificate of Deposit
TOTAL 42,069,648 37,170,652 Programme of the Bank
• CRISIL A1+ (Reaffirmed) for the Short Term Fixed Deposits
Material Changes and Commitments, if any, affecting the of the Bank
Financial Position of the Bank which have occurred between
the end of the Financial Year of the Bank to which the financial • CARE AA (Stable) (Reaffirmed) [Double A, Outlook: Stable]
statements relate and the date of the report for the Tier II bonds (Under Basel III)
• IND AA/Stable (Affirmed) by India Rating and Research for
There are no material changes affecting the financial position of
the Tier II bonds (Under Basel III)
the Bank which have occurred between the end of the financial
year of the Bank to which the financial statements relate and the During the year under review, there were no revisions in the credit
date of the report. ratings obtained by the Bank.

Change in Capital Structure and Listing of Employee Stock Option Scheme (ESOS)
Shares The Bank has instituted Employee Stock Option Schemes, duly
The subscribed and paid up share capital of the Bank as on March approved by the shareholders of the Bank to enable its employees
31, 2021 is ` 3,992,305,496/- divided into 1,996,152,748 equity including Whole Time Directors to participate in the future growth
shares of `   2/- each. The Bank’s equity shares are listed on the and financial success of the Bank. The Employee Stock Option
National Stock Exchange of India Limited (NSE) and BSE Limited Schemes are formulated in accordance with the SEBI guidelines,
(BSE). During the year, 34,88,176 equity shares of ` 2/- each as amended from time to time. The eligibility and number of
were allotted under Employee Stock Option scheme (ESOP) of the options to be granted to an employee is determined on the basis
Bank and admitted for trading in NSE and BSE. of various parameters such as scale, designation, performance,
grades, period of service, Bank’s performance and such other
As on March 31, 2021, Bank has an outstanding of 3,000 parameters as may be decided by the Nomination, Remuneration,
units rated, unsecured, redeemable, non-convertible, Basel III Ethics and Compensation Committee of the Board from time to
compliant lower tier II subordinated bonds aggregating to ` 300 time in its sole discretion.
crore.
The Bank’s shareholders had approved the Employee Stock
Important changes which have occurred after the close of Financial Option Scheme 2010 (ESOS 2010) on December 24, 2010 and
Year the Federal Bank Limited Employee Stock Option Scheme 2017
(ESOS 2017) on July 14, 2017.
After the close of Financial Year, 1,30,990 equity shares of ` 2/-
each were allotted under ESOP scheme of the Bank and have been Under ESOS 2010, the Nomination, Remuneration, Ethics
admitted for trading on NSE and BSE. Accordingly, the paid up and Compensation Committee granted 3,47,20,200 options
share capital of the Bank as on May 31, 2021 is ` 3,992,567,476 during the year 2011-12, 2,44,84,750 options during the year
divided into ` 1,996,283,738 equity shares of ` 2/- each. The 2012-13, 2,60,94,250 options during the year 2013-14,
shares are actively traded on NSE and BSE and have not been 1,11,56,450 options during 2014-15, 10,25,000 options during
suspended from trading. the year 2015-16, 9,65,000 options during the year 2016-17

Annual Report 2020-21 37

Directors’ Report (Contd...)
and 1,00,000 options during the year 2017-18. The options Transfer of Shares underlying Unpaid Dividend
granted which are non-transferable, with vesting period of 1 to Pursuant to the provisions of Section 124(6) of the Act and
5 years subject to standard vesting conditions, must be exercised the Investor Education and Protection Fund (IEPF) Authority
within five years from the date of vesting. As on March 31, 2021, (Accounting, Audit, Transfer and Refund) Rules, 2016 notified
6,95,91,185 options had been exercised and 9,196,193 options by the Ministry of Corporate Affairs on September 7, 2016 and
were in force. subsequently amended vide notification dated February 28, 2017,
all the equity shares of the Bank in respect of which dividend
Under ESOS 2017, the Nomination, Remuneration, Ethics and amounts have not been paid or claimed by the shareholders for
Compensation Committee granted 2,23,18,348 options during seven consecutive years or more are required to be transferred to
the year 2017-18, 3,72,31,307 options during the year 2018-19, demat account of IEPF Authority. Upon transfer of such shares,
3,05,24,986 options during the year 2019-20 and 1,68,84,159 all benefits (like dividend, bonus, split, consolidation etc.), if any,
options during the year 2020-21. The options granted which are accruing on such shares shall also be credited to the Account of
non-transferable, with vesting period of 1 to 4.25 years subject to IEPF and the voting rights on such shares shall remain frozen
standard vesting conditions, must be exercised within five years till the rightful owner claims the shares. Shares which were
from the date of vesting. As on March 31, 2021, 5,57,062 options transferred to the demat account of IEPF Authority can be claimed
had been exercised and 7,49,26,966 options were in force. back by the shareholder by following the procedure prescribed
under the aforesaid rules.
Other statutory disclosures as required by the SEBI guidelines/
Securities and Exchange Board of India (Share Based Employee Accordingly, 271586 equity shares of 180 members of your
Benefits) Regulations, 2014 on ESOS are given in website of Bank were transferred to Demat Account of IEPF Authority. Your
the Bank in the link: https://www.federalbank.co.in/web/guest/ Bank had sent individual notice to all the aforesaid 180 members
shareholder-information. and has also published the notice in the leading English and
Malayalam newspapers.
Transfer to Investor Education and Protection
Fund The details of the nodal officer appointed by the Bank under the
Transfer of Unpaid/ Unclaimed Dividend provisions of IEPF are disseminated on the website of the Bank viz.,
As per Sections 124 and 125 of the Act read with Investor https://www.federalbank.co.in/unclaimed-dividend-warrants.
Education and Protection Fund Authority (Accounting, Audit,
Transfer and Refund) Rules, 2016 (‘IEPF Rules’), dividend, if not Directors
claimed for a consecutive period of 7 years from the date of As on March 31, 2021, Bank’s Board consists of 11 members,
transfer to Unpaid Dividend Account of the Company, are liable with rich experience and specialized knowledge in various
to be transferred to the Investor Education and Protection Fund areas of relevance to the Bank, including banking, accountancy,
(‘IEPF’). The said requirement does not apply to shares in respect MSME, finance, small scale industry, agriculture, strategic
of which there is a specific Order of Court, Tribunal or Statutory planning, risk management, information technology and
Authority, restraining transfer of the shares. Payment and Settlement Systems. Besides the Chairperson,
a Non-Executive Non-Independent Woman Director, the
As a result, the unclaimed/unpaid dividend for the year 2012-
Board comprises seven Non-Executive Independent Directors
13 amounting to ` 95.44 lakhs which remained unpaid and
including one woman independent director and three Executive
unclaimed for a period of 7 years has been already transferred by
Directors.
your Bank to the IEPF.
Further, the unpaid dividend amount pertaining to the financial During the year, Reserve Bank of India vide their letter dated
year 2013-14 will be transferred to IEPF during the Financial Year July 16, 2020 had approved the re-appointment of Mr. Shyam
2021-22. Srinivasan as Managing Director & Chief Executive Officer (MD
& CEO) (DIN: 02274773) of the Bank for a period of one year
Your Bank has uploaded the details of unclaimed/ unpaid dividend w.e.f. September 23, 2020 till September 22, 2021. Accordingly,
for the financial year 2013-14 onwards on its website viz., www. approval of the shareholders for re-appointment of Mr. Shyam
federalbank.co.in and on website of the Ministry of Corporate Srinivasan as MD & CEO of the Bank through ordinary resolution
Affairs viz., www.iepf.gov.in and the same gets revised/updated is being sought at the ensuing AGM of the Bank.
from time to time pursuant to the provisions of IEPF (Uploading of
Information Regarding Unpaid and Unclaimed Amount lying with Pursuant to the recommendation of the Nomination,
Companies) Rules, 2012. Remuneration, Ethics and Compensation Committee, the Board

38 Federal Bank
 Corporate Overview Statutory Reports Financial Statements

Directors’ Report (Contd...)

of Directors of the Bank approved the appointment of Ms. Varsha effective from February 11, 2020. The Shareholders in the 89th
Purandare (DIN- 05288076) as an Additional Independent AGM held on July 16, 2020 had approved the appointment of Mr.
Director of the Bank, with effect from September 08, 2020. Sudarshan Sen as Independent Director of the Bank for a term
Pursuant to the provisions of Section 161 of the Act, she continues of five (5) consecutive years with effect from the date of his
to hold office as an Additional Director of the Bank, up to the date appointment by the Board. Further, the Shareholders of the Bank
of the ensuing AGM or the last date, on which the AGM should at the 89th AGM approved the appointment of Ms. Grace Koshie
have been held, whichever is earlier. Your Bank has received a (DIN: 06765216), Part –Time Chairperson as Non–Executive,
notice in writing from a member proposing the candidature of Non-Independent Director of the Bank with effect from July 17,
Ms. Varsha Purandare as a Director (Non-Executive Independent) 2020 to November 21, 2021 and also took on record the approval
on the Board of the Bank. Further, the NRC and the Board of received from RBI for the appointment of Ms. Grace Koshie as
Directors of the Bank have also recommended her appointment Part-Time Chairperson of the Bank with effect from November
as an Independent Director, not liable to retire by rotation, to the 07, 2019 to November 21, 2021.
Shareholders at the ensuing AGM for a period of five years with
effect from September 08, 2020. The Shareholders in the 89th AGM had also approved the
re-appointment of Mr. Shyam Srinivasan (DIN: 02274773) as
The Nomination, Remuneration, Ethics and Compensation Managing Director & Chief Executive Officer of the Bank, for
Committee at its meeting held on June 09, 2021 after a period of one year with effect from September 23, 2019 to
taking into account the performance evaluation of Mr. A P September 22, 2020 and Mr. Ashutosh Khajuria as an Executive
Hota during his first term of three years and considering Director of the Bank designated as Executive Director and Chief
the knowledge, acumen, expertise and experience in Financial Officer of the Bank for the period from January 28, 2020
respective fields and the substantial contribution made by to March 31, 2021. Further, the Shareholders of the Bank at the
him during his tenure as Independent Director since his 89th AGM approved the appointment of Ms. Shalini Warrier as
appointment, has recommended to the Board that continued Executive Director of the Bank, for a period of three (3) years with
association of him as Independent Director would be in the effect from January 15, 2020.
interest of the Bank. Based on the above, the Nomination,
Remuneration, Ethics and Compensation Committee Ms. Shubhalakshmi Panse (DIN- 02599310) Independent Director
and the Board has recommended the re-appointment of of the Bank, retired from the Directorship of the Bank effective
Mr. A P Hota as Independent Director on the Board of the from July 17, 2020, upon completion of two terms as Independent
Bank, to hold office for the second term commencing from Director, in accordance with the regulatory requirements of RBI.
date of 90th Annual General Meeting upto January 14, 2026
and not liable to retire by rotation. Accordingly, approval of Necessary information pursuant to SEBI (Listing Obligations
the shareholders for re-appointment of Mr. A P Hota through and Disclosure Requirements) Regulations, 2015, in respect
Special Resolution is being sought at the ensuing AGM of of directors to be appointed and re-appointed at the ensuing
the Bank. Annual General Meeting are given in the Annexure to the Notice
convening the Annual General Meeting scheduled to be held on
Mr. Ashutosh Khajuria (DIN: 05154975) was re-appointed as July 09, 2021.
Executive Director of the Bank for a period of one year with effect
from w.e.f. April 01, 2021 till April 30, 2022 with the approval of None of the Directors of your Bank are disqualified for being
Reserve Bank of India. Accordingly, approval of the shareholders appointed as directors, as specified in Section 164(2) and Rule
for re-appointment of Mr. Ashutosh Khajuria as Executive Director 14(1) of Companies (Appointment and Qualification of Directors)
of the Bank, through Ordinary Resolution is being sought at the Rules, 2014.
ensuing AGM of the Bank.
Key Management Personnel
In terms of the provisions of Section 152 of the Companies Act,
As on March 31, 2021, the following Directors/Executive
2013, Ms. Shalini Warrier, Executive Director (DIN: 08257526),
continued as Key Managerial Personnel of the Bank:
being longest in office, shall retire at the ensuing AGM and
being eligible, offers herself for re-appointment. The Board
Mr. Shyam Srinivasan – Managing Director & Chief Executive
recommends her re-appointment.
Officer
Mr. Sudarshan Sen (DIN: 03570051) was appointed as Additional Mr. Ashutosh Khajuria – Executive Director & Chief Financial
Non- Executive Independent Director on the Board of the Bank Officer

Annual Report 2020-21 39

Directors’ Report (Contd...)
Ms. Shalini Warrier – Executive Director & Chief Operating Officer Meetings
Mr. Samir P Rajdev – Company Secretary & Vice President The Board meets at regular intervals to discuss and decide
on Bank/ business policy and strategy apart from other items
During the year Mr. Shyam Srinivasan, MD & CEO of the Bank who of business. The Board exhibits strong operational oversight
is Key Managerial Personnel was reappointed as MD & CEO of with regular presentations by business heads to the Board.
the Bank for a period of one year w.e.f. September 23, 2020 till The Board and Committee meetings are prescheduled and a
September 22, 2021 tentative annual calendar of Board and Committee Meetings
is circulated to the Directors well in advance to help them plan
After the end of the financial year and up to the date of the Report. their schedule and to ensure meaningful participation at the
meetings.
Mr. Ashutosh Khajuria (DIN: 05154975), Executive Director of the
Bank, who is also a Key Managerial Personnel was re-appointed During the year under review fifteen (15) Board Meetings. Twelve
as Executive Director of the Bank for a period of one year with (12) Audit Committee Meetings and other Committee Meetings
effect from April 01, 2021 till April 30, 2022 with the approval of were convened and held, the details of which are given in the
Reserve Bank of India. Corporate Governance report. The intervening gap between the
meetings was within the period prescribed under the Companies
The Board of Directors of the Bank at its meeting held on May Act, 2013.
17, 2021, approved the appointment of Mr. Venkatraman
Venkateswaran as Chief Financial Officer and Key Managerial The details of the constitution of the Board and its Committees
Personnel of the Bank with effect from Tuesday, May 18, 2021. are detailed in the Corporate Governance report.
Mr. Ashutosh Khajuria, Executive Director, who was also the
CFO, after the transition, made responsible for Treasury, Credit & Subsidiaries of the Bank
Collections, Strategic initiatives and establish the ESG journey of As on March 31, 2021, the Bank has one unlisted wholly owned
the Bank. subsidiary, M/s. Federal Operations and Services Limited and
one unlisted subsidiary named M/s. Fedbank Financial Services
Declaration by Independent Directors Limited.
The Bank has received declaration from all the Independent
Directors that they continue to meet the criteria of independence Federal Operations and Services Limited
as provided under the Companies Act, 2013 (the Act) and SEBI Federal Operations and Services Limited (FedServ) is a wholly
(Listing Obligations and Disclosure Requirements) Regulations, owned subsidiary company of The Federal Bank Limited (the
2015 and comply with the Code for Independent Directors as Bank) incorporated on October 26, 2018. FedServ received
specified under Schedule IV of the Act. In terms of the Companies approval from RBI on November 09, 2018 for commencing its
(Creation and Maintenance of databank of Independent Directors) operations. FedServ started its operations w.e.f. December 01,
Rules, 2019 read with the Companies (Appointment and 2018. FedServ provides operational and technology oriented
Qualification of Directors) Fifth Amendment Rules, 2019, the services to the Bank.
Independent Directors of the Bank has enrolled his/ her name in
the online databank of Independent Directors maintained by the As on March 31, 2021, FedServ’s Board of Directors has following
Government. four members-

The Independent Directors have also confirmed that they are not Mr. C Balagopal , Chairman
aware of any circumstance or situation, which exists or may be Ms. Shalini Warrier, Non- Executive Director
reasonably anticipated, that could impair or impact their ability to
Mr. Ajith Kumar K K, Non- Executive Director
discharge their duties with an objective independent judgement
and without any external influence. Mr. Johnson K Jose, Whole-time Director

In the opinion of the Board, the Independent Directors possess During the year ended on March 31, 2021, FedServ has taken
the requisite expertise and experience and are the persons of significant operational activities of the Bank which includes
high integrity and repute. They fulfil the conditions specified in Call Centre Operations. FedServ is carrying out 87 operational
the Act and the Rules made thereunder and are independent of activities of the Bank as on March 31, 2021. Company does not
the Management. deal in loans and advances, neither it accepts deposits. FedServ is

40 Federal Bank
 Corporate Overview Statutory Reports Financial Statements

Directors’ Report (Contd...)

operating from two locations:- Kochi in Kerala and Visakhapatnam ` 694.04 Crores and closing Net worth of Fedfina as on March 31,
in Andhra Pradesh. 2021 was ` 832.08 Crores. During the year, Bank has invested in
equity shares of Company amounting to ` 58.61 Crores.
The total revenue of FedServ for the year ended on March 31,
2021 was ` 26.38 Crores. The full revenue pertains to services The total loan portfolio of Fedfina as on March 31, 2021 was
provided by the Company entirely to the Bank. The Company ` 4,491.75 Crores as against ` 3,650.75 Crores as on March 31,
had a net profit of ` 1.84 Crores for the year ended on March 31, 2020. The total assets of the Company increased to ` 5,409.89
2021. The Net worth of FedServ at the beginning of the year was Crores as on March 31, 2021 from ` 4,035.10 Crores as on March
` 10.98 Crores and closing net worth of FedServ as on March 31, 31, 2020.
2021 was ` 12.82 Crores.
Note: The figures reported above for Fedfina are as per the
FedServ will help the Bank in serving the customers better and
audited financial statements prepared for the consolidation as
reducing the cost of operations significantly. FedServ will also
per AS 21, Consolidated Financial Statements.
help the Bank to improve turnaround time of various operational
processes, improve First Time Right (FTR) rate and enable the
Associate Companies
Bank to become FIRST CHOICE Bank of customers.
As on March 31, 2021, the Bank has two Associate Companies
The Profit after tax of the Company for the year ended March named M/s. Ageas Federal Life Insurance Company Limited
31, 2021 increased to ` 1.84 Crores from ` 1.27 Crores for the (Formerly known as IDBI Federal Life Insurance Co Ltd.) and
year ended March 31, 2020. The total assets of the Company M/s. Equirus Capital Private Limited.
increased to ` 14.96 Crores as on March 31, 2021 from ` 13.69
Crores as on March 31, 2020. Joint Venture in Life Insurance Business
The Bank’s Joint Venture Life Insurance Company, in association
Fedbank Financial Services Limited with IDBI Bank Limited and Ageas Insurance International N.V.
Fedbank Financial Services Limited (Fedfina) is a subsidiary (Formerly known as Fortis), namely Ageas Federal Life Insurance
company of The Federal Bank Limited (the Bank) incorporated on Company Limited (erstwhile IDBI Federal Life Insurance Company
April 17, 1995. Fedfina received approval from RBI on August 24, Limited), commenced operations in March 2008. Currently the
2010 for commencing its operations. It is a Non-deposit taking Bank has a total stake of ` 208 Crores in the equity of the Company
& Systemically Important (ND-SI) NBFC. Fedfina provides various holding 26% of the equity capital. The total premium collected by
multiple loan products such as Loan against Property (LAP), Ageas Federal Life Insurance Company Limited during the period
Structured Finance and Loan against pledge of Gold ornaments. ended March 31, 2021 was ` 1,958.64 Crores. The Company has
It also distributes loan products of the Bank. It has over 359 declared & paid final dividend of 13% for the FY 2020-21.
branches across India providing multiple loan products to various
segments of borrowers. Mr. Shyam Srinivasan, Managing Director and Chief Executive
Officer and Ms. Shalini Warrier, Executive Director of the Bank
Fedfina’s Board of Directors comprises following six members. are Non-Executive Directors in Ageas Federal Life Insurance
Company Limited.
Mr. K Balakrishnan – Chairman & Independent Director
Mr. Anil Kothuri – Managing Director & Chief Executive Officer Investment Banking Associate
Mr. Shyam Srinivasan – Non Executive Director As of March 31, 2021, Bank holds 19.90% stake in Equirus
Ms. Gauri Rushabh Shah – Independent Director Capital Private Limited. Pursuant to the right of proportionate
Mr. Maninder Singh Juneja – Nominee Director representation on Board as well as power to participate in the
Mr. Ashutosh Khajuria – Nominee Director financial, operational matters like approval of business plan,
policies, budgets, managerial remuneration, change in KMP etc.,
The total revenue of Fedfina for the year ended on March 31, the same has been treated as an associate concern as per AS 23
2021 is ` 696.41 Crores as against ` 471.27 Crores for the year Accounting for Investments in Associates in Consolidated Financial
ended March 31, 2020. Revenue grew by 48% on the back of Statements. Equirus Capital Private Limited is a private company
growth of 23% in loan book during the year. The net profit of the domiciled in India and is engaged in the business of Investment
Company grew by 48% to ` 58.60 Crores for the year ended March banking. It has 3 subsidiaries named Equirus Securities Private
31, 2021 as against ` 39.54 Crores for the year ended March 31, Limited, Equirus Insurance Broking Private Limited and Equirus
2020. The Net worth of Fedfina at the beginning of the year was Wealth Private Limited. Total turnover of Equirus Capital Private

Annual Report 2020-21 41

Directors’ Report (Contd...)
Limited on a consolidated basis was ` 65.42 Crores in FY 2021 Bank began with the first act of cultivating banking habits in the
against ` 45.06 Crores for FY 2020. agrarian society to effectively utilize idle money for productive
purposes.
Mr. Harsh Dugar, Group President & Country Head - Wholesale
Banking of the Bank is a Nominee Director on the Board of Equirus The details of the CSR initiatives undertaken during the financial
Capital Private Limited. year ended March 31, 2021 and other details required to be given
under section 135 of the Companies Act, 2013 read with rule 8(1)
Deposits of the Companies (Corporate Social Responsibility Policy) Rules,
Being a Banking Company, the disclosures required as per Rule 2014 are given in Annexure I forming part of this Report.
8(5) (v) & (vi) of the Companies (Accounts) Rules, 2014, read with
Section 73 and 74 of the Companies Act, 2013 are not applicable The CSR Policy as recommended by the CSR Committee and as
to the Bank. approved by the Board is available on the website of the Bank
and can be accessed at https://www.federalbank.co.in/corporate-
Loans, Guarantees or Investments in Securities social-responsibility.
Pursuant to Section 186 (11) of the Companies Act, 2013, loans
made, guarantees given, securities provided or acquisition of Energy Conservation, Technology Absorption,
securities by a banking Company in the ordinary course of its Foreign Exchange Earnings and Outgo
business are exempted from the disclosure requirement under The Bank is very conscious about the need for energy management
Section 134(3) (g) of the Companies Act, 2013. and as a team endeavour to contribute to low carbon economy
and acknowledges that it is a continuous process. The Bank is
Related Party Transactions introducing energy-efficient systems and leveraging technology
All related party transactions that were entered during the to boost energy efficiency in Bank’s operations. For more details of
financial year were in the ordinary course of the business of the various initiatives undertaken by the Bank for energy conservation
Bank and were on arm’s length basis. There were no materially at its premises, please refer ESG section of the Annual Report and
significant related party transactions entered by the Bank Principle 6 of Section E of the Business Responsibility Report.
with Related parties which may have a potential conflict with The Bank prides itself on continuous investment in technology
the interest of the Bank. All Related Party Transactions were upgrades that are designed to deliver cost effective best in class
placed before the Audit Committee of the Board for approval. customer service.
Prior omnibus approval for transactions which are of repetitive
nature is obtained from the Audit Committee and accordingly The Bank has used information technology extensively in its
the required disclosures are made to the Committee on quarterly operations, for more details please refer the section on Technology
basis in terms of the approval of the Committee. and Digital Updates portion of Directors report and Management
Discussion & Analysis Report forming part of the Annual Report.
The policy on materiality of Related Party Transactions and also Through its export-financing operations, the Bank supports and
on dealing with Related Party Transactions as approved by the encourages the country’s export efforts.
Audit Committee and the Board of Directors is uploaded on the
website of the Bank and the link for the same is https://www. Risk Management
federalbank.co.in/our-commitments. The Bank’s Risk Management framework is based on a clear
understanding of various risks, robust risk assessment and
Since all related party transactions entered into by the Bank were measurement procedures and constant monitoring. The Board
in the ordinary course of business and were on an arm’s length of Directors oversees all the risks assumed by the Bank. Specific
basis, disclosures as per Form AOC-2 is not applicable to the Committees are constituted to facilitate focused oversight of
Bank. There were also no material contracts or arrangement or various functions. The Risk Management Committee of the Board
transactions with related parties during the period. sets the standards and governs the risk management functions,
thereby bringing in a top to down focus on risk management.
Corporate Social Responsibility The Risk Management Committee of the Board reviews risk
Corporate Social Responsibility (CSR) has been an inherited & management Policies of the Bank pertaining to credit, market,
inbuilt element of our fundamentals right from the day the Bank liquidity, operational and business continuity management.
was founded. Our founder’s values & ethos based on trust got The Committee reviews the Risk Appetite framework, Internal
embedded in the Bank’s policies & principles. CSR in Federal Capital Adequacy Assessment Process (ICAAP) and Stress

42 Federal Bank
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Directors’ Report (Contd...)

testing. The Committee oversees setting up of limits on any Vigil Mechanism/Whistle Blower Policy
sector or country, implementation of Basel III guidelines and the The Bank has a robust mechanism for fraud risk management
activities of the executive level risk management committees. and the meticulously drafted Fraud Risk Management
The Committee assesses the level and direction of major risks Policy elucidates the numerous mitigation measures and
pertaining to credit, market, liquidity, operational, reputation, the surveillance mechanism that complements prevention,
technology, information security, compliance and capital as a detection, investigation and monitoring of both, internal and
part of the risk dashboard. In addition, the Committee oversees external frauds. Vigilance Department plays a dynamic role
risks of subsidiaries covered under the Group Risk Management in all the activities related to fraud and it also shoulders the
Framework. In addition, a Compliance Risk Assurance Cell (CRAC) responsibility in sensitizing public as well as employees at all
is functioning in the Department, which is established with the levels, on trending modus operandi of frauds, as part of the
aim to ensure total compliance with the regulatory and internal pre-emptive strategy. With a view to create an atmosphere
guidelines as well. of vigil and alertness, Vigilance Department issues Vigilance
Communications (Alerts) to all employees on regular basis that
The Risk Management Policies approved by the Board of Directors disseminates various modus operandi of frauds in the banking
and reviewed from time to time with updated regulatory and industry and also suggesting safeguards and precautions to be
internal guidelines form the governing framework for each type adopted to prevent such frauds. Preventive Vigilance Workshops
of risk. are conducted every year to sensitise and equip the field level
staff to prevent frauds and at selected branches preventive
The Integrated Risk Management Department co-ordinates Vigilance Audits are also conducted. Further, Fraud Prevention
and administers the risk management functions in the Bank. Committee at the branches conducts meetings periodically
The Department has three divisions for managing the main with a view to spread awareness among the employees on
risk streams, Credit risk, Market risk and Operational risk. potential fraudulent activities and to keep them alert. Customer
Dedicated teams within the divisions are responsible for awareness on fraudulent activities is another area that is well
assessment, monitoring and reporting of various material covered by the Bank through various effective communication
risks. Default risk and asset quality of loan portfolio are channels including SMS, E-Mails, posters at Branches, ribbon
monitored and managed by the Credit Risk Division. MIU unit messages on Bank website, internet banking webpage, etc. All
formed with the purpose of monitoring large value accounts cases of frauds reported in the Bank are investigated in detail
is linked to Credit Risk Division. The Bank has established an as part of detective vigilance activity. Lacunae, if any observed
independent Mid Office as part of Market Risk Division for real during the course of investigation are plugged and cases where
time monitoring of Treasury activities. Business Continuity process refinements are warranted, are presented before
Management, Information and Cyber Security measures relevant forums for corrective measures/necessary directions.
and Information Technology Risk form part of Operational
Risk Management. All the three divisions are independent of Bank has a robust Whistle Blower Policy termed as Protected
business operations and coordinate with representatives of Disclosure Scheme (PDS) with a view to enhancing public
the business units to implement the Bank’s risk management confidence in the Bank and also in compliance of RBI directions
Policies and frameworks. Executive level risk management in this regard. The policy aims at establishing an efficient vigil
committees namely, Credit Risk Management Committee, mechanism in the Bank to quickly spot aberrations and deal
Asset Liability Management Committee, Operational Risk with it at the earliest. It is disseminated among the employees
Management Committee and Information Security Committee assuring confidentiality and protection to the whistle blower
regularly assess the respective risks and direct corrective against any personal vindictive actions such as humiliation,
actions wherever required. The risk management functions harassment or any other form of unfair treatment. Directors
are coordinated by a Senior Executive designated as Chief Risk and Employees of the Bank, employee representative bodies,
Officer who reports directly to the Managing Director & CEO. customers, stakeholders, non-governmental organizations
All material risks of the Bank emerging in the course of its (NGO) and members of the public can lodge complaints /
business are identified, assessed and monitored in the Internal
disclosures under this scheme. A dedicated e-mail ID is
Capital Adequacy Assessment Process (ICAAP). In our view,
provided for sending complains/disclosures under PDS.
all the material risks of the Bank are identified, assessed and
Vigilance Department conducts investigation of all complaints
managed adequately.
/information received through the PDS and submits report to
MD & CEO. The details of the complaints and findings are also

Annual Report 2020-21 43

Directors’ Report (Contd...)
placed before the Audit Committee of the Board on a quarterly with effect from FY 2020-21. Accordingly the revision of tenure
basis. The scheme is popularised through various measures of M/s. Varma and Varma, one of the Joint Statutory Central
such as preventive vigilance classes, internal circulars, alerts Auditors of the Bank, is placed for the shareholders’ approval in
etc. No personnel have been denied access for giving any the ensuing AGM.
information as envisaged in the Protected Disclosure scheme.
The PDS Document is made available in Bank’s website and Pursuant to the amendment made to Section 139 of the
Intranet. Website link to Bank’s Whistle Blower Policy is Companies Act, 2013 by the Companies (Amendment) Act,
https://www.federalbank.co.in/our-commitments 2017, effective from May 07, 2018, the requirement of seeking
ratification of the members for the appointment / re-appointment
Significant and Material Orders passed by the of the Statutory Auditors has been withdrawn from the Statute.
Regulators or Courts or Tribunals Impacting Hence, the resolution seeking ratification of the members for
the Going Concern Status of the Company and re-appointment at the ensuing AGM is not being sought for
its Future Operations the reappointment of M/s. Borkar & Muzumdar, Chartered
During the financial year 2020-21, the Bank has not received any Accountants as one of the Joint Statutory Central Auditors of the
significant or material orders passed by any Regulatory Authority, Bank.
Court or Tribunal which shall impact the going concern status and
Bank’s operations in future. There is no qualification or adverse remark in Auditors’ Report.
There is no incident of fraud requiring reporting by the Auditors
Statutory Auditors under Section 143(12) of the Act.
The Shareholders in the 89th AGM held on July 16, 2020 approved
the appointment M/s. Varma & Varma, Chartered Accountants Secretarial Audit and Secretarial Compliance
(Registration No. 004532S), Kochi for a period of four (4) years Report
together with M/s. Borkar & Muzumdar, Chartered Accountants Pursuant to the provisions of Section 204 of The Companies
(Registration No. 101569W), Mumbai for a period of three (3) Act, 2013 your Bank has appointed CS EP Madhusudhanan
years as Joint Statutory Central Auditors of the Bank from the (COP: 21874), Partner of SEP & Associates, Company Secretaries,
conclusion of 89th AGM till the conclusion of 93rd and 92nd AGM Kochi as Secretarial Auditor to conduct Secretarial Audit of the
respectively. Bank for the FY 2020-21. Accordingly, the Secretarial Audit
Report for FY 2020-21 is annexed to this report as Annexure II.
RBI vide its letter DOS. ARG. No. PS-8/08.09.005/2019-20 There are no reservations, adverse remark or disclaimer in the
dated June 04,2020 had granted approval for appointment of Secretarial Audit Report.
M/s. Varma & Varma, Chartered Accountants and M/s. Borkar
& Muzumdar, Chartered Accountants as Joint Statutory Central No offence of fraud was reported by the Secretarial Auditor of the
Auditors of the Bank for FY 2020-21 for their first year. Bank.

RBI vide circular dated DoS.CO.ARG/SEC.01/08.91.001/2021- Pursuant to Regulation 24A of SEBI (Listing Obligations and
22 dated April 27, 2021 brought in “Guidelines for Appointment Disclosure Requirements) Regulations, 2015 read with SEBI
of Statutory Central Auditors (SCAs)/Statutory Auditors”. As per Circular No. CIR/CFD/CMD1/27/2019 dated February 08, 2019,
Para 8.1 of the said circular, in order to protect the independence the Bank has obtained Secretarial Compliance Report, certified
of the auditors/audit firms, entities will have to appoint the SCAs/ by CS Puzhankara Sivakumar (COP: 2210), SEP & Associates,
SAs for a continuous period of three years, subject to the firms Company Secretaries, Kochi for Financial Year ended March
satisfying the eligibility norms each year. 31, 2021, on compliance of all applicable SEBI Regulations and
circulars/ guidelines issued thereunder and the copy of the same
To comply with the requirements of the aforesaid RBI Circular was submitted with the Stock Exchanges.
dated April 27, 2021, the period of appointment of one of the
Joint Statutory Central Auditors of the Bank, M/s Varma and Compliance with Secretarial Standards on
Varma, Kochi needs to be reduced from four years to three Board and General Meetings
years. The Board of the Bank at its meeting dated June 11, 2021 The Bank has complied with Secretarial standards issued by the
recommended to the shareholders of the Bank the revision in Institute of Company Secretaries of India on Board Meetings and
the tenure of appointment of M/s. Varma and Varma, one of General Meetings.
the Joint Statutory Central Auditors of the Bank, as three years

44 Federal Bank
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Directors’ Report (Contd...)

Annual Return separate Section on Management Discussion and Analysis, as
The Annual Return for the Financial Year ended March 31, 2021 approved by the Board, which includes details on the state of
as required under Section 92 and Section 134 of the Companies affairs of the Bank, forms part of this Annual Report.
Act, 2013 read with Rule 12 of the Companies (Management and
Administration) Rules, 2014 is available on the Bank’s website, Corporate Governance
https://www.federalbank.co.in/shareholder-information. Corporate Governance has been an integral part of the way your
Bank has been doing business since inception. The Bank believe
Consolidated Financial Statements that good Corporate Governance emerges from the application
In accordance with the provisions of Section 129(3) of the of the best and sound management practices and compliance
Companies Act, 2013 read with Rule 8 of Companies (Accounts) with the laws coupled with adherence to the highest standards of
Rules, 2014, the Bank has prepared its Consolidated Financial transparency and business ethics.
Statement including its subsidiaries M/s. Fedbank Financial
Services Limited and M/s. Federal Operations and Services Your board seeks to embed and sustain a culture that will enable us
Limited and Associates, M/s. Ageas Federal Life Insurance to achieve our objectives through effective corporate governance
Company Limited (Formerly known as IDBI Federal Life Insurance and enhance transparent engagement with key stakeholders.
Co Ltd.) and M/s. Equirus Capital Private Limited, which is forming
part of this Annual report. The financial position and performance A separate report on Corporate Governance setting out the
of its subsidiaries & Associates are given in Form AOC-1, the governance structure, principal activities of the Board and its
statement containing salient features of the financial statements Committees and the policies and practices that enable the Board
of the subsidiaries/Associate Companies/Joint Venture. to fulfil its stewardship responsibilities together with a Certificate
In accordance with third proviso to Section 136(1) of the Companies from the Secretarial Auditor of the Bank regarding compliance of
Act, 2013, the Annual Report of the Bank, containing therein its conditions of Corporate Governance as stipulated under Listing
Standalone and the Consolidated Financial Statements has been Regulations forms part of this Annual report.
hosted on its website, www.federalbank.co.in. Further, as per
fourth proviso to the said Section, the Audited Annual Accounts of
Internal Complaints Committees (Information
the said Subsidiary Companies of the Bank, considered as part of
under the Sexual Harassment of Women
the Consolidated Financial Statements have also been hosted on
at Workplace (Prevention, Prohibition and
the Bank’s website, www.federalbank.co.in. The said documents
Redressal) Act, 2013)
The Bank had constituted Internal Complaints Committee, as
have been hosted on the website of the Subsidiary Companies of
per letter and spirit contained in the provisions of “The Sexual
the Bank also, in compliance with the said Section.
Harassment of Women at Workplace (Prevention, Prohibition
The documents/details available on the Bank’s website (www. and Redressal) Act, 2013”, at 9 Zones and Head Office to prevent
federalbank.co.in) will also be available for inspection by any and redress the complaints relating to sexual harassment and
Member at its Registered Office. Further, pursuant to the to organize workshops/ awareness programs to empower
provisions of Accounting Standard (‘AS’) 21, Consolidated Financial women employees while handling cases relating to sexual
Statements notified under Section 133 of the Companies Act, harassment. Workshops/ awareness programs regarding women
2013, read together with Rule 7 of the Companies (Accounts) empowerment were conducted at various locations pan India. The
Rules, 2014 issued by the Ministry of Corporate Affairs, the data with regard to the redressal of complaints by the Internal
Consolidated Financial Statements of the Bank along with its Complaints Committee are as follows:
Subsidiaries and Associates for the year ended March 31, 2021
forms part of the Annual Report. No. of complaints received for the year 1
FY-2020-21         
Requirement for Maintenance of Cost Records
No. of complaints disposed of during 1
The Bank is not required to maintain cost records as specified by
FY -2020-21            
the Central Government under section 148(1) of the Companies
Act, 2013. No. of cases pending for more than 90 days                        Nil
No. of workshops/ awareness program 2
Management Discussion and Analysis Report against sexual harassment carried out
In compliance with the Regulation 34 of the SEBI (Listing Nature of action taken by the employer/ Appropriate
Obligations and Disclosure Requirements) Regulation, 2015, District Officer action taken

Annual Report 2020-21 45

Directors’ Report (Contd...)
Dividend Distribution Policy Audit is decided based on Risk – Audit Matrix defined in Audit
In accordance with the Regulation 43A of Securities and and Inspection Policy. Significant Audit findings and observations
Exchange Board of India (Listing Obligations and Disclosure are presented to Inspection Review Committee of Executives
Requirements) Regulations, 2015, the Bank has formulated a and a report on the meetings of Inspection Review Committee
Dividend Distribution Policy and the same is annexed herewith as of Executives along with significant audit findings, directions /
Annexure III. The policy has been displayed on the Bank’s website suggestions of the Committee and action taken in such cases
at www.federalbank.co.in. are placed to the Audit Committee of the Board for review
periodically. Other findings are placed before a department level
Internal Control Systems and their Adequacy committee called the ‘Inspection Department Review Committee’
The Bank has through the years developed and stabilized an for review and its observations are placed before Inspection
effective internal control system calibrated to the risk appetite Review Committee of Executives.
of the Bank and aligned to the scale, size and complexity of
its operations. The scope and authority of the internal audit As per the requirement of Companies Act, 2013, Bank has
function is defined in the Audit and Inspection Policy of the formulated Internal Financial Controls framework. Risk and
Bank, duly approved by the Board of Directors. In order to help Controls associated with each process in the Bank are documented
Bank achieve its mission of adopting the best professional under the Internal Financial Controls Framework. Inspection and
practices prevailing in the industry, while framing the policy, Audit Department plays a significant role in testing the control
substantial inputs are taken from - RBI guidance note on Risk effectiveness for each process under the framework.
Based Internal Audit, ‘The internal audit function in banks’
published by Basel Committee on Banking Supervision and The Internal Audit function provides independent assurance
Model Audit Manual on Internal & Concurrent Audit Systems to the Board of Directors and Senior Management on the
in Public Sector Banks. Audit and Inspection Policy is reviewed quality and effectiveness of the bank’s internal control, risk
annually. Policy is reviewed considering various guidelines management and governance systems and processes, thereby
of RBI, Basel Committee recommendations, ICAI guidelines, helping the Board and Senior Management protect the bank and
other statutory / regulatory guidelines, directions of Board / its reputation.
Audit Committee of the Board issued from time to time and
periodic internal guidelines / instructions issued by the Bank. At Policy on Board Diversity
the enterprise level, the Inspection and Audit Department, on Policy on Board Diversity of the Bank mainly depends on the
a continuous basis, assesses and monitors the effectiveness qualifications for appointment of Directors of the Bank as
of the control systems and its adequacy to meet the growing contained in the Banking Regulation Act, 1949 and satisfying
complexities. The audit function essentially validates the the Fit and Proper Criteria for directors as per the regulatory
compliance of Bank’s processes and operations with regulatory requirement of RBI.
guidelines, accounting procedures and Bank’s own internal rules
and guidelines. A department level group meets on periodical The Bank continuously seeks to enhance the effectiveness of
intervals to discuss latest internal / RBI / regulatory guidelines its Board and to maintain the highest standards of corporate
for ensuring that the required changes are implemented for governance and recognizes and embraces the benefits of diversity
making the audit function updated and dynamic. in the boardroom. Diversity is ensured through consideration of a
number of factors, including but not limited to skills, regional and
The Bank has a robust system towards escalating the audit industry experience, background and other qualities. In forming its
findings to appropriate levels in the hierarchy of Management perspective on diversity, the Bank also take into account factors
and discussions in various committees towards suggesting based on its own business model and specific needs from time
corrective action and its follow up. The Bank in compliance of to time.
the requirements of Section 138 of the Companies Act, 2013,
has designated the Head of Inspection and Audit Department as Board Diversity enhances the quality of performance of the
Internal Auditor who directly reports to the Managing Director Board; ushers in independence in the performance of the Board;
& CEO of the Bank. The Bank has various types of audit which eradicates the gender bias in the Board; achieves sustainable
inter-alia include Risk Based Internal Audit, Information System and balanced performance and development; supports the
Audit, Concurrent Audit, Gold Loan Audit and Management Audit. attainment of strategic objectives & also ensures compliance of
Branches are risk rated and the frequency of Risk Based Internal applicable law/s and good corporate practices.

46 Federal Bank
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Directors’ Report (Contd...)

Nomination, Remuneration, Ethics and Compensation Committee 4. The directors shall preferably be in the range of 35-70
has the responsibility for leading the process for Board years of age.
appointments and for identifying and nominating, for approval
b. Disqualification / Conflicts of interest
by the Board, candidates for appointment to the Board. The
1. The Bank’s Directors shall be subject to the
benefits of diversity continue to influence succession planning
disqualifications / prohibitions contained in the
and continue to be the key criteria for the search and nomination
Companies, Act 2013 and the Banking Regulation Act,
of directors to the Board. Board appointments will be based
1949 with respect to directorship of companies in
on merit and candidates will be considered against objective
general or banking companies in particular.
criteria, having due regard for the benefits of diversity on the
Board, including gender. While making Board appointments, the 2. A Director shall not be a director of any other company,
regulatory requirements for appointment of at least one Woman or partner or proprietor of a firm, where such
Independent Director on the Board of the Bank will also be directorship, partnership, or proprietorship involves
considered. or is likely to involve actual or potential conflicts of
interest as a Director of the Bank. A Director shall
Bank’s Policy on Directors’ Appointment promptly inform the Board / committee of any actual
and Remuneration including Criteria or potential conflicts of interest with respect to any
for Determining Qualifications, Positive matter that may come up for the consideration of the
Attributes, Independence of a Director and Board or of any committee of which he is a member,
other matters provided under sub-Section (3) and shall refrain from participating in a discussion on
of Section 178 of Companies Act, 2013 the matter.
a. Qualifications, Experience and knowledge c. Suggested criteria for determining attributes of a director
as required to be specified under Companies Act, 2013
1. The Board should bring to their tasks a balanced mix of
include
knowledge, skills, experience, and judgment relevant
1. Integrity in personal and professional dealings.
to the Bank’s policies, operations, and needs. Not
less than fifty -one percent of the total number of 2. Wisdom and ability to take appropriate decisions.
Directors shall be persons having special knowledge,
3. Ability to read and understand financial statements
skills, or valuable experience in one or more fields,
such as banking, finance, management, economics, 4. Ability to deal with others with a sense of responsibility,
law, accountancy, agriculture and rural economics, firmness, and cooperation.
cooperative movement, trade, industry, infrastructure,
5. Refrain from any action that would lead to loss of his
engineering. The Bank shall ensure to include in its
independence.
Board need based representation of skills such as
marketing, risk management, strategic planning, d. Suggested criteria for determining Independence of a
treasury operations, credit recovery, information director
technology, payment & settlement systems, human The criteria of independence of a director are determined
resources and business management. At least two based on the conditions specified in Section 149 (6) of
Directors shall be persons having special knowledge or the Companies Act, 2013 and SEBI (Listing Obligations
practical experience in agriculture and rural economy, and Disclosure Requirements) Regulations, 2015. The
cooperation, or small-scale industry. The Bank should independent director shall at the first meeting of the Board
ensure that Board members with requisite skill sets, as in which he participates as a director and thereafter at the
prescribed by regulations are there in the Board of the first meeting of the Board in every financial year or whenever
Bank. there is any change in the circumstances which may affect
2. The Board to have at least One Woman Independent his status as an independent director, give a declaration
Director in its composition. that he/ she meets the criteria of independence. The terms
and conditions of appointment of Independent Director are
3. The directors should be able to devote sufficient time
disclosed on the website of the Bank and a web link thereto
and attention to the discharge of their duties to the
is: https://www.federalbank.co.in/our-commitments.
Bank.

Annual Report 2020-21 47

Directors’ Report (Contd...)
Policy on Remuneration compensation, including the perquisites, will be treated as part
Policy on Remuneration to Non-Executive Directors/ of fixed pay. Perquisites that are reimbursable would also be
Independent Directors included in the fixed pay so long as there are monetary ceilings on
The Policy of the Bank for the payment of remuneration to these reimbursements. Contributions towards superannuation/
Non- Executive Directors / Independent Directors of the Bank is retiral benefits will also be treated as part of fixed pay. (Approval
explained in the Comprehensive Compensation Policy for Non- from RBI to be taken as per section 35B of the Banking Regulation
Executive Directors / Independent Directors (other than Part Time Act while deciding the fixed and variable compensation part for
Chairman), as approved by the Board of Directors and is disclosed Managing Director & CEO and Whole Time Directors)
on the website of the Bank and a web link thereto is: http://www.
federalbank.co.in/shareholder-information. The variable compensation for Whole Time Directors, Managing
Director & Chief Executive Officer and Material Risk Takers is
As required under Banking Regulation Act, 1949 prior approval of fixed based on organizational performance (both business-unit
RBI is required, to give remuneration to Non-Executive Part Time and firm-wide) and KPAs set for the official. The organization’s
Chairman of the Board. performance is charted based on Performance Scorecard which
takes into account various financial indicators like revenue earned,
As per the Policy, during FY 2020-21, Non-Executive Director/ cost deployed, profit earned, NPA position and other intangible
Independent Directors of the Bank are paid sitting fees for factors like leadership and employee development. The Score
attending Board/ Committees meetings and reimbursement of Card provides a mix of Financial and Non-Financial, Quantitative
expenses for participation in Board/Committee meetings and in and Qualitative Metrics. The variable pay is paid in the form of
addition, profit linked commission for FY 2019-20 was also paid share-linked instruments, or a mix of cash and share-linked
during the year. Non- Executive Part Time Chairman was paid instruments. While considering/ recommending the variable pay
remuneration in addition to sitting fees with the approval of RBI. in respect of Managing Director & CEO and Whole Time Directors,
serious supervisory observations (if any) shall be factored, which
Policy on Remuneration to MD & CEO, Executive will be ensured through suitable processes.
Directors, Key Managerial Personnel and
other Employees
Risk, Control and Compliance Staff
The Compensation / Remuneration Policy of the Bank as approved
Members of staff engaged in financial and risk control, including
by the Board contains the policy for payment of remuneration to
internal audit, are compensated in a manner that is independent
MD & CEO, Executive Directors, Key Managerial Personnel and for
of the business areas they oversee and commensurate with their
all the other employees of the Bank.
key role in the bank. The total fixed and variable compensation
paid out to the employees in the Risk Control and Compliance
As per the guidelines given by RBI, Compensation/Remuneration
Function is decided independent of business parameters. The mix
Policy has been designed with the following Core Principles:
of fixed and variable compensation for control function personnel
is weighted in favour of fixed compensation, to ensure autonomy
Core Principles
and independence from business goals.
1. Effective governance of Compensation.
2. Alignment of Compensation with Prudent Risk Taking. Other categories of Staff
The compensation package applicable to Executives in Level IV
3. Effective Supervisory Oversight and Stakeholder
to VII was fixed and governed based on the periodical industry
Engagement.
level settlements under IBA pattern. To make the Compensation
Structure market driven and competitive, a new performance
Compensation of Managing Director & CEO, Whole Time
based compensation package called “Grander Compensation
Directors and Material Risk Takers (MRTs)
Package” has been introduced for Executives in Level 4 and
The compensation paid out to the referred functionaries is divided
above with effect from May 01, 2017 which consists of both
into two components:
fixed and variable compensation. The Compensation Package of
The fixed compensation is determined based on the relevant Executives under Non Grander Compensation Package comprises
factors such as industry standards, the exposure, skill sets, talent of fixed compensation (determined based on the relevant factors
and qualification attained by the official over his/her career span such as industry standards, the exposure, skill sets, talent and
and adherence to statutory requirements. All the fixed items of qualification attained by the official over his/her career span)

48 Federal Bank
 Corporate Overview Statutory Reports Financial Statements

Directors’ Report (Contd...)

and variable compensation (comprising of cash, share-linked Severance Pay and Guaranteed Bonus
instruments, or a mix of both cash and share-linked instruments). Severance pay (other than gratuity or terminal entitlements or as
entitled by statute) is not paid to any official of the Bank.
The compensation paid to Award Staff and Officers coming
under Scale I to III is fixed based on the periodic industry level Guaranteed Bonus on joining in the form of Cash/equities/
settlements with Indian Banks’ Association. The present scale deposits/ bonds/debentures etc. or multiyear guaranteed bonus
of pay and other service conditions applicable to employees, (like retainer fees) is not paid to any official in the organization.
whose compensation package is governed under IBA package is However, to attract talent, sign on bonus or joining bonus can be
as per provisions of 11th Bipartite Settlement/ Joint note dated paid, but this will be limited to the first year only and it will be
November 11, 2020. given as Employee Stock Options only

Limit on Variable Pay and Deferred compensation Hedging

Managing Director & CEO, Whole Time Directors and Material No compensation scheme or insurance facility would be provided
Risk Takers (MRTs): In order to have a proper balance between by the Bank to employees to hedge their compensation structure
fixed pay and variable pay, at least 50% of the total compensation to offset the risk alignment mechanism (deferral pay and claw back
would be variable. Deferral arrangements would invariably exist arrangements) embedded in their compensation arrangement.
for the variable pay, regardless of the quantum of pay. For such Compliance arrangements are in place to ensure that employees
executives of the bank, a minimum of 60% of the total variable do not insure or hedge their compensation structure.
pay must invariably be under deferral arrangements. Further,
if cash component is part of variable pay, at least 50% of the Malus / Claw back arrangement
cash bonus would also be deferred. However, in cases where The variable compensation is covered under Malus / Claw back
the cash component of variable pay is under ` 25 lakh, deferral arrangements in case of all categories of employees. In the event
requirements would not be necessary. The deferral period would of subdued or negative contributions of the bank and/or the
be minimum of three years. relevant line of business in any year, the deferred compensation
will be subjected to:
Risk Control and Compliance Staff: At least 25% of the total
compensation would be variable and the total variable pay will • Malus arrangement wherein Bank shall withhold vesting of
be limited to a maximum of 100% of the fixed pay (for the relative all or part of the amount of deferred remuneration.
performance measurement period). Deferral arrangements would
• Claw back arrangement wherein the employees shall be
invariably exist for the variable pay, if the Variable Pay exceeds
liable to return previously paid or vested remuneration to
75% of the fixed pay. In such cases a minimum of 60% of the total
the bank. The deferred compensation, if any, paid to such
variable pay must invariably be under deferral arrangements.
functionaries shall be subject to Claw back arrangements,
Further, if cash component is part of variable pay, at least 50% of
which will entail the Bank to recover proportionate amount
the cash bonus would also be deferred. However, in cases where
of variable compensation from such functionaries, on
the cash component of variable pay is under ` 25 lakh, deferral
account of an act or decision taken by the official which
requirements would not be necessary.
has brought forth a negative contribution to the Bank at a
prospective stage.
Other categories of Staff: The variable pay would be in the form
of cash, share-linked instruments, or a mix of both cash and The malus and claw back provisions would cover the deferral and
share-linked instruments. The total variable pay will be limited to retention periods. If an Official covered under these provisions
a maximum of 300% of the fixed pay (for the relative performance is responsible for any act or omission or non-compliance of
measurement period). Deferral arrangements would invariably regulatory guidelines resulting in a penalty being imposed by
exist for the variable pay, if the Variable Pay exceeds 200% of the any Regulators or engages in a detrimental conduct, the Bank
fixed pay. In such cases a minimum of 60% of the total variable would be entailed to recover proportionate amount of variable
pay must invariably be under deferral arrangements. Further, compensation from such functionaries within 48 months from
if cash component is part of variable pay, at least 50% of the the date of payment/vesting of variable compensation. The Bank
cash bonus would also be deferred. However, in cases where has put in place appropriate modalities, performance thresholds
the cash component of variable pay is under ` 25 lakh, deferral and detailed framework to cover the trigger points with or
requirements would not be necessary. invoking malus/claw back, taking into account relevant statutory
and regulatory stipulations, as applicable.

Annual Report 2020-21 49

Directors’ Report (Contd...)
Executive Director (ED) level Committee for reviewing the the Board, who were evaluated on specified parameters. The
linkage of Risk based performance with Remuneration performance evaluation of the Independent Directors was carried
a. The Committee shall review the Compensation paid vis-a- out by the entire Board, other than the Independent Director
vis risk taking by the Executives to ensure that prudent risk concerned. The performance evaluation of the Chairman and the
taking is recognized in the compensation framework Non Independent Directors were carried out by the Independent
Directors. The Directors expressed their overall satisfaction with
b. The Committee shall analyse the risk reward correlation and
the evaluation process.
ensure that excess risk taking is not encouraged
c. The Committee shall review the performance based variable 1.Performance Evaluation of Independent Directors
compensation paid every year and ensure that an optimum including Non-Executive Director
risk reward balance is maintained. Criteria for evaluation include:
a. Attendance at the Board and Committee meetings
d. Linkage of performance during a performance measurement
period with levels of remuneration. b. Study of agenda in depth prior to meeting and active
participation at the meeting
e. Bank’s policy on deferral and vesting of variable remuneration
and criteria for adjusting deferred remuneration before c. Contributes to discussions on strategy as opposed to
vesting and after vesting. focus only on agenda

f. The Committee shall establish appropriate compliance d. Participate constructively and actively in the
arrangements to ensure employees do not insure or hedge Committees of the Board in which they are
their compensation structure. Chairpersons or Members
e. Exercises his skills and diligence with due and
g. The Committee shall update the details to the Nomination
reasonable care and brings an independent judgement
and Remuneration Committee on an annual basis.
to the Board
Familiarization Programmes for Independent f. Knowledge and Competency: i) How the person
Directors fares across different competencies as identified for
The familiarising programme for the Independent Directors are effective functioning of the entity and the Board ii)
disclosed in the Report on Corporate Governance that forms Whether the person has sufficient understanding and
part of this Annual Report. The details of such familiarization knowledge of the entity and the sector in which it
programmes are also disclosed on the Bank’s website, operates
www.federalbank.co.in under section “Shareholders Information”. g. The Director remains abreast of developments
affecting the company and external environment in
Board Evaluation which it operates independent of his being apprised at
Pursuant to the provisions of the Companies Act, 2013 and meetings
Regulation 17(10) and other applicable Regulations of the SEBI
(Listing Obligations and Disclosure Requirements), Regulations, h. Whether person is independent from the entity and
2015, the Board has carried out an annual performance evaluation the other directors and there are no conflict of interest
of its own performance and of the directors individually, as well as i. Whether the person demonstrates highest level of
the evaluation of the working of its various Committees for the integrity (including conflict of interest disclosures,
year under consideration. maintenance of confidentiality, etc.

The evaluation process was initiated by putting in place, a 2. Performance Evaluation of Chairperson
structured questionnaire after taking into consideration inputs Criteria for evaluation include:
received from the Directors, covering various aspects of the a. Works effectively with the Board as a whole
Board’s functioning, such as adequacy of the composition of
b. Ability to elicit inputs from all Board Members and
the Board and its Committees, Board culture, execution and
steer the discussions to a logical conclusion
performance of specific duties, obligations and governance.
c. Works with the Board and directs the management
Thereafter a separate exercise was carried out to evaluate the for creating an effective process for long-range or
performance of individual Directors, including the Chairman of strategic planning for the Company

50 Federal Bank
 Corporate Overview Statutory Reports Financial Statements

Directors’ Report (Contd...)

d. Whether the Chairperson displays efficient leadership, j. Undertaking of various Developmental initiatives
is open-minded, decisive, courteous, displays within the organisation
professionalism, able to coordinate the discussion, etc.
k. Compliance with ethical standards & code of conduct
and is overall able to steer the meeting effectively
and exercising duties diligently
e. Whether the Chairperson is able to keep shareholders’
4. Performance Evaluation of Board and Committees
interest in mind during discussions and decisions
Criteria for Evaluation of Board include:
f. Whether the Chairperson is impartial in conducting a. The Board is of appropriate size and has the appropriate
discussions, seeking views and dealing with dissent, etc balance and diversity of background, business
experience, industry knowledge, skills and expertise in
g. Handling of critical situations concerning the Bank
areas vital to the Bank’s success, representing sectors
h. Thinks strategically to promote growth, improve laid down by the regulators, given its current and future
financial performance and gain competitive advantage. position
i. Understands financial planning, budgeting and b. New Board members participate in an orientation
management of the organization’s investments and program to educate them on the organization, their
overall organization financial perspective. responsibilities, and the organization’s activities, the
Board encourages a culture that promotes candid
3. Performance Evaluation of Non-Independent Directors
communication
(MD & CEO and Executive Directors)
c. The Board oversees management’s procedures for
Criteria for Evaluation include:
enforcing the organization’s code of conduct, Action
Quantitative Targets: Taken Reports on the discussion/directions of the
a. Achievements of performance against targets set Board are submitted at regular intervals to the Board

Qualitative Targets: d. The Board oversees risk management through inputs

a. Apprises the Board regarding the organization’s from the Risk Management Committee
financial position and operational budget so as to e. The Board considers the quality and appropriateness
enable the Board to make informed financial decisions of financial reporting, including the transparency of
b. Provides Leadership in developing strategies and disclosures
organizational plans with the management and the f. The Board ensures compliance with the relevant
Board of Directors provisions of the Companies Act and other regulatory
c. Ensures that the Board is kept informed about all provisions as applicable to the Bank
issues concerning the Bank g. The Board oversees the compliance processes
d. Media interaction and ability to project positive image h. The Board views the organization’s performance from
of the Company the competitive perspective - industry and peers
e. Effectively pursues the performance goals in relation performance, industry trends and budget analysis and
to mission and objective of the organization with reference to areas where significant differences
are apparent etc.
f. Motivating employees, providing assistance &
i. The Board ensures compliance with the relevant
directions and supervising & safeguard of confidential
provisions of the Companies Act and other regulatory
information
provisions as applicable to the Company.
g. Establishment of internal control processes,
j. The Board has defined an effective Code of Conduct for
monitoring policies and encouraging suggestions
the Board and Senior Management.
h. Cultivates effective Relationship with Industry Foras,
k. Whether the Board monitors and manages potential
Community and business leaders and Regulatory
conflicts of interest of management, members of
Bodies and Public Officials
the board of directors and shareholders, including
i. Ensures compliance with all legal and regulatory misuse of corporate assets and abuse in related party
requirements transactions.

Annual Report 2020-21 51

Directors’ Report (Contd...)
Criteria for Evaluation of Committees include Technology and Digital Updates and Measures
a. The Committee Terms of Reference and composition taken in IT Governance, Information Security,
continue to be appropriate IT Audit, IT Operations, IT Services Outsourcing
b. The mandate, composition and working procedures of Technology and Digital updates
Committees of the Board of Directors is clearly defined
IT provides the strong foundation that enables your Bank to grow
and disclosed
extensively and gain market share. In the following paragraphs,
c. Committee meetings are organized properly in number, we provide more details of the entire governance structure over
timing and location IT, with focus on information security.

d. The Committee is effective in carrying out its mandate

IT governance comprise processes that ensure the effective
e. The Committee members receive adequate material in and efficient use of IT in enabling our organization to achieve its
advance of Committee meetings, in sufficient time and goals. It is an integral part of corporate governance and consists
detail to permit members to effectively consider issues of the organizational structures, leadership and process that
to be dealt with ensure IT sustains and extends the organization’s strategy and
objectives.
f. The Committee allocates the right amount of time for
its work
The governance of IT is effectively supervised by the Board
g. Whether the Committee has fulfilled its functions as of Directors through the IT & Operations Sub-Committee of
assigned by the Board and laws as may be applicable the Board. Besides the Chairman, an Independent Director,
the Committee comprises one Independent Director and two
h. Whether adequate independence of the Committee is Executive Directors. All members of the Committee have
ensured from the Board extensive experience in IT & Operations and are able to provide
i. Whether the Committee’s recommendations effective guidance and direction to the management team.
contribute effectively to decisions of the Board
Executive level committee which oversee the IT governance
5. Assessment of Flow of Information function include the Operations Risk Management Committee
Criteria for evaluation include: (ORMC), the Information Security Committee (ISC) and the Project
The agenda and related information are circulated in advance Steering Committee (PSC).
of meetings to allow board members sufficient time to
study and understand the information, Information on the Your Bank has a well-defined Information System Security Policy
annual operating plans and budgets and other updates and a Cyber Security Policy. The effective implementation of these
are provided to the Board; Updates on operating results of policies is supervised by the Information Security Committee and
the Bank is furnished to the Board, periodically etc. Update by the IT & Operations Committee of the Board.
on the compliance with the regulatory, statutory or listing
requirements are placed before the Board. In recognition of the need for enhanced systems security, your
Bank conducts a wide range of system audits, using internal and
Business Responsibility Report external auditors. These range from the quarterly Vulnerability
In July 2011, the Ministry of Corporate Affairs, Government of Assessments (VA) and Penetration Testing (PT) to concurrent
India, came out with the ‘National Voluntary Guidelines on Social, audits to an annual end to end audit of IT infrastructure. All the
Environmental and Economic Responsibilities of Business’. These applications, both web based and mobile based apps exposed to
guidelines contain certain principles that are to be adopted internet are subjected to external penetration testing (PT) before
by companies as part of their business practices and require releasing to use.
disclosures regarding the steps taken to implement these
principles through a structured reporting format, viz. Business
Bank has deployed best in class infrastructure to provide
Responsibility Report. Pursuant to Regulation 34(2)(f) of SEBI
availability of service to users and customers without fail. The
(Listing Obligations and Disclosure Requirements), Regulations,
installed infrastructure is tested for its reliability and robustness
2015, your Bank has prepared the Business Responsibility Report
by periodic audits. In addition, periodic Disaster Recovery Tests
and forms part of this Annual Report.

52 Federal Bank
 Corporate Overview Statutory Reports Financial Statements

Directors’ Report (Contd...)

are conducted to ensure the ability to move to the Disaster safeguarding the assets of the Bank and for preventing and
Recovery infrastructure in the event of downtime in the main detecting fraud and other irregularities;
production capability.
4. that the annual financial statements have been prepared on
a going concern basis;
More details on digital initiatives of the Bank are available in the
Management Discussion and Analysis Report, forming part of this 5. that proper internal financial controls were in place and that
Annual Report. the financial controls were adequate and were operating
effectively;
Particulars of Employees 6. that systems to ensure compliance with the provisions of
In terms of Section 136 of the Companies Act, 2013, the copy of all applicable laws were in place and were adequate and
the financial statements of the Bank, including the consolidated operating effectively.
financial statements, the Auditor’s Report and relevant annexures
to the said financial statements and reports are being sent to Awards and Accolades
the Members and other persons entitled thereto, excluding the Your Bank has won various awards and accolades in the Financial
information in respect of the employees of the Bank containing Year 2020-21. Technology and digital have taken centre stage
the particulars as specified in Rule 5(2) of the Companies and your Bank continues to focus on innovation with customer
(Appointment and Remuneration of Managerial Personnel) convenience. The awards are a testimony to the Bank’s
Rules, 2014. The statement containing particulars of employees commitment on the digital front with various initiatives which
as required under Section 197(12) of the Act read with Rule 5 brought in acclaim from various stakeholders.
(2) of the said Rules is available on the website: https://www.
federalbank.co.in/shareholder-information. Your Bank’s MD & CEO, Shyam Srinivasan, was conferred with the
title ‘Business Standard Banker of the year’. Through his able
The ratio of the remuneration of each Director to the median leadership, your Bank has transitioned into an organisation that
remuneration of the employees of the Bank and other details in regularly punches above its weight.
terms of Section 197(12) of the Companies Act, 2013 read with
Rule 5(1) of the Companies (Appointment and Remuneration Your Bank has been declared winner in the ‘Private Sector Bank
of Managerial Personnel) Rules, 2014, are forming part of this of the Year’ Gold category at the 20th edition of Outlook Money
report as Annexure IV. Awards.

Director’s Responsibility Statement Your Bank emerged winner of Business Today – KPMG Best Bank
To the best of our knowledge and belief and according to the award in the category “Indian Bank with balance sheet above
information and explanations obtained to us, the Directors make ` 1 Trillion and below ` 3 Trillion” for the year 2019-20.
the following statements in terms of Section 134 (3) (c) of the
Companies Act, 2013: On the HR front, your Bank has been recognized as a ‘Great
Place to Work’ in a study conducted by the Great Place to Work®
1. that in the preparation of the annual financial statements for Institute. Great Place to Work® Institute works with companies
the year ended March 31, 2021, the applicable accounting around the world to build a High-Trust, High-Performance Culture
standards have been followed along with proper explanation that drives better business performance.
relating to material departures, if any;
2. that such accounting policies as mentioned in the Notes to Your Bank was declared winner among medium sized banks for
the Financial Statements have been selected and applied the Most Innovative Project and runner up in the categories
consistently and judgment and estimates have been made ‘Best IT & Cyber Security Initiatives’ and ‘Best Technology
that are reasonable and prudent so as to give a true and fair Bank of the Year’ by Indian Banks’ Association at its National
view of the state of affairs of the Bank as at March 31, 2021 Technology Awards.
and of the profit of the Bank for the year ended on that date.
Your Bank was recognized winner at Infosys Finacle Client
3. that proper and sufficient care has been taken for the Innovation Awards program, in the category “Customer Journey
maintenance of adequate accounting records in accordance Reimagination” and was recognized runner up in the category
with the provisions of the Companies Act, 2013 for “Product Innovation’’.

Annual Report 2020-21 53

Directors’ Report (Contd...)
Your Bank won ‘SKOCH Award’ for Silver Category in BFSI in recognition of the versatility and excellence of FedMobile App. The Bank was
adjudged by State Forum of Bankers Clubs, Kerala as the ‘Best Bank Among Old Private Sector Banks of the Country.’

Your Bank won the prestigious ‘Finnoviti Award 2021’ instituted by Banking Frontiers for the Artificial Intelligence based Digital Leading
Platform by creating new benchmarks in the entire BFSI & Financial ecosystem.

Acknowledgement
The Board of Directors places on record its sincere thanks to the Government of India, Reserve Bank of India, various State Governments
and regulatory authorities in India and overseas for their valuable guidance, support and cooperation. The Directors wish to express their
gratitude to Investment Banks, Rating Agencies and Stock Exchanges for their support. The Directors record their sincere gratitude to
the Bank’s shareholders, esteemed customers and all other well-wishers for their continued patronage. The Directors express their
appreciation for the contribution made by every employee of the Bank.

For and on behalf of the Board of Directors

Sd/-

Grace Koshie
Date: June 16, 2021 (DIN-06765216)
Place: Aluva Chairperson of the Board

54 Federal Bank