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IndusInd Bank Ltd.

BSE: 532187 Sector: Financials
BSE 00:00 | 24 Apr IndusInd Bank Ltd
NSE 05:30 | 01 Jan IndusInd Bank Ltd
OPEN 394.80
VOLUME 1193853
52-Week high 1755.00
52-Week low 235.60
P/E 5.94
Mkt Cap.(Rs cr) 26,570
Buy Price 385.00
Buy Qty 170.00
Sell Price 388.00
Sell Qty 180.00
OPEN 394.80
CLOSE 410.10
VOLUME 1193853
52-Week high 1755.00
52-Week low 235.60
P/E 5.94
Mkt Cap.(Rs cr) 26,570
Buy Price 385.00
Buy Qty 170.00
Sell Price 388.00
Sell Qty 180.00

IndusInd Bank Ltd. (INDUSINDBK) - Director Report

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Company director report

The Board of Directors of the Bank have pleasure in presenting the Twenty-fourth AnnualReport covering business and operations of the Bank together with the Audited FinancialStatements for the year ended March 31 2018.

The 3nancial performance for the year ended March 31 2018 is summarized as under:

(Rs in crores)

Particulars As on March 31 2018 As on March 31 2017
Deposits 151639.17 126572.22
Advances 144953.66 113080.51
Operating Pro3t (before Depreciation and Provisions and Contingencies) 6867.75 5641.71
Net Pro3t 3605.99 2867.89

During the year under review despite the disruption in growth rate in the Indianeconomy and a persistently challenging macroeconomic environment the Bank improved itsbusiness with Deposits growing by 19.80% and Advances by 28.19% over the previous year.

The Bank continued to focus on increasing earnings from its core banking businessstrengthening the fee income streams and maintaining control on operating costs.

Operating Profit (before Depreciation and Provisions and Contingencies) rose by 21.73%to Rs 6867.75 crores as compared to Rs 5641.71 crores in the previous year.

The Net Profit of the Bank after considering all expenses and necessary Provisions andContingencies was higher by 25.74% at Rs 3605.99 crores as against Rs 2867.89 croresin the previous year.


The Directors recommend appropriation of Profit as under:

(Rs in crores)

Operating Profit before Depreciation and Provisions and Contingencies 6867.75
Less: Depreciation on Fixed Assets 211.64
Less: Provisions and Contingencies inclusive of Income Tax 3050.12
Net Profit 3605.99
Profit Brought Forward 7118.38
Amount available for Appropriation 10724.37
Transfer to Statutory Reserve 901.50
Transfer to Capital Reserve 7.62
Dividend (including Tax on Dividend) 432.24
(23rd Annual General Meeting of members held on July 26 2017 approved the payment of Dividend for the year 2016-17 for the Equity Shares outstanding as on that date.)
Deduction during the year 71.52
Total Appropriations 1412.88
Balance carried over to Balance Sheet 9311.49

The Earning Per Share (EPS) of the Bank rose to Rs 60.19 during the year 2017-18 fromRs 48.06 in the previous year.

In view of the overall improvement in performance as well as the need to conserveCapital for continued growth the Directors recommend Dividend of Rs 7.50 per Equity Shareof Rs 10 each for the year ended March 31 2018. (Dividend for the year 2016-17 was Rs6.00 per Equity Share of Rs 10 each).

Considering the Equity Shares outstanding as at March 31 2018 the total amount ofdividend payable including Taxes to be borne by the Bank amounts to Rs 542.70 crores. Inaccordance with the revised AS 4 – ‘Contingencies and events occurring after theBalance Sheet Date' this amount is not accounted as liabilities as at March 31 2018.

Financial Performance and State of A3airs of the Bank

The year under review was the 3rst year of the new Triennial Planning Cycle of theBank (Planning Cycle 4 for Financial Years 2017-20) with the theme of "Digitize toDi3erentiate Diversify and Create Domain Leadership (4D)" with a strategy to gain‘Market Share with Profitability'.

Backed by improved volumes the Total Income of the Bank for the year under review grewby 18.59% to Rs 22030.85 crores from Rs 18577.16 crores.

The healthy rise in Profitability was the result of growth in Net Interest Income (NII)as well as Non-Interest Income. Net Interest Income improved by 23.67% to Rs 7497.45crores from Rs 6062.60 crores while Non-Interest Income rose to Rs 4750.10 crores fromRs 4171.49 crores registering growth of 13.87%.

Core Fee Income such as commission exchange loan processing and account managementfees fees on Investment Banking and distribution of third-party products and earningsfrom foreign exchange business grew by 19.73% to Rs 4176.75 crores from Rs 3488.59crores earned during the previous year.

Yield on Advances dropped to 11.21% during the year as against 11.71% in the previousyear while the Cost of Deposits fell to 5.98% from 6.41% in the previous year. The Bankwas able to maintain its Net Interest Margin at the same level as of previous year at3.99%.

The Bank expanded its branch network steadily to reach 1400 branches as against 1200branches at the beginning of the year. Revenue per employee during the year improvedsigni3cantly to Rs 48 lakhs.

The Net Non-Performing Assets ratio of the Bank stands at 0.51% in current year. TheProvisioning Coverage Ratio (PCR) stands at 56.26% as compared to 58.39% in the previousyear.

The year under review witnessed a number of signi3cant events some of which are listedbelow:

• On April 18 2017 the Bank issued Basel III-compliant Additional Tier 1 Bonds(AT1/ PDI) for Rs 1000 crores in addition to Rs 1000 crores mobilized during March2017.

• On October 14 2017 the Board of Directors of the Bank and the Board ofDirectors of Bharat Financial Inclusion Limited

(BFIL) (formerly known as SKS Micro3nance Limited) approved Amalgamation of BFIL withthe Bank through a Composite Scheme of Arrangement. The Competition Commission of Indiahas granted approval to the proposed Scheme and the RBI has accorded their "NoObjection" for the Amalgamation.

In this regard as on date of this report:

• The Scheme has ‘no adverse remarks' in the Observation Letters from theSecurities and Exchange Board of India (SEBI) /

National Stock Exchange of India Limited vide letter dated June 1 2018 and BSE Limitedvide letter dated June 4 2018. O RBI vide letter dated June 8 2018 conveyed theirapproval for incorporating of the Wholly-Owned-Subsidiary to act as

Business Correspondent of the Bank as part of Bank's Amalgamation with BFIL.

• The Scheme is awaiting approval from the respective Shareholders and Creditorsof the Bank and BFIL the National Company Law Tribunal (NCLT) and is subject tocompliance with the conditions speci3ed by RBI.

• _ Equity Shares of the Bank have been included in the bellwether 30 Member BSESensex Index. They have been part of Nifty 50 the bellwether index of NSE since April2013.

• _ RBI have granted approval on April 3 2018 for the proposed acquisition ofIL&FS Securities Services Limited the securities services arm of IL&FS as aWholly-Owned Subsidiary of the Bank. This transaction is conditional on de3nitiveagreements and other regulatory approvals.

Performance of Subsidiary and Associate Company

The Bank does not have a subsidiary.

IndusInd Marketing and Financial Services Private Limited (IMFS) is an AssociateCompany of the Bank and is engaged in the business of providing manpower services.Pursuant to Section 129(3) of the Companies Act 2013 read with Rule 8 of Companies(Accounts) Rules 2014 the Bank has drawn up a Consolidated Financial Statement includingthe Financial Statement of its Associate Company which also forms a part of this AnnualReport.

During FY 2017-18 IMFS earned Revenue of Rs 243.09 crores as against Revenue of Rs217.21 crores in the previous year. IMFS earned Profit of Rs 0.44 crores in FY 2017-18.

Statement containing the salient features of the 3nancial position of the AssociateCompany in Form AOC-1 is enclosed as ‘Annexure' to the Financial Statements.

Share Capital

The Paid-Up Equity Capital of the Bank as at March 31 2018 consisted of 60 0223187Equity Shares of Rs 10/- each.

During the year under review the Bank allotted 2074482 Equity Shares of Rs 10/- eachpursuant to Exercise of Options under its Employees Stock Option Scheme 2007.

The Bank has not issued any Equity Shares with Di3erential Voting Rights.


On April 18 2017 the Bank allotted on Private Placement basis 10000 Rated ListedNon-Convertible Perpetual Subordinated & Unsecured Basel III-compliant AdditionalTier I Bonds ("AT1") in the nature of Debentures of Face Value of Rs 1000000(Rupees Ten lakhs each) for cash at par amounting to Rs 1000 crores.

In compliance with Regulation 53 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the names of the Debenture Trustees with their contactdetails are given below:

Trustee I:

Name of Debenture Trustees : Catalyst Trusteeship Limited (formerly GDA Trusteeship Ltd.)
Address : GDA House Plot No. 85 Bhusari Colony
(Right) Kothrud Pune – 411 038 Maharashtra India.
Website :
E-mail :
Trustee II:
Name of Debenture Trustees : Beacon Trusteeship Limited
Address : Prabhat Kunj Prabhat Colony 3 Santracruz (East) Mumbai – 400 055
Website :
E-mail :

Tier II Capital

The Bank did not issue any Tier II Capital instruments during the year. As on March 312018 the value of outstanding Tier II Capital instruments is Nil.


The Bank is a banking company governed by the Banking Regulation Act 1949 and assuch the provisions in the Companies Act relating to acceptance of Public Deposits arenot applicable.

Capital Adequacy

The Bank continues to be adequately capitalized. The Capital Adequacy Ratio of theBank calculated under the Basel III Capital Regulations mandated by RBI is set outbelow:

Particulars March 31 2018 March 31 2017
i) Capital Adequacy Ratio (CRAR) 15.03% 15.31%
ii) CRAR- Common Equity Tier 1 Capital 13.42% 14.02%
iii) CRAR- Tier 1 Capital 14.58% 14.72%
iv) CRAR- Tier 2 Capital 0.45% 0.59%

Credit Ratings

Instruments Rating Rating Agency
Infra Bond program AA+ CRISIL
Additional Tier I Bond program AA CRISIL
Certi3cates of Deposit A1+ CRISIL
Senior Bonds program AA+ India Ratings and Research
Additional Tier I Bond program AA India Ratings and Research
Short Term Debt instruments A1+ India Ratings and Research


The Bank's Board comprised eight Directors as on March 31 2018 viz. Mr. R.Seshasayee Non-Executive Part-time Chairman 3ve Independent Directors Mr. Yashodhan M.Kale Non-Executive Non-Independent Director and Mr. Romesh Sobti Managing Director& CEO.

(a) Non-Executive Independent Directors

All Independent Directors have given Declarations that they meet the criteria ofindependence as laid down under subsection (6) of Section 149 of the Companies Act 2013.In compliance with Regulation 16 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Declarations were placed before the Board of Directors in theirmeeting held on April 19 2018 and based on the Declarations the following Non-ExecutiveDirectors continue to be identi3ed as Independent Directors as on March 31 2018: (i) Mrs.Kanchan Chitale (ii) Mr. T. Anantha Narayanan (iii) Mr. Ranbir Singh Butola (iv) Mr.Shanker Annaswamy (v) Dr. T. T. Ram Mohan

(b) Woman Director

In terms of the provisions of Section 149 of the Companies Act 2013 read with Rule 3of the Companies (Appointment and Quali3cation of Directors) Rules 2014 and Regulation17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 speci3edcompanies are required to have at least one Woman Director in their Board.

Mrs. Kanchan Chitale (DIN: 00007267) who joined the Board on October 18 2011is an Independent Woman Director in the Board and Chairs some important Committees.

(c) Chairman of the Board

Mr. R. Seshasayee (DIN: 00047985) has been Non-Executive Part-time Chairman ofthe Bank since July 24 2007. Shareholders of the Bank had in the 23rd AGM held on July26 2017 approved the re-appointment of Mr. R. Seshasayee as Non-Executive Part-timeChairman for a period of 2 years.

RBI have conveyed approval for the re-appointment of Mr. R. Seshasayee as aNon-Executive Part-time Chairman for a period of 2 years i.e. up to July 24 2019.

(d) Managing Director & CEO

Mr. Romesh Sobti (DIN: 00031034) has been Managing Director & CEO of theBank since February 1 2008.

Shareholders of the Bank had in the 21st AGM held on August 17 2015 approved there-appointment of Mr. Romesh Sobti as the Managing Director & CEO for a period ofthree years with e3ect from February 1 2015.

Reserve Bank of India have conveyed their approval for re-appointment of Mr. RomeshSobti up to March 23 2020.

(e) Details of Directors seeking Appointment / Re-appointment / Directors retiring byrotation at the forthcoming AGM


Mr. Yashodhan M. Kale (DIN: 00013782) completed his tenure in the Board onNovember 3 2017. Reserve Bank of India have vide their letter dated December 20 2017conveyed approval for continuance of Mr. Yashodhan M. Kale in the Board upto April 152019.

The Board of Directors had in their meeting held on January 11 2018 accordinglyapproved the appointment of Mr. Yashodhan M. Kale as ‘Additional Director' in thecategory of ‘Non-Executive Non-Independent Director' in the Board. Approval of theshareholders is being requested for the appointment of Mr. Yashodhan M. Kale as Directorin the Board of the Bank.


Mr. Romesh Sobti (DIN: 00031034) has been the Managing Director & CEO of theBank since February 1 2008. Shareholders of the Bank had in the 21st AGM held on August17 2015 approved the re-appointment of Mr. Romesh Sobti as the Managing Director &CEO for a period of three years with e3ect from February 1 2015.

The Nomination & Remuneration Committee of the Board had recommended to the Boardof Directors the reappointment of Mr. Romesh Sobti as Managing Director & CEO withe3ect from February 1 2018.

Reserve Bank of India have vide their letter dated January 16 2018 conveyed theirapproval for the re-appointment of Mr. Romesh Sobti as ‘Managing Director & CEO'from February 1 2018 until March 23 2020.

Approval of the shareholders is being requested for re-appointment of Mr. Romesh Sobtias Managing Director & CEO of the Bank upto March 23 2020.

Retirement by Rotation

Section 152 (6) of the Companies Act 2013 provides that not less than two-thirds ofthe total number of directors of a public company shall be liable to retire by rotationand that one-third of such directors as are liable to retire by rotation shall retire fromo3ce at every Annual General Meeting (AGM) of the company.

In accordance with the provisions of the Companies Act 2013 out of theNon-Independent Directors Mr. R. Seshasayee (DIN: 00047985) Non-Executive Part-timeChairman of the Bank being longest in O3ce retires by rotation and being eligibleo3ers himself for re-appointment at the AGM.

Approval of the shareholders is being requested for re-appointment of Mr. R. Seshasayeeas Non-Executive Part-time Chairman of the Bank.

As required under Regulation 36(3) of the Listing Regulations particulars of theDirectors seeking appointment reappointment and retirement by rotation are given in theExplanatory Statement and attached to the Notice of the forthcoming AGM.

None of the Directors have been disquali3ed from being appointed as ‘Director'pursuant to Section 164 of the Companies Act 2013.

(f) Cessation of Director

Mr. Vijay Vaid (DIN: 00219709) who had been a member of the Board as‘Non-Executive Independent Director' since October 18 2011 ceased to hold o3ce withe3ect from February 3 2018.

The Directors wish to place on record their appreciation for the valuable contributionsmade by Mr. Vijay Vaid towards the deliberations in the Board Meetings during his tenureas Director of the Bank.

Board and Committee Meetings

During the year ten meetings of the Board and ten meetings of the Audit Committee wereheld the details of which are given in the Corporate Governance Report which forms anintegral part of this Report.

The Board has constituted the Audit Committee with Mr. T. Anantha Narayanan as Chairmanand Mrs. Kanchan Chitale Mr. Ranbir Singh Butola Mr. Shanker Annaswamy and Mr. YashodhanM. Kale as Members. There have not been any instances during the year when recommendationsof the Audit Committee were not accepted by the Board.

Details of the composition of the Board and all its Committees and of the Meetings heldand attendance of the Directors at such Meetings are provided in the Corporate GovernanceReport. The intervening gap between the Meetings was within the period prescribed underthe Companies Act 2013 and the Listing Regulations.

Performance Evaluation of the Board

Pursuant to the provisions of the Companies Act 2013 and Listing Regulations theNomination & Remuneration Committee of the Board had laid down the criteria forPerformance Evaluation of the Board as a whole Committees of the Board Directorsindividually and of the Chairman as well as the process of evaluation.

The Bank has aligned its Board Evaluation Framework in line with the Guidance Note onBoard Evaluation issued by SEBI under their Circular dated January 5 2017.

The Board of Directors have carried out the annual evaluation of the performance of theBoard as a whole Individual Directors including Independent Directors Non-IndependentDirectors the Managing Director & CEO and the Chairman and the Committees of theBoard.

The performance of the Board as a whole Committees of the Board Directorsindividually and of the Chairman has been evaluated / reviewed by the Nomination &Remuneration Committee Committee of Independent Directors and by the Board of Directorsin their meetings held on May 8 2018.

The Statement indicating the manner in which the evaluation exercise was conducted isincluded in the Report on Corporate Governance which forms an integral part of thisAnnual Report.

System for Internal Financial Controls and its Adequacy

The Bank operates in a fully computerised environment with a Core Banking Solutionsupported by diverse application platforms for handling special businesses such asTreasury Trade Finance Credit Cards Retail Loans etc. The process of recording oftransactions in each of the application platforms is subject to various forms of controlssuch as in-built system checks Maker – Checker authorisations independentpost-transaction reviews etc. The Financial Statements are prepared based on computersystem outputs. The responsibility of preparation of Financial Statements is entrusted toa dedicated unit which is completely independent of business risk audit or otherfunctions. This unit does not originate accounting entries except for limited matters suchas Share Capital Taxes and Transfers to Reserves. The Bank has implemented adequateprocedures and internal controls which provide reasonable assurance regarding reliabilityof 3nancial reporting and preparation of Financial Statements and that such internal3nancial controls were adequate and were operating e3ectively during the year.

Conservation of energy and technology absorption and foreign exchange earnings andoutgo

Conservation of Energy:

Considering the nature of its activities as an entity in the Financial Services sectorthe Bank has voluntarily taken steps towards conservation of energy and details of whichare furnished in Principle 6 of Section E of the Business Responsibility Report.

Technology Absorption:

The Bank has made optimum use of Information Technology in its operations. Detailspertaining to Technology Absorption have been explained in the Management and DiscussionAnalysis Report which forms an integral part of the Annual Report.

Foreign Exchange Earnings and Outgo:

The provisions relating to 134(3)(m) of the Companies Act 2013 on particularsrelating to Foreign Exchange Earnings and Outgo are not applicable to a Banking companyand as such no Disclosure is being made in this regard.

Risk Management

The Bank has an Enterprise-wide Risk Management (ERM) framework in place. The RiskManagement Department covers Credit Risk Market Risk Assets-Liabilities Management(ALM) Operational Risk and Information Security Risk across all verticals independent ofbusiness functions.

Risk Management functions in the Bank have been aligned with best industry practicessupported by advanced risk measurement and analytical systems which enable proactive riskmanagement and monitoring. Risk Management is continually enhanced in line with changes inoperating environment and regulations.

The Bank has a comprehensive framework of Risk Management Policies which specify therisk appetite risk measurement methodologies and monitoring and control measures for therespective business segments. The policies have been designed keeping risk appetite as thecentral objective and business strategies have been aligned to risk policies.

The Bank has set up a Board-level Committee viz. ‘Risk Management Committee' toexamine risk policies and procedures developed by the Bank and monitor adherence to riskparameters and prudential limits set for di3erent portfolios / products / segments.

Details of Risk Management Models and Frameworks implemented by the Bank are mentionedunder ‘Management Discussion and Analysis'.

Vigil Mechanism / Whistle Blower Policy

The Bank has in place the "Whistle Blower Policy" since 2009.

The said Policy is in compliance with RBI Guidelines provisions of the Companies Act2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.The Vigil Mechanism at the Bank requires submission of Quarterly Reviews before the AuditCommittee of the Board and placing of Annual Reviews before the Audit Committee and theBoard of Directors.

The Policy also incorporates suggestions of the Protected Disclosure Scheme for PrivateSector and Foreign Banks instituted by Reserve Bank of India.

The Board of Directors of the Bank have constituted a Board-level Committee viz. theVigilance Committee which conducts overview of cases of vigilance nature arising out ofactions of the employees of the Bank. The Committee meets at least twice a year.

The Bank has been awarded the ‘Certi3cate of Commitment' by Central VigilanceCommission.

The Bank's Whistle Blower Policy is in synchrony with all statutory and regulatoryguidelines on Vigil Mechanism.

Further details about the Vigil Mechanism are furnished in the Report on CorporateGovernance and the current Whistle Blower Policy of the Bank is available on the Bank'swebsite at the under-mentioned link:

Statutory Auditors

M/s Price Waterhouse Chartered Accountants LLP (PW) Mumbai (Firm Registration No.012754N / N500016) Statutory Auditors of the Bank have Audited the accounts of the Bankfor the Financial Year 2017-18 and will retire at the conclusion of this Annual GeneralMeeting.

M/s Price Waterhouse Chartered Accountants LLP have been associated with the Bank asStatutory Auditors for the past three years.

Independent Auditors' Report

M/s Price Waterhouse Chartered Accountants LLP Statutory Auditors of the Bank haveaudited the accounts of the Bank for the year 2017-18 and their Report is annexed.Pursuant to Section 143(3)(i) of the Companies Act 2013 the Statutory Auditors have alsoreported on the adequacy and operating e3ectiveness of internal 3nancial controls systemover 3nancial reporting which has been enclosed as ‘Annexure A' to the IndependentAuditors' Report.

Significant Audit observations if any and corrective actions taken by the Managementare presented to the Audit Committee of the Board from time to time.

There are no quali3cations reservations or adverse remarks or disclaimers made in theAuditors' Report.

Secretarial Audit

In terms of Section 204 of the Companies Act 2013 and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Bank has appointed M/s Bhandari& Associates Company Secretaries in Practice to undertake Secretarial Audit of theBank for the FY 2017-18. The Secretarial Audit Report submitted by M/s Bhandari &Associates is furnished at Annexure I and forms an integral part of this Report.

The Secretarial Audit Report submitted by Bhandari & Associates for FY 2017-18 doesnot contain any qualification reservation or adverse remark.

Statutory Disclosures

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo pursuant to Section 134(3)(m) of the Companies Act 2013 read with theRule 8(3) of the Companies (Accounts) Rules 2014 is given in the Management Discussionand Analysis Report. Also the other Statutory Information / Disclosures required to begiven under the Banking Regulation Act 1949 and the Companies Act 2013 as applicable tothe Bank have been laid out in the Schedules / Notes attached and form part of theBalance Sheet and the Profit and Loss Account.

Details pursuant to remuneration of Directors and Employees in terms of Section 197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 including the Companies (Appointment andRemuneration of Managerial Personnel) Amendment Rules 2016 are given at Annexure II andform an integral part of this Report.

The information relating to employees required to be furnished under the Companies Act2013 and the Rules made thereunder is given under the head ‘Particulars of Employees'later in this Report.

Employees Stock Option Scheme

The Bank had instituted the Employee Stock Option Scheme (ESOS-2007) to enable itsemployees including Whole-time Directors to participate in the future growth of theBank. Under the Scheme Options can be granted which upon exercise from time to timecould give rise to the issuance of a number of shares up to 7% of the issued EquityCapital of the Bank. The eligibility and number of Options to be granted to an employee isdetermined on the basis of criteria laid down in the Scheme and is approved by theCompensation Committee of the Board of Directors.

An aggregate of 41633300 Options comprising 6.94% of the Bank's Equity Capitalhave been granted under the Scheme. Statutory disclosures as required by SEBI (Share BasedEmployee Bene3ts) Regulations 2014 are given at Annexure III and form an integralpart of this Report.

The Annual Certi3cate on compliance with SEBI (Share Based Employee Bene3ts)Regulations 2014 issued by Statutory Auditors of the Bank is being placed before Membersin the ensuing AGM.

The Employees Stock Option Plan is administered by the Compensation Committee of theBoard.

Disclosure on compliance with Secretarial Standards

The Directors have devised proper systems to ensure compliance with the provisions ofall applicable Secretarial Standards and that such systems are adequate and operatinge3ectively.

Directors' Responsibility Statement

To the best of their knowledge and belief and according to the information andexplanations obtained by them the Directors make the following statement in terms ofSection 134(3)(c) and 134(5) of the Companies Act 2013:

(a) that in the preparation of the Annual Accounts for the Financial Year ended March31 2018 the applicable Accounting Standards have been followed along with properexplanation relating to material departures if any;

(b) that such accounting policies as mentioned in the Notes to the Financial Statementshave been selected and applied consistently and that judgments and estimates have beenmade that are reasonable and prudent so as to give a true and fair view of the state ofa3airs of the Bank as at March 31 2018 and of the Profit of the Bank for the year endedon that date;

(c) that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Bank and for preventing and detecting frauds and otherirregularities;

(d) that the Annual Financial Statements have been prepared on a ‘going concern'basis;

(e) that proper internal 3nancial controls were in place and that the 3nancial controlswere adequate and operating e3ectively; and

(f) that systems to ensure compliance with the provisions of all applicable laws werein place and were adequate and operating e3ectively.

Extract of Annual Return

The details forming part of the extract of the Annual Return in Form MGT-9 as requiredunder Section 92(3) of the Companies Act 2013 and Rule 12(1) of the Companies (Managementand Administration) Rules 2014 are included in this Report as Annexure IV andform an integral part of the Annual Report.

Particulars of Employees

The Bank had 25284 employees on its rolls as on March 31 2018.

59 employees who had been employed throughout the year were in receipt of remunerationof Rs 1.02 crores per annum or more and only 1 employee employed for part of the year wasin receipt of remuneration of Rs 8.50 lakhs per month or more. The information containingparticulars of employees pursuant to Section 197 of the Companies Act 2013 read with Rule5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014forms part of this Report. However the above Annexure is not being sent along with thisAnnual Report to the Members of the Bank in line with the provision of Section 136 of theCompanies Act 2013. Members who are interested in obtaining the particulars may pleasewrite to the Company Secretary at the Secretarial and Investor Services O3ce of the Bank.The aforesaid Annexure is also available for inspection by Members at the Registered O3ceof the Bank up to the date of this Annual General Meeting during business hours on workingdays.

None of the employees hold (by himself or along with his spouse and dependent children)more than two percent of the Equity Shares of the Bank.

Policy on Remuneration to Non-Executive Directors

Until the Financial Year 2015-16 all Non-Executive Directors including theNon-Executive Part-time Chairman received remuneration only by way of Sitting Fees forattending the meetings of the Board and of various Board Committees.

In line with the guidelines contained in RBI Circular dated June 1 2015 oncompensation of Non-Executive Directors of Private Sector Banks the Board of Directorson the basis of the recommendations of the Human Resource & Remuneration Committee(since re-named as ‘Nomination & Remuneration Committee') in their meeting heldon May 12 2016 approved the payment of remuneration of Rs 25 lakhs per annum with e3ectfrom April 1 2016 to Mr. R. Seshasayee Non-Executive Part-time Chairman (subject toapproval of Reserve Bank of India which has since been received) and to the Non-ExecutiveDirectors (other than the Non-Executive Part-time Chairman) in the form of Profit-relatedCommission of Rs 10 lakhs per annum for each Director in such manner as may be decided bythe Board of Directors.

Shareholders had in the 22nd Annual General Meeting of the Bank held on July 1 2016accorded their approval for payment of the above-mentioned remuneration in the form ofProfit-related Commission to the Non-Executive Directors including to the Non-ExecutivePart-time Chairman for FY 2016-17. The Non-Executive Directors including theNon-Executive Part-time Chairman accordingly received remuneration in the form ofProfit-related Commission in addition to Sitting Fees for attending meetings of the Boardand of various Board Committees.

No Stock Options were granted to the Non-Executive Directors.

During FY 2016-17 the Board of Directors have on the recommendations of the HR &Remuneration Committee (since re-named as ‘Nomination and Remuneration Committee')formulated the ‘Policy on Remuneration to Non-Executive Directors' including theNon-Executive Part-time Chairman.

During the Financial Year 2017-18 the Board reviewed the ‘Policy on Remunerationto Non-Executive Directors'. The Policy is hosted on the Bank's website at the link givenbelow: The Board ofDirectors have also formulated a Policy in relation to Key Management Personnel and SeniorManagement personnel of the Bank. The said Policy is given under ‘Disclosure onRemuneration' at Note No. 12.6 of the Notes in Schedule 18 to the Financial Statementswhich forms an integral part of this Annual Report.

Details on compensation to Whole-time Directors are given under the Report on CorporateGovernance that forms an integral part of this Report.

Particulars of Loans Guarantees or Investments outstanding

Section 186(11) of the Companies Act 2013 mandates that the provisions of Section 186of the Companies Act 2013 except sub-section (1) do not apply to a loan made guaranteegiven or security provided by a banking company in the ordinary course of business. Theparticulars of loans made guarantees given and investments made by the Bank are disclosedin the Financial Statements as per the applicable provisions of the Banking RegulationAct 1949.

Particulars of Contracts or Arrangements with Related Parties

All transactions entered with ‘Related Parties' during the year under review wereon ‘arm's length basis' and in the ‘ordinary course of business' and thereforedo not attract the provisions of Section 188 of the Companies Act 2013.

Further there are no materially Significant Related Party Transactions during the yearwith any of the Related Parties viz. Promoters Directors and Key Management Personneland other related entities including IMFS an Associate Company which may have potentialcon3ict with the interest of the Bank at large.

In view of the above the disclosure under Form AOC-2 is not applicable to the Bank.

The Policy on Related Party Transactions as approved by the Board of Directors ishosted on the Bank's website at the below given link:

Consolidated Financial Statements

In accordance with Section 129(3) of the Act Consolidated Financial Statement ofIndusInd Bank Limited (‘the Bank') and IndusInd Marketing and Financial ServicesPrivate Limited ("the Associate") has been prepared and is included in theAnnual Report.

In terms of AS 23 the Bank has prepared the Consolidated Financial Statements for theyear ended March 31 2018 wherein the Standalone Financial Statements of the Bank as ofthat date are consolidated with that of IMFS an associate in which the Bank has a 30%stake by adopting ‘Equity Method'.

Indian Accounting Standards (Ind AS)

The Reserve Bank of India (RBI) issued Circular No. DBR.BP.BC.No.76/21.07.001/2015-16on February 11 2016 requiring scheduled commercial banks to comply with the IndianAccounting Standards (Ind AS) for accounting periods beginning from April 1 2018 onwardswith comparatives for periods ending on or after March 31 2018.

RBI on April 5 2018 through announcement in its 3rst Monetary Policy Statement forFY 2018-19 deferred Ind AS implementation for the scheduled commercial banks (excludingRRBs) by one year such that the implementation of Ind AS would begin from April 1 2019onwards with comparatives for the year beginning April 1 2018.

Pursuant to the RBI Circular dated February 11 2016 the Bank formed a SteeringCommittee comprising members from cross-functional areas for the purpose of reviewingand monitoring the progress of implementation. The Bank set up a Working Group under theguidance of the Steering Committee to conduct Gap Assessment to identify the di3erencesbetween the current accounting framework and Ind AS including the identi3cation of theaccounting policy options provided under Ind AS 101 First Time Adoption. Besidesaugmenting skilled resources within the Financial Reporting team the Bank also engagedthe services of leading professionals with international experience to assist in theproject. Training programs were organized for the team members in the Business Credit andFinance Teams. The Bank is in the process of identifying the changes required to be madeto its systems and processes and is evaluating technology solutions.

The Audit Committee of the Bank's Board of Directors oversees the progress of the IndAS implementation process. Some of the areas of Significant accounting impact pursuant tothe application of Ind AS are summarized below:

(a) Accounting impact on account of application of Ind AS at the date of transitioni.e. April 1 2018 will be recognized in equity or other components of equity. (b) Theclassi3cation and measurement of 3nancial assets will be driven by the Bank's businessmodel for managing those assets and the characteristics of the contractual cash 3ows ofthe assets. All 3nancial assets will be classi3ed as subsequently measured at amortisedcost Fair Value through Other Comprehensive Income (FVOCI) or Fair Value through Profitor Loss (FVTPL). (c) Financial Instruments would be derecognised on transfer ofSignificant risks and rewards and not based on the legal form of the arrangement.

(d) Interest will be recognised in the Income Statement using the e3ective interestmethod and any directly attributable fees and costs would be considered to be anadjustment to the e3ective interest rate. (e) All Derivatives would be required to befair-valued and recognised on the Bank's Balance Sheet. (f) Expense for Stock Options willbe recognised in the Statement of Profit and Loss based on the Fair Value of the Options.(g) Impairment requirements for 3nancial assets carried at amortised cost or at fair valuethrough other comprehensive income including certain o3 Balance Sheet items are based onan Expected Credit Loss (ECL) model. The Bank will be required to recognise either a12-months' or lifetime ECL depending on whether there has been a Significant increase inCredit Risk since initial recognition. This will be Significantly different from thecurrent methodology for calculating the provision for Standard Assets and Non-PerformingAssets (NPAs). The Bank has developed models for computation of ECL and is testing thesame.

In addition to the above as per Reserve Bank of India directions the Bank submittedStandalone proforma Ind AS 3nancial statements along with other computations to the RBIfor the half-year ended September 30 2016 in FY 2016-17 and for the quarter ended June30 2017 in FY 2017-18 as required.

Corporate Social Responsibility

In line with its CSR focus areas the Bank has committed to various long term communitydevelopment projects that have a large positive impact. Consistent with the requirementsof Section 135 of the Companies Act 2013 and CSR Rules 2014 the Bank has set up aBoard-level CSR Committee to review the CSR initiatives. The Committee is headed by Mrs.Kanchan Chitale as the Chairperson Mr. Yashodhan M. Kale (inducted in the Committee onMarch 26 2018) and Mr. Romesh Sobti as Members. Mr. Vijay Vaid ceased to be a Member onhis retirement from the Board on February 3 2018.

The composition of the CSR Committee is in accordance with Section 135 of the CompaniesAct 2013.

The Bank's CSR Policy and strategy direct and govern the Bank's activities in focusareas namely Environmental Sustainability Rural Development and InclusivenessPreventive Healthcare and other areas of special interest that include Education Sportsand Heritage.

In FY 2017-18 in line with the agenda on digitization the Bank pledged support to thePM's initiative of digitizing Rural India by reaching out to 2 lakh candidates across 275districts in 11 Indian states of Haryana Punjab Rajasthan Madhya Pradesh MaharashtraGujarat Jharkhand Chhattisgarh West Bengal Odisha and Uttar Pradesh. The Bank has alsoinitiated a 3agship solid waste segregation and management programme in partnership withthe Government of Uttarakhand. Adding on to the two on-going 3agship sports projectsnamely the Para-Champions and the Blind Cricket Programme the Bank introduced theIndusInd Girl Power Programme in FY 2017-18 that supports woman athletes across JudoBoxing and Wrestling to represent India in reputed sports tournaments.

During the year under review the Bank has also introduced a unique project involvingthe rehabilitation and skill development of women rescued from tra3cking in Bihar.

The CSR Initiatives / Projects undertaken by the Bank are in accordance with ScheduleVII of the Companies Act 2013.

Companies on the basis of criteria prescribed under Section 135 of the Act arerequired to spend at least Two per cent of their Average Net Profits made during the threeimmediately preceding 3nancial years in pursuance of their Corporate SocialResponsibility Policy. Accordingly the Bank spent Rs 20.47 crores towards various CSRactivities speci3ed in Schedule VII of the Companies Act 2013. The programmes are oflarge scale and hence the absorption of funds is milestone-linked for larger impact.

The Bank also recognises and addresses environmental issues like climate change andglobal warming and measures its carbon footprint. The Bank currently features in the‘A' list of the CDP a platform that is widely referred by global Investors. The Bankis also a front-runner investing in on-site solar energy solutions and LEED-Certi3edgreen buildings. While these investments have not been considered as part of our reportedspend this year it has had substantial impact on the environment in line with globaltargets of the UN Sustainable Development Goals.

The Report on CSR activities undertaken by the Bank is set out at Annexure V andforms an integral part of this Report. Details of the CSR Policy and initiatives adoptedby the Bank on CSR are available on Bank's website at the link given below:

Business Responsibility Report (BRR)

The Securities & Exchange Board of India have vide their Circular dated December22 2015 mandated Top 500 Listed entities to include the ‘Business ResponsibilityReport' (BRR) as part of the Annual Report describing the initiatives taken by the listedentity from an environmental social and governance perspective in the format as speci3edby SEBI.

In view of the above and in compliance with Regulation 34(2) of the ListingRegulations BRR of the Bank has been furnished at Annexure VI and forms anintegral part of this Report.

Corporate Governance

Corporate Governance is essentially a set of standards systems and procedures aimedat e3ective honest transparent and responsible management of a company within theapplicable statutory and regulatory structures.

The Bank has adopted the industry best practices of Corporate Governance and aims tocontinue banking on the highest principles of governance and ethics. At IndusIndCorporate Governance is more than just adherence to the statutory and regulatoryrequirements. It is equally about focusing on voluntary practices that underlie thehighest levels of transparency. The Governance framework is driven by the objective ofenhancing long-term stakeholder value without compromising on Ethical Standards andCorporate Social Responsibilities.

The Bank's guiding principles are also articulated through its Code of Business Conductand various initiatives taken to maintain transparency by communicating with theShareholders on developments in the Bank. The Bank has also set up various subCommitteesof the Board to bring in more e3cacy and transparency in its working.

The Bank continues to focus on better complete and timely disclosures to the StockExchanges for dissemination to the Stakeholders.

Further complete disclosures regarding Corporate Governance are provided in theCorporate Governance Report which forms an integral part of this Annual Report.

Certificate from M/s Bhandari & Associates Practising Company Secretariescon3rming compliance with the conditions of Corporate Governance stipulated under ScheduleV of the Listing Regulations is attached as Annexure VII and forms part of thisAnnual Report.

Management Discussion and Analysis Report

The Management Discussion and Analysis Report as prescribed under Regulation 34(2) ofthe Listing Regulations forms part of the Annual Report.

Significant and Material Orders passed by the Regulators or Courts

There are no Significant and material Orders passed by the Regulators / Courts thatwould impact the ‘going concern' status of the Bank and its futures operations.

Awards and Accolades

During the year under review the Bank has received many awards and accolades forexcellence in managing IT Risk Marketing and Communications CSR Initiatives Safety andSecurity Best Data Quality and Information Technology and for Innovations etc.

Mr. Romesh Sobti Managing Director & CEO was awarded as the ‘Best Banker' atthe BW Businessworld Magna Awards 2017. He was3also bestowed with3the prestigious BusinessToday's ‘Best CEO Award'.

Brief details of various awards are covered in the initial pages and in the ManagementDiscussion and Analysis Report which forms an integral part of this Annual Report.

Cautionary Statement

Certain statements in the ‘Directors' Report' and in the ‘ManagementDiscussion and Analysis' describing the Bank's objectives estimates and expectations maybe ‘forward-looking statements' within the meaning of applicable Securities Laws andRegulations. Actual results could di3er substantially from those expressed or implied.Important factors that could make a di3erence include economic conditions in the domesticand overseas markets changes in Laws / Regulations and other incidental factors.

Material events that have happened after the Balance Sheet date

No material changes and commitments a3ecting the 3nancial position of the Bank haveoccurred between the end of the 3nancial year of the company to which the FinancialStatements relate and the date of this Report.

Policy on Prevention Prohibition and Redressal of Sexual Harassment at Workplace

The Bank has zero tolerance for sexual harassment at workplace and has adopted a Policyon Prevention Prohibition and Redressal of Sexual Harassment of Women at the Workplacein line with the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules made thereunder.

The Policy aims to provide protection to women employees at the workplace and preventand redress complaints of sexual harassment and for matters connected or incidentalthereto with the objective of providing a safe working environment. The Bank has alsoconstituted Internal Complaints Committees to enquire into the complaints of sexualharassment and recommend appropriate action.

The Bank has received 7 complaints alleging sexual harassment at workplace during the3nancial year 2017-18. The status of the same is as under.

No. of cases received during the year No. of cases closed during the year No. of cases pending for investigation at the end of the year
7 7 NIL


The Directors are grateful to the shareholders for the trust and con3dence reposed bythem in the Bank.

The Directors are also grateful to the Reserve Bank of India the Ministry of CorporateA3airs Securities and Exchange Board of India Insurance Regulatory and DevelopmentAuthority and the Stock Exchanges for the guidance and support extended by them to theBank.

The Board expresses its deep sense of appreciation to all employees for their excellentperformance strong work ethic and untiring commitment which qualities have contributedto the Bank's continued progress in a challenging environment. The Board thanks its valuedcustomers for their patronage and looks forward to the growing of this mutuallysupportive relationship in future.

For and on behalf of the Board of Directors
Place: Mumbai R. Seshasayee
Date : June 22 2018 Chairman
(DIN: 00047985)