The place before you the Annual Report of the Bank together with the audited Statement of Accounts and Auditors’ Report for the financial year ended March 31, 2019.

FINANCIAL INCLUSION:

During the FY 2018-19, the Bank’s achievement against the set targets under Financial Inclusion schemes is given below

Aadhaar Seeding: Bank has achieved 78.20% of Aadhaar seeding and 69.58% in Aadhaar Authentication in active CASA accounts.

Atal Pension Yojana (APY): ‘the Bank has enrolled 2,23,454 APY accounts during the year with average of 76 accounts per branch against a target of 1,73,220. ‘the Bank has received an incentive of Rs.3.95 Cr of which 1.99 Cr towards fresh enrolments, Rs. 0.23 Cr towards volume based additional incentive and Rs. 1.72 Cr. towards persistency incentive.

Establishment of Aadhaar Enrolment Centres: DFS, Ministry of Finance, Govt. of India has advised all Banks to establish 1 enrolment centre for every 10 branches. As per existing branch network, Bank needs to establish 290 enrolment centres PAN India. Accordingly Bank has established 290 Aadhaar enrolment and updation centres and achieved 100% target.

- Our Vashi branch in Maharastra state has received Best Performing Branch award from UIDAI for registering highest number of enrollments.

- Bank has received capital incentive claim of Rs. 2.11 Crores form NABARD towards establishment of265 Aadhaar Enrollment Centres as on 31.03.2018.

Financial Literacy and Credit Counselling Centers: 3 FLCCs one at Sirguppa in Karnataka state, one each at Jagtial and Siddipet in Telangana state started operations. With this bank is having total of 11 FLCCs functioning and are providing services.

Bank Mitra Facilitators: As number of Bank Mitra activities are increasing on day to day basis, Bank has appointed Bank Mitra Facilitators in 8 Districts of Andhra Pradesh, 4 districts in Telangana and in 3 Districts of Odisha State.

Gram Swaraj Abhiyan (EGSA): Under this programme DFS has identified about 48,503 villages having above 1000 population for conducting campaigns to provide universal coverage under financial inclusion related schemes such as PMJDY, PMSBY & PMJJBY. Of 117 identified aspirational districts, our Bank presence is in 35 Districts under which 341 villages exist. Bank has exceeded the set targets under this campaign as indicated below.

SUBSIDIARIES & REGIONAL RURAL BANKS : ‘the Bank has one Subsidiary, namely, Andhra Bank Financial Services Limited (ABFSL), which is wholly-owned by the Bank. ‘the Company has earned a profit of Rs 127.04 Lacs before Income Tax and a Net Profit of 91.80 Lacs after Income tax during the year ending 31.3.2019, with this the accumulated losses of the company has been brought down from Rs 572.36 Lacs to Rs 480.56 Lacs as on 31.03.2019. Bank has one sponsored Regional Rural Bank namely Chaitanya Godavari Grameena Bank located in Guntur (Andhra Pradesh), covering the districts of Guntur, East Godavari and West Godavari with 218 branches. As on 31.03.2019, the total business stood at Rs.9080.49 Crore, and Net profit after Tax is Rs.71.71 Crore. Percentage of Gross NPA to Average Advances is 1.00%.

SECURITY ARRANGEMENTS : Bank has upgraded the security arrangements at branches, currency chests and ATMs. All branches in the Bank are provided with CCTV system for video surveillance. Conventional alarm system at 99 % branches have been upgraded to Integrated Intruder Burglar Alarm System (IIBAS). Centralized Alarm Monitoring Station has been established in Head Office for 24X7 monitoring of Integrated Intruder Burglar Alarm System installed in branches. 40 % of branches have already been integrated to CAMS at Head Office and are being monitored continuously. Integration of balance branches is in progress. State of Art integrated e-surveillance system has been provided in 88 % of the ATM Sites and Bank has reduced revenue expenditure to the tune of approximately 68 Crores per Annum, by replacing physical guarding with e-surveillance at these sites. Installation of e-surveillance system at balance sites is in progress. All efforts are on to ensure that all security gadgets are maintained in working condition at all times and minimize crime incidents against Bank.

NRI CELL: “The NRI Cell was set up with a view to serve as an effective channel of communication between the Bank and its NRI Clientele thereby increasing NRE Deposits. ‘the Cell supports and guides the branches & Representative Office in Dubai thereby ensuring betherment in Customer Service. During the Financial year, the Bank has closed its representative office in New Jersey. NRI Cell provides useful information related to Banking & Foreign Exchange to NRIs through NRI Bulletin (AB Connect) every month. At present nearly 54991 NRI Customers (both existing and prospective) are being connected and accessing the information provided in the NRI Bulletin (AB Connect). Total NRI business of the Bank of the Bank stood at Rs. 3403 Cr as on 31.03.2019.

BRANDING AND COMMUNICATIONS: “The Bank has undertaken publicity & branding during the financial year to derive good mileage and visibility for the Bank. Some of the major publicity activities include,

- Utilization of Ad Space (Big hoarding) at Nizam Club, Hyderabad for publicity on our products.

- Advertisement in Sri Venkateswara Bhakti Channel (SVBC) during live programmes.

- Exhibiting of our ADs on Bus Shelters, Central Medians at different places.

- Putting up of Bank’s Stall at All India Industrial Exhibition at Hyderabad which run for 45 days.

CORPORATE SOCIAL RESPONSIBILITY (CSR): As the Bank reported loss for the year ending March, 2018, there was no budget allocation for Donation which includes CSR activities for the financial year 2018-19.

BANK’S WEB SITE: ‘the Bank maintains its website www.andhrabank.in in three languages, viz., English, Hindi and Telugu for providing information about the Bank, its services and products offered. ‘the Bank has made its WCAG (Web Content Accessibility Guidelines) website accessible to ‘visually impaired persons’, as per Government of India guidelines. “The Bank being the Convener of State Level Bankers’ Committee, Andhra Pradesh, maintains separate website www.slbcap.nic.in. ‘this website communicates all the proceedings of SLBC Meetings, State Government directives, instructions to Bankers and public. ‘the Bank follows meticulously CERT-In (Indian Computer Emergency Response Team) guidelines issued from time to time in maintaining Bank’s Website securely.

AWARDS AND REWARDS: “The bank received the following awards during the FY 2018-19:

- IBA Banking Technology Awards-2019-Our Bank has won 4 awards at IBA Banking Technology Awards-2019- viz.,”the Best Technology Bank of Year-Winner, “‘the Best Financial Inclusion Initiatives-Runner up’, “‘the Best Payments Initiatives-Runner up’ and ‘The Most Customer Centric Bank using Technology-Runner up.

- Infosys Finacle Client Innovation Awards 2019- Our Bank has won 3 awards at Infosys Finacle Client Innovation Awards 2019 -viz., ‘Process Innovation-Winner, ‘Accelerated Transformation-Runner up’ and ‘Emerging Technologies Led Innovation-Runner up.

- Awards under APY : Bank got the following awards in campaigns announced by PFRDA

- Bank has been awarded as the “Second Best Performing Public Sector Bank” from PF RDA for the FY 2018-19.

- MD & CEO of our Bank was awarded in APY “Leadership Capital” campaign by PFRDA.

- Makers of Excellence - Executive Director of our Bank has been awarded as best Executive Director under APY.

- APY - Splendid 7 - General Manager FI of our Bank has been awarded as Best Performing General Manager under Major Banks category.

- APY - Passion for Performance - Nodal Officer - FI of our Bank has been awarded as best performing Nodal Officer under APY.

- Special Recognition Award for Excellent performance in “ AePS by NPCI” in “B” Category banks.

Indian Accounting Standards (Ind AS) - Progress: Implementation of Indian Accounting standards (Ind As) has been deferred till further notice, vide circular No. DBR. BP. BC. No. 29/21.07.001/2018-19 dated March 22, 2019. Bank shall comply with the Indian Accounting Standards (Ind AS) for financial statements for accounting period ending 31st March 2019 and thereafter in accordance with the guidelines of Reserve Bank of India. In order to facilitate smooth transition to the application of Ind AS , Bank is in the process of identifying the changes required to be made in the IT system & other policies to comply with Ind AS.

CHANGES IN THE BOARD DURING THE YEAR: “The following changes took place in the Composition of the Board during the FY 2018-19:

- Shri J Packirisamy, assumed charge as MD& CEO on 21.09.2018.

DIRECTORS’ RESPONSIBILITY STATEMENT:

The Board of Directors hereby state that

- ’the applicable accounting standards have been followed in the preparation of the annual accounts and proper explanations have been furnished, relating to material departures.

- Accounting policies have been selected and applied consistently, reasonable and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Bank as at 31.03.2019 and of the profit and loss of the Bank for the financial year ended on 31.03.2019.

- Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the relevant regulatory provisions for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities.

- ’the annual accounts have been prepared on a going concern basis.

- Internal Financial controls to be followed by the Bank have been laid down and such internal financial controls are adequate and are operating effectively.

- Proper systems have been devised to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

ACKNOWLEDGEMENT: Andhra Bank is grateful to the Government of India, RBI, SEBI, NABARD, and other authorities/agencies, Financial Institutions and Correspondent Banks for their valuable support and guidance. ‘the Directors also express their deep sense of appreciation to all the staff members of the Bank for their dedicated service, outstanding professionalism and commitment towards Bank’s vision for a sustainable growth. Finally, the Directors wish to sincerely thank all the customers, shareholders and other stakeholders for their valuable support.

For and on behalf of the Board,

Place : Hyderabad (J Packirisamy)

Date :13.05.2019 MD & CEO