Management Discussion and Analysis

Corporate Overview Statutory Reports Financial Statements
Management Discussion and Analysis

Global Economic Scenario on different trajectories of recovery. The stimulus spending per
We have crossed one year since the pronouncement of COVID-19 capita by the developed countries has been nearly 580 times
as a global pandemic. It not only produced a distinctive recession higher than that of the least developed countries, whereas the
in 2020 but also resulted in terrible loss of lives and livelihoods. average per capita income of the developed countries is only 30
Countries across the world braved a multifaceted crisis which times higher than that of the least developed countries. The fiscal
included health shock, disruption of the domestic economy, measures have been complemented by unprecedented monetary
capital flow reversals, collapse of commodity prices and slump rejoinders. 92 Central Banks have cut policy rates, a total of 241
in foreign demand. The contact-intensive services sectors were times from March 2020 to February 2021. Many central banks
hit disproportionately hard, causing uneven distribution of losses. implemented additional monetary and prudential measures
to boost liquidity and ensure financial stability. A number of
As per the estimates of United Nations Department of Economic monetary authorities also announced changes in their monetary
and Social Affairs, the world output shrank by 4.3% in 2020. This is policy frameworks to enhance policy flexibility and improve
over three times the impact witnessed during the global financial monetary transmission.
crisis of 2008-09. With an estimated output decline of 5.6%, the
pandemic hit the developed economies the hardest, owing to Of all the alphabetical letters used to describe the path of
the strict and prolonged lockdown measures that were imposed recovery, the K-shape stands out. It signifies the crucial feature
during the outbreak in many of the European countries and some of this crisis: the burden borne by less-skilled workers, youth,
parts of the United States. The contraction was milder in the women, small businesses and lower-income countries. It also
signifies how high-income earners and large companies have
developing countries compared to the developed countries, with
benefitted the most from the massive rally in equity markets,
output shrinking by 2.5%. The least developed countries saw their
fuelled by the unprecedented monetary policy accommodation.
GDP contract by 1.3% in 2020.
All this has polarised economies worldwide and has left wider
scope for growth in the future.
The pandemic also resulted in severe employment crisis
worldwide. As per the International Labour Organisation, full
Even with high uncertainty about the path of the pandemic, a way
or partial lockdown measures had affected almost 2.7 billion
out of this is increasingly visible. Thanks to the inventiveness of
workers by April 2020, representing about 81% of the global
the scientific community, multiple vaccines that can reduce the
workforce. In spite of some improvement later in the year,
severity and frequency of infections are now available. In parallel,
unemployment rates in most countries still remained well
adaptation to pandemic life has enabled the global economy to do
above the pre-crisis levels. Job and income losses pushed an
well despite passive overall mobility, leading to a stronger-than-
estimated 131 million additional people into poverty in 2020. The
anticipated rebound, on average, across regions.
fast pace of digitalization, automation and robotization, further
reduced labour demand in the medium term. While productivity As per many global research firms, there remains high albeit
is expected to experience some growth in economic sectors moderating uncertainty about the evolution of the COVID-19
embracing automation, the average productivity growth is likely pandemic and its economic effects. Vaccine production is ramping
to falter. This coupled with declining investments in fixed capital up and rollouts are gathering pace around the world. Widespread
and lower labour force participation rates are expected to weigh immunization is the sole way to re-establish the normalcy of
on potential output going forward. social and economic activities.
The COVID-19 crisis has resulted in a significant shock to trade, IMF is projecting a stronger recovery in 2021 and 2022 for
restricting cross-border travel, disrupting international production the global economy compared to their previous forecast,
networks and impacting demand worldwide. As per UN reports, with growth projected to be 6% in 2021 and 4.4% in 2022.
global trade in goods and services contracted by an estimated 7.6% Nonetheless, the outlook presents daunting challenges related
in 2020. Global merchandise trade has however been recovering to divergences in the speed of recovery, both across and within
since mid 2020 on the back of strong demand for electric and countries as well as the potential for persistent economic
electronic equipment, pharmaceuticals and, especially, personal damage from the crisis.
protective equipment. Massive stimulus measures amounting to
USD12.7 trillion prevented a total collapse of the world economy. Indian Scenario
However, stark differences in the size of the stimulus packages The year 2020 started on a weak note as India’s GDP growth
between developed and developing countries have put them rate hit a six-year low in 2019 and then gradually decelerated
Annual Report 2020-21 71

Management Discussion and Analysis (Contd...)
further. The challenges in the domestic financial sector and crucial expenditure was targeted towards capex and health.
other global headwinds were key contributors to it. Despite The Budget also supplemented its infrastructure focus plans
this, the fundamentals of Indian economy remained strong and with innovative financing tools, which included raising resources
GDP growth was expected to rebound from the first quarter of from monetization of government owned assets and providing a
2020-21. To revive demand and boost economic growth, the thrust to privatization. The Budget has been iced with some far-
Union Budget for FY 2020-21 tried to take a calibrated path. The reaching reforms announced in terms of disinvestment.
Budget’s economic strategy was designed with the underlying
assumption that the Indian economy appears to have bottomed Looking at the impact of the pandemic induced disruptions,
out and is expected to pick up in 2020-21. It is at this moment various sectors in the Indian economy have been affected in
that the COVID-19 pandemic struck the nation. As India went diverse proportions and the recovery across them has been
into a nationwide lockdown to control the pandemic, Government uneven. While we saw resilience in agriculture, technology and
announced the initial set of measures to limit the damage. By the pharmaceuticals sectors and the recovery in manufacturing,
end of April 2020, it was clear that without immediate additional auto, and power has been faster than expected, contact-
assistance from the government, the Indian economy could be intensive services sectors such as tourism, recreation, aviation,
looking at widespread financial ruin. Eventually, on May 12, 2020, manufacturing and construction continue to grapple with the
the Hon’ble Prime Minister of India announced the Atmanirbhar challenges of the pandemic. Economists now expect a ‘K Shaped’
Bharat Abhiyan package, with special focus on the MSME sector. recovery for India instead of a ‘V Shaped Recovery’, as estimated
earlier. While the earlier growth rate forecasts were done based on
The economy registered a record contraction of 24.4% in Q1- the large string of fiscal and monetary support, the new surge in
FY21 and recovered marginally with a negative growth of 7.3% in COVID-19 cases in the second wave have raised fears of renewed
Q2- FY21. The retrieval in Q2 demonstrates the resilience of the restriction, crippling the economy and once again making it solely
Indian Economy, albeit partially. Since the unlocking, there was reliant on domestic consumption.
a renewal in the economic activity, though the pace and extent
of the same has been wavering. Some parameters have been One possible reason for the second surge in COVID-19 cases
witnessing progressive, albeit gradual advances, while for some might be the optimism surrounding the availability of vaccines,
segments, the improvements have been dropping steam, which which may have caused people to lower their guard, enabling the
can be attributed to the easing of pent up demand and restocking rapid spread of virus. The change in attitude towards the virus
of inventories. The signs of recovery further strengthened since amongst the masses was also reflected through the sudden
November 2020 as a higher number of sectors saw normalized rise in mobility since mid January. Going forward, the steepness
economic activities. The economy registered a GDP growth (YoY) of the curve should sound as an alarm for people to limit their
of 0.4% in Q3 FY21, after recording negative growth in the previous movements to prevent the virus from spreading. Irrespective
two quarters. The positive growth during the third quarter of of how and when the restrictions are imposed, whether they
FY 2020-21 was indicative of slow resumption of economic are voluntary or mandatory, they are expected to hamper the
activities, higher consumption and activity across sectors. economic growth of India in the first half of FY 2021-22.
Looking ahead at CY 2021, various government and international Indian Banking Industry
institutions initially projected a sharp “V shaped recovery” for Like any other sector, the disruption caused by COVID-19 and
the Indian economy. The Economic Survey 2020-21 estimated subsequent lockdowns in the country saw material pressure
a robust double-digit growth of 11% in FY 2021-22, albeit on multiple fronts in the banking sector. The uncertainty arising
over a lower base, backed by revitalisation of consumption out of its direct impact on banks with consequent impact on
and investment demand amid a mega-vaccination drive. The debt servicing ability of borrowers and asset quality woes has
International Monetary Fund (IMF) projected the economy to adversely impacted the risk appetite of lenders, thereby impacting
grow by 11.5% (further raising it to 12.5% later) and reclaim the credit uptick. During the critical phase of the pandemic, Indian
its status of the fastest growing economy. RBI estimated Banks focused on maintaining adequate staff at the branches,
the economic growth at 10.5% (further revising to 9.5%) in FY deployed mobile ATMs and implemented door step banking for
2021-22, supported by sustained improvement in financial senior citizens to ensure the much-needed service to customers.
resources and strong push provided by the Union Budget for Several Banks which had already made significant investments
revival of key sectors. Through the landmark union budget for in technology and digital transformation were supporting the
FY 2021-22, the Government explicitly made on growth and customer requirements through various digital innovations.
72 Federal Bank

Government of India and Reserve Bank of India made many In FY 2021-22, given the growth in the economy and the base
regulatory interventions to protect the health of Indian Financial effect coming into play, bank credit is likely to increase. Based
System. This included providing relief to the Banks as well as on the report of many research firms, a higher deposit growth
borrowers by offering the option of availing moratorium on loan is expected in the range of 9-11% in FY 2021-22 to support
repayments, restructuring of loans, slashing the repo rates to credit growth of 8-10% in the said period. However, a sub-
record low and opening up special credit lines to encourage the normal monsoon and another surge in COVID-19 cases leading
banks to lend more, especially to the MSME segments. These to localised or partial lockdowns in key states may impact the
steps gave critical and momentary relief to India’s banking industrial as well as the service segments and pose downside
system. risks to deposit and credit growth in FY 2021-22. Though,
systemic support from RBI and the Government at various levels
The first half of this fiscal witnessed a contraction in bank credit could give the much needed fillip for growth.
owing to the pandemic which forced both borrowers and lenders
to tread cautiously. Since lifting of lockdowns in the country, there Business Strategy
was faster-than-expected uptick in economic activities, which During FY 2020-21, COVID-19 emerged as the black swan event
was further supported by the pent-up demand, fuelled by the of the century and had significant macro-economic impact. In this
festive season. The bank credit growth stood at 5.6% YoY for the background, your Bank continued with the resolve to perform and
fortnight ended March 26, 2021 as compared with last year’s demonstrated robust operating performance during the financial
level of 6.1%. The growth figures of the fortnight have the benefit year, driven by the identified priorities.
of lower base of the previous year-end since the time denotes
initial period of lockdown in the country. With the onset of the pandemic, your Bank invoked business
continuity plans and higher priority was accorded to ensure
Subdued growth was witnessed in Industrial credit with low single that customers were supported, while maintaining business
digit growth recorded since fiscal 2016 due to increasing asset continuity and reinforcing organisational fitness. Your Bank
quality issues. Industrial credit was up by ~7% majorly driven by further initiated an analysis of the situation from different slants,
lending to infrastructure in fiscal 2019. In fiscal 2020, the private with various stress testing for capital, liquidity and asset quality.
capex was soft, thereby resulting in a growth rate of ~1% in Since the extent of the pandemic was still unknown, the strategy
industrial credit. The overall industry credit growth was further adopted for FY 2020-21 was to be nimble yet flexible to deal
dragged down by the economic effects of the pandemic and with the dynamic and ever-changing environment. The pandemic
muted demand, impacting various sectors including engineering, induced a shift in the business strategy of your Bank with focus
infrastructure and construction. Retail credit, which led the pack on creating value through resilient growth. Sensing the change &
till fiscal 2020, registered weak growth in the first half of fiscal reshaping business strategy along with it, the growth mantra of
2021. However it bounced back in the second half and is expected your Bank during this phase revolved around the core themes of
to grow further in fiscal 2022, as the economy picks up. Preserve, Conserve and Innovate.
With the slowdown in economic growth, deposits grew at a The near term focus of your Bank was in creating flexible plans
moderate rate of ~8% in fiscal 2020. The pandemic influenced to deal with the dynamic environment. Analytics and decision
customers to start conserving their money and reduce their engines were continuously used to identify potential risk
private consumption. This reflected in the Year-on-Year deposits areas. Relentless emphasis was given to digital migration and
growth range of 9.5%-12%, April 2020 onwards, despite the digitization of internal processes. Your Bank ensured continuous
declining deposit rates. The FY 2020- 21 saw the deposits traction in relatively higher margin business. With the deposit
growth crossing 10% and register 11.4% Year on Year growth franchise becoming stronger and granular, a tight vigil was kept
(fortnight ended March 26, 2021). Moreover, the liquidity surplus on possible slippages and focus was placed to strengthen the
in the banking system stood at Rs.3.8 Lakh Crore as on March 26, balance sheet. Robust operating performance helped your Bank
2021 and the bank CD’s reduced by over 70.0% on Y-o-Y basis to increase the coverage ratios and set aside higher provisions
on account of such surplus. Time deposits account for 87.7% for what could potentially need a higher requirement with the
of aggregate deposits (88.1% share as on March 27, 2020) and passage of time, should the environment continue to be fraught
grew at a slower pace compared to the demand deposits, which with risks. Despite many disruptions caused by the pandemic,
accounted for the balance 12.3% (11.9% share as on March 27, your Bank continued to grow low-cost deposits as much as gold
2020). loan business. Business banking and retail segments, which are

heavily synchronized with and dependent on physical branches, pursue initiatives, which will enhance the status from Presence
have also started seeing good traction. On the digital end, it was to Prominence in ‘Rest of India’.
a very special year for your Bank as we not only made significant
progress in our digital journey and utilised the digital route to With stability and predictability in performance, best in class
conduct our daily tasks but also made momentous internal liability franchise, improved operating metrics, shift in credit mix
strides. Therefore, from all aspects, your Bank made meaningful towards granular retail , top tier asset quality and robust coverage
progress during the financial year and ticked all the right boxes ratios, your Bank believes that it has now earned the “ Right to
through a strategic, well-thought approach. Grow”. With the right tools and a robust strategy, we aim to scale
up to the next level of growth across all business segments,
Though the pandemic has altered our outlook on certain near and eventually achieve the “Right to Win” in the next three to
term business strategies, your Bank’s commitment to pursue four years. The growth rates will be calibrated to the economic
the credo of becoming the “FIRST CHOICE” Bank for all the realities and emphasis will continue on sustained earnings during
stakeholders remains intact. It is not just confined to business this period. As technology and digital take center stage, your Bank
growth, but spreads across the entire range of attributes that will continue to work towards ensuring customer convenience
concerns a stakeholder, be it products, processes, value creation, and be a front runner in launching various innovations with the
compliance, controls or innovation. Your Bank commands a objective to bring a positive influence in the way of doing business.
prominent leadership position in the Home Market (Kerala). The Committed to compliance and ever-improving risk management
strategy remains to convert this commanding prominence to practices, your Bank is fully poised for high-quality performance
complete dominance. Going forward, your Bank will continue to and growth.
Overview of Performance (Standalone)

Income (` in Crore)
Interest Income Non-Interest Income Total Income
FY 2020-21 13758 FY 2020-21 1945 FY 2020-21 15703
FY 2019-20 13211 FY 2019-20 1931 FY 2019-20 15142
During the financial year, the yield on average advances (gross) stood at 8.75% and the yield on investments (excluding trading gain)
stood at 6.57%. The interest/discount on advances/bills improved to ` 10,795 Crore (March 31, 2021) from ` 10,671 Crore (March 31,
2020), interest on investments improved to ` 2,349 Crore (March 31, 2021) from ` 2,184 Crore (March 31, 2020) and other interest
including interest on balances with RBI / other interbank funds improved to ` 614 Crore (March 31, 2021) from ` 356 Crore (March 31,
2020).The share of interest income of your Bank to total income stood at 88%.
Expenditure (` in Crore)
Interest Paid Operating Expenses Total Expenses
FY 2020-21 8224 FY 2020-21 3692 FY 2020-21 11916
FY 2019-20 8562 FY 2019-20 3376 FY 2019-20 11937
74 Federal Bank

During the financial year, the average cost of deposits of your Bank dropped to 5.00% from 5.88% as on March 31, 2020. The interest paid
on deposit stood at ` 7,805 Crore with YoY drop of 4% and other interest expenses stood at ` 420 Crore with a YoY drop of 9%. The staff
opex increased by 15% and other operating expenses increased by 3% translating to 9% increase in operating expenses.
Operating Performance (` in Crore)

Particulars March 31, 2021 March 31, 2020 Net Profit
Net Interest Income 5,534 4,649
Non-Interest Income 1,945 1,931 FY 2020-21 1590
Net Total Income 7,479 6,580
Operating Expenses 3,692 3,376 FY 2019-20 1543
Operating Profit 3,787 3,205
The net interest income of your Bank registered a robust 19% growth even with the net credit growth of 8%, enabled by the granular
deposit franchise and the improvement of credit profile towards granular retail. During the financial year, your Bank’s spread on advances
(gross) improved to 3.75% and spread on investments (gross) improved to 3.28%. Even with the disruptions caused by the pandemic,
operating profit rose by 18%. Net profit registered 3% growth even with 41% increase in provisions (to improve coverage) excluding tax.
Asset Quality Parameters

Particulars March 31, 2021 March 31, 2020 Gross and Net NPA %
GNPA(` in Crore) 4,602 3,531 1.19
Mar-21
NNPA (` in Crore) 1,569 1,607 3.41
Provision Coverage 65.14 53.39 Mar-20 1.31

Ratio (%) 2.84
Provision Coverage Ratio (%) (Inc TWO) 77.65 72.48 Net NPA % Gross NPA %
Even with the high economic impact of the pandemic, Bank reported almost flattish slippages. The Gross NPA of your Bank as on March
31, 2021 stood at ` 4,602 Crore Gross NPA as a percentage to Gross Advances is at 3.41%. The Net NPA stood at ` 1,569 Crore and
this as a percentage to Net Advances is at 1.19%. The Provision Coverage Ratio (including technical write-offs) stood at 77.65%, an
improvement of 517 bps. Provisions (excl TWO) improved by 1175 bps to reach 65.14%.
Key Ratios
Particulars March 31, 2021 March 31, 2020
CASA Ratio
Return on Average Total Assets 0.85 0.94
Return on Average Equity 10.38 11.10
FY 2020-21 33.81
Cost to Income Ratio 49.36 51.30
Net interest margin 3.16 3.05
FY 2019-20 30.50
Earnings per Share (EPS) ` (Annualised) 7.97 7.76
Book value per share (end period) ` 80.77 72.86
Return on assets and return on equity slightly deteriorated during the year owing to the economic impact of pandemic and stood at
0.85% and 10.38% respectively. Earnings per share improved to ` 7.97 from ` 7.76, while book value per share increased to ` 80.77
from ` 72.86. CASA ratio improved by 331 bps supported by robust traction in savings book and current deposits. Various cost control
initiatives of your Bank helped to bring down the cost to income ratio from 51.30% to 49.36%.

Balance Sheet parameters (` in Crore)
Particulars March 31, 2021 March 31, 2020 % Change
Liabilities
Capital 399 399 0.2
Reserves & surplus 15,724 14,119 11.4
Deposits 172644 152,290 13.4
Borrowings 9,069 10,372 -12.6
Other Liabilities & provisions 3,531 3,458 2.1
Total 201,367 180,638 11.5
Assets
Cash & balances with RBI 7647 6,175 23.8
Balance with Banks & Money at call 11,944 6,400 86.6
Investments 37,186 35,893 3.6
Advances 131,879 122,268 7.9
Fixed Assets 491 480 2.3
Other Assets 12,220 9,423 29.7
Total 201,367 180,638 11.5
Total assets increased by 11.48% to ` 2,01,367 Crore as on March 31, 2021 from ` 1,80,638 Crore on March 31, 2020, driven by 7.86%
growth in net advances, 86.64% increase in the balance with Banks and Money at call and 29.68% increase in other assets.
Deposits (` in Crore)
Particulars March 31, 2021 March 31, 2020 % Change CASA
Customer Deposits 163,609 145,650 12
Certificates of Deposit 5,985 4,449 35 FY 2020-21 58370
Interbank deposits 3,050 2,191 39 FY 2019-20 46450
Total Deposits 172,644 152,290 13
Deposits growth held up well for your Bank during FY 2020-21 with overall deposits increasing by 13% YoY. Retail deposits make up
90% of overall deposits and core deposits constitutes 98% of the total deposits. Retail deposits grew by 14% YoY and NR deposits, which
constitute 39% of total deposit, grew by 12% YoY.
Advances (` in Crore)
Particulars March 31, 2021 March 31, 2020 % Change
Retail Advances 44,910 37,878 19 Net Advances
Business Banking 11,890 10,529 13
Agri Advances 16,076 13,051 23
FY 2020-21 131879
Gold Loans 15,816 9,301 70
Commercial Banking 13,262 11,970 11 FY 2019-20 122268
Corporate Banking 48,738 50,725 -4
Gross Advances 134,877 124,153 9
The overall advances stood at ` 1,34,877 Crore led by a broad based growth (except corporate loans). Retail loans remained one of the
fastest growing segment at 19% YoY growth along with agri advances at 23% YoY. Gold loan growth was sharp at 70% YoY with the loan
book crossing ` 15,000 Crore majorly driven by the branch network. Your Bank further reshaped the credit book; Retail to Wholesale
Ratio improved to 54: 46 from 50:50 (March 2020).
76 Federal Bank

Capital Management (` in Crore) Institutions. This division of your Bank offers customized
Particulars March 31, 2021 March 31, 2020 products and services across working capital, term funding,
Common Equity Tier-1 15,455 14,057 structured finance, cash management, trade finance and forex
Capital management backed by comprehensive electronic banking
Additional Tier-1 Capital 0 0 solutions, which provide easy day to day operations for your
Total Tier-1 Capital 15,455 14,057 Bank’s clients. During FY 2020-21, this business moderated to
Tier-2 Capital 868 1,118 closing total asset of ` 50,910 Crore. The focus of wholesale
Total Capital 16,323 15,175 banking continues to be the preferred banking partner to its
Common Equity Tier-1 13.85 13.29 clients, with a well-designed client selection strategy and a
Ratio (%) robust credit underwriting process. Customer engagement
Total Tier-1 Capital 13.85 13.29 under this division has been further strengthened through tailor
Ratio (%) made and differentiated solutions that caters to the client’s
Tier-2 Capital (%) 0.77 1.06 banking requirements, enabling your Bank to be the preferred
Total Capital Ratio (%) 14.62 14.35 choice for multi-product relationship.
Capital Adequacy Ratio and Tier – 1/ CET - 1 Ratio of your The distribution continues to expand through the Relationship
Bank computed as per Basel III guidelines for the financial year Management structure at numerous locations and touch points,
increased by 27 bps and 56 bps respectively. Increase in profit catering to the entire value chain across business verticals. This
and growth in lower risk weighted assets helped in improving the approach has helped your Bank in tapping various Retail, SME and
CRAR. Capital Adequacy Ratio at 14.62% stood well above the cross-sell opportunities. Most of your Bank’s clients have moved
regulatory minimum requirement of 10.875%, including a Capital to digital platform of the Bank, “Fed E Biz” and all products are
Conservation buffer of 1.875%. being offered and serviced through this platform, in line with the
philosophy of “Digital at the Fore, Human at the Core”.
Opportunities and Threats
The second wave of COVID-19 in the country has led to localised Commercial Banking
restrictions in various states. The financial institutions fear that Commercial Banking division focuses on providing end-to-end
any restrictions placed locally or across the country may hamper financing solutions to Mid-Market and MSMEs. Your Bank’s
the economic progress and lead to economic losses which may offerings in this segment include working capital, term loan, trade
further increase the loan defaults. Already hit by a big wave of finance and advisory services, cash management, supply chain
loan defaults even before the pandemic, the Banks in the country finance, foreign exchange services, structured offerings, gold
cannot afford any more stress in the financial system. If there is metal loan and liability products. Your Bank could leverage upon
a continued surge of COVID-19 cases in the country, it will either its relationship structure, branch network, digital platform and
impact the growth rates of the Banks or impact the credit cost multiple product offerings to add many New to Bank clients as
at varying degrees, based on the nature of the asset book and well as increase its wallet share of business with existing clients.
strength of the Balance Sheet. Going forward, the smaller players During FY 2020-21, this business scaled up further with a closing
in the market may have higher risk of deteriorating credit cost advance position of ` 13,262 Crore as against ` 11,970 Crore in
while with an improving balance sheet and stable asset quality, FY 2019-20. The business continues to have a diversified and
your Bank will have the opportunity to gain further market share granular portfolio in terms of sectors and geography. Your Bank’s
in select segments. A further resurgence of COVID-19 may see focus in Commercial Banking will continue to be the “Bank of First
delayed economic recovery leading to lower ability to leverage Choice” for all its clients.
and consume credit in the corporate segment, as the companies
would restrict borrowings. CV/CE Business
The CV/CE Division finances single unit owners, fleet operators
Business Overview and strategic clients for their purchase of new and used
Corporate and Institutional Banking Commercial Vehicles and Construction Equipments. Your Bank
Corporate and Institutional Banking division offers a commenced this business in FY 2018-19 in the states of Tamil
comprehensive suite of banking products and services, both Nadu and Kerala in view of strong presence in these regions and
locally and overseas. It caters to Large Business Houses and during last two years, gradually expanded the reach to cover
Corporates, MNCs, Capital Market clients, PSUs and Financial Southern and Western India.

During last year, your Bank further consolidated its teams through an automated system, could improve MSME loans by
in business acquisition, credit underwriting and collections. 19% in the SME books and despite de-classification of traders
Despite industry challenges in the form of economic slowdown from MSME, its contribution of MSME to total PSL has improved.
and COVID-19, the division grew by 58% to reach ` 912 Crore
of advances with a good mix of new and used vehicles spread The vertical conducted extensive market study in FY 2020-21,
across different user groups in strategic client segments, while benchmarked the competitive products along with customer
ensuring robust asset quality. Your Bank could on-board a large requirements and introduced new products to keep up with
number of new clients with significant cross sell and fee income the changing market requirements. The products were well
opportunities. It also signed MOUs with Commercial & vehicle appreciated and accepted. Business banking vertical of your Bank
OEMs like Tata Motor, Daimler India and Mahindra Truck & Buses is actively moving towards digitization through implementation
to be a preferred financier for them. and improvisation of various digital channels for quick loan
sanctions.
Government Business
Government Business vertical focuses on providing end to end Retail Banking
solution to the Government departments and entities. With an During FY 2020-21, your Bank could register a growth of 26% in
objective to further augment the liability book and tap the potentials CASA amidst various ongoing issues like the pandemic, recession
of these Government departments and entities in building CASA threats etc. The total deposits grew by 13%. Retail deposits
and Term Deposits, your Bank started this Business in FY 2018- constituted 90% of the total deposit.
19. This vertical of your Bank is managed through Relationship
Managers posted across numerous locations and touch points to The prime focus of your Bank was to on-board new relationships
canvass deposits from Central & State budgetary allocations and through a dedicated team of Relationship Managers, ensuring
Local and State Government offices like Panchayats, Municipalities acquisition of high-value savings accounts and corporate salary
etc. Federal Bank offers bespoke CASA products exclusively accounts, including salary accounts of State/ Central Government
designed to suit the needs of Government & related entities. entities. Your Bank has also leveraged the salary account of
The vertical actively engages with Government Departments to the employees of its commercial / institutional banking clients’
digitalize various operations for the Government functioning. Total in a meaningful way. To equip the younger generation with the
deposits of this vertical grew by 17% on YoY basis. facilities of contactless banking, your Bank has launched a new
Scheme viz. FedFirst Account for Minors.
Business Banking
Business Banking, comprising of business loans up to ` 5 Crore, Your Bank is focusing on more tie-ups with FinTech partners via
mainly to Micro, Small and Medium Enterprises. The segment API and Open Banking programmes, paving the way for greater
registered a growth of 13%, disbursing 11,000+ loans (excluding access to the millennial segment, with special thrust on salaried
GECL and FITL) during FY 2020-21, of which 22% loans were clients. Your Bank is now one among the seven leading banks in the
disbursed to New To Bank customers. country, empanelled by NSE Clearing Limited, for submitting Fixed
Deposit Receipts (FDRs) issued as collateral to clearing members
Business banking vertical focused on granular growth through in electronic form (e-FDRs). Your Bank has also introduced Video
neighbourhood banking and remained one of the high yielding KYC based account opening - Federal 24 7, thereby providing an
portfolios of your Bank in FY 2020-21. While the business vertical easy, convenient, and contactless way to open accounts.
is mainly driven through the traditional strong hold branch
network, Relationship Managers posted at potential centers Your Bank could grow its portfolio size in the Corporate
across the country contributed in bringing good quality fresh Salary segment to ` 1,687 Crore. Thrust was given to deepen
customers to our fold. The DSA arrangement for sourcing from relationships with existing clients of Corporate and Commercial
unexplored markets was initiated in FY 2020-21, for which your Banking and thereby increase the Corporate Salary accounts from
Bank expects to reap results in FY 2021-22. the available universe.
Your Bank actively participated in the implementation of With the added focus on HNI segment, CASA share from HNI
COVID-19 relief measures announced by the Government and segment to Bank’s total CASA improved to 45.25% in FY 2020-21
could disburse an amount of ` 1,128 Crore by way of ECLGS 1.0 as compared to 40.72% in FY 2019-20. Number of HNI profiled
and 2.0. Your Bank, by implementing directive from Ministry of customers has reached 2.45 Lakhs in FY 2020-21, registering a
Finance on classification of MSME based on Udyam certificate 25% Y-o-Y growth in client count.
78 Federal Bank

The launch of a special segment, devoted to High Net worth The Bank registered a business figure of ` 82 Crore in Para
Individuals, was a key feature of the year under review. The Celesta Banking Fee Income with the following initiatives/ outcomes:
segment, designed to cater to the special needs of this segment,
comes with a ‘Celesta’ Savings account (for both Residents and • Bank entered into a strategic tie up with ICICI Securities to
NRs). This account is clubbed with the premium “Celesta” debit offer online trading services to customers
card variant and offers a host of exclusive offerings like family • Bagged ‘IBA Most Innovative Product Award, FY 21’ for
banking program, customized wealth management services and Instant demat, where demat account can be opened in less
personalized offers and benefits including concierge services, dual 2 minutes
RM support etc. The scheme was launched in October 2020 and
has gained much popularity within a short period, adding 6500+ • Improved the penetration of ‘Sovereign Gold Bond’ with
customers. Total Savings Account portfolio of Celesta reached PAN India market share @ 1.11% through sale of 361 Kgs of
` 1,925+ Crore. Gold
• Insurance business has been the largest contributor to
The retail loan book of your Bank grew by 19% reaching ` 44,910 non-banking fee income totalling to ` 66.5 Crore. Your Bank
Crore, forming 33% of the total advances of your Bank. The partnered with Ageas Federal (Life Insurance JV), Max-Bupa,
retail book has seen good traction across all its major products. Bajaj-Allianz, HDFC-Ergo & TATA-AIG (non-life insurance)
Mortgage-backed Housing Loans and Retail Loan against for insurance business and offers an array of insurance
Property (Retail LAP) continue to be the major components of the products which helps in protection & safety against various
retail loan book with a combined share of 65%. During the year, risks. Bank, through this association, has offered various
the housing loan portfolio crossed ` 20,000 Crore, registering a products such as annuity plans, guaranteed wealth plans,
growth of 10% and the auto loan portfolio grew by 12%, crossing hospital cash, medical insurance, credit insurance, travel
` 3,600 Crore in book size. insurance, etc.
Your Bank had also introduced multiple digital capabilities which • Bank obtained Tele marketing licence from IRDA for
includes (a) e-NACH, a self-assisted journey for customers to insurance sales and is now LIVE with 3 insurance partners
register for a mandate that automates collection of EMI, (b) e-Sign, in Tele Sales (HDFC Ergo, IDBI Federal & Max Bupa)
a digital signature process for document execution, (c) e-KYC • With the support and coordination of all the stakeholders,
through Aadhaar Based authentication process (d) online banking your Bank introduced 15 new products in the insurance
statement analysis, etc. All these capabilities are integrated in space in the current financial year
a new loan origination system for Auto Loans and have helped
improve the delivery speed and productivity for the bank. Your Cards and Payment Solutions
Bank had also tied up with auto giants, M/s Maruti Suzuki Your Bank has become the 5th largest private sector bank in the
India Ltd and M/s Hyundai India, to enhance its presence in the country in terms of monthly debit spends. During March 2021,
auto segment. During COVID-19, your Bank had also tightened monthly debit spends of your Bank has reached an all-time high
the credit norms so as to ensure maintenance of quality of its at ` 1,120 Crore. Your Bank has partnered with leading e-com
Retail portfolio. merchants in the country to conduct promotional campaigns.
More than 75+ campaigns have been conducted across leading
Your Bank’s association with WMS (Wealth Management brands like Amazon, Flipkart, Myntra, INOX, BookMyShow, Indigo,
Services) partner M/s Equirus Wealth for FY 2020-21 witnessed Snapdeal, MMT, Big Basket, Swiggy and Reliance Digital. This has
significant boom in business, generating substantial growth in not only helped in enhancing your Bank’s brand presence across
AUM (Assets under Management) and revenue. As part of the leading e-commerce merchants but has also played a key role
business outcome, your Bank has on boarded 5,000+ clients for in increasing spends on debit cards. The number of customers
WMS services in FY 2020-21, adding an incremental AUM of using debit cards for spends on POS and E-Com has increased
` 800+ Crore and revenue of ` 4.70 Crore. Total AUM as on March exponentially.
31, 2021 stands at ` 1,448 Crore. Your Bank is proud to report
that while the Mutual Fund industry reported net negative sales Your Bank expanded the Debit Card EMI (DC EMI) reach to leading
for 8 months in the last FY, your Bank consistently registered a e-com giants including Amazon and Flipkart. Affordability loans of
positive growth in sales during the same period, thereby gaining a more than ` 40 Crore have been disbursed during the FY through
considerable market share. DC EMI, thus establishing consumer finance as a stable business

line contributing to a higher yield of the loan book. The capability In FY 2020-21, in midst of the pandemic, your Bank could on-
is currently made available to the staff members of your Bank and board 13,921 new customers with a total business of around
will be launched to the customers soon. ` 54 Crore through these Business Correspondent tie-ups.
Non- Resident Banking Financial Inclusion

NR franchise like yester years kept the Federal flag flying high The objective of Financial Inclusion is to extend financial services
through growth in portfolio, overseas presence, and digital efforts. to the large unserved population of the country and unlock their
FY 2020-21 was yet another stunning year for the NR portfolio growth potential. It also strives to achieve more inclusive growth
of your Bank, despite the fact that the nation and whole world by making finance available to the poor in particular. Through
were impacted by the pandemic. The NR business of your Bank methods like financial literacy, your Bank is committed to
grew by 12% and NR CASA portfolio grew by 19%. Dominance channelize the savings of the unserved population of the country
in the remittance business with robust remittance engine and and offer new lending avenues to this group.
more than 110 remittance arrangements across the globe will
synergize to further strengthen the NR franchise. Financial Literacy through Rural Branches and Financial
Literacy Centers
To reinforce the Relationship Model for NR business, your Bank Your Bank believes that business exists in the society and any
has launched an exclusive video calling platform “Vmeet” where business requires social sanction for its survival and growth.
Relationship Managers can meet their customers in a virtual Thus, it is crucial for organisations to have a social commitment.
world and provide necessary assistance.
Financial literacy programmes intend to provide basic banking
Personal Inward remittance business crossed the milestone knowledge to people across various walks of life. The financial
figure of ` 1,00,000 Crore this FY and has registered 15% YoY literacy classes are organised and conducted by our branches in
growth as your Bank enjoyed close to 17.5% market share in rural areas to spread financial awareness amongst the masses.
this segment. Your Bank has commenced remittance tie up with Currently 161 rural branches of your Bank are conducting financial
new partners from three new geographies- MoneyGram USA, literacy campaigns for general public and school children in these
Orbit Remit New Zealand, Terra Pay UK, and is in the process areas.
of going live with 7 other remittance partners including two
prominent Banks in UAE and Qatar. Your Bank has launched its Federal Ashwas Financial Literacy Centers (FAFLCs) are your
outward remittance platform –‘Fed e Remit’, which is an easy Bank’s initiative to provide free, unbiased, fair and coordinated
and convenient online outward remittance service offered to financial education through financial literacy classes and credit
Resident Individuals and NRIs holding NRE accounts, to remit counselling and have proved to serve as effective financial literacy
funds from India. and credit counselling centers in rural and semi urban areas.
The centers aim to create awareness and educate the targeted
Given the opportunities and potential of NRI business segment, segments including farmers, micro & small entrepreneurs, self-
we expect it to continue serving as a key growth engine for your help groups, senior citizens and school children about products
Bank in the coming years. from various banks, thus benefitting the entire industry. Other
than this, the FLCs also organise ‘Going Digital’ camps for the
Micro and Rural Banking rural populace.
Micro lending through Business Correspondents (BCs)
Reaching the unbanked to bring them under the financial umbrella During the financial year ended March 31, 2021, due to COVID-19
has always been the priority of your Bank which is being effectively pandemic and consequent lock downs, only a few physical literacy
driven through its various financial inclusion programmes under classes could be conducted by the FLCs. However, online classes/
Branch and Business Correspondent (BC) channel. session on financial literacy were conducted, wherever possible.
Block Level Bankers’ Committee (BLBC), District Level Review
As permitted by RBI and in compliance with Bank’s Board Committee (DLRC) and other meeting were also conducted by the
approved policy on engaging Business Correspondents, your lead bank through online Video Conference. Around 609 literacy
Bank has a network of three Business Correspondents across camps (including 311 online sessions) and 332 counselling sessions
selected geographies, exclusively for sourcing and servicing of (including Tele counselling) were undertaken by these centers
Micro lending portfolio. during the FY 2020-21, benefitting more than 18,000 people.
80 Federal Bank

Your Bank participated in the Financial Literacy Week (FLW) general public for death or disability due to accident and for death
observed by RBI during February 08 to 12, 2021 across the due to any reason respectively. Atal Pension Yojana (APY) is the
country. The theme was “Developing Credit discipline and Government backed pension scheme provided to unorganised
encourage availing credit from formal financial institutions as per sector.
requirement” and the focus was on the following topics, with a
view to improve credit and reduce NPAs: Your Bank could help 411 families of our deceased customers
who joined the low cost insurance schemes (PMJJBY and PMSBY)
• Timely Repayment & Credit Score by settling claims amounting to ` 821 Lakhs.
• Borrowing from Formal Institutions only

In July 2020, your Bank implemented PM Street Vendor’s
• Responsible Borrowing Atmanirbhar Nidhi (PM SVA Nidhi) scheme, announced by
Ministry of Housing and Urban Affairs, Govt. of India (MoHUA),
During the financial literacy week, your Bank conducted the to address the challenges faced by street vendors in the light of
following activities: COVID-19 pandemic and consequent lockdown. The Scheme is
available to all street vendors engaged in vending in urban areas
• Branches displayed posters on FLW theme at prominent as on or before March 24, 2020. The vendors from rural or peri-
places within the branch premises and distributed FLW urban areas vending in the geographical limit of the Urban Local
leaflets to customers Bodies (ULBs) are eligible for an amount up to ` 10,000/- (without
• Displayed the FLW message on home page of your Bank’s any collateral security) to be repaid in 12 months as EMI, wherein
website in English and Hindi MoHUA will provide subsidy @ 7% per annum to the beneficiaries
on prompt repayment of the loan.
• Financial Literacy Centers (FLCs) of your Bank conducted
special camps on each day of the FLW, while focusing on the Your Bank also participated in Pradhan Mantri Garib Kalyan
key theme Yojana (PMGKY) scheme, a special package to women PMJDY
account holders, announced by Govt. of India in the light of
Your Bank offers Pradhan Mantri Jan Dhan Yojna (PMJDY) COVID-19 pandemic. Beneficiaries under the scheme have been
accounts to the general public with an overdraft (OD) facility to centrally credited an amount of Rs 500 each for the months of
eligible cases (mainly to weaker section & low income household April- June, 2020. The amount was credited to the beneficiaries
groups), with OD facility of up to ` 10,000/- to eligible customers, account immediately on receipt of the fund from Govt. of India.
with an objective to ensure access to financial services, namely As advised by DFS, Ministry of Finance, your Bank also sent SMS
savings & deposit accounts, remittance, credit, insurance, communication to the beneficiary account holders in English and
pension in an affordable manner. In FY 2019-20, Ministry of in local languages, before and after the credit of amount each
Finance, Government of India announced the continuation of month.
Comprehensive Financial Inclusion Mission (Pradhan Mantri Jan
DhanYojana – PMJDY) with change in focus of opening accounts Your Bank has implemented MUDRA – Shishu Interest
from ‘every household’ to ‘every adult’. The main attraction of Subvention Scheme which provides a 2% Interest subsidy
the scheme is zero-balance bank account with RuPay debit card on prompt repayment of Shishu loans under Pradhan Mantri
and with free accidental insurance cover of Rs. 2 Lakhs. Till date, Mudra Yojana (PMMY) for a period of 12 months. PMMY was
your Bank has opened more than 6.21 Lakhs accounts with an announced by the Ministry of Finance, Govt. of India to aid the
outstanding balance of ` 316.22 Crore. The average balance in micro enterprise business segment. SIDBI is the administrative
PMJDY accounts as on March 31, 2021 is ` 5,094/- . agency for the program. The interest subvention amount
received from SIDBI is credited to eligible PMMY Shishu loan
Aadhaar and mobile seeding in PMJDY accounts with your Bank accounts.
is 83% and 96.5% respectively as on March 31, 2021.
Your Bank has implemented Chief Minister’s Helping Hand
Your Bank is also actively participating in the PM’s social security Loan Scheme (CMHLS), launched by Govt. of Kerala to self-
schemes (Pradhan Mantri Suraksha Bima Yojana (PMSBY), help Neighbour Hood Groups of M/s Kudumbashree Mission
Pradhan Mantri Jeevan Jyoti Bima Yojana(PMJJBY) and Atal and provides immediate financial support in view of COVID-19
Pension Yojana) launched by the Government of India. The PMSBY outbreak, continued lock down and related hardships faced by
and PMJJBY schemes provide low cost insurance benefits to the people working in the unorganised sector.

Considering the widespread havoc caused by the pandemic, deployed across the network to cater to farmer clients of various
Government of India had announced the Emergency Credit Line genres. Agricultural advances of your Bank has registered a
Guarantee Scheme to revamp the MSMEs/Business Enterprises. remarkable growth of 23% in FY 2020-21 despite all odds and
The scheme provides 100% guarantee coverage by NCGTC stood at ` 16,076 Crore as on March 31, 2021 against the base
(National Credit Guarantee Trustee Company Limited). Your figure of ` 13,051 Crore. Your Bank is committed to remain a
Bank implemented the scheme and the benefits have also been perfect partner and a dominant player in agri financing portfolio
extended to PMMY loan account holders. The Scheme is offered in the years to come.
as a pre-approved program and the eligible borrowers were
informed through central SMS/ email campaigns. Your Bank also focussed on providing gold loans to borrowers
as an easy source of finance to the needy with quick turnaround
Your Bank has implemented the following process refinement/ time. The Gold Loan segment is one of the major sectors that have
improvements in FY 2020-21 for operational convenience: registered impressive growth during the pandemic. Gold Loan
advances registered a record growth of ` 6,515 Crore, 70 %, from
• Automation of PMMY Working Capital Limit Renewal: As
the base figure of ` 9,301 Crore to ` 15,816 Crore in the FY 2020-
a part of process improvement, your Bank has introduced
21. Various new Gold Loan schemes like KCC gold were specifically
automation of renewal process of working capital limits
offered to the customers to tide over difficult times. Tailor-made
under PMMY (MUDRA) scheme through BPM portal. The
schemes such as Agricultural Gold Loans, Business Gold Loans,
process is auto initiated in BPM Portal, one month prior
Overdraft Loans, EMI Gold Loans and Bullet Repayment Loans to
to the expiry date of the loan, and is made available to the
suit the needs of various sections of the society were deployed.
branches for a period of up to 90 days from the due date.
Your Bank also launched digitally-powered doorstep Gold Loan
The process enables branches to renew OD/CC limits of a
services in association with a Fintech company, to enhance the
borrower in a quicker and hassle free manner.
ease of availing such loans.
• Implemented Inter-bank shifting of APY account: Through
this initiative, the Atal Pension Yojana subscribers can Integrated Treasury Operations
shift their APY account from one bank to another, without Your Bank’s treasury operations involve Balance Sheet
redemption of unit & reinvesting. Management, Liquidity Management, maintenance of Statutory
• Upgrade or Downgrade of APY Pension amount throughout Reserve Requirements, trading in Money Market Instruments,
the year- In order to provide flexibility, as per the direction Bonds and Debentures, Equity, Alternate Investment Instruments
from PFRDA, your Bank has implemented a facility which and Foreign Exchange. The Treasury & Forex dealing room is
allows APY subscribers to upgrade or downgrade their APY located in Mumbai and your Bank has dedicated and full-fledged
pension amount throughout the year instead of restricting it dealing desks in the major segments namely; Foreign Exchange-
to the month of April every year. Interbank and Merchant Forex, Derivatives-Currency Options /
Cross Currency Swaps (on back to back basis), Currency Futures,
Agri Banking Interest Rate Futures. Domestic - Money Market, Government
Agriculture, with its allied sectors, is unquestionably the largest Securities, Bonds and Debentures, Certificates of Deposit,
livelihood provider in India, more so in the vast rural areas, even Commercial Paper, Interest Rate Swaps and Equity. Your Bank is
during this pandemic. It continues to contribute a significant also providing a web-based trading platform and intraday trading
figure to the Gross Domestic Product. Sustainable agriculture, in facilities to clients in the G-Sec segment. The front office activities
terms of food security, rural employment, and environmentally are further being augmented by a robust Front Office System
sustainable technologies such as soil conservation, sustainable which efficiently captures all the front end dealings of the Bank.
natural resource management and biodiversity protection, are This ensures total automation of the treasury activities and its
essential for holistic rural development. The increased presence seamless integration with your Bank’s core banking system.
of the Bank’s branches in rural and semi-urban areas provides
a great opportunity to your Bank for improving its exposure to Foreign Exchange Business
Agriculture and Priority sector. Our unique set of products and Foreign Exchange Business of your Bank has taken a leap in the
competitive customer service enabled the Bank to meet farmer past 3 years and the entire business model has been revamped
demands for better credit delivery and serve as their perfect to focus on the distribution of Forex and Interest Rate products,
banking partner during difficult times. High-calibre workforce oriented towards the hedging needs of the clients. The Treasury
of Development Officers and Agri Relationship Managers are Sales Team, with its taskforce of 23 members spread across the
82 Federal Bank

country, is offering these hedging products to the Bank’s clients. extend timely and efficient service to forex clients and improve
The team works closely with all the Relationship Managers of the effectiveness of the branches. Your Bank has introduced the
Bank, covering the Large Corporate, SME and Retail segment of concept of Trade Hubs/Corporate Client Service Centers in all
clients, for its Forex and Interest Rate product offerings. Seamless metro cities and other major centers to bring more efficiency
co-ordination between the Treasury Sales team spread across in handling trade transactions. SWIFT operations are also
various centers and the team at the dealing room in Mumbai centralized to ensure speed and reliability. Presently, all financial
has resulted in enhanced distribution of these products to the messages in SWIFT are generated only through Straight Through
customers. With the Derivatives Desk fully active this year, your Process (STP), whereby contents of such messages flow directly
Bank has significantly expanded its Treasury product basket, from the accounting system (Core Banking Solutions) to SWIFT
thereby adding a new revenue line. Besides adding a diversified platform without any manual intervention. In the trade finance
revenue stream, this has significantly added value to the existing segment, export credit facilities are provided in both rupee and
customer relationships. The extensive usage of data analytics in foreign currency for pre-shipment and post-shipment activities
understanding customer business has also helped the Bank in of the exporters. Non-fund based facilities, such as letter of
increasing the Forex business through its branches. credit, stand by letter of credit (SBLC), guarantees etc., including
various structured products are also extended by your Bank.
Your Bank conducted regular one-on-one meetings with
exporters/ importers at the zonal level to strengthen relationships, Federal Bank – IFSC Banking Unit (IBU)
assess the financial position of units, support additional credit Your Bank opened its IFSC Banking Unit (IBU) at India’s first
requirements and acquire new relationships. Your Bank is closely International Financial Service Center (IFSC) located at GIFT City
associated with various trade bodies/ associations including (Gandhinagar, Gujarat) in November 2015. IFSC in GIFT City is
Federation of Indian Exporters Organisations (FIEO), Engineering conceptualized and designed at par with other global financial
Export Promotion Council (EEPC) etc. for deepening relationships centers operating in various parts of the world viz. Hong Kong,
with exporter/importer communities and offering them apt Dubai, Singapore etc. The branch is like an overseas branch
guidance. situated in an overseas jurisdiction, enabling your Bank to
explore International business opportunities. IBU is regulated by
Your Bank has a dedicated Foreign Exchange Cell at Mumbai,
International Financial Services Centers Authority (IFSCA) with
catering to all the requirements of the clients / branches with
effect from October 01, 2020, who is the uniform regulator for all
respect to foreign exchange, trade finance, FDI/ODI/ECB and
financial institutions, including Banks in the IFSC.
cross border transactions. The Bank has been giving thrust to
the development of forex business and is continuously working
Various products offered and activities handled from the Federal
to improve the operating skills of relevant personnel through
Bank IBU are:
meetings, interactions and training programmes. Your Bank is
also on the forefront of conducting Foreign Exchange Dealers • Credit facilities to Wholly Owned Subsidiaries (WOS))/Joint
Association of India (FEDAI) training programmes for the banking Ventures (JV) of Indian companies registered abroad
fraternity. This enables the designated branches to improve their • Credit facilities to overseas companies
operating efficiency substantially. Further, your Bank periodically
• Retail Lending to Qualified Individuals
updates and codifies the RBI/ FEDAI instructions applicable for
forex business in form of comprehensive directions/ circulars/ • External Commercial Borrowings (ECB)
handbooks for the benefit of its operating staff. • Trade Finance Products
Your Bank has published a citizen charter for forex facilities and • Non-fund based facilities (Standby Letter of Credit/Bank
publishes the exchange rates of various currencies on a daily Guarantee etc.)
basis on the Bank’s website for the benefit of public. Your Bank is • Acceptance of foreign currency deposits
now a member of the Managing Committee of FEDAI.
• Treasury operations
Foreign exchange business of your Bank is conducted through With the opening of IBU, your Bank caters to both domestic and
two ‘A’ category branches and eighty eight (88) ‘B’ category international clients for their various funded and non-funded
branches/ offices and the IFSC Banking Unit (IBU) Branch in investment requirements at multiple jurisdictions. IBU boosts the
GIFT City (Gujarat International Financial Tec City). The entire balance sheet of your Bank by empowering it to extend various
foreign exchange / trade finance transactions are centralised to foreign currency loans to eligible entities as well as qualified

Individuals across different foreign jurisdictions. Your Bank also first Bank in India to do so. The development and deployment of
participates and extends facility in foreign syndicated Loans to Feddy is a farsighted step taken by your Bank, considering the
large corporates. It also extends facilities like External Commercial importance that AI is gaining in the digital world.
Borrowing (ECBs), Trade Credit facilities etc to resident entities.
Federal Bank IBU has executed transactions in various segments Getting more number of customers activated across Digital
like manufacturing, metals, media & entertainment, health care, Channels has been one of the key metrics of your Bank for the
electrical, food, construction, retail etc. past 4 years and Mobile Banking was identified as one of the
most important channel for achieving this mission. Considering
Digital & Technology the impact that can be created by the JAM trinity (Jandhan,
Digital today has become a basic hygiene to be adopted by every Aadhaar and Mobile), your Bank has invested in enhancing
industry in the world. A revolution in digital technology has been the Mobile Banking platform and has launched a state of the
triggered by the spread of the pandemic, making it essential for art Mobile Banking application, an upgrade to FedMobile. This
survival in the changed socio-economic environment, forcing revamped version of FedMobile– Federal Bank’s highly popular
most industries to undergo a tremendous digital transformation. mobile banking application - comes with more user-friendly and
advanced features than its predecessor, ensuring a richer and
Your Bank has always been a change leader in the industry. more pleasant experience for its users. Your Bank has combined
Products like FedBook and Selfie app to open accounts are Mobile Banking, FedBook and BHIM UPI into a single application,
testimony of your Bank’s inclination towards digital innovation. and along with that, added a host of new features and services to
Today, a prospective customer of your Bank can open a full- make it a one stop shop for all your banking needs. Enriched with
fledged account in less than 5 minutes, using the Video KYC new banking and payment features, this version of the app is a
services, facilitated by e-KYC services of UIDAI and the new complete package, which enables users to access and manage
regulations allowing the usage of Video calling service for their accounts from anywhere, anytime and enables them to
completing customer due diligence. The technology enables them undertake banking as well as non-banking transactions.
to open accounts as per their preferred scheme from the comfort
of their office or any other Indian location. Bank as a new age digital platform
Over the year under review, your Bank continued to focus on
With the pandemic came the need for social distancing in empowering customers with digital products and services to
branches. Thus your Bank launched FedSwagat, an application ensure uninterrupted banking services. Starting with customer
that allows customers to book their appointments with their on-boarding through an instant account opening platform to
preferred branch at their preferred date and time. Along with Tab Banking and Selfie Mobile app, your Bank is ensuring digital
this, your Bank also launched a video conferencing solution for services at all touch points. On March 31, 2021, nearly 90%
Non-Resident customers, which helps them to connect with their of all eligible savings accounts were opened digitally, thereby,
Relationship Manager/Branch Manager face to face and remotely. ensuring ultimate customer satisfaction and cost savings for
This assisted many clients who were unable to come to India due your Bank.
to travel restrictions imposed under the lockdown.
Your Bank’s digital platforms like FedNet, Lotza and FedBook for
Your Bank has always been a step ahead with respect to retail customers and FedCorp, Corporate FedNet, Paylite and Fed
facilitating emergency services. Towards this end, it launched a e-Biz for its corporate and SME customers underwent a series
solution that digitally enabled its customers to avail Guaranteed of updates and enhancements to improve customer experience
Emergency Credit Line (GECL) loans in less than 3 minutes. and security. As on March 31, 2021, around 86% of your Bank’s
transactions were handled through its digital platforms. Around
Ensuring instant and effective customer service has also been 92% of the retail individual transactions happened through Digital
a critical factor during the pandemic as several locations were Channels, especially Mobile Banking, which accounted for 70% of
locked down and the customer service centers ran on limited all transactions.
resources. Keeping the situation in view, your Bank launched
an Artificial Intelligence (AI) based Personal Assistant ‘Feddy’ In continuation of the digital journey, your Bank has also pioneered
to provide suitable answers to customer queries. Feddy was the use of Tab Banking in the sourcing of Auto Loans. The solution,
made available to the customers through your Bank’s Website, GoNoGo, is designed for simplicity and speed and is used at the
Whatsapp, Amazon Alexa & Google Assistant. Later, your Bank point of sale (i.e. the car dealer’s location) to facilitate the approval
integrated Feddy in Google Business Messaging and became the and opening of car loans.
84 Federal Bank

Open Banking shapes a new business and system architecture 1. Fed-e-Remit: Fed-e-Remit is a digital platform for Outward
Your Bank started investing in Open Banking since 2017, and Remittances. The outward remittance from India is growing
today, Federal Bank is recognised as a strong player in API Banking heavily and under LRS, the projected outflow is around
with more than 83 APIs and 13 API bundles and 100+ partners USD 18 Bn. Your Bank has launched an end-to-end online
connected to the platform. The open banking platform is a plug platform through which the customers can send money in
and play one where partners can look at the APIs and make best all major currencies under LRS, in a completely digital and
use of the Sandbox and documentation to build suitable products paperless manner.
that they want to roll out.
2. Branded contactless POS terminals: Your Bank launched
Fostering new Partnerships in the Open Banking Era its own branded POS terminals with unique design and
Your Bank has partnered with many Fintechs in the country where multiple features like Amazon Pay, Credit Card EMI, and Tap
the Fintechs make use of the technology capability and business and Pay facility at very competitive rates.
knowhow of the Banks while contributing their share by bringing 3. FedSwagat: This is an appointment booking platform for
in innovation and enabling a better customer experience. A few customers, first in the industry, where customers can pre-
partnerships that commenced in FY 2020-21 are: book appointments with a preferred branch for a preferred
service. This is aimed at providing safe and convenient
1. BharatPe: A Fintech that provides a unified QR for merchant banking services without any queues.
establishments. As on March 31, 2021, BharatPe has on
boarded 37.66 Lakhs merchants on Federal Bank’s UPI 4. Video KYC: In the pandemic-driven situation, people no
platform with 4.88 Crore transactions made by customers at longer prefer to visit a branch to open an account with their
these merchant locations through Federal Bank. Your Bank is preferred Bank. With the intention of allowing prospective
Bharatpe’s number one partner bank as on March 31, 2021. customers to open accounts from anywhere in India,
your Bank launched Federal 24 7, where they can start a
2. DIgiVirdhi Technologies: Federal Bank has partnered with
relationship, with a combination of Aadhaar based e-KYC
M/S Digivridhi Technologies (DGV) for automating payments
and Video KYC, in under three minutes. The state of the
in the GCMMF (Amul) milk collection ecosystem. M/S DGV
art facility make use of Advanced Artificial Intelligence
has integrated with Federal Bank to provide Micro ATM
capabilities, face recognition & geo tagging, using a video
services, end to end digital payments and settlement
call, to open an account on all days of the year.
services for the milk societies who are members of GCMMF
ecosystem. The partnership is in a Closed User Group Mode 5. vMeet: It is a Video conferencing application where
with just one Milk Society and a group of farmers in the customers can request for video calls with their respective
current Fiscal while a formal launch is expected to happen RMs/Branch Managers and video chat with them. They can
in Q1 of FY 2021-22. The project is expected to reach 36 get remote investment advices as well as support through
Lakhs farmers in Gujarat once fully implemented. The this channel. This facility helps NRI customers, who are
project aims to reduce cash in the economy and promote facing travel restrictions, to enjoy face to face video chat
digital payments amongst the farmer community. with the Bank officials.
3. EPIFI: EPFIFI is a neo-banking platform that aims at providing 6. Federal Bank Cash Points: All our POS terminals feature
hyper-personalised and frictionless savings and investment withdrawal of cash facility enabling people to withdraw
services to salaried millennials and working professionals. cash through these terminals. This helps our customers to
The partnership rides on the Open Banking capabilities of withdraw small amount of cash from merchant locations
your Bank and helps acquisition of new customers for the without having to visiting any branch or ATM and at the same
Bank through the EPIFI mobile banking application. The time helps our Merchants to effectively recycle their cash.
project is currently under a Closed User Group mode for Merchants can subscribe for these services free of cost.
friends and family and is expected to launch in the first
month of FY 2021-22 to one Lakh plus customers, who are 7. Amazon Pay in POS terminal: The millennial customers
already in the waitlist. prefer convenience in payments. To promote safe and secure
transactions, your Bank collaborated with Amazon Pay and
Major Launches in FY 2020-21 integrated the facility in its POS terminals. This facilitates
The Bank launched many initiatives during the year. Few of them consumers to make contactless payments at merchant
are mentioned as below- locations without the need for a debit card.

8. Mini Digital Bank: Making the whole gamut of financial training of a BOT to create an algorithm that can surface
services available to customers 24 x 7 is an endeavour of any the most relevant information for any given context. Given
player in BFSI. We have thus launched our Mini Digital Bank, the combination of human touch along with cutting edge
a completely new Mobile Banking package- FedMobile. The machine learning, our assistant can answer questions with
new app provides a complete banking experience to our an incredible level of accuracy.
existing as well as prospective customers, starting from On
Digital Adoption & Merchant Acquisition
boarding, Payments, Investments, Loans, Account services,
The digital share of transactions of your Bank crossed 85% for
Life Style services, UPI & FedBook .The app is a one-stop
the Fiscal Year, of which Corporate Digital share of the Bank
shop for every need of the customer and has eliminated the
reached 73.50%. 92% transactions done by the Retail customers
need for multiple applications.
were through digital channels. The total number of digital users
9. Feddy, our personal assistant: Your Bank launched a of your Bank stood at 27.83 Lakhs at the end of Fiscal Year. The
personal assistant ‘Feddy’ to guide its customers through total number of merchants reached 37.66 Lakhs at the end of
their queries. Our approach goes beyond the usual Q&A the year.
100 86.07% 87.00%

85.52% 85.36%
86.00%
80 85.00%
81.90% 69.36 76.76 84.00%
82.64%
60 50.7 50.64 59.81 83.00%
10.65 11.19 10.12 11.22 13.16 82.00%
40 81.00%
Mar-20 Jun-20 Sep-20 Dec-20 Mar-21
Transactions through Branch (Lakhs) Transactions through Digital Channels (Lakhs) Digital Share
The digital users grew by 21% YOY and the monthly Mobile department ensures sufficiency and protection of underlying
Banking volumes crossed ` 10,000 Crore mark during the Fiscal assets, and also ensure that the securities are updated and re-
Year to reach ` 10,645 Crore as on March 31, 2021. valued at regular intervals. Further, the department constantly
endeavours to ensure an excellent turnaround time.
MeitY Score Card
Your Bank is ranked 2nd in the DIGIDHAN dahsboard published by The preservation of asset quality is of paramount importance
Meity as on Januray 2021 and is ranked number 1 in the category for your Bank and the Credit Monitoring Department deploys
specific score card. Your Bank has achieved the target given by various tools to closely monitor the credit health of the portfolio
MeitY for digital transactions and merchant acquisition. on an ongoing basis. The department has put in place defined
systems, procedures and practices, and developed various
Credit Health Management tools for gathering and analysing data from internal as well
Credit Administration Department ensures the health of credit as external sources. To stay sharp and relevant in the dynamic
portfolio (i.e. borrowers with aggregate exposure of ` 2 Crore and socio-economic environment, your Bank’s Credit Monitoring
above) through meticulous compliance of pre and post-disbursal Department is continuously upgrading the tools.
covenants of credit sanctions and error free documentation. The
department prepares the documents as per sanction terms, Identifying stress during the nascent stage and initiating prompt
verifies the executed documents once they are submitted for corrective actions based on the data analysis forms the crux of
setting up of limit, and ensures creation of charge and perfection credit health management process. Thus, stressed situations
of securities within the stipulated timeframe. The department are identified well in advance and corrective action plans are
also ensures regular follow-up of compliance with covenants implemented wherever required. Asset quality and credit
required by the credit policy and the Sanction Order. Further, the discipline with compliance culture on an ongoing basis is ensured
86 Federal Bank

by the Bank through an end-to-end monitoring process by the • Integrated Risk Management Department headed by a Chief
Credit Monitoring Department. Risk Officer coordinates various risk management functions
of your Bank
Stressed Asset Management
• An independent risk governance structure has been put in
Gross NPA as a percentage of Gross Advances of the Bank stood
place, duly ensuring independence of risk measurement,
at 3.41% and Net NPA as a percentage of Net Advances of the
monitoring and control functions
Bank stood at 1.19%. The Provision Coverage Ratio (including
technical write offs) stood at a healthy 77.65%. The risk management framework is subjected to review and
up-gradation on an ongoing basis, in tune with regulatory
Your Bank constantly improves its collection and recovery guidelines and best practices in the industry. In order to focus
architecture to improve its asset quality. It also uses various on maximization of return on capital, your Bank has aligned its
analytics tools to predict the propensity to default and business strategies to a Risk Appetite Framework. A risk-based
collection score of the borrowers. Collection strategies are pricing framework has thus been implemented for pricing of loans
formed based on these analytics driven reports. Your Bank to evaluate returns vis-a- vis risks taken.
has rolled out an end-to-end digital platform for settlement of
low ticket loans, which resonates with its ‘Digital at the Fore’ Credit Risk Management
philosophy. Macro factors such as slowdown in economic growth, imbalances
in the economy, stress in certain industries etc and micro level
Your Bank has utilised the relief packages provided by Reserve factors such as poor underwriting standards, inadequate
Bank of India, such as COVID Resolution and Moratorium, as a monitoring, weak collection and recovery mechanism etc are a
customer engagement program, where the impacted customers few elements that contribute to the credit risk of a Bank.
were provided with viable solutions to tide over their temporary
financial difficulties. Your Bank strengthened the collection Your Bank has a centralized credit risk management division
mechanism through increased team strength and improved independent of its business functions. It has strong credit
partnerships. Enhanced use of digital tools and analytics has also appraisal and risk management practices in place for identification,
helped your Bank to maintain one of the industry best collection measurement, monitoring and controlling credit risk. Further, your
efficiency, despite the challenges faced by the COVID-19 Bank has a distinct credit risk architecture, policies, processes and
pandemic. systems for managing credit risk in both its retail and wholesale
businesses. Wholesale lending is managed on an individual as
Risk Management well as portfolio basis. In comparison, retail lending, due to the
The Risk Management philosophy of your Bank is to take risk by granularity of individual exposures, is managed largely on a
choice rather than by chance. Your Bank seeks to build scalable portfolio basis across various products and customer segments.
and resilient businesses while operating within the guardrails of For both categories, there are robust follow up and monitoring
risk management. Your Bank is exposed to various risks that are mechanisms in place to ensure credit quality and minimise
inherent to any banking business. The major risks are credit risk, defaults. The factors considered while sanctioning retail loans
market risk including interest rate risk and liquidity risk, information include income, demographics, employment, credit history of the
and cyber security risk and other operational risks. Your Bank has borrower and tenor of the loan. In wholesale loans, credit risk
a robust risk management framework in place, which covers the is managed by capping exposures on the basis of the borrower
policies, procedures, methodologies and framework established group, industry, credit rating grades and geography, amongst
to systematically manage the material risks. others.
• The Board of Directors oversee and approve the risk policies Your Bank follows a policy of portfolio diversification and
and strategies to establish an integrated risk management evaluates its total financing exposure to a particular industry
framework and control system in your Bank in the light of its growth forecast and profitability. Your Bank’s
Credit Risk division monitors all major sectors of the economy
• The Risk Management Committee (RMC) of the Board
and specifically tracks industries in which the Bank has credit
oversees the management of various risks associated with
exposures. Your Bank also has a framework for managing
business, systems and processes
concentration risk with respect to single borrower and group
• Executive Level Committees ensure effective implementation exposures, based on the internal rating and track record of the
of risk policies of credit, market and operational risks borrowers. The exposure limits for lower-rated borrowers and

groups are substantially lower than the regulatory limits. Your fall due, without incurring unacceptable losses. Your Bank
Bank is continuously reviewing and validating the credit rating monitors Liquidity Risk through Liquidity Coverage Ratio
models / score cards for its appropriateness and predictiveness. (LCR), Structural Liquidity Gaps, Dynamic Liquidity monitoring,
Credit risk management in your Bank, through its various policies, Liquidity Ratio analysis, prudential limits for negative gaps in
risk assessing tools and risk mitigating measures, ensures robust various time buckets etc.
credit growth with superior asset quality.
Interest rate risk is the risk where changes in market interest rates
During challenging periods, like the current one triggered by the affect the Bank’s earnings through changes in its Net Interest
pandemic, where the economic activities become highly dynamic Income (NII) and the market value of equity through changes in
and volatile, your Bank conducts continuous stress testing of the the economic value of its interest rate sensitive assets, liabilities
portfolios and ensures necessary remedial actions. and off-balance sheet positions. Interest Rate Risk on Trading
Portfolios is monitored through Market Risk Measurement tools
Currently, credit risk capital is computed using the standardized such as, VaR, PV01 etc on a daily basis.
approach. RBI guidelines on Basel III capital regulations have been
implemented and your Bank is sufficiently capitalized as per the The policy frameworks for management of liquidity risk and
current requirements under Basel III. interest rate risk are established vide the Bank’s Asset Liability
Management policy. Your Bank has established appropriate risk
Market Risk Management appetite limits and other tolerance limits for both liquidity risk and
Market Risk arises largely from the Bank’s statutory reserve interest rate risk. While the maturity gap and stock ratio limits
management and trading activity in interest rate instruments, help manage liquidity risk in your Bank, regular assessment of
equity and forex market. Your Bank has well-developed its impact on the NII and economic value help mitigate interest
framework, comprising of Board approved policies and established rate risk. This is complemented by a stress testing programme
practices, for management of the market risk. Your Bank has set covering both liquidity and interest rate risk. Your Bank conducts
risk appetite and Value at Risk (VaR) limits to measure and control various studies to assess the behavioural pattern of non-
interest rate risk, equity price risk, forex risk, liquidity risk and other contractual assets and liabilities and embedded options available
market related risks. Your Bank is using various tools like stress to customers, which are used while managing maturity gaps.
testing, modified duration, PVBP, VaR, position limits, loss limits, Further, your Bank also has necessary framework in place
NOOP limit, AGL etc to monitor and contain market risk. It has to manage intraday liquidity risk. Your Bank’s Asset Liability
established an independent Mid Office at the floor of Treasury, as Management Committee (ALCO) is responsible for monitoring its
part of Market Risk Division, which reports directly to the Head of adherence to liquidity risk and interest rate risk limits.
the Risk Department and functions as the risk control unit for the
treasury activities. Your Bank’s Market Risk Management division Liquidity Coverage Ratio (LCR), a global standard to assess
monitors key parameters on a periodic basis and recommends organisation’s ability to meet its payment obligations, is used
changes in policies, processes and methodologies. The Mid Office as a measure to assess your Bank’s liquidity position. LCR level
scrutinizes the treasury deals and transactions from both market ensures that the Bank has an adequate stock of unencumbered
risk and operational risk perspectives. Your Bank has put in place High Quality Liquid Assets (HQLA) that can be converted into cash
detailed policies for the conduct of business exposed to market easily and immediately to meet its liquidity needs under a 30 day
risk and for effective management of all market risk exposures. calendar liquidity stress scenario. Based on Basel III norms, RBI
The policies and practices also take care of monitoring and has mandated a minimum LCR of 100% from January 1, 2019.
controlling of liquidity risk arising out of its banking book, trading Your Bank’s LCR as on March 31, 2021 stood at 211.74% and the
book and off-balance sheet exposures. average LCR was at 241.64% for the quarter ended March 31,
2021.
Currently, capital charge for market risk is computed under the
Standardized Duration Approach. Value at Risk (VaR) is the tool RBI has also mandated minimum Net Stable Funding Ratio (NSFR)
used for monitoring risk in Bank’s trading portfolio. The VaR and of 100% with effect from October 01, 2021. NSFR indicates
Stressed VaR for market portfolios are monitored daily. that the Bank maintains a stable funding profile in relation to
the composition of its assets and off-balance sheet activities.
Liquidity Risk Management & Interest Rate Risk Management As a prudent risk management practice, your Bank has been
Liquidity risk is the potential inability to fund increase in monitoring this ratio, and is adequately prepared to meet the RBI
assets, decrease in liabilities or meet obligations as they mandated requirements.
88 Federal Bank

Operational Risk Management Internal Financial Controls
Your Bank has a comprehensive framework comprising of Your Bank has put in place a comprehensive internal control
policies, processes and systems for measurement and framework which is supplemented with appropriate procedures
management of operational risks. Operational risk is primarily across all its business and support activities. The internal controls
managed by prescribing adequate controls and mitigation implemented are intended to manage/ mitigate the risks, ensure
measures, which are being reviewed and updated on a regular compliance with laws and regulations, and provide reliable and
basis, to suit the changes in business practices, structure and timely financial reporting.
risk profile. Your Bank is identifying and assessing operational
Your Bank has sound processes for periodic assessment and
risk through Risk and Control Self Assessments (RCSA) and
review of internal controls. Risk Control Matrices are prepared
monitoring of Key Risk Indicators (KRI). New products and
for all processes and products. Risks inherent in all business/
processes or any modifications to existing products and processes
support activities are identified and assessed on a periodic basis.
are vetted to identify and understand the nature and degree of
The related controls are also identified and evaluated in terms
the risks the Bank would be exposed to and suitable checks and
of their effectiveness. The adequacy and effectiveness of these
controls are implemented to mitigate such risks. Your Bank has
controls are independently assessed on a regular basis and if
also put in place a fraud prevention framework, whereby various
gaps are observed, action plans are prepared and implemented by
transactions are monitored by dedicated teams from the angle of
the product/ process owners for remediation of risks and control
fraud risk and Anti Money Laundering (AML).
improvements. These aspects are periodically reviewed by the
Business Continuity Management Operational Risk Management Committee.
Your Bank has put in place a comprehensive bank wide Business
Continuity Management (BCM) plan and procedure to ensure Compliance with Basel framework
continuity of critical operations of the Bank in the event of any Currently, your Bank is using Standardized Approach for
disaster/ incident affecting business continuity. Your Bank’s credit risk, Basic Indicator Approach for operational risk and
Business Continuity Program is developed considering the Standardized Duration Approach with respect to market risk
criticality of the functions performed and the systems used. In for computation of capital charge under Basel guidelines.
terms of the Business Continuity Management Policy approved by Further, your Bank is gearing up with data build up and system
the Board, Business Continuity Management (BCM) Committees requirements for migrating to advanced approaches. Capital
have been formed at all units of the Bank, which acts as a Primary Adequacy Ratio of your Bank as on March 31, 2021 under
Crisis Management Team in the event of any business disruption. Basel III norms stood at 14.62%. Your Bank’s Common Equity
A Central Crisis Management Team (CCMT) is in place to take Capital level of 13.85% offers good cushion for further expansion
responsibility and act swiftly in case of any breakdown/ failure and growth in asset portfolio and is in compliance with the
of critical systems, occurrence of natural disasters/ accidents/ requirements of Basel III norms. The Capital Adequacy ratio at
pandemic affecting business continuity. Periodic drills and tests are consolidated bank level stood at 15.19%.
conducted to evaluate the effectiveness of the business continuity RBI guidelines on Basel III demand building of capital and liquidity
arrangements and necessary steps are taken wherever needed.
buffers in phases and seek to enhance the minimum core
Information Security & Cyber Security capital, introduce a capital conservation buffer, and prescribe a
Your Bank has a robust information and cyber security framework countercyclical buffer. Your Bank has complied with the guidelines
for securing its IT infrastructure and systems. The Information for regulatory capital under Basel III norms and is fully prepared
Security Team headed by the Chief Information Security Officer for moving on to complete Basel III compliance as per the
(CISO) formulates and periodically reviews the information implementation schedule prescribed by RBI. Your Bank has also
and cyber security policies and practices. Bank has a Security complied with the Liquidity Coverage Ratio (LCR) prescribed under
Operations Center (SOC) which performs security monitoring Basel III norms. The LCR of your Bank on a consolidated basis as
round the clock. Dissemination of information and cyber security on March 31, 2021 stood at 215.28%.
awareness among the staff and customers is undertaken on a
Capital Management Framework
regular basis through various modes.
Your Bank’s approach to capital adequacy is driven by strategic
Your Bank has received ISO 27001 accreditation for its critical IT and organisational requirements while taking into account
areas including Data Center, DR Site, ATM Switch etc. Your Bank the regulatory and macro-economic environment. Capital
has also received the PCI-DSS certification for its card payments management involves an on-going review of the level of
infrastructure. capitalization against the set risk appetite and to maintain a strong

capital base to support long term stability, planned business in a fast advancing technology landscape, keeping in mind the
growth and mitigate inherent risks in various businesses. regulatory environment, calls for a strong compliance framework
to manage your Banks’ Compliance Risk.
Your Bank endeavours to maintain strong Tier I capital position as
part of the overall business strategy and as a source of competitive A Compliance Risk Assurance Cell (CRAC), under the guidance of
advantage. It provides assurance to regulators and credit rating Chief Risk Officer, is functioning in your Bank since May 2019 to
agencies, while protecting the interests of depositors, creditors ensure adherence to various regulatory and internal requirements.
and shareholders. Strong capitalization also enables the Bank to CRAC works with the aim to assure total compliance in the system
take advantage of attractive business opportunities. Your Bank at all points of time. The unit is also involved in a detailed study
strives to strike a balance between the need for retaining capital on various processes and procedures in vogue, to identify process
for strength and growth while providing an adequate return to gaps, if any.
shareholders and sets an internal Capital Adequacy ratio target
that includes a buffer in excess of the minimum regulatory COVID -19 Concerns
requirement. In addition to the regulatory risk based capital The outbreak of Covid-19 pandemic poses a serious threat
framework, your Bank is also subject to minimum Leverage Ratio to lives and livelihoods across the world and can severely
requirement and maintains a Leverage ratio which is higher than impact the global economy, including India. The impact of the
the regulatory requirement. pandemic may pose challenges in the business continuity,
asset quality and liquidity position of your Bank and adequate
Your Bank has a structured management framework in the
measures have been put in place to respond dynamically
Internal Capital Adequacy Assessment Process (ICAAP) to
to these challenges and minimise impact. The RBI and
identify, assess and manage all risks that may have a material
Government of India have come out with various measures
adverse impact on its business/financial position/capital
to manage the situation. Your Bank is closely monitoring the
adequacy. The ICAAP framework is guided by a comprehensive
situation and necessary steps are in place to ensure business
Board approved ICAAP Policy. ICAAP is aimed to ensure that
continuity. The credit quality is being assessed under various
your Bank maintains capital commensurate to its risk profile and
stress scenarios at close intervals. The liquidity position is also
improves upon its risk management systems and framework on
being closely watched and contingent liquidity position and
an ongoing basis. It involves realistic assessment of level of risks
available sources of funds to meet contingent scenarios are
inherent in the business operations of the Bank and setting aside
being assessed periodically.
adequate capital to cover all such risks. The annual ICAAP is placed
before the Board and the Risk Management Committee (RMC).
Human Resources
Quarterly review of the ICAAP is conducted and placed before the
In a year that was much challenging, your Bank took all the efforts
RMC. The capital management framework is also complemented
to keep its employees in good spirits. Many digital activities were
by the risk management framework, which covers the policies,
conducted to ensure continuous employee engagement and keep
processes, methodologies and frameworks established for the
the employees and their families motivated. The implementation
management of material risks. of Work from Anywhere in your Bank is a morale booster for
Additionally, the Board approved Stress Testing Policy and the employees and a trendsetter for the industry itself. It also
Framework entails the use of various techniques to assess serves as a timely measure to ensure business continuity during
potential vulnerability to extreme but plausible stressed business the pandemic. During the year, your Bank was titled as a Great
conditions. Based on the stress testing policy approved by the Place To Work, which is a globally coveted certification. The total
Board, your Bank conducts stress tests on various portfolios and human capital of your Bank stands at 12,592 at the end of the
assesses its impact on the capital ratios and the adequacy of financial year. The average age of the employees is 37 years and
capital buffers for current and future periods. Your Bank periodically the current male-female ratio is 60:40.
assesses and refines its stress testing framework in an effort to
ensure that the stress scenarios capture material risks as well as Employee Engagement
reflect possible extreme market movements that could arise as a Qualitative engagement activities bind employees and their
families to the organisation and keep their spirits high, particularly
result of market conditions and the operating environment.
during this pandemic. Additionally, your Bank believes that a
Compliance Risk Assurance positive employee experience will lead to higher levels of employee
The rising consumer expectations for anywhere, anytime banking engagement which will not only build happy families, but also will
in a safe and secure mode coupled with growing product profile help us achieve better customer engagement and satisfaction.
90 Federal Bank

In an effort to bring more comfort to our employees and build a Resource Re-skilling
good work life balance, your Bank had initiated measures that Your Bank has been focusing on Talent Re-skilling Strategy
will go a long way in making your Bank the Most Admired Bank. through internal grooming and external absorption, in alignment
Webinars on Stress Management, Yoga, Health & Wellness, with business transformation. The re-skilling activities,
Photography, etc were conducted periodically to keep the considering the process and business transformation which the
employees informed and engaged during the lockdown. Digital Bank has undertaken at branches, have helped to enhance the
Family meets were conducted to cheer the employees and their business per employee. The concept of Branch Light-Distribution
families. Employees were motivated to showcase their own Heavy Relationship Model and New Business Verticals refers to
talents and that of their family members through the official the thrust given to the HR strategy in your Bank. These objectives
online communication platforms on Yammer. These were are being fulfilled through digitization, centralization of activities
eventually compiled into videos named Lockdown Diaries. and learning programs that are focused on customer service,
sales and relationship banking.
The safety of our people was ensured through an option of Work
from Home on a rotation basis along with the benefit of flexi Over the last year, internal talent pool was identified and
locations for work. Under this option, employees facing travel redeployed to spearhead the activities at specific geographies as
difficulties were allowed to work in branches/offices near their Wealth Management RMs, Corporate Salary RMs, Priority Banking
home and special consideration was given to employees in need of RMs, HNI & NRI Business Development Managers, CB & CIB RMs,
special care. Your Bank ensured the safety of employees and their Treasury Sales RMs, Government Business RMs, CV/CE RMs, Retail
concerns related to the pandemic were met by the formation and RMs and Fee Income RMs. While the relationship portfolio was
strengthened by hiring experienced personnel from the industry
co-ordination with Crisis Management Teams at Head Office and
at supervisory roles, the Officers at field level were deployed from
all Zonal Offices. SMILES, a Program to relieve stress and provide
the internally available talent pool in various relationship verticals /
counselling to employees, was also organised by your Bank.
verticals formed on account of reorganisation.
Employee Communication
Reimagining Recruitment
Your Bank ensures the effectiveness of various channels
FedRecruit, the Artificial Intelligence (AI) based flagship HR -Tech
that facilitate employee communication at various levels.
Solution of your Bank reimagined the traditional hiring practices
Latest technologies are deployed to reach a wider audience
through digital disruption, encompassing Robotic Interview,
and aid the employees to collaborate with each other. A
Game Based Simulations, Chatbots, Mobile Application for real
communication strategy was also issued during the pandemic
time candidate engagement etc., arguably the first of its kind in
on employee welfare, general health/hygiene/best practices
India. This new initiative has resulted in measurable efficiencies
and general matters. Christened as ‘Ask Series’, relevant Talk
in the recruitment cycle, leading to faster candidate profiling,
Shows were conducted by the top management through digital
greater stakeholder engagement, employer branding, superior
platforms, encouraging active participation by the employees. hiring and better analytics.
This helped the employees to align with the leadership thought
and vision and help them stay more informed, equipped and Employee and Industrial Relations
current. To disseminate the information regarding updates and The Industrial Relations scenario during the last year had been
other measures, internal digital platforms like Filter Coffee congenial and various representative bodies were given due
(internal newsletter) and Yammer were extensively used. importance to maintain harmonious relations.
Through effective communication, the objective of your Bank
is to establish a seamless connect with all employees and Talent Development and Training
involve the entire taskforce in building stronger trust-based Training Division of your Bank i.e. the Federal Knowledge and
relationship. Development Center (FKDC) spearheads and drives learning and
development activities “Phygitally” with the objective of building a
Employee Welfare and Wellbeing workforce that is constantly learning, re-learning and developing.
Your Bank gives paramount importance to the welfare and well- Your Bank has a bouquet of Synchronous and Asynchronous
being of its employees. All efforts are being taken by your Bank Learning programmes driven fully through virtual modes even
to support the employees and their family members during the before the pandemic times, which has helped uninterrupted
pandemic. learning opportunities for employees post pandemic lockdown.

These include Instructor-led live webinars, webcasts, offline • DAKSHA – To keep abreast with the latest industry trends
video tutorials, gamified learning, simulations and custom-made and gain exposure of the emerging market trends in
E-learning programmes, categorised into Mandatory Learning, BFSI, DAKSHA – an online talk series by external industry
Micro Learning and Role-based Learning modules, addressing experts and stalwarts in BFSI, is organised for your Bank’s
Role-specific functional and behavioural learning requirements of employees once or twice a month.
employees in various roles.
• Live internal Master class series- This is conducted by
All learning programmes are curated based on training need internal and external domain experts and is hosted on a wide
analysis of knowledge, skills & attitude, conducted at the beginning range of topics like Financial Investments, Digital Marketing,
of the financial year. An Academic Council chaired by Executive Data Analytics etc.
Director and Chief Human Resources Officer with members
• Mandatory e-learning – E learning modules like Information
drawn from various administrative and business verticals, field
Security Awareness, Business Continuity Management, KYC
representatives and faculty team meet twice in a financial year to
& AML Guidelines, Banking Ombudsman, BCSBI and Fair
chalk out the priority training areas for the Bank and to review the
Practices Codes etc. were provided to all officers.
progress and effectiveness of all training interventions.
During FY 2020-21, the Bank further evolved in the mode of Key Statistics 2020-21
learning and training dissemination by going 100% Digital. Your • Against total employee strength of 12,592, training was
Bank provides around 300 plus self-paced e-learning courses provided to 10,820 employees in the current FY with a 100%
for its employees, structured under quarterly learning seasons, shift from classroom mode to online instructor-led training
with RPA-enabled tracking and follow-up, gamified learning (including 936 employees trained via external institutes)
dashboards and leader boards etc. to ensure that learning is
• 99% of our officers, including executives, and 96% of
engaging and adds value to business and individual growth.
total employees have participated in various self-paced
Training Highlights FY 2020-21 e-learning programmes
• MOOCs tie up with EdX - For specialized roles requiring
• 4.02 Lakhs total learning hours generated under various
additional domain knowledge in Digital, Data Analytics,
training and self-paced e-learning modules, which is
Automation, Design Thinking, Blockchain etc, your Bank
equivalent to an average of 4.5 days of training to each
offered various learning programmes in EdX.
employee
• Gamified Learning - Our LMS enables gamified learning
• Board members and 76 Senior Management Executives
with real-time updates on learning hours completed, points
underwent training and certification in IT and Cyber Security
scored, unique and personalized dashboards and Digi
at IDRBT, Hyderabad in compliance with the RBI guidelines
badges.
• E- Learning on Cyber Security was provided to 10,107
• Digital Induction – Induction and orientation programme
employees as part of the mandatory learning programme
went completely digital in order to combat pandemic
challenges and successfully deploy trained manpower • E-learning on Business Continuity Management was
to our branches. Use of online live engagement tools like provided to 7,336 employees including Senior Management
Mentimeter, Wordwall platforms and Leaderboards gives (96% officers)
the desired physical classroom touch to our virtual learning
programmes. Performance Management System
Performance Management System in your Bank helps employees
• Learnathon- A month long learning drive was conducted
stay focussed and ensures continuous improvement at Individual,
across the organisation through short videos that were
Group and Organisational levels.
curated in-house by key functional departments. The drive
helped in knowledge dissemination of our products and
Half-yearly Performance Review discussions and Year-end
processes.
Performance Evaluation are conducted and the performance of
• Leaders League – In this event which was conducted over Officers against their set goals are analysed. The Officers are
various months , 1,035 employees across the organisation given online feedback on their level of performance against the
engaged directly with our MD & CEO on various leadership allotted goals. Employees awarded with lower grades are given an
ideas over virtual fireside chats. opportunity to submit their grievance through an online platform.
92 Federal Bank

An independent committee then looks into the grievances and • Information System Audit - Information System Audit
arrives at a judicious decision, which is communicated to the collects and evaluates the evidence to determine whether
employees concerned. the information system safeguards assets, maintains data
integrity and availability, achieves organisational goals
Inspection and Audit effectively and consumes resources efficiently. It focuses
Inspection and Audit independently evaluates the adequacy, on the risks that are relevant to information assets and
completeness, operational effectiveness and efficiency of all assesses the adequacy of controls implemented for
internal controls, risk management/governance systems and mitigating the risks. All critical IT infrastructures in your Bank
processes of your Bank. The Audit Committee of the Board are subjected to Information System Audit by information
provides direction and reviews the adequacy of internal audit systems professionals from reputed CERT-IN empanelled
function, including its reporting structure, staffing, coverage external audit firms and Certified Information System
and frequency of audits. The Head of Inspection & Audit Auditors (CISA) of your Bank. Critical Information Systems
Department is designated as the “Internal Auditor” of the Bank are subjected to Vulnerability Assessment & Penetration
and reports directly to Managing Director & CEO. An executive Testing (VAPT) every quarter. In addition to this, Information
level committee named the “Inspection Review Committee of System Audit covering physical security of IT systems, core
Executives” headed by the Managing Director & CEO oversees banking system operations, business continuity procedures
the audit and inspection functions and reviews the audit and cyber security is conducted at branches/ offices. During
procedures and methodologies, effectiveness of audit systems, the year 2020-21, Information System Audit was conducted
progress in completion of audits, risk rating of branches, and in 1,376 branches/ offices.
significant audit findings.
• Management Audit - Management Audit in your Bank
The Audit & Inspection Policy, Information System Audit Policy essentially focuses on identifying the adequacy and
and the Internal Audit Procedure & Guidance Manual, which serve effectiveness of processes adopted for decision making in
as the basic guidance documents for internal Audit function, various Head Office Departments of the Bank, Zonal Offices,
were subjected to annual review during the year. The review Large Corporate Hubs, National and Regional Credit Hubs,
covered appropriate modifications and refinements based on the Loan Collection & Recovery Divisions, Currency Chests,
observations made by Reserve Bank of India in the Risk Based Regional Cheque Processing Centers, your Bank’s Subsidiary
Supervision, other regulatory guidelines, changes in internal rules Companies etc. The feedback from management audit is
and guidelines, and directions of the Audit Committee of the relied upon by the auditee units to improve the processes,
Board and the Board of Directors. The review and modifications procedures and systems in place in such offices. During the
ensured that the audit systems and procedures are contemporary year 2020-21, Management Audit was conducted in 129
and continue to be an effective tool for monitoring control and offices.
compliance in your Bank. Inspection & Audit is responsible for
• Offsite Audit - Offsite audit is a forward looking diagnostic
self-assessment of the Bank’s internal financial controls by
tool to identify gaps in the systems and procedures of your
testing and validating the effectiveness of controls on an on-
Bank. The entire revenue audit in your Bank is undertaken
going basis.
through Offsite Audit. Your Bank leverages Computer Aided
Audit Tools (CAAT) for generating and analysing exceptions
All activities (including outsourced activities) and all entities
while conducting offsite audits.
(including subsidiary companies) of your Bank fall within the
ambit of internal audit. The major audits undertaken by your Bank • Concurrent Audit - Your Bank is increasingly relying on
during the financial year are: ‘Concurrent Audit’ as an early warning system to ensure
near real-time detection of irregularities and lapses
• Risk Based Internal Audit - Your Bank has leveraged on Risk and is also used as a tool to prevent frauds. We have
Based Internal Audit (RBIA) as a tool to assess the risks in its implemented the revised Concurrent Audit framework,
processes, operations and effectiveness of related controls. duly approved by the Audit Committee of the Board, as per
Risk Based Internal Audit conducted at branches focuses on RBI circular dated September 18, 2019, with effect from
prioritizing the audits and audit resources based on the level April 1, 2020. During the year under review, Concurrent
of inherent business risks and control risks. 745 Risk Based Audit was in place in 239 branches and 80 offices, covering
Internal Audits were conducted during the year. 61.16% of total advances and 43.75% of total deposits of

your Bank. The offices covered under the Concurrent Audit The compliance position of audit comments has improved during
include Treasury Department, Operations Department, the year 2020-21. A significant reduction of 44% in the position of
Information Technology Department, Loan Collection audit comments outstanding for rectification is observed on year-
and Recovery Department, Zonal Credit Administration over-year basis.
Divisions, Depository Participant, International Financial
Service Center Banking Unit, National Credit Hubs, Large Transaction Monitoring and Fraud Prevention
Corporate Hubs, Regional Credit Hubs, Centralised Retail Your Bank is having a fully equipped Transaction Monitoring &
Credit Hubs, Corporate Client Service Centers, FedServ, Fraud Prevention Department with state-of-the-art monitoring
Deposits Cards and Unsecured Lending, Transaction tools working round the clock. The transactions in Core Banking
Banking Department, Digital Center of Excellence, Regional and various online channels are monitored by the Transaction
Cheque Processing Centers, Transaction Monitoring Monitoring Team. With special focus on UPI, a new team has
and Fraud Prevention Department, AML Monitoring been set up to monitor UPI transactions on NPCIs eFRM tool.
Department, Credit Monitoring Department, Exceptionally Monitoring of POS acquiring and Payment Gateway (Cards)
Large Branches and Branches where RBIA risk rating is transactions is also under the purview of the Department to have
a holistic control over the transaction monitoring activities of the
assessed as “High”. Concurrent Audit is also conducted in
Bank. Proactive Risk Manager (PRM) tool has been implemented
all the currency chests as required by the Reserve Bank of
for monitoring Debit Card transactions in view of the increased
India. 276 External Auditors / Audit Firms and 23 Retired
technology-led vulnerability in the market. Other special tools
Officers were engaged for audit assignments during the
are also used for monitoring cyber frauds. The card monitoring
period. Additionally, Concurrent Audit of 19 units was
activity also takes place round the clock. With the launch of Credit
conducted by Internal Audit Staff.
Cards (CUG & Staff Launch), monitoring of Credit Card transactions
on dedicated tool – Falcon has also commenced. Transaction
The Inspection & Audit Department is manned by appropriately
Monitoring Team could identify suspicious online transactions and
qualified personnel and has a staff strength of 90 officers (as
take immediate remedial measures to prevent further occurrence.
on March 31, 2021) with expertise and exposure in all activities
The close association with Cyberdome of Kerala Police has been
of the Bank, such as branch operations, credit sanction, credit
instrumental in preventing many fraudulent transactions and
monitoring, clearing operations, information technology, risk
making recoveries to a reasonable extent.
management and treasury operations.
Legal Compliance
During the FY 2020-21, audits were undertaken at various
In recent times, the legal environment in the country has become
operating units, considering the audit universe and in tandem
very dynamic, with new laws and amendments to the existing
with the Annual Audit Plan approved by the Audit Committee of
laws being enacted at a very brisk pace. In order to cope up with
the Board. Data on major audits conducted during the year is as
this change and to ensure legal compliance, it is imperative for
follows: a robust legal risk management process to be laid down. The
process helps your Bank to mitigate the legal risk which falls
Type of Inspection/Audit Number of Audits
conducted under the larger umbrella of operational risk.
Risk Based Internal Audit 745 Your Bank has a healthy compliance and legal risk management
Information System Audit 1,376 culture. The processes are designed to ensure legal and
Management Audit 129 regulatory compliance and enable detection and prevention
of any breaches. The Legal Department of your Bank frames
Revenue Audit 1,257
processes and controls that can efficiently manage and mitigate
Gold Loan Audit 1,894 the legal risks stemming from the daily business transactions
Credit Audit 644 of the Bank. Further, your Bank has a well laid system, which
Legal Audit 471 ensures that the documentation process is contemporary and
in tune with industry standards, thus minimising the menace of
Bi-monthly audits at Currency Chests 54
legal risk, and in the meantime enhancing customer experience.
Audits of outsourced agencies/ 183
Additionally, a “Manual of Instructions on Documentation”
managed services
has been published by our Legal Department comprising of all
94 Federal Bank

the general instructions pertaining to documentation for the visual means, which also helps in resolving the hitches faced by
reference of branches and other functionaries, and the same is the Legal Hubs, thereby enabling them to function efficiently and
also updated periodically. contribute to the overall growth of your Bank.
Legal Hubs are set up at all the Zones of your Bank to ensure Regulatory Compliance
compliance with local laws and render legal support to the Compliance, with all applicable laws and regulations, is
branches, underwriting teams and credit administration quintessential to the success of the Bank. Hence, your Bank
teams. New products, processes and schemes introduced balances growth and controls simultaneously to achieve the
by your Bank invariably undergo legal vetting by the Legal Most Admired Bank status. Your Bank’s compliance philosophy
Department to ensure legal compliance and proper analysis declares that the Bank has neither appetite nor tolerance
of legal risks involved. Moreover, the Legal Department is for any compliance risk on account of non-compliance with
rendering professional and expert advice on various legal issues regulations.
associated with your Bank.
Your Bank adopts risk- based approach and has put in place
With the strong objective of making your Bank a Zero Customer- appropriate policies and processes to ensure enterprise-
Complaint Bank, strenuous efforts are being made to reduce wide compliance. To manage compliance risk, we have built
the number of suits/ complaints filed against the Bank before a comprehensive Compliance Risk Management Framework
different courts/ consumer forums. The fortnightly publication (CRMF), containing processes covering implementation of
of “Legal Decisions Affecting Banks” circulated by Legal regulations, identification of risks, and remediation of risks on
Department based on verdicts rendered by Supreme Court/ time. To identify any known or hidden risks, we have a variety of
various High Courts/ Tribunals coupled with various educational monitoring and testing programs, like branch and department
circulars issued by Legal Department, keeps all teams well self- testing by frontline staff, review by Compliance Monitoring
informed on legal challenges/ issues and steps to be taken Officers and Compliance Risk Assurance Cell (CRAC). Every staff
to avert compliance failures. Legal Department, a repository of your Bank is committed to maintain the highest level of
of statutes, also updates the teams/offices/ branches of compliance standards, both in professional and personal life. Zero
the relevant amendments/ modifications made to statutes adverse regulatory action or investigation on the Bank during
from time to time. Standard Loan Agreements are modified/ the financial year is a testament of their commitment and the
simplified from time to time to make them contemporary and in effectiveness of your Bank’s compliance management.
tune with industry standards.
Your Bank has taken many steps to strengthen its compliance
Other than this, the Legal Department has formulated a structure. It has revised the Compliance Policy and the Policy
framework for legal compliance of local laws compiling the Land on Combating Financial Crime, keeping in view the regulatory
and Stamp Laws, related customs and practices etc., in vogue requirements and best domestic and international practices.
in different states. It has also published Stamp Duty tracker for This year, it has also extended the compliance program to the
guidance of branches/ offices, especially for the use of those subsidiaries and group companies. Additionally, your Bank has
who are posted to a branch outside their home state. Moreover, also framed a robust annual Compliance Risk Assessment
Zonal Legal Hubs have been holding sessions on legal topics for Program and Quality Assurance Program to rate the compliance
enriching branch level functionaries. With a view of imparting risk and ensure sustenance of compliance standards.
awareness on latest developments/ amendments in law and
to strengthen the knowledge base of the Legal Officers of your On the technological front, your Bank is also embarking on
Bank, the department is also conducting Biennial Conference of tech-based innovations to rewrite its compliance controls and
Legal Officers where legal luminaries address the participants on standards. The Continuous Compliance Monitoring (CCM) is a
latest topics virtually. new technological solution leveraging the data analytics and
artificial intelligence. The solution will be industry’s first and help
The Legal Department is also conducting Panel Advocates multiple control functions such as compliance, audit, vigilance
Meet across various Regions/Zones, which helps the Bank in and CRAC to comprehensively monitor scenario-based alerts on
understanding the best practices on legal/documentation side and any transactional deviations within 24 to 48 hours. The upgraded
also helps in deriving optimum services from the panel advocates. Anti- Money Laundering solution that your Bank is currently
Value addition is imparted by holding interactions amongst the implementing will provide an exhaustive list of management
members of Legal Department and Legal Hubs through audio- and screening capabilities of individual transactions, comparable

with the Financial Action Task Force (FATF) recommendations Project’; recognition as a runner up in the categories of ‘Best
and international standards. Moreover, the Bank is developing Technology Bank of the Year’ and ‘Best IT Risk & Cyber Security
an electronic comprehensive obligation register covering more Initiatives’ among medium banks; and IBA Annual Banking
than eighty statutes and thirty regulatory authorities/ industry Technology Awards 2021. Encouraged by the impact created by
bodies. The obligation register will be supplemented by a manual the digital campaigns, a very conscious and extensive groundwork
of instructions to each department for process mapping, gap was done in the year for a confident take off in digital marketing
identification and periodic confirmation of compliance through in FY 2021-22.
self- testing, monitoring, concurrent and internal audits.
Henceforth, the periodic compliance confirmation to the Board Service Quality
and the Regulator by your Bank will be based on the actual testing An increase in adoption of digital banking by consumers and
and affirmations carried out on all transactions from time to time. enhanced reliance on technology based solutions to overcome
With this, your Bank can proudly present its Compliance Model as day-to-day challenges has made it imperative for any business
a benchmark for the industry. to leverage innovation and technology for improving the existing
products and procedures and delivering quality experience to
Marketing customers. Your Bank thus initiated a Quality movement in 2012
Marketing campaigns of your Bank in FY 2020-21 were driven with the following objectives:
by the twin watchwords ‘Digital at the Fore and Human at the
Core’ and ‘First Choice’. The primary endeavour of your Bank • Ensure standardization in the look of and feel of branches
was to ensure that it stays on the course despite unfavourable
external conditions. Hence, priority was given to digital and social • Raise pan India branch performance with regard to customer
media campaigns over large scale ATL campaigns like TV and experience
print. Over the years, data driven digital advertising has gained
• Ensure uniformity and predictability across the Bank’s touch
a greater impetus among brands aiming to become more
points
focused and result-oriented. Your Bank adhered to this
profound change by embarking on a robust digital marketing • Create system, processes and procedures, inherently
journey. To stay on track and capitalize on the new reality capable of continuous improvement
of marketing and advertisement, your Bank partnered with
a leading digital marketing agency. Through a combination • Ensure standardization in customer communication
of product and brand promotions, your Bank ensured that it
remained relevant, visible and on top of mind for customers/ In pursuit of this, your Bank has employed a dedicated team
audience. to facilitate identification and implementation of process
improvements which are critical from a customer point of view.
The year saw your Bank launch an array of campaigns on This team liaises with other teams to evaluate various customer
Digital for products such as Federal 24 7, Celesta, Car Loans, touch points and strives to improve various services. The team
Sovereign Gold Bonds, Contactless Cards etc. with prime focus had identified and executed 100+ process improvements, large
on visibility and conversions. The endless possibilities of social and small, to ensure responsive and frictionless customer service.
media were also leveraged for brand promotion during the One of the initiatives is introduction of a self-service facility (Fed e
FY. Having said that, your Bank also explored some traditional Point) via website, where the customer can avail various banking
marketing avenues such as Radio Campaigns for products such services through a single portal. Some of the services available
as Gold Loans. During the year under review, brand Federal on this portal include Email ID updation, request for debit card/
made significant inroads into the consideration set of Indian cheque book, Gold Loan renewal, raise a dispute, KYC upload,
consumers and slowly but steadily gained the mindshare of Positive Pay system, profile update in customer account, 15 G/H
various stakeholders. updation, online financial advisory etc.
Your Bank’s MD & CEO winning the ‘Business Standard Banker Your Bank has also implemented the RBI guidelines on
of the year’ award has caught the attention of the industry at Harmonisation of Turnaround Time (TAT) and customer
a national level. Several other recognitions came your Bank’s compensation for failed transactions using authorised Payment
way including ‘Best Bank and Fastest Growing Bank’ Systems, by putting in place various systems and a dedicated
by Business Today and KPMG; awards for ‘Most Innovative team which ensures this.
96 Federal Bank

Customer Grievance
Sr. No Particulars Previous Year Current Year
(2019-20) (2020-21)
1. Number of complaints pending at beginning of the year 1,354 1,692
2. Number of complaints received during the year 2,00,249 1,47,914
3. Number of complaints disposed during the year 1,99,911 1,46,108
3.1 Of which, number of complaints rejected by the Bank 48,386 46,394
4. Number of complaints pending at the end of the year 1,692 3,498
Maintainable complaints received by the Bank from OBOs
5. Number of maintainable complaints received by the Bank from OBOs 535 757
5.1. Of 5, number of complaints resolved in favor of the Bank by BOs 150 243
5.2 Of 5, number of complaints resolved through conciliation/ mediation/advisories 385 511
issued by BOs
5.3 Of 5, number of complaints resolved after Passing of Awards by BOs against the Nil Nil
Bank
6. Number of Awards unimplemented within the stipulated time(other than those Nil Nil
appealed)
Note: Maintainable complaints refer to complaints on the grounds specifically mentioned in BO Scheme 2006 and covered within the
ambit of the Scheme
Customer Delight department co-ordinates with diverse functions like Planning,

Your Bank is always keen on relationship building, customer Budgeting, Monitoring of Business Performance, Business
convenience and delight. With the purpose of enhancing customer Analytics, Cost Management and Management Information
experience and brand trust, it initiated opening of new branches, systems to achieve its goals.
capacity building of contact center, web based portal for self-
service, digital products and also observes customer-day on 15th ‘Branch Light Distribution Heavy’ approach followed by your Bank
of every month. Branches are also sanitized and laced with fine ensures a healthy co-existence of the branch channel consisting
interiors, at par with industry standards. The security aspect of 1,272 Branches, 1,957 ATMs/Cash Recyclers (including 10
has been given utmost importance with modern equipment like Mobile ATMs), with alternate distribution channels including
closed circuit TV, motion sensors, infra-red cameras and fire Relationship Managers, Field Sales teams, and Digital Acquisition;
alarm systems. Your Bank has also started online real time remote thereby leveraging multiple engines for customer acquisition and
security and surveillance of ATMs and branches towards this end. engagement; embracing its goals with focus, quality, granularity,
Further, it is progressively equipping its branches with fake note regularity and sustainability. The department, through its various
detectors, note sorting machines and currency authenticating initiatives, brings synergy between the distribution channels
machines, in compliance with the regulatory guidelines. Your Bank to deliver desired results. Cost Management has become a
has installed 1,957 ATMs/Cash Recyclers (including 10 Mobile compulsion to ensure sustainability in the long run pushing the
ATMs) which will enable customers to withdraw/deposit cash in department to maintain a holistic approach and adopting an agile
their account 24 X 7. With these measures, your Bank is focussing operating model, while connecting cost reduction and investment
on ensuring excellence in operations, service delivery with least decisions.
gaps based on customer feedback and strives to maintain high
level of customer satisfaction along with reduced count of Under the watch of a core Analytics team, your Bank is consistently
customer complaints through an efficient redressal mechanism. enhancing its analytical capabilities and leveraging the rich data
resources available in an optimal manner. The deliverables for
Strategic Planning the division, in the form of relevant, qualitative and actionable
In this new era of heightened economic volatility, strategic insights for stakeholders at each level and on time, are ensured
planning has become more relevant and critical. The Corporate by leveraging both internal and external data sources. This will
Planning Department of your Bank works towards developing ensure that the right product is offered to the right customer at
effective future-ready strategies aligned with the market realities the right time using right channel, warranting the customer wallet
and setting aspirational goals for your Bank to achieve. The share to always point north.

Leveraging cutting-edge technologies, the power of data Promoting Education
science and robust analytical frameworks is aiding the decision- Federal Bank Hormis Memorial Foundation Scholarships
making process for your Bank, enabling it to capitalize on new From the Year 2005-06 onwards, the Foundation is providing
opportunities as well as gear up to respond optimally during scholarships to deserving students for pursuing professional
stressful times like COVID-19. Overall, this ensures a better courses. From FY 2020-21, 13 additional scholarships have
customer experience and infusion of customer delight while been added to the Nursing category, taking the total number of
maximizing profitability. scholarships for nursing students to 45. During the year 2020-
21, the trust offered assistance to 125 eligible students out of
MIS team, a multi-functionary cell under Corporate Planning 150 seats available. This included 20 seats each for Medicine,
Department, coordinates comprehensive report generation and Engineering, BSc (Agri), MBA; 45 seats for BSc Nursing and 25
automation, ensuring data quality, accuracy and timeliness of seats to the wards of Martyred Armed Force Personnel. From
information for prudent decision making as its prime objectives. the inception of the program till date, a total of 1015 students
The agile reporting of MIS enables branches and offices to align were selected for scholarships and 418 students are still
and organise themselves to the set goals. The automated reports/ receiving the same.
insights to individual business units, by making use of cutting-
edge business intelligence tools, enable the users slice and dice Federal Skill Academies (FSA)
data, helping them to derive meaningful insights and empowering As part of the Corporate Social Responsibility initiatives, your
them to take informed business decisions. The Regulatory Bank started the Federal Skill Academy at Kochi on October 18,
Reports Cell, which functions under MIS, is a specialized team 2015 (Founder’s Day). The social initiative was launched to give
that deals with generation and automation of regulatory reports wings to the youth belonging to the underprivileged section of
of your Bank, and ensures integrated and prompt generation of the society. The aim of the project is to impart skill training to
reports for stakeholders to enable onward submission to the unemployed and marginalized youth to empower, mentor and
regulators. Your Bank also has a Quality Assurance Cell for MIS, assist them to upgrade their skills for improved employability,
that ensures the accuracy and consistency of data captured in the increased efficiency and career growth.
Bank’s systems and validates the critical reports generated by the
MIS team. Smooth implementation of the project was ensured through
collaboration with M/s SB Global Educational Resources Pvt Ltd as
Corporate Social Responsibility the implementing partner. All expenses towards this initiative are
Major CSR Projects undertaken during FY 2020-21 borne by your Bank. On successful achievement of the objective
The Corporate Social Responsibility activities of your Bank of the first Academy, your Bank decided to expand the Academy’s
touches a wider footprint through areas like Health, Education, operations to three more states, i.e. Coimbatore (2016), Kolhapur
Women Empowerment, Environment Sustainability and other (2018) and Karnal (2019). The number of trainees have grown
activities permitted by the Schedule VII of the Companies Act, rapidly since then and the initiative has created livelihood for the
2013. Federal Bank Hormis Memorial Foundation was set up youth as well as contributed significantly to the national skilling
by your Bank in 1996 in the fond memory of the Bank’s founder initiative.
Late Shri. K P Hormis. The foundation and its activities were
inaugurated by the then Finance Minister Shri. P Chidambaram at The year 2020-21 started with an unprecedented situation
Ernakulam on October 18, 1996. as the COVID-19 pandemic disrupted all the normal activities,
with Education/Training/Skilling being one of the worst affected
The CSR projects are executed under the Federal Bank Hormis segments on account of social distancing norms. The situation
Memorial Foundation, which acts as a special purpose vehicle for warranted the skilling industry to introduce technology driven
implementation of CSR activities of your Bank. The last financial learning and skilling and blended/hybrid learning thus emerged
year witnessed the spread of COVID-19 pandemic and its medical as an effective solution. As change leaders during this crisis, FSA
and socio economic impacts, resulting in inclusion of COVID-19 decided to start delivering the theoretical portions of the skilling
activities under the CSR umbrella by the Ministry of Corporate programs using online platforms. The first step to address the
Affairs. need was creating a cadre of well trained E-Teachers. The Pilot
batch of E- Teacher program thus commenced on September 9,
Major CSR projects undertaken during FY 2020-21 by your Bank 2020 at FSA Kochi and BPO Non voice program followed suit on
are as follows: November 11, 2020.
98 Federal Bank

‘Vidyapetty ’ for COVID-19 and Crowd Sensing using Mobile Phone. In lieu of its
The Govt of Kerala began virtual classes for school students commitment to help India fight against the pandemic, your Bank
from June 1, 2020 in an effort to ensure continuation of lessons supported the research team in IIT Palakkad to make desirable
despite the pandemic induced lockdown. The classes were being breakthroughs.
conducted through the Kerala Infrastructure and Technology for
Promoting Education-Various Projects
Education (KITE)-Victors Channel. However, given the fact that
(a) Support to M/s K P Hormis Education and Charitable Society,
about 2 Lakhs students did not have adequate facilities to attend
Mookkannur for providing scholarship to meritorious students
online classes, this new method of teaching and studying posed
a challenge for both teachers as well as students. Eventually, (b) Support to disruptive innovations in education in the wake
Deshabhimani, one of Kerala’s leading Daily, organised of COVID-19 crisis organised by Rajagiri Media Trust
‘Vidyapetty’, an initiative to enable those students who do not (c) Support to Govt. NSLP School, Ezhupunna for purchasing a
have access to TV at home, attend the online classes. Your LED TV to conduct online classes for students
Bank supported this initiative as a part of promoting education
amongst the underprivileged section and eligible students were (d) Providing Note Books and stationery items to 213 children
identified in each district with the help of schools. at SOS Children’s Village, Aluva
Support to Light of Life Trust Disaster Management – COVID-19

Support to Light of Life Trust, Mumbai for the program, ‘Anando’, Deployment of Mobile ATMs in Karnataka, Kerala, Maharashtra
was designed for children who were school dropouts, belonging and Tamil Nadu
to the age group 11-18 years, with the aim to help them continue During the month of April 2020, in an effort to support people
their education and enable them to lead a life of self-sufficiency affected by the nationwide lockdown imposed by the Govt, your
and dignity. The program was implemented for 54 students at the Bank started deploying Mobile ATMs for a period of 3 months to
Worli Center during the academic year 2020-21. bring essential banking services to the doorstep of the residents
Support to Oxfam India project- Back to School Campaign in Tamil Nadu, Karnataka & Maharashtra. In the Phase II of the
Oxfam India is a confederation of 20 independent charitable project, mobile ATMs were also deployed in Kerala.
organisations focusing on the alleviation of global poverty and
incorporated under Companies Act 1956. The aim of the project Livelihood Enhancement- CovidWarden Initiative
is to assist children from under privileged families to continue As an esteemed organisation committed to the people of Kerala,
their schooling which was interrupted as an aftermath of the your Bank extended support to the unskilled/unorganised
pandemic. After identifying that the incidence of child labour segment of the society under its Corporate Social Responsibility.
and child marriage of girl children was very common in the slum Based on the requests submitted by the agencies, unskilled
areas and migrant colonies of South East Delhi, M/s Oxfam India personnel were deployed as Covidwardens for managing the
proposed the re-enrolment of these underprivileged girl students crowd outside the branches and ensuring social distancing as well
back to the educational institutions. as sanitization of hands.
Support to IIT Palakkad- Research and Development in the Support to Helpage India, New Delhi
context of COVID-19 Helpage India is a leading charity in India working with and for
IIT Palakkad intends to set up an Assistive & Rehabilitation disadvantaged elderly for nearly four decades. Your Bank, with
Technology Research & Development Center in their institute a 50-50 contribution from public, supported Helpage India by
in collaboration with SreeChitra Medical Institute (SCTIMST) sponsoring 5,600 food packets to migrants labourers during the
Thiruvananthapuram and National Institute of Mental Health lockdown period of 15 days at various locations in New Delhi.
and Neurosciences (NIMHANS) Bangalore. SreeChitra Institute
of Medical Sciences and Technology (SCTIMST) Trivandrum and Funding Community Kitchens at Aluva, Perumbavoor
a Medical Research Group in Italy have agreed to share their In the recent years, Kerala has been experiencing a large influx
expertise and 60,000 ultrasound images of COVID-19 cases of migrant workers from different parts of India. Due to the
in Italy for the project. In an effort to assist hospitals in Kerala lockdown imposed by our Govt, these migrant labourers were
to combat the COVID-19 situation, IIT Palakkad also plans to left without job and food. During this period, your Bank supplied
develop Biomedical Assistive Diagnostic Devices and systems like food materials to community kitchens for providing meals to such
Low Cost Medical Ventilator, Pulse Plethysmograph, Ultrasound migrant labourers and other weaker section at Perumbavoor,
Lung Imaging and Automated Analysis, Group Testing Equipment Aluva and Angamaly.

Support to KeshavSrushti • Provisons for enhanced medical facilities in Alappuzha Town
M/s KeshavSrushti is a non-profit organisation located in Uttan,
Bhayander (West), Thane District. Your Bank supported the • Distribution of re-usable masks in Angamaly Constituency
organisation in providing 1,000 PPE Kits to doctors and medical • Sanitising & fumigation of all our branches and ATMs for the
staff, working in hospitals of Mumbai. safety of customers
Support to National Health Mission • Mobile vaccination in Malappuram District
Your Bank supported the National Health Mission with PCR Testing
machine for General Hospital Ernakulam during the first wave of • Vaccine Distribution project in the State of Maharashtra by
COVID-19 pandemic. The machine boosted testing capacity of purchasing and supplying 100 Ice-lined refrigerators for
the district by huge numbers. Also, as a part of the vaccination storage of COVID-19 vaccines
drive in Kerala, 10,000 vaccine carriers were supplied across the
• Setting up of basic amenities at COVID-19 first-line
state to NHM, as per the requirements of each district’s medical
treatment centers at Alappuzha, Pala, Kalluvathukkal,
authorities.
Amarambalam, Thrissur, and Kozhencherry
Support to enhance medical facilities in CMC Vellore
• Setting up of walk-in sample collection kiosk for Kollam
CMC Vellore is one of the few private hospitals identified for
District Administration
treatment of COVID-19 patients in Tamil Nadu. As a part of our
CSR initiatives, your Bank supported the hospital to augment its • Supply of 35 Rain Coats for COVID-19 surveillance/
medical facilities to combat the pandemic. containment duty for Police Force, at Vazhakulam
Support to B J Medical College, Pune • Support to various organisations like Dalit Bahujan Resource
B J Medical College, Pune is an approved testing center for COVID-19. Center, Kerala Pulaya Maha Sabha for relief measures in the
Your Bank, with 50-50 contribution from public, supported the wake of COVID-19
College by providing it with 10 testing kits in two stages.
• 10 movable barricades in the context of COVID-19
Support to Kannur Medical College, Kannur for providing My containment activities to Kerala Police, Kollam rural district
Lab Testing kits • Support for transporting migrant workers to various
Considering the rampant spread of the virus in Kasargod and destinations in Rajasthan from Chennai in four buses
Kannur Districts, the Govt of Kerala started a Viral Research and
Development Lab for COVID-19 PCR testing at the Government Healthcare
Medical College, Pariyaram, Kannur. Your Bank supported the Support to KEM Hospital to enhance medical facilities
cause with 50-50 contribution from the public. KEM Hospital (King Edward Memorial Hospital), Pune, established
in the year 1912 at Pune District of Maharashtra, is one of the
Disaster Management and Preventive Healthcare – Various largest Non-Government Organisation Hospitals in the region.
Covid-19 projects Your Bank supported the hospital with specialised ventilators
COVID-19 related projects were included under CSR by the MCA. having HFO for their 50 bedded (Level 3) Neonatal ICU.
Following are some important activities supported by your Bank-
• Construction of COVID-19 isolation rooms for City Armed Sponsoring Trauma Care Units- Support to Sansad Mobile
Reserve Force Central, Bangalore SwasthyaSeva, Himachal Pradesh
Sansad Mobile Swasthya (SMS) is a public healthcare programme
• Supplying 35 thermal scanners to police stations and offices
started by Sri Anurag Singh Thakur, MP from Himachal Pradesh
in Kochi
(presently Minister of State for Finance, Govt of India). Sansad
• Purchase of N95 masks to be used by health workers at Mobile Swasthya comprises of Mobile Medical Units (MMUs)
Medical College, Kottayam which ply to remote rural villages in Hamirpur Parliamentary
Constituency of Himachal Pradesh. This programme was started
• Raincoats supplied to Fire & Rescue Personnel, Fire Force
on April 14, 2018, on the birth anniversary of Dr B R Ambedkar.
Station, Gandhinagar, Ernakulam
Within a short span of time, a fleet of 19 Mobile Medical Units
• Supply of 500 units of PPE Kits for doctors and health are plying in Hamirpur Parliamentary constituency, which covers
workers in Ernakulum General Hospital 5 districts, 800 Panchayaths and 13,000 beneficiaries.
100 Federal Bank


Promoting Differently-abled -Support to SCTIMST (Sree Promoting Women Empowerment Project “SwayamSakthi”
Chithira Thirunal Institute for Medical Sciences and Technology) Your Bank is supporting Drishtikona Consultancy and Program
In 2017, your Bank joined hands with Sree Chithira Thirunal Management Services Pvt Ltd and partnering with Himalayan
Institute for Medical Science & Technology for setting up a Social Institute for promoting ‘SwayamSakthi’- a women
Comprehensive Center for Cognitive Rehabilitation of Children empowerment project. The Project empowers girls who have
with Neuro disorders. The center aims to provide high-quality not completed their education by providing them with ‘Bridge
state of the art and continuing care for children with Neuro Education’. Regular classes will be conducted under this initiative
Development Disorders and provide adequate support to the child to impart knowledge, thereby ensuring enrolment of girls in
and family. In phase I, it included setting up of sensory integration their age appropriate grades in regular schools. The project is
room, individual therapy rooms and paediatric physiotherapy unit targeting age groups 11-14 years, belonging to weaker sections/
at SCTIMST and the second phase envisages a sensory park and BPL families who have discontinued their education or have
sensory room at NISH. The first Phase of the project is completed, never attended school due to various socio-economic problems.
which includes one-to-one therapy rooms, soft play area for Remedial education is given to them for fulfilling their aspirations
occupational therapy and a paediatric gym. Phase II of the project for a better livelihood and career prospects. This is a one year
which included sensory park and sensory room is completed and programme and is being implemented at Madawala, Panchkula
are setup at National Institute of Speech and Hearing (NISH), District of Haryana.
Thiruvananthapuram.
Women Empowerment –Various Projects
Promoting the Differently Abled- Various Projects • Support to Christo Province for providing 10 sewing
• Infrastructural support to School for the Blind, Aluva machines to underprivileged ladies, especially widows
• Support to the differently-abled and mentally challenged of • Support for providing 28 sewing machines to unemployed
Karuna Bhavan Social Center, Kalady women in Mookkannoor Panchayath
• Support to the differently-abled and mentally challenged of • Support to ‘Say Yes: Women for India@75’ Initiative by CII-
Karuna Bhavan, Malayatoor Indian Women Network (IWN)
Health Care- Various Projects Promoting Environment Sustainability & Swachh Bharat
• Support to Christian Medical College, Ludhiana for procuring SEED – Student Empowerment for Environment Development
two ambulances with life support system To build awareness amongst student fraternity and conserve the
earth’s natural resources, your Bank has been partnering with
• Support to St. Gregorios Medical Mission Hospital, Parumala,
Mathrubhumi for SEED Programme since 2012. SEED (Student
Pathanamthitta for purchasing an ambulance with ICU
Empowerment for Environmental Development) is an initiative
system
aimed at spreading the message of ecological conservation.
• Support for purchasing Blood Bank Refrigerator for use Schools carry out simple but effective steps in environment
in the blood bank to IMA Voluntary Donor Blood Bank, protection like Planting and Protection of Saplings, Agricultural
Ernakulam Activities, Bio-diversity Conservation, Energy Conservation,
Conservation of Water bodies, Cleanliness and Protection of
• Infrastructural Support to Idukki Govt Medical College Public Health, Reduce, Reuse and Recycle Plastic waste and
Hospital intervention in local area environmental issues through SEED
Police. Your Bank has been supporting this noble cause for the
• Infrastructural Support to District Autism Center, Sultan past eight years.
Bathery, Wayanad
• Support to Divyam Foundation for purchasing a vehicle for Support to Various District Administration Bodies
Palliative Care activities Your Bank provided support to various projects of different
administrations, which include-
• Support to Holy Family Hospital, Bandra for procuring Liga
sure LS 10 tissue fusion instrument used to arrest bleeding • Tirunelveli Municipal Corporation for installation of FRP
during laparoscopic and open surgeries Mobile Toilets in Tirunelveli for public use

• Greater Chennai Corporation for setting up Miyawaki forest 22, 2019, updated all scheduled commercial Banks that legislative
at Balaji Nagar, Chennai amendments recommended by the RBI are under consideration
of the Government of India. Accordingly, RBI had decided to defer
• Trivandrum Municipal Corporation for Providing Cloud
the implementation of Ind AS till further notice.
Solution to Green Village Portal
• Trivandrum Municipal Corporation (TMC) for Waste Even though RBI has deferred the implementation, your Bank is
Management Campaign ‘EnteNagaram ,SundaraNagaram’ gearing itself to bring the necessary systems in place to facilitate
the Proforma submission to RBI. With respect to the various
Eradicating Hunger & Poverty - Various Projects instructions from Ministry of Corporate Affairs and Reserve Bank
• Supported Scalae Charitable Society for setting up a dryer of India (RBI), the actions taken by your Bank are summarized as
unit (for food processing) for farmers follows:
• Supported AkshayaPatra Foundation for distribution of food

• A steering committee was formed by MD & CEO with ED &
to 7,500 children of Karnataka for a period of 1 year through
CFO as its Chairman with members from all cross-functional
‘Happiness Box ‘project
departments
• Supplied 1.50 Lakhs Quarantine Kits costing approximately
Rs. 300/- per kit, to Non-Resident Keralites returning home • The implementation of IT solution procured to automate
during the COVID-19 pandemic the computation of Expected Credit Losses (ECL), Effective
Interest Rate, Fair valuation and other accounting changes
• Supported Kerala Samajam, Bangalore for distributing required under Ind AS is completed and your Bank is
essential grocery items to the needy in the wake of generating extracts from the system on a quarterly basis
COVID-19
• Your Bank is now in the process of implementing the other
• Distributed essential grocery items to Convents in
assessed changes required in existing IT architecture and
Ernakulam Parliament Constituency and to 16 Destitute
other processes to enable smooth transition to Ind AS
Homes in Ernakulam in the wake of COVID-19
• Supported Bosco Integrated Development Society for • Your Bank is continuing to submit the quarterly progress
providing food kits to Community School students in the report on the status of Ind AS implementation to the Audit
state of Meghalaya Committee of the Board
Promoting Sports & Culture • As directed by the RBI, the Bank is submitting quarterly
As a measure for empowering women and to promote sports Proforma Ind AS financial statements to the RBI within the
among the women from the country and overseas, support stipulated timeline
was extended to the Women’s team of Gokulam FC, run by
M/s Gokulam Football Foundation, in the year 2020-21. The • Training to the employees is imparted in a phased manner
foundation is also running a campaign called ‘Inspire Like a Girl’,
in connection with the Women’s team, who are also the current The key impact areas during the implementation of Ind AS for
champions of Indian Women’s League. the Bank include effective interest rate accounting, fair valuation
inputs, methodologies and assumptions, specific valuation
Support to Kovalam FC, Vizhinjam was also provided with a, considerations in many instruments, expected credit losses,
target to uplifting talent within the underprivileged segment, employee stock options and implementation of technology
providing livelihood and bringing them to the mainstream. The systems.
objective of the Club was to engage boys from the fishermen
families, thereby preventing them from anti-social activities such Subsidiary/ Associates Performance
as substance abuse. The club was also supported with a team bus As on March 31, 2021, your Bank has one unlisted wholly owned
for transportation purposes. subsidiary - M/s. Federal Operations and Services Limited, and
one unlisted subsidiary - M/s. Fedbank Financial Services Limited.
Ind AS Implementation Your Bank also has two Associate Companies - M/s. Ageas
Reserve Bank of India (RBI) through press release RBI/2018- Federal Life Insurance Company Limited and M/s. Equirus Capital
2019/146 DBR.BP.BC.No.29/21.07.001/2018-19, dated March Private Limited.
102 Federal Bank


Federal Operations and Services Limited Diverse Product Suite
Federal Operations and Services Limited (FedServ) is a wholly Fedfina has a wide range of financial solutions that help self-
owned subsidiary company of your Bank fully dedicated employed emerging Indian consumers meet its growing credit
to operational and technology-oriented services of the needs. The operations are divided into three categories: Retail
Bank. The company has helped the Bank in re-engineering Lending (Gold Loans, Loan against Property, Business Loans,
various operational activities and implement various process Personal Loans, and Housing Loans), Wholesale Lending (loans
improvements since its inception. FedServ has been effective to NBFCs and Construction loans) and Distribution Business
in providing support on 87 operational activities for the year (sourcing Housing Loans, Personal Loans, SME Loans for parent
ended March 31, 2021 and is expected to provide support on company).
30+ additional processes during FY 2021-22. FedServ’s primary
objective is to enhance the customer service level by up keeping AUM ` (in Cr)
4,752
and upgrading processes on a continuous basis while ensuring CAGR: ~49%
that all the perceived risks are duly mitigated. 3,780 1,846
Fedbank Financial Services Limited 1,015
Fedbank Financial Services Ltd. (Fedfina) started as a wholly- 281
owned subsidiary of Federal Bank (the Bank) in year 1995, and 2,004 592 488
was initially engaged in the distribution of Auto and Home Loans 1,429 300
434 815
for the Bank. It received a non-bank finance company license in 431 665
340
2010 and is currently registered with the Reserve Bank of India 444 352
100 1,208 1,323
as a systemically important non-deposit taking non-banking 545 786
financial company (NBFC-ND-SI). As on March 31, 2021, Federal FY18 FY19 FY20 FY21
Bank holds 74% stake in Fedbank Financial Services Limited while
Medium Ticket LAP Small Ticket LAP & HL
True North (Large PE Fund formally known as India Value Fund)
Business Loan Others Gold Loan
holds the residual 26% stake.
During the year ending March 31, 2021, Fedfina ramped up its
Growth Story focus on the retail segments with a high emphasis on granularity
Fedfina is one of the fastest growing NBFCs in the secured lending and secured lending. The Gold Loan book has acted as an effective
space. With the vision of empowering emerging India with easy counter-cyclical hedge to MSME credit in a COVID-19 stressed
access to credit, the company caters to growing needs of both year, as demonstrated by the change in its composition.
retail and commercial clients through a network of 360 branches
in 12 states across India. The AUM as on March 31, 2021 was ` 4752 Crore with ~86% of
the portfolio secured by tangible assets.
Strong Physical Reach with Digital Backbone
360 Branches Loan Composition March 31, 2021 March 31, 2020
12 States Retail 96% 90%
6 Punjab Gold Loans 39% 27%
2 Haryana 24 Delhi Mortgage Loans/ Home 45% 50%
6 Rajasthan Loans
Unsecured Business Loans 10% 8%
57 Gujarat Micro Finance/Fintech 2% 5%
1 Madhya Pradesh Lending
64 Maharashtra Wholesale Finance 4% 10%
38 Andhra Pradesh
2 Goa Performance in FY 2020-21
35 Telangana
67 Karnataka Gross revenues for FY 2020-21 grew by 48% to ` 696.41 Crore
(PY ` 471.27 Crore) on the back of growth of 23% in the loan book
58 Tamil Nadu during the year. Net profit grew 48% to ` 58.60 Crore (PY ` 39.54
Crore).

Revenue/ Profit Parameters (` in Crore)
Financials per Indian GAAP March 31, 2021 March 31, 2020 Chg (%)
Gross Revenue 696.4 471.3 48%
Net Interest Income 337 206 64%
Pre-provisioning Optg Profit 149.0 71.3 109%
Credit costs incl. write-offs# 76.6 14.7 420%
Profit after tax 58.6 39.5 48%
# The company took a one-time write-off of non-performing loans of ` 29 Cr
Net worth in FY 2020-21 grew 20% to ` 832 Crore and CRAR (computed based on Ind-AS financials per RBI norms) improved to 23.52%.
During the year, Federal Bank has invested in equity shares of Fedfina amounting to ` 58.6 Crore
Fedfina carried enhanced liquidity buffers of ` 686 Crore as on March 31, 2021 in addition to the committed credit lines from Banks, in
anticipation of any potential COVID-19 related stress to cash-flows.
(` in Crore)
March 31, 2021 March 31, 2020 Chg (%)
Capital Parameters
Net Worth 832.08 694.04 20%
Capital adequacy 23.52% 17.89% 563 bps
Balance Sheet
Asset Size 5410 4035 34%
Loan Book 4492 3651 23%
Liquidity
Cash, Bank &Liq. MFs 685.9 224.2 206%
Gross loan portfolio (on book) as on March 31, 2021 grew 21% to ` 4,492 Crore (PY ` 3,651 Crore). Total assets increased to ` 5,410
Crore (PY ` 4,035 Crore).
GNPAs fell below 1% on the back of a one-time technical write-off of ` 29 Crore.
Portfolio Quality March 31, 2021 March 31, 2020 Chg (%)
GNPA (%) 0.98% 1.35% 34 bps
NNPA (%) 0.79% 1.16% 37 bps
Robust Risk & Governance Architecture

Fedfina established a robust Enterprise Risk Management (ERM) framework, approved by the Board (which has three Federal Bank
nominees), which has enabled Fedfina to maintain net NPA levels below 1 per cent (among the lowest in the industry) and strong credit
ratings. The Company has set up a Risk Management Committee (RMC) of the Board to assist the Board by supervising and assessing
company’s risk management principles, policies, strategies, processes and controls. This committee is supported by an Operational
Credit and Risk Management Committee and Asset Liability Management Committee (ALCO).
Debt Rating
Fedfina’s long-term debt is rated AA-/stable by India Ratings and its short-term debt is rated A1+ by ICRA, CRISIL & ACUITE, indicating
the highest degree of safety regarding timely servicing of financial obligations.
Nurturing Human Talent with Enhanced People Focus

People focused initiatives led to Fedfina to receive the “Great Place to Work” (GPTW) certification for two consecutive years. The
Company took a variety of staff wellness & safety related initiatives in light of the ongoing pandemic. Prioritising employee safety,
104 Federal Bank


Fedfina established SOPs for working from home across a the earlier year due to higher provisioning of policy liabilities in lieu
variety of functions. As company followed all the advisories of prevailing interest rate scenario. The gross booked premium
by government and authorities, it launched employee benefit was ` 1,959 Crore, a growth of 6% over the previous year. Total
initiatives like Corona Kawach Insurance for all the employees, New Business Premium for the year stood at ` 632 Crore, which
free COVID-19 tele-advisory, Ambulance on Call, oxygen cylinders increased by 13% over prior year. While business sourced is driven
to employees, etc. by customer needs, AFLIC has achieved a good balance between
product segments with contribution of 50% from non-unit linked
Leverage Technology to Drive Efficiencies products. At ` 1,327 Crore, the renewal premium grew by 4% over
Fedbank Financial Services strives to be a technology driven the previous year.
company, leveraging digital technology and data analytics across
the customer life cycle. In view of this, Fedfina commissioned an Product
integrated LOS & LMS for Gold Loan business with the capability AFLI offers a comprehensive product suite of 23 plans designed
to digitally on-board customers and also provide Door-Step Gold to meet the varying life-stage requirements of its customers
Loan services. while ensuring financial protection for them and their families.
During this financial year, AFLI has filed 6 new plans with IRDAI,
With the launch of customer self-service Mobile App & Web launched 5 new products and modified 2 existing plans.
Portal in Q4’21, customers now can perform a host of borrowing
and account management activities effortlessly from the comfort Risk Management Framework & Risk Mitigation Measures
of their homes and/or workplace. Discipline is a key component of a visionary organisation. To this
end, AFLI is continuously evolving its risk management framework
Fedfina is also in an advance stage of implementing fully digital for timely identification, intervention, and mitigation of risks.
workflow for instalment loan origination, underwriting and AFLI risk management structure is guided by development,
portfolio management. The company has already committed a implementation, and monitoring of financial and operational
significant investment in information technology systems and strategies.
will continue to invest in technology to build scalable and efficient
operating model. AFLI is thus able to not only assess the risk but also ensure
mitigation, thereby improving efficiencies and enhancing the value
Ageas Federal Life Insurance Company Limited that AFLI delivers to its stakeholders. Further, our assessment
Performance Summary process ensures timely response and decisions to minimise
During FY 2020-21, Ageas Federal Life Insurance Company operational surprises and losses.
Limited (AFLIC) continued to play on its strengths which included
best in class customer service, high customer retention, Cognizant of the strong connect between risk and return, the
committed workforce among many others. This has helped to Company does not believe in risk avoidance and is rather focused
keep its overall premium growing over the prior year. AFLIC has on understanding and managing risks effectively. This approach
witnessed strong growth in New Business Premium (NBP) to the helps the Company to identify the acceptable risks and optimise
tune of 13% and in Renewal Premium, recording 4% growth over the same to achieve expected returns.
last year. The Company has also increased its market share on
APE basis as compared to the last year, despite the challenging Risk Taxonomy continues to be a vital component of the Company’s
business environment. risk management framework and helps ensure a consistent and
comprehensive approach to risk identification, assessment,
AFLIC has been agile and swiftly moved in line with macro- monitoring and response. Guided by this mechanism, AFLI is able
economic changes such as interest rates and performance of to highlight and define all the identified risks within the Company,
various financial markets thereby modifying its product suite to which further helps it to improve the necessary risk management
ensure balanced product mix for the company and at the same efforts. It also helps establish ownership of the various risk
time, offer better terms to its customers. categories and provides a link to the overall governance structure
of the Company.
In this backdrop of business performance and cost effectiveness,
the Operating Cost Ratio (operating cost to gross written premium) Financial Risk is managed by putting fund-wise strategic asset
decreased to 12.7% from 13.8% during the year. The Company allocation mix and various internal limit such as instrument
registered a profit before tax of ` 134.98 Crore,, down by 17% over concentration limits, duration limits etc in place. These limits are

monitored daily by the Middle Office and discussed at ALCO in the financial year ended March 31, 2021 as against loss of ` 8.32
its monthly meetings. In case of linked portfolios with minimum Crore in the previous financial year.
guarantees, the Company hedges the risk through duration
matching/cash flow matching within the applicable regulatory As on March 31, 2021, the Company had following subsidiaries:
boundaries. Moreover, the ALM system is in place to manage
the interest rate risk, equity price risk, underwriting risks, 1. Equirus Securities Private Limited - Institutional broking
liquidity risks etc. The Company has also put in place a credit business in cash and derivative segment
review process to review the credit risk of Corporate Bonds and 2. Equirus Wealth Private Limited – Wealth Management and
has also developed a stress testing framework in accordance PMS business
with IRDAI’s guidelines.
3. Equirus Insurance Broking Private Limited - General
The company carries out Stress Tests on its portfolio for certain Insurance Broking
scenarios and basis the results of such stress test, decides to After the successful execution of the Antony Waste Handling IPO,
control risks by putting risk limits. the Company is seeing increased demand for its services in the
area of M&A and Equity Capital Market. The Company will further
The Company has defined a Risk Control and Self-Assessment
increase its presence in the Fixed Income Market and Institutional
framework for identifying and monitoring key operational risks.
Broking. For the Wealth Management through EWPL, the team
Key Risk Indicators are used to report important operational risks
has expanded to 10 locations this year to complete the first phase
to Senior Management and Risk Management Committee of the
of expansion and help grow the AUM to ` 2,000+ Crore. This year
Board. Further, the Risk Department sends risk alerts, do’s and
we will add more locations along with a strong digital platform to
do not’s, posters, banners etc as part of this initiative to spread
make it the best omni-channel wealth platform. The Company’s
awareness and build the first line of defence.
PMS business has become one of the top funds in its category
and has now grown to ` 300+ Crore AUM, and we are expecting
Equirus Capital Private Limited
to enhance it further by adding international distribution to it.
Based on Consolidated Financials, total Assets of Equirus Capital
Private Limited stood at ` 91.32 Crore as on March 31, 2021 as
Risk Mitigation Measures
against ` 64.62 Crore as on March 31, 2020. Total gross income
A risk management policy/plan of the Company is in place to
earned by the Company during the financial year ended March 31,
2021 was ` 65.42 Crore as compared to ` 45.06 Crore during the ensure sustainable business growth with stability and to promote
previous financial year. Profit before tax posted by the Company a pro-active approach in reporting, evaluating and resolving risks
for the financial year ended March 31, 2021 was ` 3.94 Crore as associated with the business. In order to achieve the key objective,
against the loss of ` 7.76 Crore reported in the previous financial the policy establishes a structured and disciplined approach to
year ended March 31, 2020. Profit after tax was ` 3.40 Crore for Risk Management.
106 Federal Bank

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Corporate Overview Statutory Reports Financial Statements

Management Discussion and Analysis

Annual Report 2020-21 71

Management Discussion and Analysis (Contd...)

Annual Report 2020-21 73

Overview of Performance (Standalone)

Interest Income Non-Interest Income Total Income

FY 2020-21 13758 FY 2020-21 1945 FY 2020-21 15703

FY 2019-20 13211 FY 2019-20 1931 FY 2019-20 15142

Interest Paid Operating Expenses Total Expenses

FY 2020-21 8224 FY 2020-21 3692 FY 2020-21 11916

FY 2019-20 8562 FY 2019-20 3376 FY 2019-20 11937

Management Discussion and Analysis (Contd...)

Operating Performance (` in Crore)

Asset Quality Parameters

Provision Coverage 65.14 53.39 Mar-20 1.31

Annual Report 2020-21 75

Management Discussion and Analysis (Contd...)

Annual Report 2020-21 77

Management Discussion and Analysis (Contd...)

Annual Report 2020-21 79

Non- Resident Banking Financial Inclusion

Management Discussion and Analysis (Contd...)

• Borrowing from Formal Institutions only

Annual Report 2020-21 81

Management Discussion and Analysis (Contd...)

Annual Report 2020-21 83

Management Discussion and Analysis (Contd...)

Annual Report 2020-21 85

100 86.07% 87.00%

Management Discussion and Analysis (Contd...)

Annual Report 2020-21 87

Management Discussion and Analysis (Contd...)

Annual Report 2020-21 89

Management Discussion and Analysis (Contd...)

Annual Report 2020-21 91

Management Discussion and Analysis (Contd...)

Annual Report 2020-21 93

Management Discussion and Analysis (Contd...)

Annual Report 2020-21 95

Management Discussion and Analysis (Contd...)

Customer Delight department co-ordinates with diverse functions like Planning,

Annual Report 2020-21 97

Management Discussion and Analysis (Contd...)

Support to Light of Life Trust Disaster Management – COVID-19

Annual Report 2020-21 99

100 Federal Bank

Management Discussion and Analysis (Contd...)

Annual Report 2020-21 101

• Supported AkshayaPatra Foundation for distribution of food

102 Federal Bank

Management Discussion and Analysis (Contd...)

Annual Report 2020-21 103

GNPAs fell below 1% on the back of a one-time technical write-off of ` 29 Crore.

Robust Risk & Governance Architecture

Nurturing Human Talent with Enhanced People Focus

104 Federal Bank

Management Discussion and Analysis (Contd...)

Annual Report 2020-21 105

106 Federal Bank