APGVB Information

APGVB Formation By amalgamation, on the 31st March 2006, of the following 5 banks, sponsored by SBI, to participate more energetically,
with synergy, in the uplift and development of Rural Farm Sector and Rural Non-Farm Sector, with emphasis on the deprived, the Rural Poor, Rural ISB and Rural Crafts.
Sri Visakha Grameena Bank: Established on 30.09.1976 Nagarjuna Grameena Bank: Established on 30.04.1976 Sangameswara Grameena Bank: Established on 31.03.1982 Manjira Grameena Bank: Established on 31.03.1982 Kakathiya Grameena Bank: Established on 28.06.1982
Always Try to be on Top
K Lakshmana Rao Chairman
Chairman's Message
Dear Colleagues, A year has gone by since I reported at APGVB on 23.09.2011 to assume the charge as Chairman of the Bank. Looking back at the past one year of my stay, I have mixed feelings. A few things that we have achieved during the past one year have been very relevant for the Banks growth and stabilization: a) Fresh from migration to CBS Platform, the Bank had many loose ends to address: a. The Reports generated by CBS has been analysed in depth for a more comprehensive and authentic MIS; b. System Suspense and Technical Suspense Accounts have been zeroised in a reasonably short period something even many commercial banks could not achieve. c. Introduction of BCGA and Issue of Demand Drafts / Bankers Cheques d. Introduction of Pass Book Printers and DD Printers
e. Reconciliation of old Bankers Cheque Accounts. b) Introduction and stabilization of NPA Tracking in CBS system c) Introduction of Toll free number for the Bank to get feedback from the customers. d) Recruitment of Officers first time in the Bank after nearly two decades. e) Development of a Personality Development Programme Vikas Patham - for all staff f) Achieved a business growth of around Rs 2000 Crore and profit of Rs 108 Crore, both highest in the history of APGVB g) Launching of successful Deposit Mobilisation campaigns like Operation One lakh , Operation 20-20 & Vikas 63 . We could mobilise about Rs 350 crores during the slack season which is a great achievement. I am happy that most of the staff members are actively involved in Deposit mobilisation efforts. I have come to this Bank with a lot of fire in belly. After visiting many branches myself, I have set three priorities for this financial year: a) Sustainable business growth resulting in value addition to the people and to ensure utmost quality of credit. b) Strong HR Policies maximum staff, both serving and retiring, should be happy with the Bank A corpus to fund Staff salary c) Make APGVB as No.1 RRB in the country and a preferred choice for the customers wherever we are. Nearly 20 frauds have surfaced in the last 3-4 months which shows that the staff have not been following the systems & procedures. This is fraught with risk and we have to respect the systems & procedures. Lets all work together to realize these dreams and place our Bank above the rest. We welcome the 72 young officers and 193 Office Assistants to our bank and wish them all success in their careers. The RRBs are in for a sea change in near future. Banks image, stability and growth should be the single most item on everyones agenda. Collectively, we can realise our dreams. Let us be prepared for the change and benefit from it. I appeal to all staff members, including representatives of Union and Association, to join hands and contribute their best for fulfilling our aspirations and goals. Bright future is ahead for all of us. We wish a very Happy Dussehra and Deepawali festivals to all the members of staff. (K. Lakshmana Rao) Chairman By amalgamation, on the 31st March 2006, of the following 5 Formation banks, sponsored by SBI, to participate more energetically, with synergy, in the uplift and development of Rural Farm Sector and Rural Non-Farm Sector, with emphasis on the deprived, the Rural Poor, Rural ISB and Rural Crafts. Sri Visakha Grameena Bank: Established on 30.09.1976 Nagarjuna Grameena Bank: Established on 30.04.1976
Sangameswara Grameena Bank: Established on 31.03.1982 Manjira Grameena Bank: Established on 31.03.1982 Kakathiya Grameena Bank: Established on 28.06.1982
Districts Covered
Eight
Mahabubnagar (Population: 35.09 Lakhs) Nalgonda (Population: 32.43 Lakhs) Medak (Population: 26.70 Lakhs Warangal (Population: 32.46 Lakhs) Khammam (Population: 25.65 Lakhs) Visakhapatnam (Population: 38.32 Lakhs) Vizianagaram (Population: 22.45 Lakhs) Srikakulam (Population: 25.38 Lakhs)
Headquarters Ownership Number of Branches Staff
Warangal, Andhra Pradesh Government of India :50% Government of Andhra Pradesh :15% State Bank of India :35%
555
2,350 willing, young, energetic, empathetic cadre, man these branches
ANNUAL REPORT
2010 - 2011
ANDHRA PRADESH GRAMEENA VIKAS BANK

Rejuvenating Rural Economy Come, join us
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we are with you!

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6 Annual Report 2010-11
With Best Compliments from Chairman Andhra Pradesh Grameena Vikas Bank Head Office Warangal AP K. Lakshmana Rao
Empowering Rural Lives

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Srikakulam
Vizianagaram Visakhapatnam Khammam Nalgonda Saraswathi complex, Baker sahed peta Srikakulam 532001, Tel 08942-221041 Fax 08942-221040 8-12-64/1, Himagiri theatre, New S.P. Bungalow Vizianagaram 536002, Tel 08922-273956 Fax 08922-274221 TPT colony, Near Enadu, Seethamdhara Visakhapatnam, Tel 0891-2713942 Fax 0891-2746341 Wyra Road, Khammam 507002 Tel 08742-226816, Fax 08742-228972 Ramgiri, Nalgonda, Tel 08682-229943 Fax 08682-229945 apgvikasbankskl@yahoo.co.in apgvikasbankvzm@yahoo.com apgvikasbankvsp@yahoo.co.in apgvikasbankkmm@yahoo.co.in apgvikasbanknlg@yahoo.co.in Warangal Mahabubnagar Sangareddy Ashoknagar Bhadrachalam 2-739-1-3, First Floor, Ramnagar Hanamkonda, Warangal 506001 Tel 0870-2577884, Fax 0870-2568010 Mettugadda, Mahabubnagar 509001 Tel 08542-242861 Fax 08542-242862 Sangareddy, (Dist) Medak 502007 Tel 08455-276263 Fax 08455-276603 Ramachandrapuram Mandal Medak 502032, Tel 040-20040773 Fax 040-23020238 Bhadrachalam, Khammam 507111 Tel 08743-231492 Fax 08743-231020 apgvikasbankwgl@yahoo.co.in apgvikasbankmbnr@yahoo.co.in
apgvikasbanksrd@yahoo.co.in apgvbroash@yahoo.co.in apgvbbcm@yahoo.co.in
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Geographical Area
Regional Offices
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Contents
Particulars Pages Financials
Letter of Transmittal 04 Vision, Mission, Values 05 Board of Directors 06 Highlights 08 Key Performance Indicators 09 From the Chairman's Desk 12 17 Audit Report 57 Balance Sheet and Profit & Loss Account 59 Schedules & Notes 61 85
Board of Directors Report

Events and Happenings
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Annual Report 2010-11 we are with you!
The Secretary Ministry of Finance, Dept. of Economic Affairs Banking Division, Government of India Parliament Street, New Delhi-110001 Dear Sir, In accordance with the provisions of Section 20 of the Regional Rural Banks Act 1976, I forward herewith the following documents. A Report of Board of Directors as to the Bank's working and its activities during the period st st 1 April 2010 to 31 March 2011. st A copy of the audited Balance Sheet and Profit and Loss Account for the year ended 31 March 2011. st A copy of the Auditor's report in relation to the Bank's accounts for the period 1 April 2010 st to 31 March 2011.
Andhra Pradesh Grameena Vikas Bank Head Office : Warangal

Yours faithfully, Chairman (K. Lakshmana Rao) Date: 31.07.2011
Letter of Transmittal
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Annual Report 2010-11
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Vision Mission Values

Vision Mission Values
Repositioning the Bank in competitive rural market and accomplish the leadership spot in Rural Banking. Aspiring to realize the vision of excelling in Rural Credit and SME. Pursuing the best practices for delivering the value added service to the customers by transforming the key branches into profit and business centers. With efficiency and service each one of us works in tandem to deliver quality rural service, no matter where our customers choose to experience it. With the advantage of a large network in the rural hinterland, it is our duty and obligation to serve the rural masses, the deprived and denied, retail and agriculture sectors through improved processes, deployment of technology, with an emphasis on employment of rural youth, augmentation of agricultural production, up liftment of the downtrodden and unabated service to rural poor with commitment to the sacred task of rural development and women's empowerment. Profit orientation Commitment for rural development Excellence in customer service Respect to systems and procedures Team Synergy
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Chairman DGM on deputation from State Bank of India Nominees of Central Government under Section 9 (1) (a) of the Regional Rural Bank's Act, 1976 Nominees of Reserve Bank of India under Section 9 (1) (b) of the Regional Rural Bank's Asst. General Manager Act 1976 Reserve Bank of India Regional Office, Secretariat Road, Hyderabad Nominees of NABARD under section 9 (1) (c) of the Regional Rural Bank's Act, 1976. Deputy General Manager National Bank for Agriculture and Rural Development, Regional Office, Hyderabad Nominees of State Bank of India under Section 9 (1) (d) of the Deputy General Manager (RBU) Regional Rural Bank's Act, 1976 State Bank of India, Local Head Office Hyderabad Deputy General Manager (PBU) State Bank of India, Local Head Office Hyderabad Nominees of State Government under Section 9 (1) (e) of Regional Secretary, Institutional Finance Rural Bank's Act, 1976 Department, Govt. of Andhra Pradesh. District Collector & Magistrate, Warangal 1 Shri K. Lakshmana Rao 2 Shri B.Raja Rao 3 Shri B. Radhakrishna Murthy 4 Shri K.N. Singh Sardar 5 Shri D. Hari
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BOARD OF DIRECTORS
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Shri Manoj Khattar Shri K.T. Ajit Smt Vasudha Mishra, IAS Shri Rahul Bojja, IAS,
BOARD OF DIRECTORS
Shri Shri Shri Shri
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K. Lakshmana Rao B. Radhakrishna Murthy Shri K.N. Singh Sardar Shri D. Hari Manoj Khattar Shri K.T. Ajit Smt Vasudha Mishra, IAS Shri Rahul Bojja, IAS, B.Raja Rao
HIGHLIGHTS 2010 -2011

v v v v v v v v v v v Registered a business growth of Rs. 2,012 Crores (26%) Highest among all RRBs in A.P. Branches of the bank reached to 553 - Largest network among all RRBs in A.P. Deposits of the bank are Rs 4,794.72 Crores - Highest for any RRB in A.P. Advances of the bank are Rs. 4,894 Crores - Highest for any RRB in A.P. Recorded Highest net profit of Rs. 108 Crores in 2010 - 2011 Networth of the Bank surpassed Rs. 500 Crore, exactly Rs. 513.09 Crore Established Staff learning centre at Warangal to impart training and knowledge to all staff - First among all RRBs sponsored by SBI 172260 SHGs have been financed by the bank with an outstanding of Rs. 1472 Crore. This is largest for any RRB in the country Number one RRB in the country among SBI sponsored RRBs in earning maximum commission on SBI life products CBS implemented at all the 553 Branches - Branches stabilised. Bank recovered Rs. 7.35 Crores during 2010-2011 from written off accounts
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KEY PERFORMANCE INDICATORS

(Rs in '000)
Indicators 2008-09 2009-10 2010-11
No. of Districts covered 8 8 8 No.of branches 527 538 553 a) Rural 408 414 429 b) Semi urban 86 88 88 c) Urban 33 36 36 d) Metropolitan . . Total staff: Excluding Sponsor Bank Staff 2160 2221 2234 Of which Officers 1385 1322 1298 Deposits 33938850 38045125 47947222 Growth % 15.69 12.1 26.07 Borrowings outstanding 13986471 15999777 19546416 Growth % 9 14.4 22.16 Gross loans and Advances outstanding 33038840 38697224 48944327 Growth % 22.33 17.13 26.48 CD Ratio 97.35 101.64 102.08 Investments outstanding 17077816 16621685 21472834 Growth % 11.23 -2.67 29.19 SLR Investment outstanding 6211799 7589071 9996983 Non-SLR Investment outstanding 10866017 9032614 11475851 Average Deposits 29337087 34159081 39000837 Growth % 14.9 16.44 14.17 Average Borrowings 10623021 13170900 16607091 Growth % 5.6 23.98 26.08 Average Gross Loans And Advances 29531173 34117695 43335628 Growth % 23.54 15.53 27.01 Average Investments 14912212 15857429 15817799 Growth % 4.38 6.34 -0.25 Average working funds 58912403 62376495 80457660 Loans issued during the year 20777800 17992000 38271901 Growth % -15.40 -13.41 112.71 Of the above, loans to Priority Sector 16622240 15970200 29779956 Of the above, loans to Non-target Group 8259700 3166100 8491945 Averages Loans issued during the year
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Indicators 2008-09 2009-10 2010-11] Of the above, SF/MF/AL 5882373 7049110 12309498 Per branch 127092 142643 175207 Per staff 31008 34553 43370 Demand 17965792 22137900 25472765 Recovery 14870454 18049100 20595069 Over dues 3095338 408880 4877696 Recovery %(June position) 82.77 81.53 80.85 Asset classification a) Standard 32156991 37814596 46981468 b) Sub-Standard 368759 319029 1557742 c) Doubtful 380027 525900 389227 d) Loss 133063 37699 15890 Total 33038840 38697224 48944327 Std.Assets % to Gross Loans & Advances outstanding 97.33 97.72 95.99 Interest paid on a) Depostits 1699395 2126277 2274695 b) Borrowings 922423 1133711 1298240 Salary 701460 861664 1005186 Other operating expenses 761967 495587 546091 a) Against NPAs 401332 402948 476104 b) Other provisions 475462 588277 704346 a) Loans and Advances 3197146 4283306 5157559 b) Current A/c with SBI/Other Banks . . . c) Investments 1274575 1490635 1272310
Other income 420132 445226 750752 Profit/Loss 692742 1028407 1081292 Share Capital deposit received 890850 890850 890850 Productivity Recovery Performance Profitability analysis Provisions made during the year Interest received on Other information
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Indicators 2008-09 2009-10 2010-11 CumulativeProvisions against NPAs 401332 402948 476104 Interest de-recognized cumulative (INCA) 52180 65802 124406 a) No. of accounts 8525 8453 2851 b) Amount 99251 229800 76200 Reserves/Accumulated profits 2210139 3108850 4190143 Loans Written off during the year Parameters 2009-10 2010-11 % Change Total Income (Rs.crore) 622 718 15.43 Total expenditure (Rs.crore) 474 562 18.56 Net profit (Rs.crore) 103 108 4.85 Profit per employee (Rs.lakhs) 4.63 4.86 4.97 Return on average Assets 10.16 8.92 -12.2
For the year

Parameters March-10 March-11 % Change Capital, Reserves and Surplus(Rs. Crore) 316 424 34.23 Deposits (Rs.crore) 3807 4795 26.03 Advances (Rs.crore) 3870 4894 26.48 No.of branches 538 553 2.79 Capital Adequacy Ratio 11.22 11.85 5.61 Net NPA % 1.08 2.82 161
At the end of
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Chairman's Message
It is indeed a privilege to be the Chairman of this Bank, which assumed the proportion of a mini commercial bank after amalgamation on 31.03.2006, with its presence in over one third of Andhra Pradesh. I am at the helm for a little less than six months. The fiscal 2010-11 has been the best year for the Bank in terms of business and the Profit. With a growth rate of 26% each in deposits and advances ( Rs 2012 Core in absolute terms) and net profit of Rs108 Crore, both the highest ever since its inception on 31.3.2006, the Bank has done well, vis--vis previous years. The net profit would have been more by around Rs 60 Crore but for the incidence of additional provisioning on rural advances and the impact of wage revision. The Bank's growth rates are well above the industry growth of 16% in deposits and 21% in credit. The Bank has also done exceedingly well in bringing down the NPAs to Rs 198 Crore from an alarming level of nearly Rs 900 Crore, thrown up by CBS during the year, although it has doubled vis--vis Rs 88.26 Cr as on 31.3.2010.
Resources mobilization, correction of technical NPAs, upgradation of NPAs and recovery in AUCA( Rs 7.35 cr), strengthening of Balance Sheet as well and internal control mechanism had been our focused areas during the year, while reconciling the System Suspense and Cash differences as on 31.3.2011 in CBS environment, has been a significant achievement. Although the growth rates and business volume are certainly positive and encouraging features of the Bank, there are certain concerns that need to be addressed immediately. With structural changes in administrative set up as envisaged in Thorat Committee Recommendations and adoption of Core Banking Solutions two major decisions in administration and functioning of branches respectively, the Bank has gone back to budding stage, learning the new technology which is entirely different from bygone environment of manual or semi computerized operations. Another important ingredient of the APGVB's present transformation-stage is the infusion of new blood into the Bank by means of recruitments, after a gap of nearly two decades around 300 people are dotting the map of APGVB with another 419 joining the team of APGVB. They are tech-savvy, energetic, youthful, craving for recognition and young in
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age and fresh in thoughts. There is a blend of enormously experienced staff - some on the verge of retirement, some in their prime between 45-55 and fresh employees beginning to blossom. I reckon this is a crucial period for the Bank's future. The new entrants to the Bank, need to be properly nurtured, trained, groomed and oriented so that they can assume the role of professional bankers and own the responsibility of running the Bank in the future. The average age of staff which has been 53+ is coming down to 51 with this splendid additions. The outlook for RRBs in the Indian financial system is bright as they have come to occupy the attention of regulators and policymakers alike in recent times. Dr. K.C. Chakravarthi Committee's recommendations, accepted by the Government of India, have far reaching impact on them. RRBs are being brought within the internationally accepted framework of Basel-I norms and proactive measures were suggested to make the RRBs more vibrant and professional. To inject professionalism and competitive spirit in the functioning of RRBs, they have been permitted to pay dividend to Share holders with effect from 1.4.2013, which will increase the stake holders interest in the RRBs. Massive promotional avenues have been opened up through Thorat Committee Recommendations and the Bank is geared to complete the man power planning be it recruitments from the market or internal promotions. The RRB structure in Indian banking scenario in general and rural credit delivery system in particular has deepened with the GOI and RBI stipulating adoption of Core Banking Solutions Technology in all RRBs, which can virtually facilitate RRBs to hook to any other financial and banking networks in India to accentuate its presence in Indian banking and financial system. Leading technology providers like TCS, Infosys have provided CBS solutions to RRBs unlike in the past where RRBs used to outsource technology from small ticket companies. RRBs can synergise with Sponsor Banks in sharing technology and offer co-branded tech-enabled banking services. RRBs are shedding their old skin to do the functions of a normal Commercial Bank, within the rules and regulations stipulated by RBI.
RRBs were subject to quite a number of limitations in the past, prior to amalgamation, in terms of area of operation, limited opportunities for diversification of business, human resources base, technology adoption, demographic profile of clientele, a niche market etc., with limited option to scale up or scale down banking operations depending upon the market requirements. Some of these barriers have already been broken with structural changes, while it is time for nd the Bank to follow robust and sophisticated banking practices. RRBs are commercial banks in nature, included in 2 Schedule of RBI Act 1934 and they have come of age to truly become commercial banks in character and fulfill its mandate effectively in serving the rural poor, especially micro- entrepreneurs, in the agricultural and non-farm sectors. There is no dearth of banking business potential in rural areas. It is a fact and widely gets reported in media that banking facilities are lacking in rural areas and villages. Statistics reveal that of around 6 Lakh villages in India, only 10% have access to banking services, giving scope for abundant business potential. Banking majors have been targeting the rural areas for exploiting the potential. Having been in the rural space for the last thirty five years, we have edge over others who are now entering the markets. There would not have been a better time for RRBs than now, to change its face and build strong banking institutions. The theme of BANCON 2010 i.e., Transform to Outperform is apt to be a tagline to the Bank. In retrospection, the RRBs can be termed as victim of circumstances. When the agriculture and rural sectors were in
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dire need of institutional financial support, with the commercial banks and cooperatives not being able to penetrate and do the job and money lenders thriving on the rural poverty, RRBs were made to take birth and go there. They drove the money lender out, atleast partially, if not fully and played a very key role in financing agriculture and rural development. RRBs acted as instruments in the hands of Government in their direct attack on rural poverty. Wherever RRBs have existed, the people have had the banking facilities and financial support, irrespective of the quality of the other dimension of banking i.e., repayment of loans, by virtue of various policies. RRBs suffered in the process, by accumulating losses a change of place for poverty. This was not an un-anticipated phenomenon, going by a remark contained in a report issued by the Narasimham Committee in 1976, which stated that any losses incurred by the RRBs would be a price worth paying, given the social benefits that would be attained. The RRBs indeed have caused social / moral benefits to accrue in rural areas by covering vast geographical area. In the subsequent phase in this process, RRBs witnessed visible changes in the approach of policy makers, impacting the RRB, injecting the sense of sustainability and viability as an Institution capital infusion, restructuring, deregulation of interest rates, revision of priority sector norms on par with other commercial banks, recommending implementation of CBS, proposed introduction of Basel norms etc., all point to a direction to the RRBs to change for the better and be one among the many players competing for rural pie. Over a period, technology has arrived and demographic profile has changed in the rural areas and there are more
players to bank on the unbanked. Added to it, ICT solutions and BC model of branchless banking is going to increase the number of players more, forcing RRBs to compete for the business. The mandate and objectives have not changed but rules of the game did change. Let me conclude by hoping that the Bank will be resilient to meet the challenges posed by the changing environment, capitalise on the opportunities and emerge as the strongest of all RRB s in the Country. Yours sincerely,
K. Lakshmana Rao
Chairman
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Executives speak...
Shri N. Ramesh
General Manager (Credit)
The Bank's advances grew by 26%, which is the highest ever growth in any year after amalgamation in 2006. The Bank is playing major role in implementation of Annual Action Plan in the eight districts of our area of operation. The Bank has started Financial Inclusion Project in four districts of the State and the process of identification of BCs and BFs and issue of Smart Cards is in progress. We are hopeful of covering all villages with population of over 2000 allotted to the Bank, to serve the poorest of the poor at their doorsteps, by offering various services like GOAP EBT, apart from introducing Bank's deposit and other products. Growing NPAs is a major cause of concern to all of us, which have increased mainly due to non recovery of crop loans issued during 2007-08 due to the negative impact developed in the minds of good farmers after the implementation of Agriculturl Debt waiver / Debt relief scheme by Govt. of India during the year 2008.However, we are hopeful of regularizing the position during the next FY 2011-12 by intensifying the recovery efforts from the beginning of the year itself.
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Shri K. Solomon
General Manager (Operations)
The Bank could fulfill all its statutory requirements during the year viz., CRR, SLR, CAR etc., and made a huge difference in funds management, resulting in maintenance of fine cash balances and increased profitability. It is heartening that the Bank posted highest profit during the year, increasing the efficiency levels year after year. The Bank with its meager resources during the year, is able to generate the income for the individual rural customers, increase their purchasing capacity, empowering a large number of women financially and could provide inclusive banking to the rural masses who cannot afford the banking services, through low/no-cost innovative technology thus was able to not only benefit farmers immensely, but the bank was even posted an increased income over the last year through the dedicated and committed staff although handicapped by their age profile and financial constraints.
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The year 2010-11 is of great importance in the Bank's history with various initiatives taken in HR front. The Bank has recruited 163 Office Assistants and initiated measures for recruitment of another 193 Office Assistants and 73 Officers, apart from promotions in all cadres as per Thorat Committee norms and categorization of Branches, which includes 23 Scale-IV Promotions. The Bank is contemplating recruitment of Staff in all cadres during the next Financial year 2011-12, in terms of Thorat Committee manpower
norms and to meet the gap caused on account of mass retirements in the Bank. Leveraging Technology - The entire banking industry has adopted technology to increase operational efficiency and superior customer service. So has APGVB, the first RRB in the country with 500+ Branches to achieve full-fledged Core Banking Solutions in its operations. The adoption of technology would enable the Bank to improve financial analysis capability, minimize transaction cost, focus more on marketing the Bank's products and services. The Bank has a challenging task of sensitizing staff in all cadres to derive maximum benefits from the CBS environment.
Shri P.A.S. Sudhakar Rao

General Manager (HR)
Further, setting up of Bank's own Staff Learning Centre, fully equipped with computer lab, residential accommodation with own faculty, is a milestone in Bank's history. The Bank is designing a unique personality development programme by name Vikas Patham through SLC. The capacity utilization was more than 80%. The Bank has taken various Staff Welfare Measures including Group Mediclaim Policy for Staff, implementation of salary revision as per 9th Bipartite Settlement and payment of arrears. The Bank is also taking steps to introduce value added services like RGTS/NEFT, anywhere Banking and co-branded ATM Services to meet the requirement of new generation customers.
Shri M. Krishna Rao

General Manager (IT)
Executives speak...
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BOARD OF DIRECTORS' REPORT 2010 - 11

BOARD OF DIRECTORS' REPORT: 2010 - 11
Business growth th We have pleasure in presenting the 6 Annual Report of Andhra Pradesh Grameena Vikas Bank (APGVB) together with the Audited Statement of Accounts, Auditors' Report and the report on business and operations of the Bank for the financial year ended 31 March 2011. The fiscal 2010-11 has been eventful with many milestones created. The Bank has registered a growth of Rs 2012 Crore in total business vis--vis the business growth of Rs 979 Crore during last financial year. When APGVB was formed by amalgamation of five erstwhile RRBs on 31.3.2006, the total business as on that date was Rs 4001 Crore a level achieved by erstwhile RRBs over three decades, while more than half of it, has been achieved in a single year. Viewed differently, the total business growth achieved from 1.4.2006 to 31.3.2010 was Rs 3676, 55% of which was achieved in one year i.e., in 2010-11, which is a remarkable achievement by any standard.
For an RRB, in addition to profitability, volumes matter most, which directly is a measure of banking activity in rural areas. Increasing rural savings and impacting economic activity in rural areas by lending, each to the tune of around Rs 1000 Crore, is fairly gratifying facet of the Bank's performance. The Bank has registered a business level of Rs 9689 Crore as on 31.3.2011 with a growth rate of 26% over March 2010 level of Rs 7677 Crore. The deposits have reached a level of Rs 4794.72 as at the end of Mar 2011, vis--vis Rs 3807 as on 31.3.2010, registering a growth of 26%. Advances registered a growth of 26% during the year with a total outstanding of Rs 4894.43 Crore over March 2010 level of Rs 3870 Crore. (Rs in Crores)
9689 7677 6698 5635
4813
0 2000 4000 6000 8000 10000 12000
2006-07 2007-08 2008-09 2009-10 2010-11

2718 2934 3394 3807 4795 3870 4894 3304 2095 2701
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Profitability The Bank's operating profit (before provisions) has increased by Rs 35 Crore to reach Rs 206 Crore during the year, as against the previous year's Rs 171 Crore. The Bank posted a net profit of Rs 108.13 Crore during the year as against Rs 89.87 Crore for the year 2009-10. The growth in net profit has been shadowed by the huge provisions made towards NPAs and agricultural loans during this year. Income and Expenditure Particulars 2010-11 2009-10 Interest Income 642.98 577.39 Interest Expenditure 357.29 326.00 Non-Interest Income 75.07 44.52 Non-Interest Expenditure 155.12 135.72 Provisions written back 0 (-)10.94 Gross Profit/Operating profit 205.64 171.13 Taxes 48.35 45.42 Provisions and Contingencies 49.16 22.87 Provision for Salary hike 12.74* Previous year's taxes 23 Net Profit 108.13 89.87 *To the extent of provisions made during the year 2009-10, on account of revision of salary, the operating expenditure has increased by Rs 14 Crore on account of Salary Payments during the year 2010-11, offsetting extra charge to the previous year's profit. Net Interest Income During the year, the Bank has recorded a growth of Rs 65.59 Crore (11.36%) in Interest Income from Rs 577.40 crore in
the year 2009-10 to Rs 642.99 crore, as against the Interest expenses which grew by 9.6% from Rs 326 Crore during the financial year 2009-10 to Rs 357.29 crore during the year 2010-11. The Bank recorded a Net Interest Income of Rs 285.70 Crore during the year as against Rs 251.40 Crore during 2009-10 with a growth of Rs 34.30 Crore. 11.8 36.95 69.27 103 108
120 100 80 60 40 20 0 2006-07 2007-08 2008-09 2009-10 2010-11
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Interest earned on advances has gone up by Rs 87.43 Crore (20.41%) to reach Rs 515.76 Crore from Rs 428.33 crore. The growth in interest on advances was higher at Rs108.62 during 2009-10. Interest income from Investments rose by 27.82% to reach Rs 82.16 Crore from Rs 64.28 Crore during the year 2009-10. Interest expenditure on deposits registered a moderate growth of 6.98% as against 25.12% in the year 2009-10. The interest expenditure on deposits was Rs 227.47 Crore as against Rs 212.63 Crore in the previous year. This is due to the major share of Demand Deposits with lower interest rates, in the total deposits growth at 70%. Interest expenditure on borrowings was Rs 124.09 Crore with a growth of Rs 16.36 Crore (at 15.19%). The growth of 15.19% is moderate vis--vis the previous year's growth at 19.26%. The year 2010-11 witnessed moderate increase in net interest income and drastic decrease in net interest expenditure which is due to higher growth of demand deposits vis--vis term deposits. (Rs in Lakhs) Other Income The component of Other Income has reached to Rs 75.06 Crore with a remarkable growth of 68.06% as against the previous year's level of Rs 44.52 Crore. This growth has been due to plugging of income leakage in CBS environment, coupled with increase in commission on account of processing charges on advances growth of Rs 1024.68 Crore and non-fund business including cross selling of SBI Life products. The Bank has been No.1 in the country among RRBs in marketing SBI Life products for the two consecutive years. Operating Expenditure The total Operating expenditure during the year was Rs155.12 Crore as against Rs 135.73 Crore in the previous year with an increase of Rs 19.39 Crore (at 14.29%). The growth is conspicuous as against the negative growth of 7.25% during 2009-10. The two factors that propelled the Operating expenditure are the impact of wage revision th (9 Bipartite Settlement) and payment of the full-fledged monthly rentals for maintenance of CBS software and hardware, for all branches and Regional Offices. Higher provision towards employee benefits such as Leave
Encashment and Gratuity Fund have also impacted the growth in Operating expenditure. The other overheads have been maintained at the normal level and are under control.
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Int Expenditure on Deposits Int Expenditure on Refinance 12931 16994 21263 22747 10773 12409 7753 9033 0 2008 2009 2010 2011 5000 10000 15000 20000 25000 6513 7105 6428 8216 31360 31971 42833 51576 10000 20000 30000 40000 50000 60000 2008 2009 2010 2011 0 Int Income on Advances Int Income on Investments we are with you! Annual Report 2010-11
Provisions for NPAs The Bank has made an additional provision of Rs 50.06 Crore towards NPAs including a provision of Rs 31.56 Crore on rural advances. The rural advances are vulnerable to the changes in rural socio economic climate and environmental influences. This will be a cushion to the Bank, in case of slippages in performance of rural advances. Ratio Analysis The cost of deposits has come down to 5.83 % from 6.22 % while cost of funds to 4.37 from 5.14. This is due to concerted efforts of mobilizing low cost deposits and improving the share of Savings Bank component. The yield on advances has gone down to 11.90 % from 12.55 % on account of increase in NPAs. The yield on investment has also come down to 7.90% from 9.40% due to low interest regime during the year. Balance Sheet Size Total balance sheet size was Rs 7646.14 crore with a remarkable increase of 24.88% over Rs 6122.98 crore as at March 31, 2010. The growth in Balance Sheet size has been spectacular in comparison to the growth rates of 14.18% and 11.67% registered in the preceding two financial years viz., 2009-10 and 2008-09 respectively. While Deposits have grown by 26% over March 2010 level, borrowings rose by 22.16%, taking the aggregate growth of total liabilities (excluding Capital and Reserves) to 24.08%. On Assets side, the loan portfolio and investments have grown more or less equally at 26% and 27% respectively to reach Rs 4834.53 Crore and Rs 1032.70 Crore respectively, from the FY2009-10 levels of Rs 3822.85 Crore and Rs 814.96 Crore respectively.
Assets
O/s Provisions O/s Provisions O/s Provisions
Standard 4698.15 13.69 3781.46 10.66 3215.69 10.52 Sub Standard 155.77 24.29 31.90 3.56 36.88 4.16 Bad & Doubtful 40.51 21.77 52.59 33.39 38.00 22.97 Loss 1.54 3.77 3.35 13.31 13.01 Total 4894.43 61.29 3869.72 50.96 3303.88 50.66
2010-11 2009-10 2008-09

(Rs in Crores)
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Liabilities Tier-I and Tier-II Capital The Bank's authorized and paid up capital continued to be Rs 5 Crore comprising of 5 Lakh shares of Rs 100 each, subscribed by Government of India, Government of Andhra Pradesh and State Bank of India in the ratio of 50 : 15 : 35. The Bank has a Share Capital Deposit amount of Rs 89.08 Crores, subscribed by the promoters in the same ratio, in the pre-amalgamation stage of RRBs i.e., in 1996-97, as a measure of capital infusion for strengthening the balance sheets. The building up of Reserves and Surplus has been steady, strengthening the Bank's Balance Sheet year after year, although the rate of accretion to the Fund has been moderating. The Reserves and Surplus has increased by 34.78% to Rs 419.01 Crore over Rs 310.89 Crore as on 31.3.2010, indicative of the Bank's sustained earnings and steady forward moving on the path of sustainability.
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Assets Liabilities (Rs in Crores)

151.74 221.01 310.89 419.01 0 50 100 150 200 250 300 350 400 450 2008 2009 2010 2011
Reserves (Rs in Crores) Deposits 4795,62%

Borrowings, 1955,26%
Others, 384, 5% Capital & Reserves 513, 7%

Investments 1033, 14% Advamces 4835,63% Cash with Banks, 1637 21% Fixed & Other Assets, 142, 2% we are with you! Annual Report 2010-11
The following table gives the position of Tier-I, Tier-II capital, Reserves and computation of CAR. Capital 2010-11 2009-10 a. Paid up Capital 5.00 5.00 b. Share Capital Deposit 89.08 89.08 c. Statutory Reserves & Surplus 85.13 63.51 d. Capital Reserves 0.01 0.01 e. Other Reserves 14.31 14.31 f. Surplus in P&L 319.55 233.04 Total Tier-I Capital 513.09 404.97 a. Undisclosed Reserves - b. Revaluation Reserves - c. General Provisions & Reserves 71.33 d. Investment fluctuations Reserves / Fund - Total Tier-II Capital 71.33 Grand Total (Tier I + Tier II) 584.43 3. a. Adjusted value of funded risk assets i.e., balance sheet items 4838.75 b. Adjusted value of non-funded risk assets i.e., balance sheet items 0 c. a+b 4838.75 d. Percentage of Capital (Tier-I + Tier II) to Risk Weighted Assets 11.85 11.22 1. Tier-I 2. Tier-II The Bank has achieved a healthy Capital to Risk-weighted Asset Ratio (Capital Adequacy Ratio) of 11.85% calculated as per RBI guidelines. The CAR has been on upward movement increasing from 10.67% in FY 2008-09 to 11.22% in 2009-10 and further to 11.85%. The Bank's CAR is well above the levels envisaged to be achieved by RRBs, by Dr. K.C. Chakravarthi Committee st st Recommendations i.e., 7% by 31 March 2011 and atleast 9% from 31 March 2012 onwards. Deposits Total Deposits of the Bank as at the end of March 2011 was Rs 4794.72 Crore with a growth of Rs 990.20 Crore at 26.03% as against Rs 3804.51 Crore as on 31.3.2010. Savings Bank Deposits have grown by 41.11% to Rs 2212.19 Crore and Current Account by 38.20% to Rs 179.38 Crore from their respective levels of Rs 1567.68 Crore and Rs 129.80 Crore as on 31.3.2010. Term Deposits grew relatively at a lower rate of 14.05% to Rs 2403.14 from its previous year's level of Rs 2107.03 Crore. The share of CASA Deposits is exactly 50% of the total deposits as against its share of 45% in FY2009-10, on account of which Cost of Deposits has come down to 5.83% from its previous year's level 6.22%. This has contributed to the profitability of the Bank.
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(Rs in Crores)
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Deposit mix 2008 2009 2010 2011 Current A/c 124.71 163.18 129.80 179.38 Growth 90.33 -33.38 49.58 Growth %age 72.43 -20.46 38.20 Savings Bank A/c 1463.28 1439.94 1567.68 2212.19 Growth -23.34 127.74 644.51 Growth %age -1.60 8.87 41.11 Total CASA 1587.99 1603.12 1697.48 2391.57 Growth 1513 94.36 694.09 Growth %age 0.95 5.89 40.89 Term Deposits 1345.51 1790.77 2107.03 2403.14 Growth 445.26 316.26 296.11 Growth %age 33.09 17.66 14.05 Total deposits 2933.50 3393.89 3804.51 4794.71 Growth 460.39 410.62 990.20 Growth %age 15.69 12.10 26.03
The present ratio of CASA and Term Deposits is a healthy sign which has to be sustained by broad-basing the customer base. The Bank has responded to the changing dynamics of the banking industry and aligned interest rates according to the trends to offer competitive interest rate to the customers. In a bid to attract the new customers as well as retaining the existing ones, a variety of new Deposit Schemes viz., Vikas-800 and Vikas1000, Vikas-400 with the nomenclature associated with term of deposit products have been introduced during the year at appropriate time with competitive interest rates, offering a bunch of choices to the customers, to suit their saving needs. Targeting the small business and salaried customers, a tailor-made RD product namely Vikas Lakshadhikari RD Scheme was launched to attract long term customer loyalty. We had focused attention on increasing the customer base by launching campaign Opening of Savings Bank A/cs. During the year, there is a net growth of 345740 in number of depositors.
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(Rs in Crore)
2188 2718 2934 3394 3805 4795
0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
Deposits
(Rs in Crores)
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As the technology goes up and commercial banks update / upgrade their technologyoriented products / services, RRBs stand at a disadvantageous position in taking on the competition in resources mobilization and attracting new customers. (A detailed discussion on this, appears in the Management Discussion and Analysis). Borrowings Borrowings is the only other variable source of funds for the Bank's operations, apart from deposits. As per laid down policy, the Bank has access to avail refinance from State Bank of India (being Sponsor Bank) and National Bank for Agriculture and Rural Development(NABARD) for Short Term Seasonal Agricultural Operations (Crop loans) and medium & long term loans to Self Help Groups etc. SBI provides refinance to the extent of 60% and NABARD 30% of the loan disbursements of crop loans (10% being own stake) while NABARD provides 100% for loans disbursed to SHGs. The refinancing agencies lay down policy, criteria and terms & conditions for availing refinance, every year, basing on which the Bank seeks sanction of certain credit limits for that particular year from the Board Of Directors, keeping in view the Bank's Annual Action Plan. During the year, the amounts borrowed as refinance from SBI & NABARD stood at Rs 718.65 Crore and Rs 1235.99 Crore (outstanding as on 31.3.2011) respectively. The Bank has also availed refinance from National Housing Bank towards financing rural housing to the extent of Rs 50 Crore, taking the total outstanding as on31.3.2011 to Rs 200 Cr.
The total borrowings as at the end of Mar 2011, grew by Rs 22.17% to Rs 1954.64 Crore from FY2009-10 level of Rs 1599.98. The usual growth in borrowings is in tandem with the growth in agricultural and SHG lending. (Rs in Crores) Particulars 2008 2009 2010 2011 SLR Investments 568.45 621.17 758.90 999.69 Growth 52.72 137.72 240.79 Growth %age 9.28 22.17 31.73 Non SLR Investments 966.84 1086.60 903.26 1147.58 Growth 119.75 -183.34 244.32 Growth %age 12.39 -16.87 27.05 Total Investments 1535.29 1707.78 1662.16 2147.28 Growth 172.48 -45.61 485.11 Growth %age 11.23 -2.67 29.19 As on 31.3.2011, total investments of the Bank (both SLR and Non SLR) have gone up by 29.19% to 2147.28 Crore from Rs1662.17 Crore during the FY 2009-10. The 29.19% growth in investments during 2010-11 is conspicuous vis--vis negative growth of 2.67% registered during 2009-10. Significant improvements in funds management have been brought in, which enabled Non SLR investments to grow up by 27.05% from FY09-10 level of Rs 903 Crore to Rs 1148 Crore as on 31.3.2011. The Accounts department at Head Office monitored the funds flow everyday and idle funds
Assets
Investments
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have been transferred to Head Office by Sweep facility and these funds are deployed profitably. The Bank's investments have two channels one for the purpose of maintaining Statutory Liquidity Ratio under Section 24 of the Banking Regulation Act in the form of Government Securities and the other with Sponsor Bank Branches in the form of Term Deposits. Investment of our Bank's funds is managed by Investment Committee headed by Chairman with four General Managers (viz., Credit, Operations, HR and IT) and three Chief Managers (viz., Accounts, Planning & Credit) as members. The Committee meets periodically to review and deploy the funds in SLR or Non SLR instruments. The actual investment in Government securities, including selection of securities etc., is being done by Sponsor Bank's Portfolio Management Services, Mumbai in accordance with an agreement entered into, to this effect. The premium paid in purchasing the Government Securities, is amortised during the tenure of the investment. A sum of Rs 3.74 Crore has been amortised during the year. Non SLR investments at present are invested in TDRs with Sponsor Bank Branches. However, a sum of Rs 18 Crore is in PSU bonds invested by erstwhile RRBs and Rs 15 Crore in SBI Mutual Funds invested after amalgamation, all of which will mature by June 2013. The investment policy approved by the Board is in conformity with the RBI guidelines and is reviewed by the Board on half yearly basis, apart from controlling the investment decisions. The Bank has been monitoring and following up for prompt receipt of interest due from Government Securities / Bonds. CRR and SLR Credit Portfolio
The Bank has complied with the regulatory requirement of maintenance of adequate balances towards CRR and SLR. There was no default in maintenance during the FY 2010-11. The Bank has a well-laid down system of assessing the CRR and SLR requirements on fortnightly basis taking into account the Net Demand and Time Liabilities. The Bank has kept Rs 283.22 cr in CRR as on 31.03.2011 while Rs 1185.03 cr in SLR. The credit portfolio of the Bank rose by 26.46% to Rs 4834.53 Crore during the financial year ended 31.03.2011, from the previous year's level of outstanding of Rs 3822.85 Crore. Agriculture & allied activities, housing, SME segments, micro credit, are the areas which occupied the major share in the credit growth. With favourable monsoon, all the districts of our Bank's area of operation received more than normal rains during the year and there has been consistent demand for crop loans and SME segments.
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Credit to Agriculture The Bank has been achieving the Agricultural credit targets set by State Government through State Level Bankers Committee. The targets of Annual Action Plans of our Bank has been the highest among all Banks in the state of Andhra Pradesh, next only to SBI, Andhra Bank and SBH. The Bank has disbursed Rs 1443 Crore towards production credit during the year, of which Rs 1191.27 Crores to the existing customers by way of renewals and Rs 252 Crore to cover new farmers. The production credit disbursed during this year, is 70% more than the last year's disbursement of Rs 848 Crore during 2009-10. The Bank has extended Rs 512.49 Crore towards investment credit during the year. Total credit to agriculture (including a portion of SHGs) is Rs 3563.00 Crore, constituting 73% of the total loan portfolio, as against Rs 2772.84 Crore during 2009-10. For the year 2010-11, the Bank has accepted a total target of Rs 2281.20 Crores for financing agriculture - production credit of Rs 1778.72 Crore and investment credit Rs 502 Crore, constituting 5.44% of the total State target of Agriculture Credit. The Bank has achieved the target by 66.04% by covering 41096 customers.
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Regional Office wise CD Ratio for the year 2010-11 The Bank has been consistent in credit dispensation and expanding outreach.
CD Ratio
77.09 92.06 97.35 101.64 102.08
2006-07 2007-08 2008-09 2009-10 2010-11 0 20 40 60 80 100 120
102 153 151 134 133 129 119 110 103
94 88
Total Bank Bhadrachalam Warangal Vizinagaram Srikakulam Mahabubnagar Khammam Nalgonda Sangareddy Visakhapatnam Ashoknagar
0 20 40 60 80 100 120 140 160 180
CD Ratio The Credit Deposit Ratio has been around 102 % for the last two financial years.
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Kisan Credit Cards The Bank aims at issuing Kisan Credit Cards to all eligible crop loan borrowers, providing hassle free, adequate and timely short term credit support to the farmers for their crop production needs including purchase of inputs in a flexible and cost effective manner. The Bank has issued new Kisan Credit Cards to 98277 borrowers with a disbursed amount of Rs 251.67 Crore, during the year for a period of three years, taking the total Cards issued to 580846. The total outstandings as at the end of 2010-11 was Rs 1705 Crore, included in the credit to agriculture. All KCC holders upto the age of 70 are automatically covered under Personal Accident Insurance Scheme, during the three year card holding period, with risk coverage of Rs 50000. The annual premium of Rs 15/- per Card is jointly borne by the Bank Rs 10/- and the borrower Rs 5/Interest subvention Self Help Groups As per the directives of Government of India, the Bank extended 1.5% interest subvention Scheme to all crop loans including agricultural gold loans sanctioned to the farmers upto the limit of Rs 3 Lakhs, sanctioned during Kharif and Rabi seasons from 1.4.2010 to 31.3.2011. An amount of Rs 8.18 Crore has been passed on as interest subvention to 297172 farmers during the year. The crop loan segment has witnessed prompt repayment of Rs 83.80 Crore by 19118 farmers and the Bank as per Government of India directives, has passed on 2% interest incentive to them, amounting to Rs 63,11,583. The Bank has been a pioneer in promoting Self Help Groups and providing Linkage with Bank credit, with the primary objective of empowering rural women to graduate to micro enterprises to generate income on sustainable basis. The initiatives of the Bank, in alignment with the Government's priorities and focus, have resulted in around 2550000 rural women, in other words that many households in rural areas, finding a solution to their economic problems by inculcating thrift and providing adequate credit. It is a common feature in every rural branch of the Bank, on any given day that a large number of women folk visit and transact their business with the Bank. (No. of KCC)
572948 634143 433142 486448 580846

0 100000
200000 300000 400000 500000 600000 700000 2006-07 2007-08 2008-09 2009-10 2010-11
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No.of Groups Outstanding (Rs in Crore) The Bank has financed to 89,781 Groups with a disbursement of Rs 1169.14 Crore, including 23236 new Groups which are credit linked during the year with a disbursement of Rs 174.27 Crore. As on 31.3.2011, the total number of groups financed by the Bank stood at 172260 with an outstanding of Rs 1472 Crore, constituting 30.69% of total credit portfolio. The loan outstanding balance per group has increased from Rs 0.72 Lakhs to Rs 0.85 Lakhs. Priority Sector Lending Priority sector lending by the Bank during the year, continued to occupy the major share of the total credit portfolio. The total outstandings in the Priority Sector advances reached to Rs 4039 Crore as at the end of March 2011 vis--vis previous year's level of Rs 3209.88 Crore, keeping pace with the growth in advances. The share of priority sector finance in the total outstanding, continued to be around 80% since inception, which indicates the Bank's continued thrust and commitment to priority sector lending. During the year, the Bank has disbursed Rs 2977.99 Crore to 510220 borrowers under priority sector, with agriculture sector garnering 52%, other priority sectors like SHGs, Education Loans and Housing 43% and remaining 5% to Non farm sector.
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SHG/HL/EL Agri. Sector NFS (ISB) 1749.22 43% 2091.66 52% 191.93 5%
1164 1472 905 606 216 332
0 200 400 600 800 1000 1200 1400 1600 2006 2007 2008 2009 2010 2011
172260 161077 139708 106350 82835 60140 0 20000 40000 60000
80000 100000 120000 140000 160000 180000 200000 2006 2007 2008 2009 2010 2011
The Bank's contribution and commitment to the SHG movement has been on the rise year after year as shown below.
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Lending to weaker sections constitutes 80% (i.e., Rs 2382 Crore) of total priority sector disbursements of Rs 2977.99 Crore, while 38% (i.e., Rs 1141 Crore) went to women borrowers. The following table shows the outstanding of the loans to various sections of the borrowers: 2010-11 2009-10 Sector No. of A/cs O/s No. of A/cs O/s 1. Weaker Sections 775273 3347.23 559480 2448.6 2. Women borrowers 480329 2282.12 468637 2082.62 3. Minorities 43782 194.61 38739 147.28 4. SCs/STs 211876 873.10 202744 748.00 The following table shows the outstanding credit extended to Central and State Government Sponsored Schemes as on 31.3.2011. 2010-11 2009-10 (Rs in Crore) (Rs in Crore) Participation in State Credit Plans The Bank has actively participated in the State Credit Plans for promotion of agriculture and rural development. The following table shows the level of achievement of targets allotted to the Bank:
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Scheme No. of A/cs O/s No. of A/cs O/s 1. SC Action Plan 19876 66.72 19351 54.32 2. ST Action Plan 21326 31.91 10745 26.50 3. BC Action Plan 4976 11.77 2941 8.71 4. Rajiv Yuva Sakthi 432 4.16 341 3.26 5. Handloom Weavers Groups 2246 8.04 2211 7.67 2010-11 2009-10 Segment 1. Crop Loans 1778.72 2027.53 1736.03 1502.21 2. Total Agr & allied activities 502.48 63.59 267.87 125.28 3. NFS 167.41 89.73 143.19 123.15 4. OPS 627.04 797.15 697.69 605.45 5. Total Priority Sector 3075.66 2978.00 2842.85 2356.09 % of achievement 96 82 Target Achievement Target Achievement APGVB Position (Rs in Crore)
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Retail Lending The Bank's retail loans portfolio consists of Housing Loans, educational loans, mortgage loans, personal loans, demand loans, personal gold loans and term loans in Non Farm Sector. O/s Mar - 2010-11 O/s Mar - 2009-10 S.No Segments No of A/Cs Amount No of A/Cs Amount 1 Housing Loans 6380 205 5387 116.35 2 Mortgage Loans 4923 98 4882 89.85 3 Education Loans 4506 72 3964 56.63 4 Demand Loans 33560 129 43648 140.25 5 Non Farm Sector - Term Loan 54726 164 56900 151.51 6 Personal Loans 17156 160 16056 136.02 7 Personel Gold Loans 84142 326 79072 225.93
Total 205393 1124 209909 916.54 (Rs in Crore) Small & Medium Enterprises and Small Business Finance Human Resources Development The outstanding credit to the SME & SBF stood at Rs 191.93 Crore vis--vis Rs 78.65 Crore as on 31.3.2010 registering a growth of 95%. During the year, a sum of Rs 153.42 Crore has been financed to 7254 units. During the year 2010-11, the Bank has witnessed significant developments in HR initiatives, many of which will have far reaching impact on the future of the Organisation. Strongly believing in motivating the staff at every available opportunity and enhancing the efficiency levels, APGVB has adopted a very proactive approach in promoting career progression to employees at all levels. The Bank is passing through a phase akin to transformations in terms of human capital, opening up huge promotional avenues and career growth opportunities. There was embargo on recruitments of staff from early 1990s and the Bank somehow managed to cope up with the business growth manifold with the existing personnel. The staff who joined the erstwhile RRBs between 1976 and 1980 has reached the superannuation stage now, retiring en-masse in lots every month, creating vacuum at managerial level. This has created promotional and recruitment opportunities in the Bank in a big way. This juncture has coincided with the notification of Regional
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2010-11 2009-10 Segment 1. Crop Loans 26261.00 30229.00 23500.00 24845.00 2. Total Agr & allied activities 11574.00 17701.00 9000.00 12728.00 3. NFS 8150.00 11051.00 8000.00 7148.00 4. OPS 15700.00 13897.00 15000.00 12200.00 5. Total Priority Sector 61685.00 72878.00 55500.00 56921.00 % of achievement 118 102 Target Achievement Target Achievement State Position (Rs in Crore)
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Rural Banks (Appointment and Promotion of Officers and Employees) Rules, 2010 in July 2010, as per the recommendations of Amresh Kumar Committee accepted by Government of India, preceded by implementation of Thorat Committee Recommendations on Comprehensive Manpower Policy, to pave way for quick career growth to the existing as well newly recruited employees. The Thorat Committee norms accorded scope for career prospects to RRB employees upto Scale-V grade, prior to which Officer Scale-III was the highest level an RRB cadre could reach. The Bank had taken early initiatives, first in the country among RRBs to be precise, to implement the Thorat Committee recommendations / norms in terms of reengineering administrative set up by creating Regional Offices to be headed by Scale-IV RRB cadre and categorization of Branches as per new business norms, in 2008-09 itself. Since the new Appointment and Promotion Rules were th awaited, senior Scale-III Officers were made to officiate the Scale-IV positions till 18 December 2010, on which 23 candidates have been promoted to Scale-IV grade to fill up the following Scale-IV vacancies: Promotions to Officers Senior Management Grade (Scale-IV) 1. Regional Managers 10 2. Heads of Departments at Head Office including three specialized areas viz., Training Centre, NPAs Management and IT Cell. 10
3. Scale-IV Branches 3 Total 23 This initiative is in conformity with the broad policy concept, envisaged by various Committees, of allowing RRBs to govern and manage themselves, rationalizing the number of officials on deputation to RRBs from Sponsor Bank. The Bank has also taken up the exercise of promotions to staff at all levels, as under, as per manpower requirement arrived at based on categorization of Branches and vacancies created by gradual retirements, resignations, natural wastages etc., as on 31.3.2010. Promotions in other grades No. 1. Office Attendants (Messenger) to Office Assistants (Clerical) 114 2. Office Assistants to Officer Scale-I (Asst. Manager) 219 3. Officer Scale-I (Asst. Manager) to Officer Scale-II (Manager) 305 4. Officer Scale-II (Manager) to Officer Scale-III (Senior Manager) 78 Total 716 Pre-promotion training has been imparted with sufficient reading material to all SC/ST staff members, who appeared for promotion tests in all cadres to make them perform better in the written tests. Nearly 40 % of the total staff (excluding new recruits) has been promoted to next higher grade during the year, highest ever in the history of APGVB. All the above initiatives and drive, which were much-awaited well over two decades, by the respective personnel, have enhanced the self-esteem and motivation levels among staff, which, the Bank expects, will translate into cognizable and quantifiable performance results.
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Recruitments Second leg of recruitments, after implementation of Thorat Committee norms, have been completed in Group B Grade (Office Assistants) during the year. The process of recruitment of 163 Office Assistants was carried out through IBPS, Mumbai, taking the cumulative figure of new Office Assistants recruited to 313. The Bank has ensured statutory requirement of providing pre-examination training to the SC/ST candidates who applied for the written test, by availing the services of professional retired Bankers in Hyderabad. The number of candidates enrolling online, for written test, ran into tens of thousands, which created a huge awareness about the Bank in the general public (non-clientele of the Bank). Certain vernacular news papers have carried out large and noticeable headlines in their career /employment opportunities, guiding the prospective employees of the Bank about written tests. The Bank has carved a niche with a strong brand image and emerged as a conspicuous institution. As on 31.3.2011, the total number of staff and composition is as under: 1. Total Number of Staff 2235 2. Of which a) Officers i) Chief Managers (Scale-IV) 23 ii) Senior Managers (Scale-III) 93 iii) Managers (Scale-II) 481 iv) Managers (Scale-I) 701 1298 b) Office Assistants 759 c) Office Attendants 178 2235 3. No. of SC / ST employees 348 4. No. of women staff. 248
From 1922 staff members (excluding new recruits), 439 staff members in various cadres, are retiring in ensuing three years i.e., by March 2014. Staff Learning Centre The year 2010-11 has been significant in the history of APGVB on account of one more milestone created by establishing Bank's own Staff Learning Centre in Warangal. Some 20 years ago, State Bank of India had an exclusive Training Institute in Khammam, to cater to the training needs of employees of RRBs sponsored by it, which was subsequently wound up. Since then the training needs of the staff, pre and post amalgamation, are met by availing the training facilities in far off places like BIRD(Lucknow), CAB(Pune), NABARD, BIRD(Mangalore), SBLCs of Sponsor Bank, etc.,
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which resulted in inadequate / lack of training to majority staff. Added to this, these training programmes were primarily meant for Officers, leaving out the Clerical and Subordinate Staff. Following the encouragement / initiatives in the policy documents, recommendations of the various Committees, constituted by Government of India/NABARD, the Bank had taken a bold step to create its own training infrastructure. There could not have been a more appropriate time to do this, with the continuous recruitments and promotions on the cards, which need training and handholding of staff to take on their new roles. Adoption of Core Banking Solutions in all banking operations from November 2009, has made it imperative for continuous training basics of computers, orientation, re-orientation, enhancing the skills on technology aspects. All the staff of the Bank needed the training as CBS is new concept to every one. Accordingly, we have established a fullfledged Staff Learning Centre at Warangal on 09.07.2010. There is a CBS laboratory at Staff Learning Centre to take care of the CBS training needs of staff. NPA tracking has been introduced in the Bank in CBS in January 2011 and necessary basic skills have been imparted to the Field Supervisors to control and contain NPAs. The Staff Learning Centre has two air conditioned Lecture halls, one for General Sessions and another for Core Banking Solutions (Computer Lab). There are 14 well furnished Hostel Rooms, which can accommodate 30 participants, a Library, Dining hall with Kitchen. Entertainment facilities like TV, Indoor games, are taken care of. Medical services are also made available by engaging the services of a Physician and a Cardiologist. Round the clock Security is also provided to the Staff Learning Centre by hiring a Security Agency. One Administrative Officer is posted to look after the management and maintenance of the Centre. A team of senior officials from within the bank was drawn as Faculty from a group of officials who opted for the assignment. Course contents of the Programmes and methodologies are designed in accordance with the emerging needs. A module on behavioral sciences is included in every training programme, by outsourcing the faculty to refresh the participants with regard to their attitude, self-help methods for personal life improvement and career growth. th Since 09 July, 2010, our Staff Learning Centre has conducted 42 programmes up to 31.03.2011 on various subjects and trained 994 employees/officials of all cadres with a Capacity Utilization of 86%. A system of feed back from participants has been introduced to give their feedback / suggestions, not only on the training programme but also on
general issues pertaining to the Bank. An offshoot of the Staff Learning Centre has been the opportunity for the top management of the Bank viz., Chairman and General Managers to reach out and interact with the Staff members, either at the inaugural or valedictory session to share the Bank's priorities and concerns. Vikas Patham APGVBSLC is developing a capsule programme, on personality development, primarily aimed at sensibly touching the very basic elements of human nature and perception. This is being so designed with inspirational and motivational contents compiled from various sources. Paradigm shift in perceiving the things, removing mental blocks, overcoming fear of failure, continuous learning, need for change etc., are a few aspects that the staff will be exposed to. At the end of the programme, it is expected that the staff will stop, think and retrospect on the basic values. The inspiration for designing such a programme is derived from State Bank of India's Parivartan programme. However, motive and contents are different from that of Parivartan. In the next financial year, the Bank is going to ensure that all staff members undergo this capsule programme.
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HRMS Staff Welfare Measures The amalgamation had posed many challenges in integrating the data on HR front. Till 31.3.2010, the Payment of Salary and Allowances to staff were being paid at Regional Office level, which was centralised at Head Office level wef April 2010, by merging the data. This exercise has greatly reduced the man hours required previously for preparation and posting of transactions in respect of payment of salary and posting of instalments to staff loan accounts, leveraging the CBS technology. The data pertaining to the Staff in respect of their bio-data, promotions, postings etc., have been digitalized and required reports are generated for MIS purpose. th In accordance with the Government of India instructions, the Bank has implemented the Wage Revision as per 9 Bipartite Settlement in the month of August 2010, with effect from 01.11.2007. The arrears accrued upto August 2010 to the extent of Rs 32.00 Crore has been worked out and paid in the month of September 2010. This exercise has been completed within a month to comply with the GOI instructions. The Bank has fully provided for the liabilities on account of superannuation viz., Gratuity and Leave Encashment as per actuarial assessment. The additional provisions made during the year are Rs 3.69 Crore and Rs 5.26 Crore respectively. The closing balance in the corpus is Rs 161.92 Crore as on 31st March 2011. The Bank has maintained cordial relations with the Officers Association and Employees Union and working/moving with great coordination towards Bank's development. The Management and Staff Association have released a joint appeal and jointly conducted several business development meetings with the branch staff at all Regional Offices to motivate the staff members to improve operating efficiency and productivity. The Structured Meetings with the representatives are held at periodical intervals to sort out any issues, thereby creating excellent working atmosphere. During the year, there was no instance of loss of any man-days on account of strike or agitation or noncooperation in the Bank. The Bank has maintained cordial relations with the SC/ST Welfare Association and OBC Welfare Association and
complied with statutory requirements in all aspects of recruitment, promotions etc., and redressed the grievances in amicable and cordial manner. The Bank has held a series of structured Meetings with the representatives of Welfare Associations and Liaison Officers and paved the way for smooth and congenial atmosphere in the Bank. Technology in the Banking Sector is playing a dominant role in driving down costs, building efficiency and working as an enabler in achieving business growth and excellence in customer service. The Bank has achieved a major landmark by covering all branches and offices under CBS. The entire Bank is on Core Banking Solutions platform and the new branches are opened with CBS from the beginning. CBS has enabled the Bank in providing a wide array of tech-enabled services to customers, such as mobile alerts and other services providing cutting edge in terms of service delivery, product innovation and better customer service. These initiatives drive the improvement in customer service, besides widening business opportunities. While the entire focus was on implementation of CBS in all Branches in the year 200910, the current year witnessed significant improvement in stabilization of the CBS broadly in the following areas th Implementation of 9 Bipartite Settlement Industrial Relations Welfare of SC/STand OBC employees 100% Core Banking Solutions
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Continuous training to the operating staff to make them comfortable Internal Controls cleaning of system suspense generated in intermediary accounts at the time of implementation and during the course of day to day operations Plugging of income leakage - Purification of data Reconciliation of old Bankers Cheques Accounts and introduction of new one Introduction of BCGA(Office Account) and its reconciliation Management Information System New Initiatives like RTGS, NEFT, SMS Alerts Customer Service Initiatives such as DD Printing, Pass Book Printing etc. Creation of a post of Chief Manager (IT) Training Support: Internal Controls: IT cell is looking after the Satellite wing of Staff Learning Center. Training is imparted to all staff members in CBS simulated environment in Staff learning center. Orientation training on new initiatives has been conducted to all staff members at regional Office level to ensure complete participation. Training is also imparted to all branch auditors to understand the systems and procedures, risk involved in the changed environment to facilitate smooth conduct of Audit and Inspection of branches. Help Desk is being maintained by IT Cell, at Ashoknagar to extend online job support to the staff members. The quality of improvement resulted in this area has been spectacular due to migration of branches / offices to 100% CBS. The speed and efficiency with which the cleaning operation of various intermediary accounts was done is unmatched in terms of saving cost, manpower and efficiency. System Suspense: The system suspense Account outstanding as on 31.03.2011 is NIL. It is being monitored daily by IT cell /Help Desk to avoid accumulation of entries. This has been a Zero tolerance area for the bank. Cash differences: The cash difference between Cash on hand and cash on hand in CGL at branches has been
reconciled and made nil as on 31.3.2011. Special drives have been conducted at Regional Office level to ensure timely rectification and reconciliation of cash on hand at branches with cash in CGL of the branches as a preventive vigilance mechanism and to prevent breed ground for frauds and malpractices. CBS Monitoring Registers: All the standard / prescribed registers in CBS environment have been introduced at the branches for improving overall functioning of branches. Some of the registers are also customized to suit the requirement of branches to comply audit compliances. Focus on Income leakage Purification of data: Zero interest accounts: Zero Balance Accounts: Purification and correction of data in respect of interest rates is completed at all branches as on 31.3.2011. Staff members are sensitized to data perfection on ongoing basis to generate error-free MIS to facilitate quality decision making management. Accounts with zero interest rates were segregated branch wise and taken up the matter with respective branches to ensure against income leakage to improve the profitability of the Bank. Zero balance accounts were taken up with respective branches for the closure of accounts to ensure against spillage of income and to prevent frauds.
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Reconciliation of old Bankers Cheques (Demand Draft) Account: Branch Clearing General Account (Office Account): Management Information System: Bankers Cheque Accounts maintained by erstwhile RRBs and continued after amalgamation, have been frozen at a cut off date(30th April 2011) and a new system of issuing Drafts /Bch s on continuous security forms has been introduced ( from 01st May 2011 ) BCGA module is introduced for transfer of funds among branches in place of Inter Office Account which is frozen and being reconciled. Reconciliation of new BCGA is being monitored by IT cell on daily basis. The Bank's think-tank analysed every piece of information and report generated under CBS to facilitate correct financial reporting and to exploit its utility. IT cell has customized all the reports for review and monitoring of the Bank's performance to enable / draw suitable strategies to improve the business and profitability of the Bank.
New Initiatives
Fixed Assets: NPA tracking: Assets and Liability Management: Service Tax & TDS: Signature scanning: Bank's own website : Disposal of old hardware: NEFT: Annual Closing: Fixed Assets accounting system / computation of depreciation is carried out by IT cell during the year to improve the error-free accounting system for statutory audit compliance. NPA tracking module is activated during the year 2010-11 for automatic tracking of NPAs. IT cell customized NPAs reports for better NPA management by placing the reports to branches on weekly intervals and highlights of NPAperformance daily through SMS. Assets and liability management is being stabilized for better management of
liquidity of funds to assess interest risk and operational risk to improve the profitability and operating efficiency of the Bank. The Bank has centralized its service tax computation at monthly intervals to avoid the delay in payment of Tax. The Bank has taken steps to activate Tax deduction at source module from 01.04.2011 to comply with statutory obligation and bring transparency in accounting system. Scanners were provided to all branches for scanning signatures / photographs of depositors to facilitate Non-Home transactions and improve customer service and operating efficiency to avoid frauds. The Bank has introduced new portal of the Bank for disseminating the information about the Bank to the general people and staff to build brand image. All the circulars and other internal developments are also placed on web site for information of the staff only. Suggestions are also invited from customer as well as from staff for improving the functioning of the Bank. A Circular has been issued to all Branches to dispose off unused and old Hardware by way of donating it to schools and SHG groups if the computer and its peripherals are fit to be used, and otherwise unused one in open auction to be conducted at respective regional office to keep the premises neat and tidy. NEFT facility is being introduced for improving customer service and easy flow of funds from Govt. Department and other agencies which go long way in providing cutting edge image of the Bank in terms of service delivery.. Annual Closing returns / statement of the bank has been generated from the system for the first time in CBS environment during the year 2010-11 and the entire process of audit and finalization of accounts is completed in record 19 days, thus enable the branches and staff to concentrate on business development and customer service.
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Customer Service Initiatives: SMS AlertsPass Book Printers: Demand Draft / Bankers Cheques Printers: Non Home Transaction Facility: Toll Free Number : The Bank has activated SMS alerts for timely information to the customers about the transactions effected in their account and also about the changes in the interest rate of loan / deposit products of the Bank. This has improved the image of the Bank and would go a long way in building trust and widening the customer base. Pass Book Printers were supplied to all branches and to improve the customer service and also guard against malpractices in noting the entries in passbooks. The Bank has introduced printing of Demand Drafts/ Bankers Cheques at all branches to improve remittance business and also to facilitate automatic reconciliation of entries . Non Home transaction facility is extended to the customers Rs 25,000/ per day as add-on service to the customers. The Bank has introduced a Toll free telephone No. 1800 425 7900 for receiving the suggestions and complaints from the customers and general public. This has helped the bank in getting the direct feedback from the public about the functioning of the Bank. Expansion of Outreach Information & Communication Technology - Smart Card Project
Financial Inclusion Technology Fund (FITF) While the concept of RRBs coupled with nationalization of Banks itself was one of the biggest initiatives of Government of India towards inclusive banking and inclusive growth, the Bank's latest IT-enabledinitiatives date back to 2006 when the Government of Andhra Pradesh mooted payment of Social Security Pension and NREGS Payment through Smart Cards under EBT (Electronic Benefit Transfer) towards broader goal of Total Financial Inclusion. In collaboration with State Government and IDRBT, the Bank implemented ICT Solutions from 2006 for GOAPsponsoredElectronic Benefits Transfer viz., payment of Social Security Pension and Payment of NREGS Wages. The framework adopted was to create banking relationship with a vast section of un-banked rural poor, adopting (a) Smart Card technology and (b) Business Correspondent model. The Bank had appointed M/s A Little World, Mumbai as Technology Service Provider with M/s Zero Mass Foundation, Mumbai as Business Correspondent. The women members of Self Help Groups (SHGs) are deployed as Customer Service Providers (CSPs) by the Business Correspondent. Smart Card project was first implemented in one Mandal in Warangal District as a pilot and later upscaled to four districts viz., Warangal, Medak and Mahabubnagar and to Khammam (under 'One-DistrictOne-Bank' model). Our target is to cover 1193 Grama Panchayats in Warangal, Medak, Mahabubnagar and entire 770 GPs in Khammam district and issue Smart Cards to 17,47,659 beneficiaries by opening No Frills Accounts. As on 31.3.2011, 65% of the target has been achieved by bringing 11,30,185 beneficiaries into banking fold and issuing Smart Cards. The Project Monitoring and Implementation Committee (PMIC) with representatives from NABARD, IDRBT, State government and Technology Service Provider under Chairmanship of Bank's Chairman, monitors and reviews the progress at periodical intervals and sorts out operational issues and support for effective implementation. The Bank has submitted the above Financial Inclusion Project to NABARD for sanction of grant assistance under FITF. The total financial outlay of the project is Rs.4.54 crores for opening and issuance of cards to about Rs. 15.70 Lakhs accounts, which was sanctioned with a grant assistance of Rs.3.40 crores (75% of total project cost). The duration of
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the project is 3 years from the date of sanction i.e. 15 May, 2009. The Bank has also submitted a proposal for sanction of grant assistance for implementation of Financial Inclusion Project in Khammam district with a total outlay of Rs.4.83 crores. The project is under consideration of NABARD. With the main objective of providing Training to the Customer Service Providers (CSPs) deployed in the districts of Warangal, Medak and Mahabubnagar for capacity building and enriching / equipping the subject knowledge of Banking and Financial Products to be extended to the customers at the villages through Bio Metric enabled technology, the Bank has submitted a project to NABARD for sanction of grant assistance The NABARD has sanctioned a grant assistance of Rs.23.81 Lakhs (80% of the project cost) under Financial Inclusion Fund. Financial Inclusion Fund (FIF) Two steps forward in implementation of Smart Card Project Providing Banking Services to un-banked villages having population of more than 2000 by March, 2012
th
Integration of Bank's data lying in Technology Provider's Server with our Bank's CBS database has been initiated during the year in coordination with respective technology providers viz., M/s A Little World and M/s C-Edge Technologies. Modalities have been worked out as to the architecture of the data transmission among Bank's Branches/Regional Offices, Smart Card Server with ALW and CBS Server with C-Edge Technologies. Once this arrangement becomes operational, the transactions through Smart Cards using ICT Solutions will reflect in our Bank's Central Database with M/s C-Edge Technologies on batch transaction processing mode. The other step forward is introduction of delivery of main stream banking services like Savings Bank, RD Accounts etc., leveraging the branchless banking infrastructure created, furthering the cause of Total Financial Inclusion. The Technology Provider M/s ALW is on the job and the Bank is hopeful of achieving this feat in the next financial year.
As per the recommendations of the High Level Committee to review the Lead Bank Scheme, unbanked villages having population of more than 2000 have been allocated to various banks for providing of banking services by opening of banking outlets or through any of
the various forms of ICTbased models, including through BCs, in these villages by March 2012. Accordingly, 869 villages having population of above 2000, have been allotted to the Bank. The district wise allocation of villages and status of appointing BCs and their outlets as on 31.03.2011 is as under. SNo District No. of villages allotted No. of BCs appointed No. of outlets opened 1 Mahabubnagar 135 1 115 2 Medak 93 1 87 3 Warangal 86 1 65 4 Khammam 126 1 111 5 Nalgonda 119 - 6 Srikakulam 118 - 7 Vizianagaram 98 - 8 Visakhapatnam 94 - TOTAL 869 378
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Action Plan of the Bank

Use of Business Facilitators(BFs) and Business Correspondents (BCs) Financial Inclusion Branch Expansion Asset Quality - Management of Non Performing Assets (NPAs) a) For the purpose of implementation of A P Smart Card Project in 4 districts viz., Khammam, Warangal, Medak and Mahabubnagar, the Bank has already appointed Business Correspondent and been implementing Financial Inclusion Project by leveraging ICT solution. The Bank has already opened outlets in 1940 villages. Of the total 1940 villages, 378 villages are having population of more than 2000. Apart from EBT, Bank is planning to roll out our Banking products in these villages shortly. b) The Bank is organizing training programmes to the Customer Service Providers (CSPs) to enrich their job knowledge about our Bank products, for which a project is sanctioned by NABARD with grant assistance under FIF. c) The Bank is in the process of identifying suitable BCs for the remaining 491 villages in 4 districts to implement Financial Inclusion Project during 2011-12.
In tune with the RBI guidelines, the Bank has launched a scheme for financial inclusion by extension of Banking Services through BCs and BFs. To start with, the Bank is going with the use of services of individual Business Facilitators only for identified services such as SB Account opening, RD Account opening, Current Account opening, TDR/STDR, (min. maturity 1 year), Recovery in NPA a/cs / Written off accounts / AUCA, Cross Selling of Mutual Fund and Insurance products, Demand Loans against specified security, Demand Loans against Gold ornaments. The Bank is giving publicity by displaying the advertisement in the Notice Board of the Branch and concerned Gram Panchayat Office. The Bank has appointed about 50 Business Facilitators during the year and would commence business operations in the next financial year. In line with the country's inclusive growth framework, the Bank's initiatives in this direction aim at financial empowerment and participation of rural masses. With this objective, the Bank has extended credit facility under general credit cards, credit linkage for Self Help Groups, enhancing outreach through Business Correspondents and extending technology driven Smart Cards. During 2010-11, the Bank mobilized 531901 No frills accounts and reached a cumulative level of 1130185 Lakhs since inception. To disseminate information to rural people about banking providers and advanced technology, the Bank has formed 65 Farmers Clubs during the year, taking the total to 793 as on 31.3.2011. In 2007, in one of the meetings to review the performance of RRBs, the Honourable Finance Minister set a target of opening 2000 Branches by all RRBs in the country by March 2011. As part of this target, the Bank has opened 15 Branches during the year 2010-11 in unbanked rural areas, taking the total branches opened from 2007 to 2011 to 70 and our Bank's reach increased to 553. All the new Branches were opened with CBS Technology from the day one. A strong disciplined banking system is important for the rural economy to flourish. During the year, the Bank has focused on the basics of the Bank and increasing NPAs is one of the major concerns of the Bank. NPAs usually reflect the asset quality of the Banks, while in case of RRBs, environmental factors such as climatic and political statements influences recovery discipline. CBS environment, automatic system throwing of NPAs on daily basis, had significant impact on the volume of NPAs during the year. While the IRAC norms compliance is better this year due to automated
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system driven NPA classification process, it also resulted in incidence of huge technical NPAs, i.e., performing assets which were classified by CBS as NPAs due to incomplete or wrong data entry in the system. Apart from the technical correction of NPAs, to supplement the efforts of the operating staff at branch level, special recovery teams were formed to reach out to the borrowers and counsel them to regularize their loans and re-establish their banking relationship. This has yielded very good results and the Bank could recover Rs 3527.93 Lakhs from the NPAs. Wherever warranted, the Bank had initiated legal action under SARFAESI Act against the high value willful defaulters in the Non Farm Sector. During the year, 222 accounts amounting to Rs 1036 Lakhs, have been taken up under SARFARESI Act and the recovery under this process was quite encouraging. The Bank could recover Rs.370 lakhs as against the recovery of Rs.142 lakhs during 2010-11.
The recovery from AUCA and Written Off Accounts during the year, indicate the degree of special and serious efforts made by the operating staff as well as special teams. An amount of Rs.735.62 lakhs has been recovered from the loss assets written off and parked in AUCA, 285% higher than that of previous year i.e., Rs 267.48 Lakhs. This is one of the milestone performances of the Bank during 2010-11. After careful consideration of the burden of carrying along the doubtful and loss assets, for which 100% provision has been made, the Bank has adopted a Policy to write off these loans with an outstanding of upto Rs 1.00 Lakh, which were sanctioned under Govt. Sponsored Schemes. The Bank has exercised due care and diligence in framing this policy. The vigorous campaign launched by the Bank to regularize the bad loans, has led to write off comparatively lower amount of Rs 762.23 Lakhs as against Rs 2298.16 Lakhs written off during the year 2009-10. The following table shows the reduction of NPAs by means of cash recovery and write off: Cleansing of Bank's Balance Sheet Write Off Policy Year Total Reduction By Write Off By Cash Recovery 2010-11 42.90 7.62 35.27 2009-10 31.90 22.98 8.92 (Rs in Crores) Compromise Policy and One Time Settlement The Bank has also adopted alternative recovery methods to reduce and recover bad loans. Performance under Compromise Policy and One Time Settlement Schemes are furnished below: (Rs in Lakhs) Scheme No of Accounts Amount Due Amount recovered OTS 2177 625.88 494.51 Compromises 243 200.69 146.93
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Creation of a dedicated Department for management & Monitoring of NPAs Internal Control System Inspection and Audit Audit Committee of the Board Management Audit by Sponsor Bank During the year, the Bank has created a dedicated department headed by a Chief Manager for close monitoring and follow up with Regional Offices and Branches. The Bank has constantly been upgrading the Audit System to conform to the industry standards. The year 2010-11 can be called An year of Audit in the Bank. The scope of Audit has been enlarged, as never before, to encompass every unit of administration, involving financial and/or non financial decisions, and create a precedence to carry forward this to ensure soundness of the Banking practices in the Bank. The Department has carried out its operations with fair and without prejudice and helped strengthen the systems and procedures. The Risk Focused Internal Audit Report System, as suggested by State Bank of India, has been implemented in the Bank from July 2009. During the year, the Audit Department has audited 409 Branches, 10 Regional Offices, IT Cell, Staff Learning Centre and Accounts Department at Head Office. The Department has also carried out Income Audit, KYC Audit, Securities Audit (at HO quarterly), Leave Audit (quarterly), Salary Audit and submitted reports. Income Audit has been carried out in 110 branches, KYC Audit in 119 Branches and Spot Audits on 10 Branches. Besides, Regional Offices have conducted Snap Audits on 348 Branches during the year. The Bank's management have earmarked significant portion of their executive time to study the Audit Reports and visit
the branches wherever warranted basing on the Audit outcome and initiate corrective measures. There has been significant improvement in the Audit rating of the Branches. As on 31.3.2011, the number of Excellent, Good and Satisfactorily Run branches stood at 229, 126 and 16 respectively, without any branch being rated Unsatisfactorily run. 63 Branches upgraded their rating from Good to Excellent, and one branch from Unsatisfactorily run to Good and 266 Branches retained its previous rating. There were slippages also in Audit Rating 26 Branches have been downgraded from Excellent to Good and 14 Branches from Good to Satisfactory. The Audit Committee, constituted with one SBI-nominee-director as Chairman and nominee directors of RBI and NABARD as members has met during Board Meetings and reviewed the audit function, quality of the audit system and transparency and accuracy that the audit system has carried. The Audit Committee has suggested evaluating Self Audit Culture among the Branches, special monitoring of the downgraded branches. The Committee has also suggested measures to strengthen audit system and also placing before the Board in respect of branches downgrading to Satisfactorily Run rating continuously for three audits. During the year 2010-11, the Bank has been subjected to the Management Audit by the Sponsor Bank, basically aimed at critical evaluation of the policies and methods adopted by the management in the administration of the Bank. The Bank has taken all measures to comply with the Audit Report and submitted final compliance report to the Sponsor Bank.
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Right to Information Act Vigilance The set up instituted by the Bank to comply with the provisions of Right to Information Act, has projected an excellent face of the Bank, in responding to the applications received under RTI Act and providing information as required under the provisions and exhibited the level of transparency with which the Bank has been functioning. Every unit of the Bank is RTI Act compliant. At the Branch level, the Branch Manager has been designated as Assistant Public Information Officer while the Regional Manager concerned is the Central Public Information Officer. At Head Office level, the Chief Manager (Board) is the Assistant Public Information Officer and the Chief Manager (Audit & Inspection) is the Central Public Information Officer. The General Manager (Operations) has been designated as Appellate Authority in the Bank, under RTI Act. During the year, the Bank has received 24 applications and 6 appeals and disposed off all applications and appeals within the stipulated time frame. With the advent of technology in banking operations, the element of risk is more pronounced, with the data and information flow across various levels of operations, being prone to mischief and posing potential threats. The Bank has stepped up vigilance mechanism to safeguard the interest of the operating personnel as well as the Bank. In this backdrop, the Bank has revised guidelines for conduct of several Preventive Vigilance Measures like Surprise visits, Surprise Checks to review the level of adherence to the laid down systems and procedures. Every forum is being used
to impress upon the operating staff to be aware of the dire necessity of maintenance of password secrecy in CBS and being vigilant about the nature of transactions. The Staff Learning Centre has embedded a module in its curriculum of every training programme on the risk elements in technology driven banking operations and the ways and means of preventing the potential frauds in CBS. The Bank has brought out a booklet on Preventive Vigilance Measures for ready reference of all staff members, enlightening them on preventive vigilance measures, to create a sense of awareness to work in CBS environment and to protect the bank/system from perpetration of frauds and malpractices. In order to remind about the dangers of frauds, misconduct and other corrupt practices and to generate greater st awareness among all sections of the staff, 1 November is being observed as Fraud Prevention Day and KYC Observance Day and Pledge has been administered to all the staff. A Vigilance Manual, customised to the Bank's needs, covering the entire gamut of disciplinary process has been prepared with the help of Bank's Legal Advisor and released for the benefit of operating staff who deal with the vigilance matters. Frauds Monitoring Committee of the Board met three times and reviewed the vigilance and disciplinary cases. The Bank had formulated a complaint handling policy to redress the grievances of customers and improve quality of customer service. The Bank has also introduced Whistle Blower Scheme with an objective of providing an avenue for raising concerns related to frauds, corruption or any other misconduct and reassurance that those who disclose such information are protected from retaliation for such disclosure. Complaints
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Regional Managers monitor the redressal of the complaints received from the branches under their control. The complaints received at Head Office are dealt with at Head Office level. The Bank has disposed off all 45 complaints received during the year. The Bank has received 26 complaints received through Banking Ombudsman and disposed off all 26 complaints including 2 complaints pending as on 31.3.2010. The Bank has conducted its affairs in such a manner as to safeguard the interests of all the stake holders i.e. shareholders, bank customers, regulatory authority, society at large, employees etc. The Bank has adhered to all regulatory requirements and put in place effective monitoring system and control mechanism and the day to day administration of the bank. Committee approach has been adopted in all financial and nonfinancial decisions taken by the Bank in order to derive the collective wisdom of all participants in decision making as well as maintaining the transparency, through Head Office Management Committee and Head Office Credit Committee I & II at Head Office and Regional Office Credit Committee at Regional Office level. The Board of the Bank is constituted by (a) Chairman of the Bank (b) two non official directors appointed by Government of India (c) one nominee director each from Reserve Bank of India and NABARD (d) two nominee directors from Sponsor Bank (e) two nominee directors from Government of Andhra Pradesh, headed by the Chairman of the Bank.
The Board of Directors has met six times during the year on 19.04.2010, 10.06.2010, 20.08.2010, 21.10.2010, 31.12.2010, 04.03.2011. The Board has undergone some changes in the composition on account of completion of their tenure / transfer of officials. Shri T Hanumantha Rao, who was Chairman of the Bank at the beginning of the financial year, has been repatriated to Sponsor Bank in September 2010 and Shri K.Lakshmana Rao, Deputy General Manager, SBI, took over reigns of the Bank from September 2010. Similarly Shri V. William Raju, nominee director of RBI on the Bank's Board has been replaced by Shri K.N. Singh Sardar, Asst. General Manager, RBI, Hyderabad during the year. The State Government nominee Shri N. Sridhar, IAS, District Magistrate & Collector, Warangal has also been replaced by the new incumbent Collector Shri Rahul Bojja, IAS, District Collector, Warangal. The Bank places on record the service of Shri T. Hanumantha Rao, Deputy General Manager, SBI, under whose stewardship as Chairman, the Bank has achieved crucial milestones such as migration of 100% branches to CBS Platform, opening of new Branches, expansion of outreach through Smart Card Technology in addition to business growth. He has also represented the APGVB, as member, in many high-level Committees constituted by RBI/NABARD/Government of India, bringing recognition to the Bank at national level. The Bank also places on record the commendable services rendered by Shri V. William Raju, DGM, RBI and Shri N. Sridhar, IAS. Banking Ombudsman Scheme Corporate Governance Board
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Attendance of Directors at Board Meetings during 2010-11

Name of the Director No. of Meetings held No. of Meetings attended 1. Shri K. Lakshmana Rao (27.9.2010) 3 3 Shri T. Hanumantha Rao (24.9.2007) 3 3 2. Shri B. Raja Rao (1.2.2008) 6 6 3. Shri B. Radhakrishna Murthy (2.6.2009) 6 3 4. Shri K.N. Singh Sardar (1.7.2010) 4 4 Shri V. William Raju (9.9.2008) 1 1 5. Shri D. Hari (21.8.2009) 6 6 6. Shri Manoj Khattar (12.4.2010) 6 2 7. Shri K.T. Ajit (19.12.2008) 6 4 8. Smt Vasudha Mishra, IAS (10.9.08) 6 Nil 9. Shri Rahul Bojja, IAS (20.12.2010) 2 1 Shri N. Sridhar, IAS (20.6.2009) 4 Nil
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Management Discussion and Analysis

Like any other financial institution, the performance of RRBs depends on many factors. Apart from overall economic and financial conditions, the vagaries of nature which affect agriculture and rural areas, affect RRBs also to a great extent. The Indian economy projected a positive outlook with a growth of 8.5% in 2010-11 as against 8% in 2009-10. The growth has been broad-based in all three segments of the economy viz., agriculture, manufacturing and services which grew by 5.4%, 8.1% and 9.6% respectively, with agriculture, which put up dismal performance during 2009-10 at 0.4% growth,
strongly bounced back to the growth path during the year. Manufacturing and Services Sector have continued to grow at 8.1% and 9.6% respectively. Indian economy is set on recovery path, although food inflation, higher commodity prices and volatility in global commodity markets have been major causes of concern. Inflation, which is known to be the Tax on poor man, continues to be higher than expected. The Reserve Bank of India (RBI) hiked policy rates to control the rising inflation and maintain growth. Interest rates systematically went up throughout 2010 and 2011 but inflation too continued to rise unabatedly. The country witnessed a normal Southwest monsoon (June-September) in 2010 after a year of deficient rainfall, to the extent of 23 per cent in 2009. Good monsoon is crucial for many economic developments. Monsoon rains replenish reservoirs and increase groundwater levels, allowing better irrigation and higher generation of hydropower. About 40% of India's arable land has irrigation facilities. The rest depends on the monsoon rains. Higher rainfall levels can also reduce demand for diesel, used to pump water from wells for irrigation when rainfall is scant. Scant rainfall increases dependency on international markets for foodstuff as it did in 2009. Sufficient rain during monsoon lifts domestic demand, as higher farm output increases the incomes of rural people, who account for about two-thirds of India's 1.2 billion population. Higher demand for goods and services can boost economic growth. Also, inflation could ease because a better supply of agricultural produce would lead to lower prices. Our Bank's Service Area received good rainfall during the year, creating favourable conditions for agriculture. Indian economy - Overview Southwest Monsoon
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District Actual Rainfall Normal Rainfall % of deviation 1 Srikakulam 846.0 705.7 20 2 Vizianagaram 894.1 692.7 29 3 Visakhapatnam 914.2 712.6 28 4 Mahabubnagar 639.0 446.6 43 5 Warangal 1068.1 799.0 34 6 Khammam 1157.9 890.3 30 7 Nalgonda 599.2 561.8 7 8 Medak 753.1 675.8 11 State Average 808.1 624.1 29 The quantum of rain fall is more than the normal rainfall in all the 8 Districts under our area of operation.
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Agriculture Banking Sector Favorable monsoon resulted in higher food production. As per the second advance estimates of production for 2010-11 released by Ministry of Agriculture on February 9, 2011, production of foodgrains is estimated at 232.07 million tonnes, oilseeds at 27.85 million tonnes, sugarcane at 336.70 million tonnes and cotton at 33.93 million bales of 170 kg each. These production estimates are at higher levels compared to last year primarily due to significant improvement in the productivity in almost all the crops. The Banking Sector during the year operated in a situation of tightening liquidity and steep borrowing costs. Bank credit growth has slowed down to 21% during the year as against previous year's growth of 23%. According to the latest data released by Reserve Bank of India on March 25, 2011, banks have lent over Rs 40.5 lakh crore vis--vis Rs 33.3 lakh
crore as on March 26, 2010. The growth in lending by Banks was lower than RBI projections at over Rs 53.5 lakh crore, which is 15% higher than over Rs 46.3 lakh crore a year ago. In absolute terms, however, the incremental deposits of Rs 7.16 lakh crore raised during the year is close to the Rs 7.19 lakh crore of incremental credit.
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Bank's performance under MoU with Sponsor Bank S.No Parameter Actuals Mar.10 Growth levels Mar 20110 over -ment Mar 11 Mar11 Mar10 1 Deposits 3807.29 951.82 4759.11 4794.72 987.43 103.74 2 Advances 3869.75 1122.22 4991.97 4894.43 1024.68 91.30 3 CD Ratio 101.64 3.25 104.89 102.00 0.36 ----4 NPAs 88.26 -24.64 63.62 196.03 107.77 308.12 NPAs % 2.31% -1.04% 1.27% 4.01% 1.69% ----5 Net Profit 102.84 154.26 154.26 108.13 5.16 70.01 MOU MOU Actuals Growth of achieve
(Rupees in Cr)
Limitations and Challenges Since their inception, RRBs have taken deep roots and have become a sort of inseparable part of the rural credit structure in India. So is the Bank. It would be unthinkable to visualize rural credit delivery system without RRBs. Various Committees, including historical Narasimham Committee, have gone into various aspects of RRBs and suggested measures, on account of which RRBs have reached the present stage we are with you!
Resources mobilization Interest Rates Credit The Bank faces stiff competition from other commercial banks in resources mobilization apparently because of the advantage of technology driven banking. The people, even in rural areas, who have surplus funds to save by means of Bank deposits, are not the poorest. The children from rural middle class families in Andhra Pradesh are very active in studies and pursuing higher studies in different parts of the country and some abroad. The youngsters from rural parts of the State, are all over the State and Country, either studying or working keeping their families back home in villages (75% of India's engineering graduates come from the four southern states of Andhra Pradesh, Karnataka, Tamil Nadu and Kerala). This segment of the rural population, expects all modern facilities like ATMs, online Banking, NEFT/RTGS etc. Banks which offer these facilities are automatic choice for them. Our Bank is losing this segment of young customers. Apart from rural branches, the Bank has around 125 urban and semi urban branches. This is one of the reasons the Bank could not increase the customer base substantially and achieve broad-based growth in deposits, resulting in high dependence on bulk and volatile institutional deposits. There is heavy dependence on refinance from Sponsor Bank and NABARD - Rs 1954 Crore, which works out to 40% of the total loans and advances. In the absence of level-playing field, to compete with the competitors, the Bank always resorts to offer interest rates on deposits, a fraction higher to lure the depositors. When the Policy rates are hiked, the commercial Banks, apart from hiking their interest rates on deposits, pass on the burden to their borrowers by increasing interest rate on existing and new loans. The RRBs have a very small lee-way for a similar approach, for the interest rate on crop loans, which forms major portion of the credit portfolio, is not within
the scope of the Bank. Every increase in deposits rate translated into cutting down net interest income. We have borrowed funds from SBI and NABARD to the tune of Rs 1954 cr and as interest rates were increased by the lenders on such funds , our Bank is facing higher interest burden. Consistent and rapid growth in advances vis--vis invariably negative-growth or no-growth in deposits in the first 1-2 quarters, is one of the characteristics of the Bank. Features like high exposure to Crop loans and Self Help Groups, limited scope for diversification of advances and comparatively poor asset quality with mounting NPAs in the backdrop of vitiated repayment climate, add to the vulnerability of the credit portfolio. There is limited scope for competing with other Banks in capturing high value advances in the backdrop of low resource base and uncompetitive interest rates. HR Issues Objectives of RRBs Integration of Human Resources after amalgamation is one of the challenges the Bank is facing. Around 40% of the staff having put up more than 30 years of service in erstwhile RRBs, is on the verge of retirement and adopting to technical skills and adjusting to the computerized environment is a formidable task for them. We have recruited 163 Employees from the market in 2010-11 and infused young blood into the organization. The objective of RRBs was to develop rural economy by providing credit facilities for the development of agriculture, trade, commerce, industry and other productive activities in the rural areas, particularly to small and marginal farmers, agricultural laborers, artisans and small entrepreneurs.
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Initiatives taken by the Bank Conducting deposit mobilization campaigns to focus attention on building a wide and sustainable deposit base. Launching of new deposit products with attractive features and competitive interest rates. Conducting Grama Sabhas and recovery camps to educate the borrowers about the benefits of prompt repayment and improve the recovery position of the bank. Imparting necessary training to all members of staff to improve their skills and knowledge levels to give them the confidence to work more efficiently in the new computerized environment. Taking up with the Sponsor Bank for making available facilities like ATMs and NEFT. Entering into MOU with NABARD for co-financing of high value advances. Started financial inclusion in a few unbanked villages as per the directions of RBI. Undertaking project ambience on a large scale to improve the image of the bank and improve the customer convenience. Focusing on cross selling to improve the non-fund-based income and profitability of the Bank Undertaking the recruitment exercise on a massive scale to replenish the dwindling man power resources of the bank. Launching 'Vikas Patham' programme for all employees to change their attitude and mindset (on the lines of 'Parivartan' Programme of State Bank of India).
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This is a sacred task. Poorest of the poor live in rural areas. Poverty, poor quality of education, unemployment, underdevelopment are a few associated characteristics. The objectives, if fulfilled effectively by RRBs, would serve one of
the most important challenges our country is facing i.e., the need for matching the urban development with rural development. The Bank, charged with the above mandate, is fully involved in extending credit to rural people, as per the State Credit Plans. However, the Policies, the State and the System have to support the RRBs in doing its ' sacred banking' activities. The Bank should sustain lending activity by healthy repayment climate and recycling of funds. Dr. KC Chakravarthi Committee's recommendation of increasing authorized Share Capital to Rs 500 Crore is a welcome policy initiative which would strengthen the RRBs.
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Bank's Targets for the year 2011-12 (Rs in Crore)

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Sl.No Particulars Actual 2010-11 Growth for Level the year 2011-12 os 2011-12 1 Deposits: 4,794.72 1,198.68 5,993.40 % of Growth 25% 2 Borrowings : 1,954.64 745.36 2,700.00 % of Growth 77.29% 38.13 72.39 3 Outstanding Advances: 4,894.43 1,223.61 6,118.04 % of Growth 25% 4 Loans issued During the Year : a) Target Group 2977.99 3061.74 3061.74 b) Non-Target Group 849.19 765.44 765.44 5 KCCs (20% increase both in 580846 116169 697015 No. of a/cs and amount) (Rs.1705.14) (Rs.341.03) (Rs.2046.17) 6 C.D. Ratio (%) 102.08% 102.08% 7 Investments a) SLR 999.70 287.68 1287.38 a) Non-SLR 1147.58 448.77 1596.35 Total : 2147.28 736.45 2883.73 8 Profit for the year 108.13 54.06 162.19 9 Non Performing Assets 196.28 -74.02 122.26 Budgeted Budgeted
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Future outlook
The Bank has certain priorities cut out for it to build a better APGVB within the scope of the Bank: a) Strengthening of Systems and Procedures and internal control systems particularly in the wake of CBS enabled banking including updating the scanned signatures and photographs of all customers at all branches, to safeguard against possible operational risk. b) Train and reorient all the staff on Core Banking Solutions and educate them on the necessity of day-to-day checking of CBS reports with real time transactions, to safeguard against possible human or system errors. c) Refresh the outlook and perceptions of the staff through 'Vikas Patham', a Behavioral Science Programme, developed by the Bank's Staff Learning Centre, to help creating a healthy working atmosphere. The integration issues post amalgamation, if any, will dilute to a great extent with this orientation of staff. Developing leadership abilities will help staff not only in realizing their self esteem but also contribute to the growth of the Bank. d) Mould the new recruits into professional bankers by imparting skills and core competencies and align them to the
Bank's objectives and priorities. The strategy is to develop them into high performance individuals. e) Leveraging CBS technology to offer value added services like ATMs, NEFT/RTGS, with the support of Sponsor Bank, to increase operational efficiency and productivity. f) Exploring Solar Energy resource for powering the Branches to overcome electricity shortage / failure and ensure uninterrupted branch functioning. g) Reduce the high NPAlevels in the Bank by sustained follow-up. h) Increase the inflow of Deposits into the Bank, maintain credit quality and bring down the dependence on refinance from NABARD & SBI. i) Reduce the high CD ratio of 102 % by having continuous focus on mobilizing savings from the public. j) Accelerate business growth and create healthy bottom line for the Bank. k) Purchase of land for construction of Bank's own building for Head Office, Staff Learning Centre. We have so many successes in 2010-11. CBS set up is more or less stabilised. Registered Rs 108 Cr Net Profit during the Year. Established a Staff Learning Centre of our own at Warangal. Staff have been motivated to increase Deposits and reduce NPAs. Nothing succeeds like success. APGVB would become a stronger Organisation by the day to serve its mandate and survive against all odds and come up with flying colours in the years to come.
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Acknowledgements The Board of Directors of the Bank places on record its sincere gratitude for the continued trust, confidence, support patronage and encouragement received from its customers who have stood with the Bank all through. The Board of Directors places on record and express their gratitude for the guidance and cooperation received from the Sponsor Bank, Government of India, Government of Andhra Pradesh, Reserve Bank of India, NABARD, other Financial Institutions and Banks for their unflinching and valuable support to the Bank from time to time. Further the Board conveys its gratitude to Shri Rakesh Sharma, Chief General Manager, SBI, Hyderabad LHO, Shri Ashwini Mehra, General Manager (NW-I), SBI, Hyderabad LHO, Shri T.S. Krishnaswamy, General Manager (NW-II); Shri S. Krithivasan, DGM & CDO, SBI, Hyderabad LHO, Shri G. Vijay Kumar, DGM, RRBs, State Bank of India, Corporate Centre, Mumbai, Shri C. Lakhsmi Pathi, AGM (RRBs), SBI, Hyderabad LHO, for their guidance and continued managerial support. The Board conveys its gratitude to Shri A.S. Rao, Regional Director, Reserve Bank of India, Regional Office, Hyderabad, Shri M. Sebastian, Banking Ombudsman, Andhra Pradesh, Shri M. Sanjaya, General Manager, RPCD, Reserve Bank of India, Hyderabad for their support. The Board also conveys their gratitude to Shri P. Mohanaiah, Chief General Manager, National Bank for Agriculture and Rural Development, Regional Office, Hyderabad, and General Managers Shri E.V. Murray, Shri D.N. Magar and Shri V. Maruthi Rao. The Board also expresses sincere thanks to Sri. R. Subramanyam, Principal Secretary, Rural Development Ms G. Jayalakshmi, IAS, Commissioner, Rural Development, Government of Andhra Pradesh and her predecessor Shri S.S. Rawat, IAS, Sri Rajashekar, IAS, CEO, SERP and all the District Collectors, Project Directors of DRDA, IKP,
DWMA, SC/ST BC Minorities and Housing Corporations of Srikakulam, Viziangaram, Visakhapatnam, Khammam, Nalgonda, Warangal, Mahabubnagar and Medak for their support and encouragement. The Board expresses its sincere thanks to organisations like Singareni Colleries Ltd., Pollution control board, AP. MARKFED, APIIDC, Endowments dept., Adovates Mutually Aided Co-op society ltd. Hyd. etc. for their excellent support to us in the form of Bulk deposits. Their investments with us are enabling us to serve the farmers in a better manner. The Board extends its heartfelt gratitude to M/s CPJ Associates, the Central Statutory Auditors of the Bank for their cooperation in completing the Audit of the Bank's Financial Year 2010-11 in time. The Board also expresses its gratitude to all Public Relations Officers, Press and media for their cooperation in giving wide publicity for the Bank. The Board also thank the Officers Association, Employees Union and SC/ST/OBC Welfare Associations for their constructive role played in overall development of the Bank. Last but not the least, the Board places on record its deep appreciations for the excellent performance, sense of involvement, ownership and dedicated services rendered by each and every staff member in achieving the sustained business growth and profit. For and on behalf of Board of Directors of Andhra Pradesh Grameena Vikas Bank Chairman
(K. Lakshmana Rao)

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Stand up, be bold, be strong. Take the whole responsibility on your own shoulders and know that you are the creator of your own destiny -- Swami Vivekananda "Progress is impossible without change and those who cannot change their minds cannot change anything. - George Bernard Shaw You can gently shake the world. -- Mahatma Gandhi Everyone thinks of changing the world, but no one thinks of changing himself. -- "Leo Tolstoy" It's not the mountain we conquer-but ourselves." - Sir Edmund Hillary
Financials
Auditors Report Balance Sheet Profit & Loss Account Schedules & Notes
C.P.J. & Associates Chartered Accountants To The President of India 1. We have audited the attached Balance Sheet of ANDHRA PRADESH GRAMEENA VIKAS BANK, Head Office st Warangal, as at 31 March, 2011 and also the Profit and Loss Account and the cash flow statement annexed
thereto for the year ended on that date in which are incorporated the returns of 28 branches audited by us and 511 Branches audited by branch auditors. The Branches audited by us and those audited by other auditors have been selected by the Bank in accordance with the guidelines issued to the bank by the NABARD. These financial statements are the responsibility of the Bank's management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. We have conducted our audit in accordance with auditing standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis of our opinion. 3. The Balance Sheet and the Profit & Loss Account have been drawn up in Form A and B respectively of the Third Schedule to the Banking Regulation Act, 1949 and they give the information as required to be given by virtue of the provisions of the Regional Rural Banks Act, 1976. 4. On the basis of the audit as indicated in paragraphs 1 & 2 above and subject to limitation of disclosure and subject to the following. (a) Accounting policy 2 of Schedule No. 17 regarding recognition of certain items of income/expenditure on receipt/payment basis, which is not in conformity with the Accounting Standard 9 on Revenue Recognition issued by the Institute of Chartered Accountants of India, the effect of which on the accounts could not be ascertained. (b) The Bank is not having the practice of recognizing deferred tax liability or deferred tax asset in the books of accounts as required by the Accounting Standard 22 on Accounting for taxes on Income issued by The Institute of Chartered Accountants of India. The effect of this on the accounts is not material and significant. 5. We further report that : (a) we have obtained all the information, which to the best of our Knowledge and belief, were necessary for the purpose of our audit and have found them to be satisfactory.
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Auditors Report
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(b) The transactions of the Bank, which have come to our notice, have been within the powers of the Bank. (c) The returns received from the offices and branches of the Bank have been found adequate for the purpose of our audit. 6. In our opinion, the Balance Sheet, Profit and Loss Account comply with the applicable accounting standards, except as stated in paragraph 4 above. 7. In our opinion, as shown by books of bank, and to the best of our information and according to the explanations given to us :
(a) the Balance Sheet, read with the notes there on is a full and fair Balance Sheet containing all the necessary st particulars, is properly drawn up so as exhibit a true and fair view of state of affairs of the Bank as at 31 March, 2011 in conformity with accounting principles generally accepted in India; (b) the Profit and Loss Account, read with the notes there on shows a true balance of Profit, in conformity with accounting principles generally accepted in India, for the year covered by the account; and (c) the Cash Flow Statement gives a true and fair view of the cash flows for the year ended on that date. For C.P.J. & Associates Chartered Accountants Sd/(Chandraprakash Jain) Partner Membership No.24716 Place : Warangal th Date : 18 April 2011
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Andhra Pradesh Grameena Vikas Bank

Head Office: Warangal
Balance Sheet As On 31st March 2011

Place: Warangal Date: 18-04-2011 As per our report even date For C.P.J. & Associates For Andhra Pradesh Grameena Vikas Bank
Chartered Accountants Firm Reg No 8180S (` in '000)
Chandra Prakash Jain K.Solomon K. Lakshmana Rao Partner General Manager (Operations) Chairman Membership No. 24716 Particulars Sch. 31.3.2011 31.03.2010 Capital 1-A 5,00,00 5,00,00 Share Capital Deposit 1-B 89,08,50 89,08,50 Reserves And Surplus 2 419,01,43 310,88,50 Deposits 3 4794,72,22 3804,51,25 Borrowings 4 1954,64,16 1599,97,77 Other Liabilities And Provisions 5 383,67,86 313,52,02 TOTAL 7646,14,17 6122,98,04 Cash and Balances with RBI 6 378,28,54 302,72,58 Balances with Banks and Money at Call & Short Notice 7 1259,05,78 1030,36,44 Investments 8 1032,69,83 814,95,71 Advances 9 4834,53,57 3822,84,73 Fixed Assets 10 19,13,96 20,24,30 Other Assets 11 122,42,49 131,84,28 TOTAL 7646,14,17 6122,98,04 Contingent Liabilities 12 33,56,77 16,55,86 CAPITAL AND LIABILITIES ASSETS Significant Accounting Policies 17 Disclosures and Notes on Accounts 18
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st
Profit & Loss for the year ended 31 March 2011
Particulars Sch As on 31.03.2011 As on 31.03.2010 Interest Earned 13 642,98,69 577,39,41 Other Income 14 75,07,52 44,52,26 TOTAL 718,06,21 621,91,67
Interest Expended 15 357,29,35 325,99,88 Operating Expenses 16 155,12,77 135,72,51 Provisions and Contingencies 49,15,91 22,87,14 Provisions no longer required written back NIL -10,93,55 TOTAL 561,58,03 473,65,98 156,48,18 148,25,69 Less: Provision for Taxation - Current tax-Income Tax 48,35,26 45,41,62 Profit after Tax 108,12,92 102,84,07 Less Income tax of previous year NIL 23,36 Provision for Salary Arrears NIL 12,73,60 Net Profit for the Year 108,12,92 89,87,11 Brought Forward Profit 233,04,74 161,15,05 TOTAL 341,17,66 251,02,16 Transfer to the Statutory Reserves 21,62,58 17,97,42 Profit(+) /Loss(-) Carried Over to Balance Sheet 319,55,08 233,04,74 TOTAL 341,17,66 251,02,16 Significant Accounting Policies 17 Disclosures and Notes on Account 18 I. INCOME II. EXPENDITURE Profit before tax IV. APPROPRIATIONS Place: Warangal Date: 18-04-2011 As per our report even date For C.P.J. & Associates For Andhra Pradesh Grameena Vikas Bank
Chartered Accountants Firm Reg No 8180S
Chandra Prakash Jain K.Solomon K. Lakshmana Rao Partner General Manager (Operations) Chairman Membership No. 24716
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Schedules forming part of Balance Sheet as on 31st March 2011 SCHEDULE - 1 A - CAPITAL SCHEDULE 1 B SHARE CAPITAL DEPOSIT
Particulars As on 31.03.2011 As on 31.03.2010 NIL NIL (Fully owned by Central Government) NIL NIL a. The amount brought in by Banks by way of startup Capital as prescribed by Reserve Bank of India should be shown under this head b. Amount of deposits kept with Reserve Bank of India NIL NIL section II (2) of the B. R. Act, 1949. Authorised Capital 5,00,00 5,00,00 (5,00,000 Equity shares of Rs.100/- each) Issued Capital (5,00,000 Equity Shares Rs.100/-) 5,00,00 5,00,00 Subscribed Capital 5,00,00 5,00,00 (5,00,000 Equity Shares Rs.100/-) Called Up Capital 5,00,00 5,00,00 (5,00,000 Equity Shares Rs.100/-) Less: Calls Un Paid NIL NIL Add: Forfeited Shares NIL NIL TOTAL 5,00,00 5,00,00 I. For Nationalized Banks Capital II. For banks incorporated out side India
III. For other banks Particulars As on 31.03.2011 As on 31.03.2010 a. Govt., of India 44,54,25 44,54,25 b. State Bank of India 31,17,98 31,17,98 c. Govt., of Andhra Pradesh 13,36,27 13,36,27 TOTAL 89,08,50 89,08,50 Share Capital Deposit from
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SCHEDULE 2
RESERVES AND SURPLUS
Particulars As on 31.03.2011 As on 31.03.2010 Opening Balance 63,51,07 45,53,65 Additions During the Year 21,62,59 17,97,42 Deductions During the Year NIL NIL TOTAL 85,13,66 63,51,07 Opening Balance 1,20 1,20 Additions During the Year NIL NIL Deductions During the Year NIL NIL TOTAL 1,20 1,20 Opening Balance NIL NIL Additions During the Year NIL NIL Deductions During the Year NIL NIL TOTAL NIL NIL Opening Balance 14,31,49 14,31,49 Additions During the Year NIL NIL Deductions During the Year NIL NIL TOTAL 14,31,49 14,31,49 319,55,08 233,04,74 TOTAL 419,01,43 310,88,50 I. Statutory Reserve II. Capital Reserve III. Share Premium IV. Revenue and Other Reserves V. Balance In Profit & Loss Account
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SCHEDULE 3
DEPOSITS
SCHEDULE 4
BORROWINGS
Particulars As on 31.03.2011 As on 31.03.2010 A. I. Demand Deposits i) From Banks NIL NIL ii) From Others 179,38,79 129,80,13 II. Savings Bank Deposits 2212,19,36 1567,67,96 III. Term Deposits i) From Banks NIL NIL ii) From Others 2403,14,07 2107,03,16 TOTAL 4794,72,22 3804,51,25 B. i) Deposits of Branches In India 4794,72,22 3804,51,25 ii) Deposits of Branches Out Side India NIL NIL TOTAL 4794,72,22 3804,51,25 Particulars As on 31.03.2011 As on 31.03.2010 i) Reserve Bank Of India NIL NIL ii) Other Banks (SBI) 718,65,30 707,71,07
iii) Other Institutions and Agencies 1235,98,86 892,26,70 (NABARD & NHB) NIL NIL TOTAL 1954,64,16 1599,97,77 I. Borrowings In India II. Borrowings Out Side India
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SCHEDULE 5 OTHER LIABILITIES AND PROVISIONS SCHEDULE 6 CASH AND BALANCE WITH RESERVE BANK OF INDIA (` in 1000)
Particulars As on 31.03.2011 As on 31.03.2010 I. Bills Payable/Bankers Cheque 36,98,31 39,63,41 II. Inter Office Adjustments (Net) 57,46,80 9,00,81 III. Interest Accrued 148,22,91 143,62,39 IV. General Provision on Standard Assets 13,68,88 10,66,50 V. Provision on Investments in Mutual Funds 8,00 NIL VI. Provision towards restructuring of SME 89,65 89,65 And Housing Loans VII. Others a. Audit Fee Provision 31,00 32,00 b. Interest on borrowings 4,22,82 82,26 c. Other Liabilities 13,94,94 14,89,19 d. Bonus NIL 7,92 VIII. Other Provisions 56,74,58 25,19,03 IX Income Tax Provision for 2009-10 2,74,71 45,41,62 X Income Tax provision for current year 48,35,26 NIL XI Provision for salaries NIL 22,97,24 TOTAL 383,67,86 313,52,02 Particulars As on 31.03.2011 As on 31.03.2010 I. Cash in Hand (Including Foreign Currency Notes) 93,36,42 79,79,34 II. Balances With Reserve Bank of India i) In Current Accounts 284,92,12 222,93,24 ii) In Other Accounts NIL NIL TOTAL 378,28,54 302,72,58
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SCHEDULE 7 BALANCES WITH BANKS AND MONEY AT CALL & SHORT NOTICE
Particulars As on 31.03.2011 As on 31.03.2010 a) In Current Accounts 144,47,27 183,15,30 b) In Other Deposit Accounts 1114,58,51 847,21,14 a) With Banks NIL NIL b) With Other Institutions NIL NIL TOTAL 1259,05,78 1030,36,44 i) In Current Accounts NIL NIL ii) In Other Deposit Accounts NIL NIL iii) Money At Call And Short Notice NIL NIL TOTAL NIL NIL GRAND TOTAL 1259,05,78 1030,36,44 I. In India i) Balances With Banks ii) Money At Call And Short Notice
II. Out Side India

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SCHEDULE 8 INVESTMENTS

Head Office: Warangal Particulars As on 31.03.2011 As on 31.03.2010 I. Investments In India i. Government Securities 999,69,83 758,90,71 ii. Other Approved Securities 18,00,00 46,05,00 iii. Shares - Long Term NIL NIL iv. Debentures and Bonds NIL NIL v. Subsidiaries And / or Joint Ventures NIL NIL vi. Others 15,00,00 10,00,00 TOTAL 1032,69,83 814,95,71 II. Investments Out Side India i) Government Securities (Including Local Authorities) NIL NIL ii) Subsidiaries And / or Joint Ventures NIL NIL iii) Other Investments (To Be Specified) NIL NIL TOTAL NIL NIL GRAND TOTAL 1032,69,83 814,95,71
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SCHEDULE 9 ADVANCES

Head Office: Warangal Particulars As on 31.03.2011 As on 31.03.2010 1. Bills Purchased and Discounted 4,98 4,78,40 2. Cash Credits, Over Drafts and 1742,64,14 1194,02,23 Loans Repayable on Demand 3. Term Loans 3091,84,45 2624,04,10 TOTAL 4834,53,57 3822,84,73 1.Secured by Tangible Assets 4412,00,49 3426,35,66 2.Covered by Bank/Govt. Guarantees NIL NIL 3.Un Secured 422,53,08 396,49,07 TOTAL 4834,53,57 3822,84,73 1. Priority Sector 3960,48,24 3024,10,20 2.Public Sector NIL NIL 3.Banks NIL NIL 4. Others 874,05,33 798,74,53 TOTAL 4834,53,57 3822,84,73 1.Due from Banks NIL NIL 2.Due from Others NIL NIL TOTAL NIL NIL TOTAL (C. I &II) 4834,53,57 3822,84,73 A. B. C.I Advances in India II. Advances Out Side India
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SCHEDULE 10 FIXED ASSETS
SCHEDULE 11 OTHER ASSETS

Particulars As on 31.03.2011 As on 31.03.2010 At Cost as on 31st March of the Preceding Year 3,72 3,72 Additions During the Year NIL NIL Deductions During the Year NIL NIL TOTAL 3,72 3,72 At Cost as on 31st March of the Preceding Year 39,09,85 24,37,90 Additions During the Year 6,19,79 14,71,95 Deductions During the Year NIL NIL Depreciation to date 26,19,40 18,89,27 TOTAL 19,10,24 20,20,58 TOTAL OF (I+II) 19,13,96 20,24,30 I. Land II.Other Fixed Assets (including Furniture And Fixtures Particulars As on 31.03.2011 As on 31.03.2010 1. Inter Office Adjustments (Net) NIL NIL 2. Interest Accrued 57,66,59 94,27,23 3. Tax Paid On Advance Tax Liability 32,78,27 19,78,27 4. Tax deducted at source during the year 44,10 25,98 5. Tax deducted at source during earlier years 4,60,85 4,60,85 6. Stationery 32,94 42,40 7. Stamps 3,60 3,02 8 Commission to be received from SBI Life 10,95 NIL 9. Telephone Deposit 1,64 49 10 Suspense 13,39 62,69 11. 2% Subvention receivable from GOI/ RBI/NABARD 10,39,37 8,34,55 12. PMIRP 2006 receivable from GOI NIL 15,18 13. Prepaid expenses - Insurance 8,31 37,07 14. Income Tax paid against disputed demand 13,64,00 NIL 15 Others 2,18,48 2,96,55 TOTAL 122,42,49 131,84,28
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SCHEDULE 12 CONTINGENT LIABILITIES

SCHEDULE 13 INTEREST EARNED

Particulars As on 31.03.2011 As on 31.03.2010 Interest/Discount On Advances/Bills 515,75,59 428,33,06 Interest On Investments 82,16,03 64,27,69 Interest On Balances With Reserve Bank Of India And Other Inter Bank Funds NIL NIL Others 45,07,07 84,78,66 TOTAL 642,98,69 577,39,41
(` in 1000)
Particulars As on 31.03.2011 As on 31.03.2010 1. Claims Against The Bank not Acknowledged as Debt 27,27,29 11,69,39 2. Liability For Partly Paid Investments NIL NIL 3. Liability On Account of Outstanding NIL NIL Forward Exchange Contracts 4. Guarantees Given On Behalf On Constituents A.) In India 5,01,78 3,85,19 B) Out Side India NIL NIL 5. Acceptances, Endorsements And Other Obligations NIL NIL 6. Other Items For Which Bank Is Contingently Liable (Unclaimed Bankers Cheques Treated As Income) 1,27,70 1,01,28 TOTAL 33,56,77 16,55,86
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SCHEDULE 14 OTHER INCOME

SCHEDULE 15 INTEREST EXPENDED

Particulars As on 31.03.2011 As on 31.03.2010 Commission, exchange and brokerage 67,71,70 39,21,97 Profit on sale of investments nil 44,12 Profit on revaluation of investments nil nil Profit on sale of lands, buildings and other assets nil nil Profit on exchange transactions nil nil Income earned by way of dividend etc., nil nil from subsidiaries / companies and /or joint ventures abroad/in india Miscellaneous income 7,35,82 4,86,17 Total 75,07,52 44,52,26 Particulars As on 31.03.2011 As on 31.03.2010 Interest On Deposits 227,46,95 212,62,77 Interest On Reserve Bank Of 124,08,95 107,73,35 India/Inter Bank Borrowings Others 5,73,45 5,63,76 TOTAL 357,29,35 325,99,88
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SCHEDULE 16 OPERATING EXPENSES

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Particulars As on 31.03.2011 As on 31.03.2010 Salary Payments and Provisions to Employees 100,51,86 86,16,64 Rent, Taxes, Lighting and fuel 6,80,05 5,06,10 Printing and Stationery 1,59,32 1,56,08 Advertisement and Publicity 17,55 8,15 Director's Fee, Allowances And Exp. 2,36 3,62 Depreciation On Banks Property 7,30,13 5,26,72 Auditor's Fee And Expenses 34,73 28,89 Legal Charges 8,59 10,64 Telephones charges 98,97 1,14,67 Postage (-)34,50 9,75 Repairs And Maintenance 18,02 24,84 Insurance 2,92,49 3,23,41 Travelling & Halting expenses 3,85,50 3,49,52 Leave Fare Concession 93,79 78,88 Leave Encashment Fund 5,26,34 2,96,41 Medical Expenses 1,54,15 1,29,57 Gratuity Contribution Fund 3,68,54 5,61,93 AMC for Software and Hardware 8,54,86 4,03,23 Amortisation provided on Govt. Securities 3,74,28 6,63,76 Books and Periodicals 37,90 29,28 Computerisation 27,30 48,57 Vehicle and Fuel 1,50,89 89,86 Smart Card Expenses (-)79,51 NIL Bonus (-)4,29 41 Entertainment 41,98 41,31 Other Expenses(Sundries) 5,21,47 5,50,27
TOTAL 155,12,77 135,72,51

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SCHEDULE 17 SIGNIFICANT ACCOUNTING POLICIES A) ACCOUNTING POLICIES

i) Standard Assets: 1. General : 2. Revenue Recognition: 3. Advances: a. The accompanying financial statements have been prepared on the historical cost basis and confirm to the statutory provisions and prevailing practices. b. Accounting policies not specifically mentioned otherwise are consistent and in consonance with the accounting practices regularly followed by the Bank. a. Interest on performing Assets has been recognized on accrual basis and on Nonperforming Assets on realization basis as per RBI guidelines. b. Interest on investments and deposits has been recognized on accrual basis. c. Commission, Exchange and Brokerage are normally recognized on the date of receipt although income may relate to transaction period extending beyond the accounting period. d. Locker rent is recognized on realization basis. e. Interest on overdue term deposits is accounted for on renewal. f. All other income/expenditure have been recognized on accrual basis except few items like electricity and telephone charges, rentals, property taxes etc. which are accounted for on cash basis. Provisions on advances have been arrived at in accordance with RBI guidelines/directives as under, a) All advances have been classified under four categories i.e., Standard Assets, SubStandard Assets, Doubtful Assets and Loss Assets. b) Provisions on Advances are made as under, General Provision for Standard Assets at the following rates; a) Direct advances to agricultural and SME sectors at 0.25% b) Commercial real estate sector at @ 1% c All other advances not included in (a) & (b) above, at 0.40%
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i i 4. Fixed Assets : 5. Investments : 6. Staff Benefits: 7. Segment Reporting i) Sub-Standard Assets: iii) Doubtful Assets I & II v) Doubtful Assets III: v) Loss Assets vi) a. Gratuity b. Leave Encashment 10% of the outstanding Advances for secured portion and 20% of unsecured portion of Advances. @ 20% or 30% of the secured portion based on the number of years the account remained as doubtful asset and @ 100% of unsecured portion of the adjusted outstandings after netting retainable amount of DICGC claim wherever received.
As per the revised guidelines on doubtful III category accounts existing as on 31.03.2011, 100% has been provided. @ 100% of the adjusted outstandings after netting retainable amount of DICGC claim wherever received. An additional provision of 1% has been provided on an average rural advances. a) Fixed Assets have been accounted for on historical cost basis. b) Depreciation has been provided for the Written Down Value method at the rates specified in Income Tax Rules, on all assets except computers. c) In respect of Computers, depreciation has been provided on Straight Line Method (SLM) @ 33.33% p.a. as per RBI guidelines. a) Investments are valued at cost or market value, whichever is lower as at the close of the year. b) Investments held in Government Securities are classified under Held to Maturity as per RBI guidelines. As per guidance note issued by ICAI the provision is made on the basis of valuation obtained from Actuarial Society of India. As per guidance note issued by ICAI the provision is made on the basis of valuation obtained from Actuarial Society of India. The bank operates solely in the banking sector industry including investments, not liable to deferent risks and rewards. Consequently, bank has not recognized any business segments or geographical segments and hence no disclosure is made.
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8. Income Tax Expense: 9. Net Profit / Loss Income Tax is calculated in accordance with relevant Tax regulations applicable to the Bank. Deferred Tax asset / deferred tax liability is not recognized, since these are not material and significant. The Net Profit/Loss disclosed in the Profit & Loss account is after making a. Provision on Non-Performing Assets and b. Other usual and necessary provisions. The accounts of the bank have been drawn up in accordance with the revised Format III Schedule of Banking Regulation Act, 1949 to the extent practicable.
SCHEDULE 18 DISCLOSURES & NOTES ON ACCOUNTS

I. Disclosures as per norms for RRBs 1. CAPITAL S No Particulars Current year Previous year i) CRAR(%) 11.85 11.22 ii) CRAR - Tier I Capital (%) 10.60 10.29 iii) CRAR - Tier II Capital (%) 1.25 0.93 iv) Percentage of Shareholding of the A Government of India 50.00 50.00 B State Government 15.00 15.00 C Sponsor Bank 35.00 35.00 2. INVESTMENTS S No Particulars Current year Previous year 1 Value of Investments i) Gross value of Investments 103269.83 81495.71 ii) Provisions for Depreciation 8.00 0.00 iii) Net value of Investments 103261.83 81495.71 2 Movement of provisions held towards depreciation on investments i) Opening Balance 0.00 1093.55
ii) Add: Provisions made during the year 8.00 0.00 iii) Less: Write off / Write back of excess provisions during the year 0.00 1093.55 iv) Closing Balance 8.00 0.00
(` in Lakhs)
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3. REPO TRANSACTION Item Minimum Maximum Daily Average As on 31st outstanding outstanding outstanding March, 2011 during the year during the year during the year Securities Sold under Repos Nil Nil Nil Nil Securities purchased under reverse repos Nil Nil Nil Nil 4. Non-SLR Investment Portfolio (i) Issuer composition of Non SLR Investments (ii) Non-performing Non-SLR investments Particulars Amount Opening balance 0.00 Additions during the year since 1st April 0.00 Reductions during the above period 0.00 Closing Balance 0.00 Total provisions held 0.00
(` in Lakhs) (` in Lakhs) (` in Lakhs)
S No. Issuer Amount Extent of Extent of Extent of Extent of Private below investment unrated unlisted placement grade securities securities securities i) PSUs 1800.00 0.00 0.00 0.00 0.00 ii) FIs - - - - iii) Banks - - - - iv) Private Corporate - - - - v) Others 1492.00 0.00 0.00 0.00 0.00 vi) Provisions held towards depreciation 8.00 0.00 0.00 0.00 0.00 Total 3300.00 0.00 0.00 0.00 0.00
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1.Asset Quality 5.1 Non-Performing Assets S No. Particulars Current year (2010-11) (2009-10) i Net NPAs to Net Advances (%) 2.82 1.08 ii Movement of NPAs (Gross) (a) Opening balance 8826 8818 (b) Additions during the year 15092 3198 (c) Reductions during the year 4290 3190 (d) Closing balance 19628 8826 iii Movement of Net NPAs (a) Opening balance 4139 4283 (b) Additons during the year 12414 2612 (c) Reductions during the year 2914 2756 (d) Closing balance 13639 4139 iv Movement of provisions for NPAs (Excluding provisions on standard assets) (a) Opening balance 4029 4013 (b) Provisions made during the year 1450 2240 (c) Write-off / Write-back of excess provisions 718 2224 (d) Closing balance 4761 4029 Previous year 5.2 Details of Loan Assets subject to Restructuring S No. Particulars Current year
(2010-11) (2009-10) i Total amount of loan assets subject to | restructuring, rescheduling, renegotiation 26560 Nil ii The amount of Standard assets subjected to restructuring, rescheduling, renegotiation 26560 Nil iii The amount of Sub-Standard assets subjected to restructuring, rescheduling, renegotiation Nil Nil iv The amount of Doubtful assets subjected to restructuring, rescheduling, renegotiation Nil Nil Note (i) = (ii) + (iii) + (iv) Previous year
(` in Lakhs) (` in Lakhs)
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5.3 Details of financial assets sold to Securitization (SC) / Reconstruction Company (RC) for Assets Reconstruction S No. Particulars Current year i No. of accounts Nil Nil ii Aggregate value (net of provisions) of accounts sold to SC/RC Nil Nil iii Aggregate consideration Nil Nil iv Additional consideration realized in respect of accounts transferred in earlier years Nil Nil v Aggregate gain / loss over net book value Nil Nil Previous year 5.4 Details on non-performing financial assets purchased / sold A. Details of non-performing financial assets purchased: S No. Particulars Current year 1 (a) No. of accounts / purchased during the year Nil Nil (b) Aggregate outstanding Nil Nil 2 (a) Of these, number of account restructured during the year Nil Nil (b) Aggregate outstanding Nil- NilPrevious year
B. Details of non-performing financial assets sold.

S No. Particulars Current year 1 No. of accounts sold Nil Nil 2 Aggregate outstanding Nil Nil 3 Aggregate consideration received Nil Nil Previous year 5.5 Provisions on Standard Assets S No. Particulars Current year
1 Provisions towards Standard Assets 1368.87 1066.00

Previous year
(` in Lakhs) (` in Lakhs) (` in Lakhs) (` in Lakhs)
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6. Business Ratios S No. Particulars Current year i Interest income as a percentage to Working Funds 7.99 9.43 ii Non-Interest income as a percentage to Working Funds 0.93 0.72 iii Operating profit as a percentage to Working Funds 2.56 1.68 iv Returns on Assets (%) 8.92 10.15 v Business (Deposits plus advances) per employee 436 343.11 vi Profit per employee 4.86 4.62 Previous year (` in Lakhs) (` in Lakhs)
7. Asset Liability Management Maturity pattern of certain terms of Assets and Liabilities
Particulars 1 to 15 to 29 days Over 3 Over 6 Over 1 Over 3 Over 5 Total 14 28 to 3 months months year year years days days months and upto and upto and upto and upto 6 months 1 year 3 years 5 years Deposits 222.80 63.72 758.14 172.48 359.84 3061.06 90.31 66.37 4794.72 Advances 242.15 726.46 968.61 339.02 484.31 1017.05 435.87 621.06 4834.53 Investments 1.85 0.82 26.45 36.20 1217.34 118.40 3.23 743.00 2147.29 Borrowings 0.00 0.00 0.00 366.77 1071.02 475.17 36.80 4.88 1954.64 Foreign 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 currency assets Foreign 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 currency liabilities
(` in Crores)
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8. Exposures Exposure to Real Estate Sector 9. Details of Single Borrower (SGL), Group Borrower Limit (GBL) exceeded by the bank: The bank had not exceeded the single borrower limit, group borrower limit fixed by the Board 10. Miscellaneous Amount of provisions made for Income tax during the year. Particulars Current Year Previous year Provision for Income Tax 4835.26 4541.62 11. Disclosure of Penalties imposed by RBI 12. Additional Disclosures as per Accounting Standards applicable to the Bank The bank has maintained CRR and SLR as per RBI Act 1934 and Banking Regulation Act 1949 and not defaulted during the financial year under report a) Related parties where control / significant influence exists or with whom transaction have taken place during the year. 12.1 Related party disclosure
(` in Lakhs)
S No. Particulars Current year I Residential Mortgages above `.20.00 lakhs lending fully secured 2163 823 by mortgages on residential property that is or will be occupied by the borrower or that is rented (individual housing loan upto `.20 lakh may be shown separately) Up to `. 20.00 lakhs 18352 10812 Lending secured by mortgages on commercial real estates 911 Nil (office buildings, retail space, multi-purpose commercial premises, multi-family residential buildings, multi-tenanted commercial premises, industrial or warehouse space, hotels, land acquisition, development and construction, etc.) Exposurewould also include non-fund based (NFB) limits. Nil Nil securitized exposures a. Residential Nil Nil b. Commercial Real Estate Nil Nil Nil Nil Fund-based and non-fund based exposures on National Housing Nil Nil Bank (NHB) and Housing Finance Companies (HFCs) Previous year a Direct exposure Ii Commercial Real Estate Iii Investments in Mortgage Backed Securities (MBS) and other b) Indirect Exposure
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Sponsor Bank, their Subsidiaries and Associates: State Bank of India
SBI Life Insurance Company Limited SBI Fund Management Private Limited State Bank of Hyderabad Key Management Personnel Shri. K.Lakshmana Rao, Chairman Shri. N. Ramesh, General Manager (Credit) Shri. K.Solomon, General Manager (Operations) Shri. P.A.S.Sudhakar Rao, General Manager (HR) Shri. M.Krishna Rao, General Manager (IT) 12.2 Particulars of related party accounts transactions The following is the summary of significant related party transactions: For the year ended For the year ended 31st March 2011 31st March 2010 Refinance received from State Bank of India 70999.99 65000.00 Interest paid on refinance to SBI 5303.08 3724.47 Investments made with: SBI - in the form of STDRs 111458.52 84721.12 SBI Fund Management Private Limited Nil Nil Interest received from SBI 4507.07 8477.08 Contributions to Gratuity Fund with SBI Life Insurance Company Limited 368.54 561.93 Contributions to Group Leave Encashment Policy with SBI Life Insurance Company Limited 526.34 296.40 Current Account transactions with SBI 8495.46 3846.25 12.3 Particulars of Managerial Remuneration: (Amount in `) For the year ended For the year ended 31st March 2011 31st March 2010 CHAIRMAN 1365387 731607 GENERAL MANAGER (CREDIT) 1179327 693185 GENERAL MANAGER (OPERATIONS) 1177985 696967 GENERAL MANAGER (H R) 1180441 733199 GENERAL MANAGER (I T) 1176974 707980
(` in Lakhs)
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12.4 Prior Period Items. 12.5 Impairment of Assets There were no material prior period items of Income or Expenditure during the year. The Bank obtains Certificate from the branches stating the physical list of Assets from each branch. Based on such information necessary entries for write off are accounted for the impaired assets. 13. Provisions and Contingencies S No. Particulars Current year A Opening balance in the floating provisions account 2519 2519 B The quantum of floating provision made in the accounting year 3155 NIl C Amount of Draw down made during the accounting year NIl Nil i. Agricultural Debt Waiver and Debt Relief Scheme2008 Residual balances written off NIL Nil ii. Appropriated towards additional provisions required for the year as per prudential norms NIL Nil iii Provision written back to profit and Loss account NIl Nil iv. Draw down total NIL Nil D Closing balance in the floating Provisions account 5674 2519 Previous year
14. Disclosure of complaints:

A. Customer Complaints: S No Particulars Nos a No. of complaints pending at the beginning of the year 2 b No. of complaints received during the year 45 c No. of complaints redressed during the year 42 d No. of complaints pending at the end of the year 5 B. Complaints disposed by the Banking Ombudsman: S No Particulars Nos a No. of complaints pending at the beginning of the year 2
b No. of complaints received by the Banking Ombudsman during the year 26 c No. of complaints disposed off during the year 28 d No. of complaints pending at the end of the year Nil
(` in Lakhs)
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II.NOTES ON ACCOUNTS
1) Fixed Assets 2) Staff Benefits: 3) Share Capital Deposit 4) Reconciliation 5) Value of Stationery 6) Taxes Land has been gifted to the bank by certain donors for the construction of the Bank's premises. The Bank had incurred only registration charges and development charges on such lands and the same is accounted as cost of land. However, market value of such lands is not considered for the purpose of financial statements. During the year an amount of `. 369 Lakhs is debited to Profit & Loss account towards Gratuity. During the year an amount of `. 526 Lakhs is debited to Profit & Loss account towards Leave Encashment. The amount received from Government of India, Sponsor Bank (State Bank of India) and Government of Andhra Pradesh towards cleansing of Balance Sheet under Restructuring of RRBs (phase II ) has been shown under Share Capital Deposits in balance sheet . The total Share Capital Deposit is `.89,08,50,490/-. Inter Office account as on 31.05.2010 has been closed after reconciling and responding all the pending entries. BCGA has been introduced in place of Inter office account with effect from 01.06.2010 and the same has been reconciled up to 31.03.2011. Reconciliation of Banker's cheque account for the quarter ended December 2010 is under progress The value of Stationery and Stamps of `. 36.54 Lakhs has been adopted as certified by the management. a) As per Section 22 of The Regional Rural Banks act, 1976, Regional Rural Bank is to be deemed to a Cooperative Society for the purpose of the Income Tax Act, 1961". b) The Income Tax assessment of the Bank for Assessment year 2007-08 has been completed and the department has raised a demand of ` 9,58,45,269/ disallowing expenditure of `27,95,02,982/ claimed under various heads of account. The Bank had remitted `. 4.79 crores and got stay for payment of the balance demand . On appeal before The Commissioner of Income tax (Appeals), the Bank had got relief to the extent of `. 24,77,02,273/- out of the disallowance made earlier by the Incometax Department. The Bank is contemplating to file appeal before the I.T. Tribunal for the remaining part not allowed by the Commissioner of Incometax (appeals). Meanwhile, as per the directions of the Commissioner of Income tax, the I.T. department a. Gratuity b. Leave Encashment
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had reassessed the Income of assessment year 2007-08, disallowing the provision of `. 15,23,19,692/- made on standard assets and raised an additional demand of ` 6,19,91,101/- The Bank had remitted ` 3.10 crores
and got stay for payment of the remaining additional demand . The bank has filed an appeal before The Commissioner of Income tax (Appeals) against this reassessment order. No provision is made since the matter is subjudice. c) The Income Tax assessment of the Bank for Assessment year 2008-09 has been completed and the department has raised a demand of ` 11,48,92,740/- disallowing expenditure of ` 26,41,79,904/ claimed under various heads of account. The Bank had remitted ` 5.75 crores and got stay for payment of the balance demand. The bank has filed an appeal before The Commissioner of Income tax (Appeals) against this assessment order. No provision is made since the matter is subjudice. Investments in Government Securities includes premium paid on such investments. The investments (including premium) in Government Securities is treated as 'Held to Maturity' category as per RBI norms, the premium is being amortized over the period remaining to maturity. The amount amortized to P&L account for the year 2010-11 was ` 374 Lakhs and disclosed under the head Operating Expenses Schedule 16 of Profit & Loss Account. st Balances in Unpaid Bankers' Cheque account outstanding for more than three years as on 31 March 2011, amounting to ` 127.70 lakhs have been credited to P& L account. 7) Investments in Government Securities 8) The Bankers' Cheques outstanding for more than three years st 9) Classification of Assets as on 31 March, 2011
(`. In lakhs)
CLASSIFICATION GROSS ADVANCES ADVANCES STANDARD ASSETS 469815 469815 SUB STANDARD ASSETS 15577 12082 BAD & DOUBTFUL ASSETS 4051 1556 TOTAL 489443 483453 ADD: INCA 1229 ADD: PROVISION ON SUB STANDARD AND DOUBTFUL ASSETS 4761 TOTAL GROSS ADVANCES 489443 NET The Net advances are Net of provisions and INCA except provision on Standard Assets.
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As per our report even date Place: Warangal Date: 18-04-2011 For C.P.J. & Associates Chartered Accountants Firm Reg No 8180S For Andhra Pradesh Grameena Vikas Bank Chandra Prakash Jain K.Solomon K. Lakshmana Rao Partner General Manager (Operations) Chairman Membership No. 24716 B. Raja Rao, Director B. Radha Krishna Murthy, Director K N. Singh Sardar, Director D. Hari, Director K.T. Ajit, Director Manoj Khattar, Director Rahul Bojja, IAS, Director Mrs Vasudha Mishra, IAS, Director K. Lakshmana Rao, Chairman 10) Receivable from Govt. of India under ADWDRS, 2008 An amount of ` 12.87 lakhs is receivable from Govt. of India under Agricultural Debt Waiver and Debt Relief Scheme, 2008 out of ` 478 Crores claimed from the Govt. and credited to farmers accounts. 11) There are 12 fraud cases outstanding as on 31.03.2011 involving an amount of ` 1,37,00,267/ .Out of which an amount of ` 5,00,873/- has been recovered. Accordingly, a provision of ` 1,31,99,394/- is required as on
31.03.2011.Since the provisions available is ` 1,25,31,241/- ,an additional provision of ` 6,68,153/- has been provided during the year. 12) The figures mentioned in Balance Sheet, Profit & Loss Account and Schedules 1 to 16 have been rounded off to the nearest thousand rupees. 13) Previous year's figures have been regrouped/ classified/recast wherever necessary
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EVENTS & HAPPENINGS

An SHG woman sharing her experience with the Chairman Shri K. Lakshmana Rao, during SHG loan mela organized by our Bhudanpochampalli Branch. Felicitation to Smt L. Dhanwanthi, ZP Chairperson, Warangal on the International Womens' Day on 8.3.2011 at our Head Office. Shri R. Rama Rao, R M.Mahabubnagar receiving the Best Banker Award from the District Collector, on the eve of Republic Day Celebrations on 26.1.2011. Shri JRP Sridhar, R.M Visakhapatnam, receiving the Best Banker Award from the District Collector, Visakhapatnam on the eve of Republic Day on 26.1.2011. Handing over Cheque of Rs1.23 Cr by Shri K. Lakshmana Rao, Chairman during SHG Loan Mela at Pochampalli Branch in Nalgonda RO. Handing over Cheque for Rs 5 Crore to Kinnera Zilla Mahila Samakya, Khammam, by Hon.'ble Chief Minister Shri N. Kiran Kumar Reddy, organized by our Khammam RO.
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Customers' meet conducted at Sadasivapet branch in Sangareddy region on the occassion of branch shifting into new premises Visit of World Bank Team to our Nandigam Br. Ashoknagar RO and inspection of Animal Husbandry Units. Shri A. Ramesh Rao, BM look on Distribution of milch animals by Chairman Shri K. Lakshmana Rao, at our Yadagirigutta Branch Vigilance Awareness Week conducted at Head Office on 25.10.2010 attended by Management Auditor Shri A.K. Gupta, DGM, SBI. Customer Awareness Campaign on Bank's Products and Services by means of Burra Katha. Opening of new Branch in Court Road,Janagoan. Shri K. Solomon, General Manager (OP) and Shri G.V. Ramana Prasad, Regional Manager, Warangal look on. 86
Events & Happenings

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Shri K. Lakshmana Rao, Chairman, handing over Keys of the Car financed by our Arasavalli Branch, Srikakulam RO.
Vermi Compost Unit financed by our Arasavalli Branch, Srikakulam Region. Sri V. Narsimha Reddy R.M. & AGM RBI Inspecting the Units Disbursement of SHG loans by Shri M. Krishna Rao, General Manager at our Yadagirigutta Branch. Shri K. Lakshmana Rao, Chairman looks on. Processing of applications in Loan Mela conducted by BHEL Branch, Ashoknagar Region. Handing over a Cheque of Rs 2.35 Cr by Shri R. Venkat Reddy Minister to SHG groups in a programme organised by our Khammam RO Sri PAS Sudhakar Rao G.M. (HR) & M. Krishna Rao G.M. (IT) along with HO staff Welcoming Sri K. Lakshmana Rao, Chairman on his assuming charge
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Events & Happenings

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APGVB Staff Learning Centre
View of Training programmes conducted at Bank's Staff Learning Centre

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Head Office: 2-5-8/1 Near Ambedkar Statue, Ramanagar, Hanamkonda - 506 001 Warangal Dt. A.P. Ph: 0870 - 2577256 I Tollfree : 18004257900 I e-mail: apgvikasbank2006@yahoo.co.in I www.apgvbank.in Experienced, leading the young Transformation into new age banking
Important Telephone Numbers
SNO
NAME
MOBILE
LAND LINE
FAX NUMBER
Head Office - Warangal 1 2 3 4 5 CHAIRMAN General Manager (Credit) General Manager (HR) General Manager (Operations) General Manager (IT) 9440903901 0870 2577700 0870 2577725 0870 2577726 0870 2577755 0870 2455944 -
Chief Manager (Vig & DP)

Chief Manager (A&I) Chief Manager (Accounts) Chief Manager (P&D) Chief Manager (Adv) Chief Manager (IT) Chief Manager (Per & HRD) Chief Manager (Training) Chief Manager (Board) Chief Manager (ICT) Officer- Board Secretariat Sect to Chairman
9440903902
0870 2577711
7 8 9 10 11 12 13 14 15 16 17
9440903903 9440903904 9440903907 9440903908 9491065590 9440903906 9493126204 9440903905 9490153767 9490157358 -
0870 2566633 0870 2577744 0870 2577766 0870 2577733 0870 2455257 0870 2577977 0870 2544801 0870 2577256 0870 2577256 0870 2577700
0870 2455946 0870 2550370 -
Regional Office - Srikakulam 1 2 3 Regional Officer Manager (Admn) Manager (Adv) 9440903954 9440903911 9440903912 08942 221041 08942 220157 08942 221439 08942 221040
Regional Office - Visakhapatnam 1 2 3 Regional Officer Manager (Admn) Manager (Adv) 9440903929 9440903918 9490153756 0891 2713942 0891 2713981 0891 2713972 0891 2713972
Regional Office - Vizianagaram 1 2 3 Regional Officer Manager (Admn) Manager (Adv) 9490153758 9490153759 9490153760 08922 273955 08922 273956 08922 273958 08922 274221
Regional Office - Khammam 1 2 3 Regional Officer Manager (Admn) Manager (Adv) 9440903926 9440903930 9440903927 08742 226816 08742 228897 08742 226813 08742 224260
Regional Office - Nalgonda 1 2 3 Regional Officer Manager (Admn) Manager (Adv) 9440903910 9440903968 9440903933 08682 228996 08682 229950 08682 229946 08682 229945
Regional Office - Mahabubnagar 1 2 3 Regional Officer Manager (Admn) Manager (Adv) 9440903939 9440903940 9440903941 08542 242861 08542 252861 08542 248492 08542 242862
Regional Office - Sangareddy 1 2 Regional Officer Manager (Admn) 9440903949 9440903950 08455 276263 08455 274088 08455 276603

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APGVB Formation By amalgamation, on the 31st March 2006, of the following 5 banks, sponsored by SBI, to participate more energetically,

Always Try to be on Top

K Lakshmana Rao Chairman

Headquarters Ownership Number of Branches Staff

we are with you!

6 Annual Report 2010-11

Empowering Rural Lives

apgvikasbanksrd@yahoo.co.in apgvbroash@yahoo.co.in apgvbbcm@yahoo.co.in

Board of Directors Report

Annual Report 2010-11 we are with you!

Andhra Pradesh Grameena Vikas Bank Head Office : Warangal

Annual Report 2010-11

Vision Mission Values

Annual Report 2010-11

HIGHLIGHTS 2010 -2011

KEY PERFORMANCE INDICATORS

Annual Report 2010-11

Indicators 2008-09 2009-10 2010-11

KEY PERFORMANCE INDICATORS

Annual Report 2010-11

Annual Report 2010-11

KEY PERFORMANCE INDICATORS

For the year

Annual Report 2010-11

Annual Report 2010-11

Annual Report 2010-11

Annual Report 2010-11

Annual Report 2010-11

Shri P.A.S. Sudhakar Rao

Shri M. Krishna Rao

Annual Report 2010-11

BOARD OF DIRECTORS' REPORT 2010 - 11

0 2000 4000 6000 8000 10000 12000

2006-07 2007-08 2008-09 2009-10 2010-11

Annual Report 2010-11

Annual Report 2010-11

2010-11 2009-10 2008-09

Annual Report 2010-11

Assets Liabilities (Rs in Crores)

Reserves (Rs in Crores) Deposits 4795,62%

Others, 384, 5% Capital & Reserves 513, 7%

Annual Report 2010-11

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Annual Report 2010-11

Annual Report 2010-11

Annual Report 2010-11

77.09 92.06 97.35 101.64 102.08

2006-07 2007-08 2008-09 2009-10 2010-11 0 20 40 60 80 100 120

102 153 151 134 133 129 119 110 103

Annual Report 2010-11

572948 634143 433142 486448 580846

Annual Report 2010-11

172260 161077 139708 106350 82835 60140 0 20000 40000 60000

Annual Report 2010-11

Annual Report 2010-11

Annual Report 2010-11

Annual Report 2010-11

Annual Report 2010-11

Annual Report 2010-11

Annual Report 2010-11

Annual Report 2010-11

Annual Report 2010-11

Annual Report 2010-11