CANARA BANK
REPORT OF THE BOARD OF DIRECTORS ON CORPORATE
GOVERNANCE
Bank’s philosophy on corporate governance
“Corporate Governance is the application of best management practices,
compliance of law in true letter and spirit and adherence to ethical standards for
effective management and distribution of wealth and discharge of social
responsibility for sustainable development of all stakeholders.” Bank’s philosophy
on Corporate Governance is both about doing Things Right and about doing Right
Things.
The vision of Canara bank is to emerge as a World Class Bank with best practices
in the realms of asset portfolio, customer orientation, product innovation,
profitability and enhanced value for stakeholders. In its endeavor to attain the goal
visualized, the bank is laying maximum emphasis on the effective system of
Corporate Governance. The interaction between the Board, Senior Management
and the Executives is so configured as to have a distinctly demarcated role so as to
derive enhanced value to its stakeholders in particular and society in general. The
overall objective is to optimize sustainable value to all stakeholders - depositors,
creditors, shareholders, customers, borrowers, employees and the society through
adherence to corporate values, codes of conduct and other standards of appropriate
behavior relevant to our functioning.
CompositionofBoardofDirectors:
The Board of the Bank has been constituted under Section 9(3) of the Banking
Companies {Acquisition & Transfer of undertaking} Act 1970 and Nationalized
Bank (Management & Miscellaneous Provision) Scheme 1970. The members of
the Board are eminent personalities from various walks of life. Their rich and
varied experiences, guide the Bank in its progress and achievements in various
spheres.
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CANARA BANK
Audit Committee:-
The formation and functioning of Audit Committee of the Board (ACB) is
governed by the directives of Reserve Bank of India.
i) ACB provides a direction as also oversees the operations of total Audit function
of the Bank which interalia includes organization, operationalization and quality
control of internal audit.
ii) The terms of reference of ACB includes the following:
1. To oversee the bank's financial reporting process and ensuring correct,
adequate and credible disclosure of financial information.
2. Reviewing with the management, the financial statements with special
emphasis on accounting policies and practices, compliance with accounting
standards and other legal requirements, concerning financial statements and
3. Review the adequacy, quality and effectiveness of external and internal
audit, internal control system, interaction with external auditors before
finalization of Annual accounts and reports, review Bank's finance and risk
management policies.
iii) ACB also examines, scrutinizes, reviews and takes appropriate action on the
basis of comments given in Statutory/External Audit reports, Long Form Audit
Report [LFAR] and Annual Financial Inspection Report {AFI}/inspection report of
RBI.
iv) ACB also makes a review of reports received from compliance cell, Interbranch
Adjustments Account, etc
Remuneration Committee:
Remuneration to Directors is paid as per the Government of India guidelines.
Hence, constitution of the Remuneration Committee has no relevance.
4.1 The details of salary paid to the whole-time Directors of the Bank, during the
year 2005-06 are furnished here under.
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CANARA BANK
Name & Designation Amount (Rs.)
Shri. M B N Rao Chairman & Managing 4,40,907/-
Director
Shri. B Swaminathan Executive Director 4,31,034 /-
4.2 Non- Executive Directors are not being paid any other remuneration except
Sitting Fees as fixed by Government of India.
Shareholders'/ Investors' Grievances Committee:
The Shareholders’/Investors’ Grievances Committee has been constituted in terms
of Clause 49 of the Listing Agreement. The Committee monitors the redressal of
the Shareholders’/Investors’ grievances like transfer of shares, non- receipt of
shares certificate/refund order/dividend warrants, etc.
Following are the details of complaints received during the year.
a. No. of shareholders Complaints Received 2172
b. No. of shareholders Complaints not solved to the Nil
satisfaction of shareholders
c. No. of Pending complaints Nil
None of the above complaints were pending for more than a month.
In terms of Clause 46 of the Listing Agreement, Shri S R Krishnan, Company
Secretary is the Compliance Officer of the Bank.
The Management Committee of the Board is constituted as per the provisions of
the Nationalized Banks (Management and Miscellaneous Provisions) Scheme
1970. The Management Committee exercises all the powers vested with the
Committee in respect of sanctioning of credit proposals, compromise/ settlement of
loans, write-off proposals, approval of capital and revenue expenditure, acquisition
and hiring of premises, filing of suits/ appeals, investment, donations and any other
matter referred to or delegated to the Committee by the Board.
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CANARA BANK
Risk Management Committee
The Bank has evolved suitable Risk Management Policies consistent with the
business focus, risk appetite of the Bank, Capital Adequacy and infrastructure of
the Bank. A Board Level Risk Management Committee has been formed, with the
responsibility of devising policy and strategy for integrated Risk Management
System for the Bank. As the Risk Management system is required to be
implemented through a Committee approach, THREE high level committees
[Link] Risk Management Committee (MRMC), Credit Risk Management
Committee (CRMC) and Operational Risk Management Committee(ORMC) have
been set up to deal with the issues relating to Risk Management covering Market
Risk, Credit Risk and Operational Risk respectively. The C&MD of the Bank is the
Chairman of these Committees, assisted by the Executive Director and other
Senior Executives of the Bank.
Asset Liability Management Committee:
Based on RBI directives, the Bank has set up an Internal Asset Liability
Management Committee (ALCO) headed by the C&MD of the Bank. The other
members of the Committee include the Executive Director and other Senior
Executives of the Bank.
The scope of ALM functions is as follows:
a. Liquidity risk management.
b. Management of market risk
c. Trading risk management
d. Funding and capital Planning
e. Profit Planning & Growth Planning
The above mentioned scope, addresses mainly the liquidity and interest rate Risk.
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CANARA BANK
Disclosures:
The related party transactions of the Bank are disclosed in the notes on accounts
schedule 17 of the Balance Sheet as on 31.03.2006. The Bank has complied with
all matters related to capital market since its listing of shares. There are no
penalties or strictures imposed on the Bank by the stock exchanges or SEBI or any
other statutory authorities on any matter related to capital Markets, during the last
three years. The Bank has complied with all the mandatory requirements
prescribed by Regulatory Authorities.
Means of communication:
Canara Bank provides information relating to Bank through its Annual Report
which contains Report of the Board of Directors on Corporate Governance, the
Directors report, audited accounts, cash flow statements, etc. The shareholders are
also intimated of its performances, through publication in news papers, intimation
to stock exchanges, press releases and through website at [Link] .
The Bank also displays official News releases, presentations in its website.
Listing on Stock Exchanges:
Canara Bank shares are listed at the following Stock Exchanges. Stock Codes of
respective stock exchanges are furnished against their names.
1 The Bangalore stock Exchange Limited CANBANK
2 Bombay Stock Exchange Limited 532483
3 National Stock Exchange of India Limited CANBANK
AUDITORS' CERTIFICATE ON CORPORATE GOVERNANCE
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CANARA BANK
To:
The Members of Canara Bank
We have examined the compliance of conditions of Corporate Governance by
CANARA BANK for the year ended 31 st March 2006 as stipulated in the relevant
Clauses of the Listing Agreements of the said Bank with the Stock Exchanges.
The compliance of conditions of Corporate Governance is responsibility of the
Management. Our examination was limited to procedures and implementation
thereof, adopted by the Bank for ensuring the compliance of conditions of the
Corporate Governance. It is neither an audit nor an expression of opinion on the
financial statements of the Bank.
On the basis of the records and documents maintained by the Bank and the
information and explanations given to us, in our opinion, the Bank has complied
with the conditions of Corporate Governance as stipulated in the above mentioned
Listing Agreements with the Stock Exchanges.
We state that no investor grievance is pending for a period exceeding one month
against the Bank as per the records maintained by the Shareholders and Investors
Grievance Committee.
We further state that such compliance is neither an assurance as to the future
viability of the Bank nor the efficiency or effectiveness with which the
Management has conducted the affairs of the Bank.
Banglore
G VENKATA RATNAM
Partner
April 24, 2006
FOR SATYANARAYANA & CO.
Chartered Accountants