http://economictimes.indiatimes.com/icici-bank-ltd/infocompanyhistory/companyid-9194.

cms Company History - SBI 1955 On 1st July State Bank of India was constituted under the State Bank of India Act 1955, for the purpose of taking over the undertaking and business of the Imperial Bank of India. The Imperial Bank of India was founded in 1921 under the Imperial Bank of India Act 1920. The Bank transacts general banking business of every description including, foreign exchange, merchant banking and mutual funds. 1959 On September State Bank of India (Subsidiary Bank) Act was passed. On October State Bank of Hyderabad become the first subsidiary of SBI. 1960 During this period, State Bank of Jaipur, State Bank of Bikaner, State Bank of Indore, State Bank of Travancore, State Bank of Mysore, State Bank Patiala and State Bank of Saurashtra became subsidiaries of the bank. 1962 The Bhor State Bank Ltd was Amalgamated with the Bank bring the total number of minor State associated banks so amalgamated to five. A scheme for amalgamation of the Bank of Aundh Ltd., was also approved. On 20th August, the Unit Bank Ltd. Chennai was taken over by the Bank. 1963 In october Branch in London become bankers to the Indian High Commission, thereby taking over a function till then performed by the office of RBI. Of the other business transacted by the Branch, an important aspect was medium term loans mostly to Indian shipping companies. 1969 On November 8th the Bank of Behar Ltd was amalgamated. 1972 A merchant banking division was set up in the central office to cater to promotional needs of the corporate sector.

1977 During the year bank introduced the Perennial Pension Plan Scheme under which if the depositors make a regular monthly payment of a fixed amount for a period of 84 to 132 months, they become eligible from the 86th and 134th months respectively for getting a monthly pension of predetermined amount forever. In order to meet all the developmental needs of the villages including their social and cultural needs, the bank launched an integrated rural developement programme, aimed at not only covering the credit needs of agriculture and agricultural activities and village industries, but also housing and social activities. 1980 Bank introduced the cash Certificate Scheme under which deposit certificate are issued for a fixed period on payment of the issue price specified for the respective maturity period and the face value corresponding to the issue price plus interest compounded at quarterly intervals is paid on maturity. The certificates are issued for the face value of Rs 100, Rs 1000, Rs 10,000 and Rs 50,000 maturing after 29,65,84 and 120 months. 1982 The Non-Resident Investment Cell was set up, which had streamlined the working operations of the non-resident investment sections at important centers. 1983 SBI launched self employment scheme, for providing self-employment to educated unemployed youth. Educated unemployed youths are encouraged to undertake self-employment ventures in industry, services and business. 1984 The bank provide need-based rehabitation assistance to large and medium sick industrial units. 1985 During the year, company set up a data bank of sick units available for taken over by healthy units. With effect from 26th August, the Bank of Cochin Ltd with 108 branches was also amalgamated with the Bank.

(i) All shares in the Capital of the Imperial Bank of India was vested in the RBI. The SBI was registered with an Authorised capital of Rs.20 crores, and an issued and paid up capital of Rs.562,50,000 divided into 562,500 shares of Rs.100 each. (ii) Every person who on the 30th June, 1955, was registered as a holder of shares in the Imperial Bank of India was paid by the Reserve Bank of India. 44,37,500 No. of shares issued at a premium of Rs 160 per share. 1986 At the end of the year 324 sick units with an outstanding of Rs 1069 crores were assisted. Of these, 107 units were considered viable and 60 from them were placed under regular nursing programme. On 1st August a new subsidiary named SBI Capital Market was functioning independently, took up leasing business and certain other new services. 100,00,00 No. of shares issued at a prem. of Rs 160 per share. 1987 Up to the end of the year the bank had sponsored 30 Regional Rural Banks covering 66 backward and underbanked districts in the country. In terms of deployment, the advances portfolio of overseas offices rose to Rs 5,767 crores. Investments in inter-bank money markets and also in prime securities amounted to Rs 2,670 crores by the end of the year. 1988 During the year bank initiated UPTECH an Industrial Technology Group to direct and guide programmes aimed at facilitating technology upgradation. Also a scheme to develop enterpreneurship among woman under the name "Stree Shakti" was launched. Several concessions in respect of margin and and rate of interest have been built into the package. Three pilot programmes were launched at Chennai, Calcutta, and Hyderabad. On 20th September, the bank inaugurated `SBINET,' an integrated communication project aimed at improving customer service, operational efficiency and administrative convenience. The network has been designed to handle voice, fax data and manages through the trunk routes and exchanges in important centres.

The bank sponsored 30 RRB's covering 66 divisions in the country. 74 branches were opened raising the branch network to 2,306. 1989 SBICAP, in their capacity as Trustee and Manager of Mutual Fund, launched two scheme viz., Mangnum Monthly Income Scheme 1989 and Magnum Tax Service Scheme 1990. During the same period SBI in association with Morgan Stanley Asset Management Inc. of USA, launched the India Magnum Fund. 1990 New products launched during the year included a Regular Income Scheme, offering an assured return in excess of 12% and the first Pure Growth Scheme aimed at capital appreciation. A Second offshore fund of US $ 12 million called Asian Convertible and Indian Fund was launched in association with Asian Development Bank, Manila. During Kharif 1990, the bank introduced an agricultural credit card, known as SBI Green Card to give greater liquidity and flexibility to farmers in procuring agricultural inputs. The scheme was introduced on a pilot basis in 125 intensive centre branches. As at on 31st March, SBIMF had over 3,40,000 Indian investors and about Rs 475 crores by way of investible domestic funds. 50,00,000 No. of shares issued at a prem. of Rs 160 per share. 1991 During February the bank set up a new subsidiary called the SBI Factors and Commercial Serviced Pvt. Ltd. for rendering factoring services to the industrial and commercial units in Western India. 1992 The bank sponsored 30 RRBs with a network of 3189 offices covering 102 backward and under banked districts of the country. A sum of Rs 15.25 crores was contributed towards the share capital of the RRBs. During the period bank intoduced `Stockinvest' scheme. Also introduced a `Gyan Jyoti' that replaced earlier education loan schemes and offers substantial augmented assistance to students pursuing higher studies. Moreover dedicated NRI branches equipped with State-of-the-art technology was set up at Mumbai and Delhi to cater to the special needs of NRI residents.

1993 During the year as a part of its overseas expansion the bank established representative office in Tashkent. During December, the bank issued 124,000,000 equity shares of Rs.10 each for cash at a premium of 90 per share of which 245,00,000 shares each were reserved for allotment on a preferential basis to Indian Financial Institutions and Indian Mutual Funds. Balance issued to the public. Simultaneously it came out with another issue of 50,00,000 12% unsecured redeemable floating rate bonds in the nature of promisory notes of the face value of 1000 each. Oversubscription upon a further amount of Rs 500 crores (in all Rs 1000 crores) was to be allowed. The face value of each bond would be redeemed at par at the expiry of 10 years from the date of allotment. In the event that the State Bank decides to exercise its option to call up the bonds they would be redeemed at the rate of 5% at the end of 5th year, at 3% at the end of 7th year and 1% at the end of 9th year. It was proposed to issue 1200,00,000 right equity shares of Rs.10 each at a premium of Rs.50 per share in the proportion of 3:5. Also another 120,00,000 equity shares of Rs.10 each were to be issued at a premium of Rs.50 per share to employees on an equitable basis. 250 sick units with the bank were referred to the BIFR including 31 public sector units. Approved rehabilitation packages being implemented in 85 units and 41 have been recommended to be wound up. The bank continued to be appointed as the operating agency and rehabilitation packages were submitted to BIFR in 48 cases. Equity shares subdivided. 1418,50,000 No. of Equity Shares of Rs. 10 each issued at a prem. of Rs 90 per share to the public. Another 1319,78,726 shares of Rs 10 each offered at a prem. of Rs 90 per share on Rights basis and to employees. 1994 358 sick units with the bank were referred to the BIFR including 55 public sector units. Approved rehabilitation packages implemented in 87 units. 1,80,463 No. of Shares kept in abeyance were issued. 1995 351 sick units with the bank were referred to the BIFR including 66 public sector units. Approved rehabilitation packages implemented in 112 units.

683 No. of shares kept in abeyance were allotted. 1996 On 3rd October the Bank Issued 261,45,000 GDRs amounting to 5,22,90,000 equity shares. 1 GDR is issued to 2 equity shares. The issue price of GDR was US $ 14.15 per GDR. 1997 Shares issued to employees of the bank bearing distinctive numbers 46,26,00,001 to 47,46,00,000 will not be good delivery. The rights issue was for 12 crore equity shares at a premium of Rs.50 aggregating Rs.720 crore in addition to a further issue of 1.2 crore equity shares of Rs.10 at a premium of Rs.50 aggregating Rs.72 crore for State Bank employees. The price of the rights had been Rs.60 per share. After SBI Capital Markets, Manila-based Asian Development bank will pick up 15 per cent equity stake in the new stock broking subsidiary of State Bank of India to be made operational by mid-1997. The balance 85 per cent will be subscribed to by SBI. SBI Securities Ltd the 100 per cent stockbroking subsidiary of SBI, has recently received the muchawaited letter of incorporation from the Registrar of Companies. Following this, both SBI and ADB will pick up their respective shares in the new stockbroking firm. SSL will have an equity base of Rs.50 crore. The State Bank of India has tied up with GE Capital to float a venture in Mumbai. State Bank signed the memorandum of understanding with GE Caps in March. State Bank will tie up with either VISA or Mastercard or even both for the franchise network. GE Caps through this joint venture will be imparting technology, credit card expertise and payment card mechanism. The Reserve bank of India has directed the SBI to set up a $300 million stand-by facility for the Indian oil corporation. State Bank of India (SBI) signed an agreement with the National Securities Depository Ltd (NSDL) for dematerialisation of its shares. Besides, SBI has also become an equity stake holder in NSDL to the extent of 4.76%. SBI Commercial and International Bank, has become the country's first public sector bank to introduce optical disk (OD) facilities for data storage.

1998 State Bank of India will kick-start its credit card business on July 1 by floating two joint ventures with GE Capital. The largest financial intermediary in the country will sign the joint venture agreement with GE Caps in the last week of January. The State Bank of India on Jan 27 kicked off its foray into the payment cards business with a joint venture agreement with US-based financial services giant, General Electric Capital Corporation (GE Capital). State Bank of India (SBI) on June 24 signed an exclusive agreement with the world's largest payment system - Visa International - for payment cards in India. The agreement was signed in Mumbai between the SBI managing director, Mr O P Sethia, and the general manager and executive vice president (South East Asia) of Visa, Mr James G Murray. 1999 State Bank of India (SBI) has bagged the mandate to syndicate the $ 120 million loan for the National Thermal Power Corporation (NTPC). The State Bank of India (SBI) proposes to take up the life insurance and general insurance business once the sector is opened up. State Bank of India has tied up with its associate banks to market the SBI Card. The SBI has tied up with State Bank of Patiala in Chandigarh and State Bank of Mysore in Bangalore to help market its credit card. SBI proposes to introduce a value-added service for cardholders whereby the credit card can also be used as an ATM card. The State Bank of India will tie up with international investment banker Credit SuisseFirst Boston and three domestic public sector banks to form a gold assaying venture. The State Bank of India (SBI) has decided to take over SBI Home Finance (SBIHF), with its assets and liabilities. Having the largest stake, SBI has been weighing various options for bailing out the joint venture company which has slipped into huge losses. The State Bank of India (SBI) has signed up with Central Depository Services (I) (CDSIL) for the dematerialisation of its shares.

SBI shares have already been admitted as security with National Securities Depository (NSDL). Besides, SBI also has a stake (Rs 10 cr) in the equity of CSDL. According to an agreement entered into with the development bank, State Bank of India (SBI) was to reduce its stake in its investment banking subsidiary to below 50 per cent by March 31. The State Bank of India (SBI) has entered into an agreement with Moody's Investor Service and Icra, under which SBI will pick up Moody's 11 per cent stake in Icra in case the global rating firm wants to get out of its investment in India. State Bank of India (SBI) has taken the lead in `convenience banking' by becoming the first public sector bank to offer its `savings bank' account holders the benefits of fixed deposits (higher interest rates) and current accounts (overdraft facility). 2000 The Bank has embarked upon the expansion of its ATM network in the twin cities of Hyderabad and Secunderfabad. The Bank has become the first government owned financial institution to join the rank of companies declaring interim dividend. The Bank has proposed to come out with an issue under private placement of unsecured, nonconvertible, subordinated bonds in the nature of promissory notes of Rs 1 lakh each aggregating Rs 600 crores with an option to retain oversubscription of up to Rs 40 crores. The Bank launched the "Metal (Gold) Loan Scheme" in Coimbatore. This is the third scheme to be introduced by SBI. SBI is also forming a subsidiary - SBI Gold and Precious Metals Pvt. Ltd. with 50 per cent equity participation. Mr. Vepa Kamesam, Deputy Managing Director, has been appointed as Managing Director with effect from 1st June. SBI board cleared the setting up of a separate subsidiary for information technology. KC Raut has recently taken charge as general manager at State Bank of India, Chennai. The Bank has become the first public sector bank to offer fixed-rate home loans.

The State Bank of India has tied up with State Bank of Mysore to launch co-branded credit cards as part its strategy to collaborate with associate banks to expand its cardholder base. Central Depository Services (India) Ltd has signed an agreement with State Bank of India as its Depository participant. State Bank of India and the Exim Bank of the US have signed amemorandum of understanding, involving $500 million, to support the small and medium-sized ndian companies to purchase US goods and services. Mr. Suresh Kumar Mehra, Workmen Directors, ceased to be a member of the Central Board of the bank effect from October 1, due to his retirement at the close of the business on September 30. The Bank has launched an international credit cards for doctors, the frist of its kind in the country, offering facilities including special discounts on medical equipment and personal loans from GE countrywide. The State Bank of India has introduced a new scheme to boost exports. The CRISIL has assigned a triple-A (AAA) rating to the State Bank of India's Rs 3,000 crore bonds programme. The Bank have decided to close down its fully-owned foreign subsidiary - SBI European Bank Ltd., in London. Mr. S. Mukerji, Managing Director, of the bank retired from the bank on 30th of November. State Bank of India Mutual Fund has launched the Magnum Gilt Fund, dedicated to investing in government securities. 2001 The Bank has signed an MoU with Cardif S.A. for the bank's life insurance business. The Bank has introduced Voluntary Retirement Scheme for eligible employees, open from the 15th January 2001 to the 31st January 2001. The Bank has incorporated a subsidiary `SBI Life Insurance Company Ltd.,' for doing life insurance business. The Bank will install 10 more Automated Teller Machines in the north-eastern region in addition to

the one already commissioned at Guwahati. State Bank of India launched three more ATMs i n Bangalore. Mr Y Radhakrishnan has been promoted to the post of managing director of State Bank of India. SBI Cards has set up a special insurance cell in Ahmedabad for facilitating the claims of SBI cardholders affected by the tragic earthquake in Gujarat. SBI has assigned the Delhi-based HCL Com Net to provide it ATM teller inter-connectivity which could involve investments running into several hundred crores. SBI chief general manager Madhav M Mehta, who is currently the operational head in Gujarat, has been transferred to its corporate office in Mumbai as chief general manager (CGM). July 3- Announces the launch of the SBI International card and the SBI Global Card for global travelers in India. SBI International cards and SBI Gold Cards would be accepted at over 20 million Visa outlets worldwide and one lakh outlets in India. State Bank of India has embarked upon an ambitious Rs 800-crore technology upgradation programme. The bank has appointed KPMG, a consultant in computer technology, to provide inter connectivity networking to the computerised branches and also to the ATMs across the country enabling its customers to transact any kind of business from anywhere State Bank of India was presented the award for JD Power Asia Pacifics 2001 India Sales Satisfaction Index (SSI) and Consumer Financing Satisfaction (CFS) State Bank of India has added three more ATMs to its network. The new ATMs were installed at SBI's Andheri (west),Goregaon (east),and Borivili (east) branches on September 22 State Bank Of India (SBI) has informed BSE that Shri K.J.Udeshi, ED, RBI has been nominated on the Central Board of the Bank as nominee of RBI in place of Dr.Y.V.Reddy, w.e.f. September 22, 2001 under Sec.19(f) of SBI Act. State Bank of India has slashed the interest rate on home loans by 0.5 per cent to 12 per cent, effective from September 15. IN A significant move, the State Bank of India has decided to distance itself from its subsidiaries - SBI Capital Markets, SBI Gilts, SBI AMC and State Bank of Credit and Commerce International. They will have the autonomy, independent chairmen and external executives at the senior management level at market-related salaries. At present, the SBI chairman is the ex-officio chairperson of all the

subsidiaries, including the associate banks. The new scheme will be aimed only at the award staff, a category that was included with officers in the January 2001 voluntary retirement scheme. SBI Cards on July 3, announced the launch of the SBI International card and the SBI Global Card for global travelers in India. - VRS implemented in which around 21,000 employees, including officers, were permitted to retire - The Bank has crossed another milestone by making a successful foray into insurance. SBI is the only Bank to have been permitted a 74% stake in the insurance business. The Bank's insurance subsidiary, SBI Life Insurance Company, a joint venture with the Bank holding 74% and Cardif S.A., the Joint venture partner, the balance 26%, was incorporated to undertake life insurance and pension business. Cardif S.A. is a wholly-owned subsidiary of BNP-Paribas, which is the largest bank in France and one of the top ten banks in the world. Cardif S.A. is the largest bancassurance company in France. - The bank's efforts to establish a world -class credit information bureau in India culminated in the successful setting up of the Credit Information Bureau (India) Ltd., a joint venture of the Bank with HDFC Ltd., Dun and Bradstreet Information Services India Pvt. Ltd. and Trans Union International Inc. 2002 - In order to reduce risk and develop a transparent and active debt market in general and government securities market in particular, the Clearing Corporation of India Ltd. has been set up in Mumbai with the Bank as the chief promoter. -E K Thakur resigns from Directorship of SBI. -TCS bags order of Rs 500 crore from SBI. -SBI has informed that the following change in Directors. 1. Shri A C Kalita, Director on the Bank's Central Board ceased to be a Director on the Board wef May 13, 2002 on expiry of his term on May 12, 2002.2. Shri Y Radhakrishnan Managing Director & GE (CB) has relinquished office of the Managing Director as on June 30, 2002 and ceased to be Director on the Board wef July 01, 2002. -State Bank of India has informed BSE that Mr D C Gupta IAS Secretary (Financial Sector), Ministry of Finance, Department of Economic Affairs, New Delhi has been nominated as Director on the Board of State Bank of India with effect from July 17, 2002 vice Mr S K Purkayastha.

-State Bank of India has informed BSE that Mr S Govindarajan, Managing Director & GE (NB) has relinquished office of the Managing Director as on July 31, 2002 and ceased to be Director on the Board w e f August 01, 2002.Further Mr P R Khanna, Director on the Bank's Central Board ceased to be a Director on the Board w e f August 20, 2002 consequent upon his resignation. -State Bank of India has informed BSE that the Bank has decided to close SBI Securities Ltd (SBISL), a subsidiary of the Bank, following a Directive in this regard from the RBI. -State Bank of India has informed that the Central Government appointed Mr A K Batra, Deputy Managing Director, State Bank of India as Managing Director, State Bank of India for the period from the date of his taking charge and upto August 31, 2003. Also, Mr P N Venkatachalam, Deputy Managing Director, State Bank of India, has been appointed as Managing Director, State Bank of India for the period from the date of his taking charge and upto March 31, 2004. -State Bank Of India has informed that Shri Prithvi Raj Khanna and Shri Kumar Bery have been duly elected as Directors under Section 19(c) of SBI Act at the General Meeting of the -State Bank of India has informed that it has appointed Mr Ananta Chandra Kalita, as a Director on the Central Board of the Bank from amongst the employees of the Bank, who are workmen, for a period not exceeding six months commencing from October 03, 2002 or until his successor is appointed or till he ceases to be workmen employee of State Bank of India, or until further orders, whichever event occurs earlier.shareholders of the bank held on September 09, 2002. -State Bank of India has informed BSE that Shri Janki Ballabh, Chairman has relinquished office of Chairman at the close of business hours on his attaining superannuation on October 31, 2002. -State Bank of India has informed that Smt Vineeta Rai, Secretary (Banking & Insurance), Ministry of Finance and Company Affairs, Department of Economic Affairs (Banking Division), New Delhi has been nominated as Director of the Board with effect from October 30, 2002. -State Bank of India has informed that the Central Government, after consultation with the Reserve Bank of India, appointed Shri A K Purwar, Deputy Managing Director, State Bank as Chairman, State Bank of India from the date of his taking charge of the post and upto May 31, 2003 i.e. date of his superannuation or until further orders whichever is earlier. Shri A K Purwar assumed the charge of Chairman, State Bank of India, on November 13, 2002. 2003- State Bank of India (SBI) and Maruti Udyog Ltd have announced a joint initiative aimed at making car finance affordable to middle and lower middle class customers. Customers will now have transparent car finance involving no hidden charges and pre-closure penalties, and also get the dealers' margins, Mr S.K. Bhattacharya, Chief General Manager, SBI, told newspersons. "It will help both the bank and Maruti to aggressively tap the Andhra Pradesh market," he said. SBI offers finance facility even for lifetime tax, insurance and accessories of the vehicle.

- State Bank of India has informed that the Bank has appointed Shri Ananta Chandra Kalita, Head Assistant, State Bank of India as a Director on the Central Board of the Bank amongst the employees of the Bank, who are workmen for a period of 3 years commencing from July 15, 2003 or until he ceases to be a workmen employee of the Bank or until further orders, whichever is earlier provided that he shall not hold the office continously for a period exceeding six year. - SBI group's total profit identified at Rs 3,354 cr in '02 - Mr. D C Gupta nominated as Director on the Board of SBI - SBI introduces IT upgradation plan with KPMG help - SBI Cards and Payment Services Private Ltd, the credit card subsidiary of the State Bank of India, introduces two new schemes recently- SBI Advantage Card to the bank's fixed deposit customers and SBI International Card for its home loan borrowers - Launches a new credit appraisal system targeting the small and medium enterprises (SME) for loans up to Rs 25 lakh - SBI selects TCS to execute trade finance solution - SBI and ICICI Bank among the top 100 banks in Asia in 2001 as per the study by Asian Banker Journal - Introduces SBI Cash Plus, its Maestro Debit Card that allows customers to access their deposit accounts from ATMs and merchant establishments 2003 - Promotes three Chief General Managers (CGM) to the posts of Deputy Managing Directors (DMDs). They are: A D Kalmankar, CGM in charge of Staff College of Hyderabad, A K Das, CGM, Hyderabad; and R K Sinha, CGM, Chandigarh - SBI appoints Mr. S K Bhattacharya as the new Chief General Manager for Hyderabad circle - Increases its equity stake in Discount and Finance House of India Ltd (DFHIL) to 51% - Ties up with Maruti Udyog Ltd. (MUL) for car finance - Receives permission from Insurance Regulatory and Development Authority (IRDA) to sell

healthcare products to individuals - Increases its Equity Stake in DFHIL to 55.30% - Starts new 'Plus schemes' loans such as Justice Plus intended for the judges and court employees, Police Plus for the police personnel, Teacher Plus for the teaching community and Doctor Plus for the medical practitioners - Receives RBI licence to set up offshore banking units (OBUs) in special economic zones (SEZs) - Launches SBI Bangalore card meant for a broad-based target audience in the 25 plus age group ranging from upwardly mobile professionals and middle class segments - SBI unveils Hyderabad card, an exclusive initiative for the citizens of Hyderabad - Ananta Chandra Kalita ceases to be a Director of SBI - Christens the tieup with Maruti Udyog Ltd. as SBI-Maruti Finance - Orders For 1,500 ATMs With NCR Corporation - Orange, the cellular service operator of the Hutch group for the Mumbai circle, ties up with State Bank of India for prepaid card refill options - Ropes in US-based consultant McKinsey & Co to undertake Business Process Re-engineering (BPR) exercise for the bank - Launches charter for Small Scale Industries (SSIs) - NPA (Non Performing Assets) slashed to 4.5 pc, writes off Rs 4,000 crore worth of assets - Forays into stock market - Stock price crosses the Rs 400 mark for the first time since listing on BSE - Mr. A K Batra, Managing Director & Group Executive (Corporate Banking) of the Bank ceases to be a Director on the Board with effect from July 8, 2003 - Plans a new scheme to attract Resurgent India Bonds (RIB) - N S Sisodia, Secretary (Banking & Insurance), Ministry of Finance and Company Affairs,

Department of Economic Affairs (Banking Division), has been nominated as a Director on the Board of State Bank of India w.e.f. July 11, 2003 - Mr. Ananta Chandra Kalita, Head Assistant, State Bank of India, appointed as a Director on the Central Board of the Bank amongst the employees of the Bank - Inks two important agreements with its employees' unions and officers' associations. According to the contract SBI's staff will be having no rights to interfere in bank's computerisation plans - SBI, AirTel launch mobility service at Rs 299 - Central government nominates Mr. Arun Singh as a director on the board of the bank wef July 25, 2003 for a period of three years. - State Bank of India along with ANZ Investment Bank have consummated 5 year syndicate loan facility of $100 million to Indian Petrochemicals Corporation (IPCL) - Opens cheque clearing cente at Kolkata - Inks pact with Mahindra & Mahindra (M&M) for co-branded tractor scheme SBI-Mahindra Tractor Plus - Joins hands with Tractors and Farm Equipment Ltd (TAFE) for tractor loans - Launches insurance scheme in Kerala - Unveils new retail bank loan product Credit Khazana, which targets the bank's housing loan account holders - Unveils online ticket reservation system 'e-Rail' - Reserve Bank of India nominates Dr Rakesh Mohan, Deputy Governor, RBI, on the Central Board of the bank - Appoints Mr C. Narasimhan as the Chief General Manager of the SBI's Kerala Circle -Unveils Credit Khazana, retail bank loan product, to target the bank's housing loan account holders - MRO-TEK Ltd has secured State Bank of India's order of Rs 15-crore to provide networking solutions of 2Mbps and 64 Kbps high-end leased line modems for SBI to connect more than 800 branches across the country.

-SBI joins hands with LIC to dentify long-term investment proposals for LIC -Tied with bajaj Auto to finance its two wheelers. -SBI granted Rs 125-cr loan to Nethaji Apparel park to set up units and buy machinery for the first batch of 54 garment plants in the 65-acre special apparel park. -The bank has tied up with TVS motor company to finance two wheeler loans -Tied up with apollo hospital enterprise to finance for the hospital treatement. -The company launched mobile pre-paid cards recharge facility at its ATM's -Tied up with ICICI Bank and HDFC for sharing ATM networks 2003-Bank has entered into MOU with both ICICI Bank and HDFC Bank for sharing Bank's ATM Network with them on bilateral terms. -The Central Government after consultation with the Reserve Bank of India, appointed Shri Chandan Bhattacharya, Deputy Managing Director State Bank Of India as Managing Director State Bank Of India for the period from December 17, 2003 to January 31, 2005. -The State Bank of India has announced a special package to BSNL employees by allowing concessional interest rates for different types of loans to be availed by the BSNL staff. 2004 -Former KCCI President nominated to SBI Bangalore Local Board -State Bank Of India has informed that Reserve Bank of India has nominated Shri A V Sardesai, Executive Director, Reserve Bank of India on the Central Board of State Bank of India vice Dr. Rakesh Mohan. -SBI sets up ATM counter in Ernakulam -Bahrain Monetary Agency (BMA) grants in-principle licence to Statte Bank of India (SBI) -SBI sets up India's first drive-in ATM in Hyderabad -State Bank of India has entered into an alliance with HDFC Bank for sharing ATM networks to be

operationalised from February 3, this year. 2004 -SBI unveils new branch in Manjeri -Bank awarded special prize for lending to self help group run by women -SBI unveils floating ATM -State Bank of India appointed six new Deputy Managing Directors on February 11, 2004. The new DMDs are: Mr T.S. Bhattacharya, CGM, Product Development and Marketing, Mr M.M.Lateef, Managing Director, SBI Gilts, Mr Yogesh Agarwal, CGM, Chandigarh, Mr Krishnamurthy, CGM, Madras LHO and Mr R.Ramanathan, CGM, Technology and Mr Vijay Anand, CGM, Corporate Account group. These top level appointments follow the appointment of the new Managing Director for the bank, Mr Chandan Bhattacharya, in December. -GAIL ties up SBI for e-banking system -SBI join hands with Visa for travel card -SBI enters into ATM sharing agreements with UTI Bank & HDFC Bank -Signs a Memorandum of Understanding (MoU) under which the bank will provide term loans to farmers for purchasing capital inputs from Jain Irrigation Systems Ltd (JISL) -Join hands with Siemens for financing the medical equipments sold by Siemens -Joins hands with VST Tillers to launch SBI-VST Shakti, a new loan scheme for farm mechanisation programme -Unveils Vishwa Yatra foreign travel card, a prepaid card which offers the traveller a convenient and secure way to carry cash -Ties up with Same Deutz-Fahr India for tractor financing -In ally with Sikkim govt to beef up SMEs -The government has chosen State Bank of India (SBI) for channelising government credit to other countries which runs into billions of dollar

-SBI opens MICR cheque processing center -Signs MoU with HMT Ltd. for financing their tractors -State Bank of India deploys Flexcube as core banking solution at Frankfurt -Mr Ashok K. Kini appointed as new Managing Director of State Bank of India with effect from April 1, 2004 to December 31, 2005 -SBI unveils Foreign Travel card in Orissa -ICICI Bank, SBI, LIC in pact for Rs 20,000-cr projects -Reliance Info in ATM pact with SBI -State Bank of India, Bangalore Circle, has announced its tie-up with New India Assurance Company Ltd (NIAC), for distribution of NIAC's general insurance products in Karnataka - SBI unveils new credit card in Ahmedabad -State Bank of India joined the billion dollar club -THE State Bank of India opened its 236th branch in the State at Tripunithura on June 16 -SBI inaugurates first Internet shoppe in Kochi -State Bank of India has opened a fully computerised branch at Karunagappally in Kollam district -L&T-John Deere Private Ltd has signed a memorandum of understanding (MoU) with State Bank of India for tractor finance -Buys 10% stake in Multi Commodity Exchange of India Ltd. (MCDEX) for Rs 2.1 crore -SBI join hands with Hero Honda to unveil co-branded credit card -State Bank of India launched its first mobile ATM for increasing the banking convenience of its customers -State Bank of India has signed a Memorandum Of Understanding (MOU) with the Societe Generale Asset Management of France (SGAM) for inducting Societe Generale Asset Management as a stake holding partner for SBI's mutual fund arm, SBI Fund Management Private Ltd (SBIFMPL)

-State Bank of India, (SBI) with a view to expand the ambit of its educational loan schemes, has unveiled a unique educational loan scheme, christened "Nursing Plus," for the nursing students of the country -SBI forges alliance with Hero Honda -SBI offers new scheme`School Plus' for schools -SBI Card has launched 'Instant Card' offering customers in need of instant credit opportunity. With this, the customers will get an opportunity to get ready to use credit card within a few hours of filing in their application form -SBI selects Finacle for international ops -SBI enters ATM tie up with Andhra Bank -SBI join hands with LIC for funding infrastructure projects -Tata Motors on December 7, 2004, signs an MoU with State Bank of India (SBI) -SBI partners with Eicher Motors on December 27, 2004 2005 -Raj Travels joins hands with SBI for travel loans -SBI opens branch at Vadakara -SBI join hands with Apollo Health to offer loans -SBI rolls out new loan scheme -SBI opens first branch in Lakshadweep island of Kavaratti -SBI enters into agreement for bilateral sharing of ATMs with PNB on May 10, 2005 -SBI signs MOU with Corporation Bank for ATM sharing -State Bank of India and 8 associate banks have entered into an agreement with Bharat Petroleum Corporation Ltd (BPCL) for enhancing card usage at fuel stations

-SBI launches new mortgage loan scheme for traders -SBI launches SBI card in Madurai -SBI inaugurates RBO in Thrissur -SBI signed a memorandum of understanding with Small Industries Development Bank of India for co-financing small and medium enterprises in Andhra Pradesh, Tamil Nadu, Uttar Pradesh, Jammu & Kashmir, Jharkhand, Delhi and Bihar -State Bank of India and Crisil have signed a memorandum of understanding under which latter will assign ratings to small-scale industries that are borrowers of SBI -NSIC join hands with SBI to offer credit to SSI 2006 -SBI teams up with Nihilent to unveil feedback system -Bhatt to become SBI's new MD -State Bank of India (SBI) has informed that Shri. Yogesh Agarwal has been appointed as Managing Director on the Board of the Bank with effect from October 10, 2006 to the June 30, 2010 2007 -State Bank of India (SBI) has appointed Shri. S K Bhattacharya as Managing Director on the Board of the Bank with effect from October 08, 2007 to the October 31, 2010, as per the Notification dated October 08, 2007, by the Government of India. - The State Bank of India (SBI) has become the first foreign bank to set up a branch in the Israel's diamond exchange. Besides diamonds, they also see huge potential in telecommunications, hi-tech, chemicals, textiles, agriculture and water management, food processing, pharma and health care. 2008 -State Bank of India (SBI) has informed that the Government of India in pursuance of clause (e) of Section 19 of the State Bank of India Act, 1955 (23 of 1955) has nominated Shri. Arun Ramanathan, Secretary, Ministry of Finance, Department of Financial Services, New Delhi as a Director on the Central Board of State Bank of India with effect from January 18, 2008, vice Shri. Vinod Rai.

-State Bank of India (SBI) has informed that the Central Government, in consultation with the Reserve Bank of India and in pursuance of clause (d) of Section 19 of the State Bank of India Act, 1955 (23 of 1955), has nominated Dr. (Mrs.) Vasantha Bharucha as a part-time non-official Director on the Central Board of State Bank of India for a period of three years with effect from February 25, 2008, vice Shri Piyush Goel. - State Bank of India (SBI) has informed that the Central Government, in consultation with the Reserve Bank of India and in pursuance of clause (d) of Section 19 of the State Bank of India Act, 1955 (23 of 1955), has nominated Dr. Rajiv Kumar as part-time non-official director on the Central Board of Directors of State Bank of India for a period of three years with effect from September 08, 2008 or until further orders, whichever is earlier. - State Bank of India (SBI) has signed a Joint Venture Agreement with Insurance Australia Group to form a Joint Venture Company which will be engaged in General Insurance business in India. - State Bank of India has rolled out a micro insurance scheme 'Grameen Shakti', for its Self Help Group (SHG) members. The product was launched on Nov 26 at the Tamil Nadu Agricultural University. The bank is hopeful to cover at least five lakh SHG members by December 31. -The company has issued rights in the ratio of 1:5 at a premium of Rs.1580/- Per Share. 2009 - State Bank of India yesterday slashed its benchmark lending rate by half a percentage point to 11.75 per cent. The Benchmark Prime Lending Rate (BPLR) was revised down by 50 basis points with effect from June 29, SBI informed the Bombay Stock Exchange. This move would benefit home, car and corporate loan customers - State Bank of India on June 30 launched two new home loan products called as SBI Easy Home Loan and SBI Advantage Home Loan, with zero processing fees for both waived off till September 30. While SBI Easy Home is for loans amount up to Rs 30-lakh while the SBI Advantage Home is for loans above Rs 30-lakh, a press release issued here said. - State Bank of India, entered into an agreement with the government of Gujarat to create a fund of Rs 5,000 crore for investing in equity of infrastructure projects. 2010 - State Bank of India, with a debit card base of over 70 million, comprising SBI Cash Plus, SBI Gold Debit Card and SBI Yuva Card, has added chip and PIN-based Platinum Debit Card to its bouquet on

March 26. - Mr Arun Kumar Agarwal has taken over charge as General Manager at State Bank of India, Kerala Circle. Until now, he has been General Manager at the Lucknow Circle of the bank. Mr Agarwal is Certified Associate of Indian Institute of Bankers and joined State Bank of India as a Probationary Officer in 1977. An expert in credit and foreign exchange, he has held several assignments ranging from Branch Manager to Regional Manager in the Patna and Delhi circles. He also served in the bank's foreign department at Kolkata handling investment of the FCNB portfolio, derivatives and correspondent relations. He has headed the Pune Module of the bank and has also served as the Deputy General Manager and Business Head for Network-1 of the Mumbai Circle. - State Bank of India (SBI) has signed a pact with Unique Identification Authority of India (UIDAI) to work as a registrar for the UID registration of residents. It has become the first bank to take up registration work for the UIDAI project. As a registrar, SBI will capture through empanelled enrolment agencies, the biometric characters such as finger prints, iris and so on and send the information to UIDAI. - Stata Bank of India (SBI) has come up with an exclusive branch in Hyderabad, for their ultra high networth individual (HNIs) which is by far is first of its kind in the country. - State Bank of India acquired State Bank of Indore. - SBI - Joint Venture agreement with State General Reserve Fund (SGRF), Sultanate of Oman - State Bank of India has consortium of Elavon Incorporation, USA and Visa International, USA as its Joint Venture (JV) Partner for Merchant Acquiring Business. - State Bank of India launched a special concessional banking scheme for the Air Force personnel. - State Bank of India (SBI) has signed an agreement with Unique Identification Authority of India (UIDAI) in order to work as a registrar for the UID registration of residents. 2011 - State Bank of India, with a debit card base of over 70 million, comprising SBI Cash Plus, SBI Gold Debit Card and SBI Yuva Card, has added chip and PIN-based Platinum Debit Card to its bouquet on March 26. - Witnessed a joint venture between the nation's largest lender, State Bank of India and the telecom lead, Bharti Airtel with an aim to provide the banking services amongst the unbanked population of the country.

- SBI - Acquisition of SBICI Bank - State Bank of India shifted from Varma Chambers, Fort, Mumbai to the following address with effect from September 28, 2011.Shares & Bonds Dept., State Bank of India,Corporate Centre,8th Floor, State Bank Bhavan, Madam Cama Road, Mumbai - 400 021Telephone nos.: 022-22740841-48 (eight lines) Fax number(s): 022-22855348. - P Choudhary has been appointed as the new chairman of State Bank of India after getting clearance from the government. - Experian Credit Information Company of India Private Limited, the first CICRA licensed credit bureau in India on September 23, 2011 said it has signed a membership agreement with State Bank of India (SBI), the largest consumer lender in India to contribute data to Experians credit bureau and enhance the effectiveness of company's range of products and services. 2012 - State Bank of India signed a Preliminary Non-Binding Memorandum of Understanding with Russian Direct Investment Fund (RDIF), to facilitate advancing bilateral economic cooperation and trade between Russia and India aimed at exploring investment opportunities in both the countries. - India's largest public sector lender, State Bank of India (SBI) has entered into an agreement with StarAgri Warehousing Ltd (StarAgri), India's leading agri-services & solutions provider, for Warehousing Receipt Financing and Collateral Management Services. - SBI launched virtual debit cards to check online fraud and promote ecommerce - SBI, ICICI Bank leading m-banking revolution in India. With the advent of smartphones and 3G services, the Mobile Banking (m-Banking) services have been fast catching up with Indian customers for conducting balance inquiries, account transactions, utility payments, and other banking activities using a mobile handset - India's largest lender State Bank of India (SBI) has been planning to cut the processing and conversion fee for home loans to leverage the approaching festival season when Indians usually spur buying as businesses offer healthy discounts. 2013 - India's leading Public Sector lender the State Bank of India (SBI) is stepping up efforts to expand its

presence in the world's second biggest economy with the lender set to launch its second branch in China.

Company History - ICICI Bank 1994 - The Bank was Incorporated on 5th January at Baroda. ICICI Bank was promoted by ICICI and erstwhile SCICI Ltd. and received the Certificate for Commencement of Business on 24th February. It does banking business of all kinds. It was founded as an institution to provide quality banking services using state-of-the-art technology. - The Bank has established a well diversified branch network with 24 branches in 15 centres covering 12 states. The bank set up a fully computerised environment with the State-of-the-art technology at all offices continuously upgrading its strong systems and procedures with special emphasis on risk management. 1996 - The deposit products and other services of the bank were branded with names such as `Maxicash' for services accounts, `Money Plus' for Current Account, `Quantum' for fixed deposit account, `Power Pay' for payroll accounts treasure chest for locker facilities and `Trice' for automated teller machine facility. - The Bank had, in compliance with a directive issued by RBI, deposited in aggregate Rs 88.16 crores with small Industrial Development Bank of India and National Bank for Agricultural & Rural Development. - The `B' category branches were authorised to handle full range of foreign exchange transaction of

customers and five other branches were placed in `C' category to handle limited foreign exchange transactions. - Seven branches of the bank with substantial foreign exchange business were linked to the society for worldwide Interbank Telecommunication (SWIFT) network which enables them to transmit Letter of Credit and fund transfer messages promptly world wide. - 700 No. of equity shares subscribed for by signatories to the Memorandum of Association. 1500,00,000 No. of equity shares allotted to ICICI Ltd. 1997 - The bank introduced electronic funds transfer facility. The bank has a full fledged vigilance and inspection department. - The bank opened 11 branches and 2 extension counters thereby increasing the total network of branches to 33 and extension counters to 4. - The Bank offered 150,00,000 No. of equity shares of Rs 10 each at a prem., of Rs 25 per share to ICICI. - The Bank offered for sale 412,50,200 No. of equity shares of Rs 10 each at a price of Rs 35 per share. - Sicom Ltd. has entered into an agreement with ICICI Bank and Dresdner Bank for providing a counter guarantee against letters of credits (LCs) opened by its clients. - The merger of SCICI with ICICI effective from April 1, the bank has become a wholly-owned subsidiary of ICICI. - ICICI Banking Corporation, a fully-owned subsidiary of Industrial Credit & Investment Corp of India Ltd, has finalised an offer for sale of 4 crore equity shares of Rs.10 each at a premium of Rs.30 per share, according to merchant banking sources. 1998 - ICICI Bank, which introduced Internet banking in India, is set to launch various technology-based new services in the near future. Some of the new services include setting up of call centres and the introduction of fund transfers between own accounts in its branches. - ICICI Banking Corporation Ltd, the first bank in the country to go in for Internet banking, is now all set to provide its account-holders with the facility of transferring funds across their accounts on the Net.

1999 - ICICI Bank has signed an agreement to use the NCR switchmark technology for onlinenetworking all its ATMs, the officials said they network would come into place in September. - ICICI Bank recently restructured its organisational structure by setting up strategic business units for retail banking, corporate banking and forex and treasury operations, as independent profit centres. - ICICI is all set to launch a 60-second television commercial on August 15, 1999. 2000 - ICICI Bank became the first Indian bank to list on the New York Stock Exchange with its $175million American depository shares issue generating a demand book 13 times its size at $2.2 billion. - The Bank proposes to bring credit cards to the "large, underserved population" in rural and semiurban areas. - SkyCell Communications Ltd, one of the two cellular service providers in Chennai, has launched `Sky Banking', for which the company has tied up with ICICI Bank and HDFC Bank. - The ICICI has announced the launch of mobile banking services for its customers, using the wireless application protocol (WAP) technology. - Ford India has tied up with ICICI Bank to introduce a scheme, enabling non-resident Indians (NRIs) to purchase a Ford Ikon car for their friends and relatives in India. - ICICI Bank has set up a ATM facility at a Indian Oil Corporation petrodiesel outlet at Chennai. - ICICI Bank has tied up with Chennai Telephones to provide Internet bill payment facility to its customers. - ICICI Bank has tied up with the Siddhivinayak temple trust to enable the bank's infinity (Internet banking) customers to order and pay for a pooja online, on the occasion of "Aangaraki Chaturthi". - The Bank proposes to extend its area of operation by opening about 35 to 40 offices and extension counters during the current fiscal subject to the Reserve Bank of India's approval. - ICICI Bank will launch a slew of new schemes in the personal segment ranging from launch of cobranded credit cards to providing loans against share within the next three months. - The Company has offered higher rates of interest on its regular income bonds and multiplier bonds while pruning it on tax saving bonds. - The Finance portal India Infoline has tied up with ICICI Bank and HDFC Bank for

banking back-ends. - Tata Teleservices Ltd. has tied up with ICICI Bank and Global Trust Bank to enable its customers to use Internet banking facilities for the payment of telephone bills. - ICICI Bank will provide credit for online transactions over chem-B.com, the online trading site for chemicals and chemical products, launched by Chembazaar Online Pvt. Ltd. - ICICI became the first financial institution to go for placement of dematerialised debt securities. - Mumbai-based ICICI Bank launched its Kid-e-bank facility in Bangalore. - ELECTRICMELA.com, the B2B portal for the electrical industry is entering into an alliance with ICICI Bank for payment gateways. - Spice Cell has tied up with Citibank N A, HDFC Bank and ICICI Bank for mobile bill settlements - ICICI Bank and UAE Exchange Centre have entered into a wire transfer arrangement, for electronic and telex transfer of funds. - The Bank has tied up with MunshiKaka.com to provide value added services to its customers. - ICICI has signed a tripartite agreement with Amitabh Bachchan Corporation Ltd. and Mr. Amitabh Bachchan, appointing him as its brand ambassador. - The new generation ICICI Bank has extended its business multiplier scheme to current account holders in Coimbatore. - ICICI Bank has launched the Business Multiplier Account in Kerala. - The swap ratio for the merger of Bank of Madura (BoM) with ICICI Bank has been pegged at 1:2 i.e., two shares of ICICI Bank for every one share of BoM. - The Kerala Government has joined hands with ICICI Bank to introduce Internet banking facility in the State's public sector undertakings. - ICICI Bank launched its debit card under the brand name "ICICIN-cash." 2001 - ICICI Is all set to become the first domestic financial institution to get a financial strength rating by the Moody's Interbank Credit Services, the bank credit rating arm of the international credit rating

agency Moody's Investors Services. - The Bank of Madura (BOM) got merged with ICICIBK. The share exchange ratio was fixed at two shares of ICICIBK for one share of BOM. With this merger ICICIBK has become one of the largest private sector banks in India. Commenting on the merger Shri H N Sinor, Managing Director and CEO ICICIBK said that "This merger would lead to considerable synergies in the operations of the merged entity and would benefit the customers and other stakeholders. - ICICI Bank and Deutsche Bank have entered into a long-term rupee interest rate swap benchmarked to Government bond yields. - ICICI Bank has tied up with Advantage E- Accounting to offer an on-line taxation and personal finance services along with off-line services like filing. - The Bank has entered into a wire-transfer arrangement called `Money2India' with the United Arab Emirates largest foreign exchange house for transfer of funds to India. - ICICI emerged as the largest fund mobiliser during 2000-01 by privately placing debts with more than one year tenure for Rs 6,413 crore, even as public sector State Bank of India placed the single largest placement of the year for Rs 2,500 crore, according to Prime Database. - ICICI Bank and BPL Mobile have tied-up to launch a co-branded credit card. To be named ICICI bank-BPL Mobile Credit Card, the card will be operational by the end of August this year. -ICICI Bank has launched its interactive touch screen kiosk 'Sparsh' at its automated teller machine (ATM) centres and branches allowing free access to its online services. - ICICI Bank has introduced a Web-based product that facilitates on-line conclusion of forex deals in the city. - ICICI Bank has launched its hundredth ATM in Mumbai. With this, the bank will have a network of 574 ATMs spread across 54 cities. According to a press release, ICICI Bank continues to focus attention on newer functions that will enable the ATM network to be a key tool of its customer acquisition and retention strategy. - ICICI Bank launched its 100th ATM in Mumbai at the bank's branch in Nariman Point. The bank now has a network of 574 ATMs spread over 54 cities in India. - Visa international and ICICI bank on September 10 announced a pilot programme for facilitating ecommerce in the country.

- As part of its drive to introduce alternate delivery channels, ICICI Bank has launched mobile banking facilities in conjunction with Spice Communications. - ICICI Bank has aligned the compensation structure of officers of Bank of Madura and made it performance-linked in line with ICICI Bank - The ICICI Bank, Teynampet, Chennai, has been directed by the District Consumer Disputes Redressal Forum, Chennai (South) to pay a compensation of Rs 50,000 to a credit-card holder of the bank for `deficiency in service'. - In the run-up to the reverse merger with ICICI Bank, ICICI has slashed its management grades to have an identical administrative structure like that of the banking subsidiary. ICICI had changed its management structure by combining two levels and cutting down the management structure to eight levels. - ICICI Bank plans to tap the debt market to raise Rs 350 crore for meeting Tier-II capital requirements. - ICICI Bank and BPL Mobile have tied-up to launch a co-branded credit card. To be named ICICI Bank-BPL Mobile Credit Card. - The bank has developed multiple access channels comprising lean brick and mortar branches, ATMs, call centers and Internet banking. As on June 2001, the bank had a network of 357 branches and 37 extension counters. Its network of 546 ATMs is the largest in the country accounting for nearly 18% of all ATMs in the country. Customers in 37 cities can now access account information over the telephone. These investments in channel infrastructure have enabled the bank to achieve rapid growth in its retail business. 2002 - CICI Bank Ltd has informed that the Board of Directors inducted Shri N Vaghul, as an Additional Director on the Board of the Bank. non-executive whole-time director and also the non-executive Chairman of ICICI Ltd. - The board of directors of ICICI Bank and ICICI in separate meeting at Mumbai, approved the merger of ICICI with ICICI Bank. The merger of two wholly-owned subsidiaries of ICICI, ICICI Personal Financial Services and ICICI Capital Services, with ICICI Bank was also approved by the respective Boards.The high courts of Mumbai and Gujarat, and the Government of India (GOI) as may be required. Consequently, the appointed date of merger is proposed to be March 31, 2002, or the date from which RBI's approval becomes effective, whichever is later. - The scheme of amalgamation envisages a share exchange ratio of one domestic equity share of ICICI Bank for two domestic equity shares of ICICI. As each American Depositary Share (ADS) of ICICI represents five domestic equity shares while each ADS of ICICI Bank represents two domestic equity

shares, the ADS holders of ICICI would be issued five ADS of ICICI Bank in exchange for four ADS of ICICI. -ICICI Bank Ltd has informed BSE that Reserve Bank of India on April 26, 2002 approved the merger of ICICI Ltd and two of its wholly owned subsidiaries, ICICI Personal Financial Services Ltd and ICICI Capital Services Ltd with ICICI Bank Ltd. -ICICI Bank acquires Shimla and Darjeeling Branches from Standard Chartered Grindlays Bank. 2002-ICICI Bank sells 3 million equity shares of Bhushan Steel. -ICICI Bank Ltd has sold 2,75,000 equity shares of Bhushan Steel & Strips Ltd on August 07, 2002 at Rs 35 per share on spot delivery basis. -S&S Power Switchgear Ltd has informed BSE that ICICI bank has appointed Mr S C Bhatia as Nominee director on Board of the Company with effect October 24, 2002.Further the Board has accepted the resignation of Mr A R Santhanakrishna as director with effect from August 18, 2002. -BPL Ltd has informed BSE that ICICI Bank Ltd has nominated Mr V A Raghu as their nominee on the Board of the Company with effect from September 30, 2002. -ICICI Bank Ltd has informed that the Government of India has nominated Ms Vinita Rai, Secretary (Banking & Insurance) as the Government Nominee on the Board of the Bank in place of Mr D C Gupta with effect from October 31, 2002. -Launches eCheques facility for its internet banking -Moody's upgrades ICICI's Rating above India's Rating -Enters into agreement with Bharti Cellular paving consumers to recharge the Bharti's pre-paid cash cards (Magic) at ICICI ATM machines -Launches a scheme called `Mutual Fund Sweep Account' which enables its customers to invest surplus funds in their current accounts in high-liquidity mutual funds through an automatic sweep facility -Clinches a deal with the govt. of Karnataka for partial payment of services -High Court approves ICICI, ICICI Bank merger -RBI approves ICICI Bank--ICICI merger

-Deposits Rs 3,000 cr with RBI to meet Cash Reserve Ratio (CRR) requirements -Placed itself as a one-stop financial solutions supplier with a branch out and de-risked business model. ICICI Bank - with ICICI, ICICI Personal Finance Services and ICICI Capital merged with itself - is the biggest private sector bank in the nation with a balance sheet size of Rs 1,04,000 crore, capital adequacy of 11.44 per cent, 500 outlets and 1,005 ATMs -Ties up with Bharti for pre-paid mobile cards via ATMs -BPL Mobile and ICICI Bank tie up to enable to recharge BPL's prepaid cellular service ability (branded `mots') at any of the bank's 1000 plus ATMs across the nation -K V Kamat appointed MD and CEO, Lalita D.Gupte Joint MD -Ties up with NCR Corporation, ATM manufacturer -Merged ICICI Bank makes debut on BSE and NSE -Rallis terminates contract farming agreement with ICICI Bank -Allots equity shares to erstwhile equity shareholders of ICICI -ICICIdirect.com, the brokerage arm, launches online trading in derivatives -Put on sale the land held by Pal Peugeot - the defunct joint venture between Premier Automobiles and Peugeot -Introduces first home loan securitisation scheme of Rs 58 crore -Buys 190 Ajmera reisdential flats for Rs 37 cr -Sanctions debt restructuring package to Alufluoride Ltd. -Takes over Shimla and Drajeeling branches of Standard Chartered Bank -Bank of India (BoI) ties up with ICICI Bank to utilize former's wide branch network covering 1,000 branches for the latter's cash management services -ICICIdirect.com unveils Direct Alerts -AirTel, in tie-up with the ICICI Bank, declares the launch of re-charge facility for the AirTel Magic

pre-paid cards on ICICI Bank's ATM network in the twin cities of Hyderabad & Secunderbad in Andhra Pradesh -Replaces Rs 7000 cr high cost borrowings of ICICI -Sets up Private Banking Division to target high net worth individuals -Bags Best Internet Bank award by Global Finance, organiser of the World's Best Internet Bank Awards 2002 -Ties up with IL&FS Mutual Fund to offer to mutual fund products online -Gets Debt Recovery Appellate Tribunal (DRAT) approval to divest Daewoo's Surajpur assets -Figures among the Top 1000 world banks -Soma Textile Board allots Optionally Fully Convertible Debentures (OFCD) to ICICI Bank aggregating Rs 3.22 cr. - Classifies loans to Dabhol Power Company as NPAs -Unveils mobile banking alerts -Srei International Finance Ltd (Srei) forays into debt securitisation alliance with ICICI Bank -ICICI Bank bags UK Banker Magazine award -Introduces Roaming Current Account, a new current account product -Launches call centre in Hyderabad -Hamblin Watsa Investment Council acquires 42.31 million equity shares of ICICI Bank -101.4 million shares of ICICI Bank held by ICICI Ltd. transferred to the ICICI Bank Shares Trust -ICICI Bank divests 16.5% stake for Rs 1,320 crore -Foreign holding in ICICI Bank reaches 62% -Lalbhais acquire ICICI's 10% stake in Amtrex Hitachi

-Orcasia acquires 42.31 million equity shares of ICICI Bank -SBI, ICICI Bank feature among top 100 banks in Asia -ICICI Knowledge Park, Apollo Hospitals ink MoU -Launches chip-based credit card for transporters -ICICI Bank launches `Drivesmart' credit card for transporters -Buys 'Sobha Pearl' property in Bangalore owned by Sobha Developers for Rs 20 crore -Launches new initiative called '180 degree feedback' -Unveils 'eTransfer' for NRI's -ICICI Knowledge Park ties up with Apollo Hospitals -HDFC MF ties up with ICICI Bank for Any Time Mutual Fund (ATMF) service -Signs MoU with Food Ministry for optimal utilisation of Plan funds and to bring in professional appraisal in project financing -SBI divests 10 lakh shares of ICICI Bank -ICICI Bank, RPG Cellular Services Ltd. in alliance for recharge facility at ATMs -Takes posession of Mardia Chemicals Unit under NPA Act -Ties up with co-operative banks for free-float funds -Introduces ATM in Bengali language -Takes over Patheja group assets under securitisation law -ICICI Bank Home Shoppe starts operations in Pune -Launches 'ATM on Wheels' in Mumbai -Euromoney Asia poll reports ICICI Bank as the best managed bank in Asia in the category of banking and finance

-Skoda Auto ties up with ICICI Bank to offer Skoda Monthly Instalment (SMI), rather than an equated monthly instalment, for its cars -Secures special one-time approval from RBI for issuing tax-free bonds worth Rs 2500 crore -Becomes the first Indian bank to launch a Resident Foreign Currency (RFC) account -ICICI Bank chairman Mr. N Vaghul heads Asset Reconstruction Company (ARC) -ICICI Bank, HPCL launch co-branded Visa Electron Debit Card -Launches `Welcome Kit' which will help the person, who opens an account with ICICI Bank to operate his account immediately 2003 -Launches micro-finance programmes -ICICI Onesource deploys new recruitment system -Sets up NRI advisory service -Singapore govt offloads 2-cr shares of ICICI Bank -Bank chief K V Kamath appointed head of finance panel for river linking project -Launches 'Give2India' to facilitate donations by NRIs -Comes out with a bond issue of Rs 400 crore -Installs Telugu language ATMs in Hyderabad -Launches 'ICICI Bank Pure Gold'-certified and tamper proof 24-carat pure gold coins in Chennai -Collects over Rs 1,200-cr via first bond issue -Obtains 'excellence in retail banking' award instituted by the Singapore-based Asian Bankers Journal -ICICI Bank-led combine gets approval for Nationwide Multi Commodity Exchange (NMCE) set up

-BioServe takes up about 3,000 sq.ft space at the ICICI Knowledge Park to set up a contract research lab -Sets up integrated currency management center in Pune -Rama Newsprint & Papers Ltd allots 5632129 no. of Equity shares to ICICI Bank Ltd on conversion right exercised by them -HDFC, ICICI buy 33-pc stake in Hindustan Coca-Cola Beverages, the Indian bottling subsidiary of the Atlanta-based carbonated soft drinks giant Coca-Cola -Reliance Info forges alliance with ICICI for bill receivables -Ties up with Employees Provident Fund Organisation to distribute pension across the country -Ties up with TeNet for micro-banking -Starts 12-hours banking services -ICICI Bank restructures organisational structure -Acquires the Credit Card Division of Tata Finance -Air India ropes in ICICI Bank as authorised dealers for hedging -ICICI Bank along with others set up Rs 800-cr "India Advantage Fund" -Records Rs 8000-cr securitisation during '02-03 -Enters deal with Pramati Technologies to deploy Pramati Server Software -Tops NPA recovery list among domestic lenders -Unveils Pure Gold coins in Karnataka -Decides to scrap '97 series deep discount bonds -Obtains approval to set up Overseas Banking Units (OBU) -Communication ministry engages ICICI Bank, IIT to study viability of telecom firms

-Unveils NRI remittance product in Canada -ICICI Bank, Amway launch co-branded international credit card -Picks up 25% shares in NCDEX (National Commodities & Derivatives Exchange) -ICICIdirect introduces tax-free Savings Bond '03 online -Videsh Sanchar Nigam Limited (VSNL) and ICICI Bank have announced a tie-up for the distribution of Tata Indicom`s dial-up Internet services -ICICI Bank offers rail ticket booking facility to its customers -Buys Apple Credit's 30-pc stake in Transamerica Apple Distribution Finance Ltd. (TADFL) -Takes over 100-pc of TADFL -Outgoing ICICI Bank Joint Managing Director Mr. H N Sinor becomes new chief executive and secretary of Indian Banks Association (IBA) -ICICI Bank, HDFC Bank tie up with Indian Railway Catering and Tourism Corporation (IRCTC) for online rail bookings -ICICI Bank, DaimlerChrysler team up for new finance scheme -Gets Insurance Regulatory Development Authority (IRDA) nod for India Advantage Fund -Announces VRS, the first for the new generation private sector banks -Bags DM Review World Class Solution Award 2003 -Enters into an institutional agreement with Dubai Bank wherein ICICI Bank would be the principal correspondent bank of Dubai Bank in India -Discontinues the contract with Bollywood Superstar Amitabh Bachchan since it finds him too expensive -Embarks on market making securitised instruments -Global Finance Magazine awards ICICI Bank as the "Best consumer internet Bank in India"

-ICICI Bank empanelled for JNPT's Electronic Data Interchange (EDI) project -Signs option contract with BHEL -ICICI Bank's 1350 employees opt for VRS -Textile sector leads ICICI Bank's NPA -Approves 7.3 million options to its employees -Birla Tyres ties up with with ICICI bank to offer Rs 2 lakh life insurance benefit to the truck drivers on the purchase of every pair of tyres -Inaugurates its first Offshore Banking Unit (OBU) at SEEPZ Special Economic Zone, Mumbai -ICICI implements NCR solution (Cheque Mark PDC Module) for post dated cheques -ICICI Bank picks up Timesofmoney.com's e-filing service -ICICI Bank acquires 17.75% stake in NDTV -Launches 'Instra Transfer', an NRI remittance product, which will enable NRIs in the Gulf to transfer funds to India within two hours -Acquires 36,000,000 shares amounting to 12.65% of Himachal Futuristic Communications Ltd (HFCL) -Divests 0.31% shares in Federal Bank -Converts part of HFCL loan into equity shares giving 12.65% stake in the company -Inaugurates Singapore branch -Decides to take the service of Bollywood Superstar Amitabh Bachchan (Big B) on purely case-to-case basis -ICICI Bank in alliance with Federation of Automobile Dealers Association (FADA) unveils credit card for vendors to dealers and opens a business-to-business (B2B) section in FADA's Web site -West Coast signs agreement to acquire ICICI's 34 percent stake in Rama Newsprint & Papers Ltd. (RNPL)

-Investmentz.com forges alliance with ICICI Bank for offering payment gateway to its customers for real-time transfer of funds -Banker Magazine of UK confers its 'Best Multi-Channel Strategy 2003' and Bank of the Year 2003' awards to ICICI Bank -Instanex Skindia depository receipts index increases the index percentage of market capitalisation used for ICICI Bank to 95 per cent from 75 per cent -ICICI Bank in association with the Federation of Automobile Dealers Association (FADA) unveils a credit card for vendors to dealers and opens a business-to-business (B2B) section in FADA's Web site -Issues notice to Ponni Sugars (Orissa) Ltd. to take possession of the Balangir Sugar Mill - Allottment 287774 equity shares of face value of Rs.10/- each on October 13, 2003 under the Employee Stock Option Scheme. -ICICI bank gets Banker magazine awards for the year -Crisil assings highest ratings to instruments issued under ICICI Bank's securitisation programme -ICICI bank gets 'Best emerging market Bank ' award from the Global Finance Magazine -Mr. R Seshasayee who was appointed as Director on the Bank on May 03, 2002 has tendered his resignation as a Director of the Bank. -ActionAid has signed up with ICICI to launch the Karm Mitra credit card -The trading of icici issued bond October 2000- Tax Saving Bond - Option I ICICI1100 N1 (benefit u/s 88) was suspended -ICICI Bank introduced foreign currency term deposit scheme for non-residents including NRI's at its offshore banking unit (OBU) in mumbai -ICICI tie up with Big Bazaar to introduce Co-branded Card specifically for Big Bazaar customers. -The company's asset-backed securities (ABS) worth Rs 835 crore on october 09 obtained highest safety ratings from Icra. -The company unveiled its global deposits scheme for individuals from its Singapore branch.

-Tied up with SBI and HDFC to share ATM networks - Has set up representative office in Dubai -Allotted 166857 equity shares of face value of Rs.10/- each on October 20, 2003 under the Employee Stock Option Scheme. -ICICI Bank unveils global deposits -Five persons have been arrested on the charge of duping ICICI Bank of Rs 1.34 crore by encashing a cheque purported to have been issued by Fortis Banque of France.. 2004 -ICICI bank credit cards cross two million mark - ICICI Banks 300 million dollar Eurobond has been awarded for being the best bond issue of India and emerging Asian market during 2003, by two foreign magazines. -ICICI ePayments Ltd. has informed that they have acquired 8008357 shares amounting to 69.99% of the total paid up capital of Tata Infomedia Limited -ICICI Bank Ltd has informed that the Bank has allotted 1,25,444 equity shares of the face value of Rs 10/- each on December 22, 2003 under the Employees Stock Option Scheme, 2000 (ESOS). -The government has allowed ICICI Bank to keep the Rs 350 crore 20-year preference shares (subscribed to by ITC) in its books for five years. -ICICI Bank Ltd has informed that the Bank has allotted 73,980 equity shares of the face value of Rs 10/- each on December 29, 2003 under the Employees Stock Option Scheme, 2000 (ESOS). -Bahrain Monetary Agency issues licence to ICICI Bank's overseas unit. It also extended a special concession for offering NRI banking services in the island nation as well as in the international markets 2004 -ICICI Bank inks pact with Mohan Bagan to unveil co-branded credit card -ICICI-Overdrive awards for Honda City, Bajaj Pulsar

-ICICI Bank ties up with Air Deccan -ICICI Bank opens new premises in Mangalore -ICICI Bank unveils mobile ATM in Kerala -ICICI Bank unveils International fixed deposit scheme at Singapore branch -ICICI Bank acquires numero uno position in new remittance shceme -ICICI Bank sets up ATM in Thiruvananthapuram -ICICI Bank launches its new home Loan Scheme With Variable EMI -ICICI Bank Ltd has informed that the shares of the Bank are delisted from The Delhi Stock Exchange Association Limited with effect from February 11, 2004. -ICICI Bank, Mohun Bagan launch co-branded credit card -The world's largest micro-finance securitisation deal of $4.3mn completed between ICICI Bank and Share Microfin Ltd., a Hyderabad based microfinancing organisation -ICICI Bank signs a memorandum of understaning with Jammu and Kashmir Bank to share the ATM network. -ICICI Bank and Andhra Bank have announced a tie-up, that enables sharing of their ATM networks. -Global Finance magazine has named ICICI Bank as one of the "Best Emerging Market Banks Asia" in an exclusive survey to be published in the May 2004 issue. -Comes out with a public offering of equity shares at a price of Rs 280 to raise Rs 3500 crore with a greenshoe option of Rs 450 crore -ICICI Emerging Sector, the private equity arm of ICICI Bank, has acquired a 54 per cent stake in the Bangalore-based Arvind Brands, the apparel arm of the Sanjay Lalbhai-promoted Arvind Mills, -ICICI Bank unveils Car Overdraft facility -ICICI Bank, SBI, LIC in pact for Rs 20,000-cr projects -ICICI Bank and Punjab National Bank have signed a memorandum of understanding (MoU) for ATM

network sharing, giving customers an access to over 2,200 ATMs in India. - ICICI Bank unveils co-branded credit card ICICI Bank Ebony -ICICI Bank has won the best bank award instituted by Asia money in the category of best domestic commercial bank in India -ICICI Bank has bagged the prestigious award of 'Best Retail Bank in India' in the category 'The Asian Banker Excellence in Retail Financial Services Program 2003' -ICICI Bank-Aircel jointly unveil new co-branded credit card -Life Insurance Corporation acquires 16,370,009 shares constituting 2.23% of voting rights in the company, increases its stake to 73,382,324 shares constituting 10.09% of voting rights -Punjab and Sind Bank (PSB) and ICICI Bank on July 02 announced the launch of co-branded credit card that will be available in three variants - Gold, Silver and Blue credit card -ICICI Bank in association with Reliance Infocomm has launched an interactive mobile banking service in India -ICICI Bank unveils multi-branded card -ICICI Bank has introduced a pre-approved personal loan product for Global Trust Bank (GTB) customers -ICICI Bank bags Internet awards from Global Finance magazine -ICICI Bank Home Loans and ICICI Bank Home Search have launched `Home Utsav', a property exhibition at the Institute of Engineers -ICICI Bank Ltd on August 9, 2004, opened its representative office in Dhaka further increasing its international presence. In light of the significant bilateral trade links between the two countries, the bank greatly values the need to have an on-the-ground presence -ICICI Bank offers new service to Canada emigrants - Launches 'Hello Canada Newcomers Account' designed to provide instant access to banking services in Canada for Indians migrants on August 23 - ICICI Bank introduces an easy deposit card at an interest rate of 0.99 per cent

-ICICI Bank rolls out kisan credit card in AP - Launches `Easy Deposit Card', which charges an interest of 0.99 per cent per month -ICICI Bank launches new mobile phone banking service -Sets up offshore banking unit (OBU) in Bahrain -Launches a new service for pre-paid subscribers of Airtel, Hutch, Orange and IDEA in association with Euronet to recharge cards through bank's ATMs or by sending SMS. -ICICI Bank has signed a deal with SunTec Business Solutions Private Ltd -ICICI Bank unveils Visa Card in UK -ICICI Bank in ally with CESC launches new co-branded credit card -Godrej Sara Lee ties up with ICICI Bank to finance distributors across the country through the channel financing model -Hindustan Petroleum Corporation Ltd (HPCL), ICICI Bank on December 23rd launches Drivesmart 2005 - ICICI Bank overtakes Citibank in credit cards with 3 mn credit cards while Citibank says it has 2.5 mn cards -ICICI inks pact with Godrej Sara Lee for channel financing -Merc joins hands with ICICI Bank to offer loans -ICICI Bank unveils office in Johannesburg - Britain's Lloyds TSB, in association with ICICI Bank, on April 18, 2005, launches new services offering free money transfers between India and the UK, as well as access to rupee mortgage for Indian property purchases. -ICICI Bank-Air Deccan credit card unveiled -ICICI Bank acquires bank in Russia

-ICICI Bank, HLN jointly launch co-branded credit card -ICICI Bank launches online Public Provident Fund (PPF) scheme on July 01, 2005 -ICICI Bank forges alliance with Fortis to serve NRIs on July 22, 2005 -ICICI Bank buys Apnaloan -ICICI Bank Home Loans launched a `Home Utsav' property exhibition on August 18th -Bharti Tele-Ventures on September 19 announced a tie-up with ICICI Bank and Visa to launch credit card on the mobile phone --ICICI Bank rolls out travel smart mastercard --ICICI wins Microsoft Corporate Challenge -ICICI Bank teams up with Hong Kong's Bank of East Asia to offer services to its clients with operations in greater China. -ICICI Bank inaugurates 1st branch in Hong Kong -ICICI bank ties up with Grameen Foundation USA to set up Grameen Capital India. -ICICI Bank's $500 million American depository shares (ADS) issue has been subscribed six times the issue size. The issue closes tomorrow concurrently with the Rs 5,750 crore public issue of equity shares in the domestic market. The domestic issue has received subscriptions for 1.86 times the 9.90 crore shares on offer. -ICICI Bank sets up pilot project in Guntur dist -ICICI Bank as outperformer: CLSA report 2006 -ICICI Bank sets up Russian subsidiary -ICICI Bank sets up new branch at Banjara Hills -ICICI bank teams up with Spanish MNC.

-ICICI Bank sets up branch in Belgium -JBIC inks agreement with ICICI Bank -Indian inks deal with ICICI Bank -Dishman inks $60mn deal with ICICI Bank -ICICI Bank inks MoU with Mitsubishi UFJ Securities -NIIT partners with ICICI Bank on 26, September, 2006 to enter Financial Services Training. - ICICI Bank has rolled out a new product `NRI SmartSave Deposits', a fixed deposit scheme for non-resident Indians -ICICI Bank has inked a memorandum of understanding with Export Development Canada (EDC), a Canadian export credit agency, for financing support to Indian purchasers of capital goods and professional services from Canada. -ICICI Bank opens 3 represetatives offices abroad. 2007 -ICICI Bank has come out with loan-on-the-spot (LOTS) product for car loans. -ICICI Bank launches card-based remittance product in Kerala -ICICI Bank is looking at increasing its share of the growing Indian remittance market. ICICI Bank on February 8 rolled out a rupee-denominated remittance card that is primarily targeted at beneficiaries of non-resident Indians (NRIs). -Mumbai: ICICI Bank has inked a co-operation pact with Austria-based Raiffeisenlandesbank Obersterreich (RLB) for covering several business areas and increasing co-operation in funding commercial and syndicated credit business, and cash management services. -ICICI bank sets up first branch in Madikeri. -Indian Railways and ICICI Bank inked a memorandum of understanding for extending the sale of etickets via merchant establishments located in 125 cities across the country. -ICICI bank mops up $500mn through five-year bond.

-BMW India and ICICI Bank on February 23 signed an agreement for offering financing solutions that will benefit the prospective buyers. -Thomas Cook (I) Ltd (TCIL) has joined hands with ICICI Bank to introduce a first of its kind premium card named Thomas Cook Titanium Mastercard. - ICICI Bank, India's second largest Bank, and Export Development Canada (EDC), Canada's Export Credit Agency, on March 13, signed a USD 50 million Line of Credit (LoC) agreement. -ICICI Bank inks agreement with Emirates Bank. -CRISIL assigns highest ratings to ICICI Bank's loan receivables securitisation programme. - ICICI Bank and apparel discount chain Megamart April 10, joined hands to unveil a co-branded credit card. -ICICI Bank Ltd has informed that Reserve Bank of India, has approved the Scheme of Amalgamation of The Sangli Bank Ltd with the Bank. The Scheme of Amalgamation shall come into effect from April 19, 2007. - ICICI Bank on declared a Rs 100-crore fund to support innovation and development of green businesses in India. -SOTC has joined hands with ICICI bank to offer-holiday now pay later (HNPL) facility to travelers. - ICICI Bank offers cheaper loans for cutting down CFC. -ICICI sets up branch in Birmingham. History and Major Events We were incorporated in 1994 as a part of the ICICI group. Our initial equity capital was contributed 75.0% by ICICI and 25.0% by SCICI Limited, a diversified finance and shipping finance lender of which ICICI owned 19.9% at December 1996. Pursuant to the merger of SCICI into ICICI, we became a wholly owned subsidiary of ICICI. The chronology of events since we were incorporated in 1994 is as follows: Change of name Our name was changed from ICICI Banking Corporation Limited to ICICI Bank Limited on September 10, 1999. The change of name was effected on account of our being widely known by the name "ICICI

Bank". Merger of Bank of Madura Bank of Madura was merged with us effective March 10, 2001. The share exchange ratio fixed for the transaction was two of our equity shares of Rs. 10 each for every equity share of Bank of Madura of Rs. 10 each. Amalgamation of ICICI ICICI, ICICI Capital Services and ICICI Personal Financial Services amalgamated with us with effect from May 3, 2002. The Appointed Date for the merger specified in the Scheme of Amalgamation, which was the date of the amalgamation for accounting purposes under Indian GAAP, was March 30, 2002. The amalgamation was approved by the High Court of Judicature at Bombay vide its order dated April 11, 2002 and by the High Court of Gujarat at Ahmedabad vide its order dated March 7, 2002. The share exchange ratio was one of our equity shares of Rs. 10 each for every two equity shares of ICICI of Rs. 10 each. Amalgamation of The Sangli Bank Limited The Board of Directors of ICICI Bank Limited and the Board of Directors of The Sangli Bank Limited (Sangli Bank) at their respective Meetings held on December 9, 2006, approved an allstock amalgamation of Sangli Bank with ICICI Bank. The amalgamation was subsequently approved by the Members of both banks. RBI (RBI) approved the scheme of amalgamation effective April 19, 2007. Source date - Prospects - 19/06/2007 - ICICI Bank mops up $4.9bn in via share sale in India. - ICICI mops up Rs 1,294cr through green-shoe option. - ICICI Bank signs pact with Korea Exim Bank. - ICICI Bank has slashed the rates on special deposit schemes by 50 basis points from 9.5 per cent to 9 per cent. - ICICI Bank awarded as the Outstanding Regional Private Bank. -The Department of Commerce, PSG College of Arts and Science, Coimbatore, is all set to conduct a training programme for students in association with the ICICI Bank.

- ICICI Bank, under its-Industry-Academia Partnership- programme, is in talks with three leading universities of the West Bengal to launch banking and insurance courses. 2008 - ICICI Bank Ltd has informed that the Government of India has nominated Shri. Arun Ramanathan, on the Board of the Bank effective January 18, 2008 in place of Shri. Vinod Rai who has resigned effective January 06, 2008. - ICICI Bank Ltd has informed that the Government of India has nominated Shri. Arun Ramanathan, on the Board of the Bank effective January 18, 2008 in place of Shri. Vinod Rai who has resigned effective January 06, 2008. - ICICI Bank has forayed into Rs 1,150-crore equity-cum-debt deal with Jaypee Infratech, which is to build and operate the 165-km six lane Taj Expressway linking Noida with Agra. -Standard & Poor's Ratings Services lowered ICICI Bank Ltd.'s $300 million U.S. commercial paper program's short-term issue credit rating to 'A-1' from 'A-1+', following the agency's downgrade of Fortis Bank SA/NV. 2009 - ICICI Bank appointed N S Kannan as the Executive Director and Chief Financial Officer on the board with effect from May 1 following the vacancy caused by the elevation of Chanda Kochhar as Managing Director and CEO of the bank, with effect from May 1. - ICICI Bank has announced the cut in the interest rates on floating home loans for new borrowers by 25-50 basis points, with immediate effect. The interest rates on existing home loans would reduce only if the floating reference rate is cut. - ICICI Bank with Singapore Airlines launched ICICI Bank Singapore Airlines Visa Platinum Credit Card, the Card has exclusive privileges especially designed for the members. - ICICI Bank Limited acting through its Hong Kong Branch (ICICI Bank) signed a loan agreement with the Export-Import Bank of China (China Exim) for USD 98 million under the Two- step Buyer Credit (Export Credit) arrangement. ICICI Bank is the first Indian Bank to have entered into this arrangement with China Exim. 2010 - ICICI Bank has increased deposit rates on select maturities. The bank has raised the interest rate on

deposits maturing in 270 days to less than one year by 25 basis points to 5.75 per cent for deposits of Rs 15 lakh to Rs 1 crore. - ICICI Bank increased its deposit rates in select tenures by up to 0.50% with instant effect, signaling hardening of interest rates in the industry. - ICICI Bank has announced the appointment of Mr Rajiv Sabharwal as a whole-time director of the bank. The bank said Mr Sabharwal is designated as an Executive Director effective June 24. Mr Sabharwal was heading the bank's retail banking operations. - ICICI Bank announced the appointment of Mr Rajiv Sabharwal as a whole-time director of the bank. - ICICI Bank has received the World Finance Awards 2010 in three categories. The three categories are Excellence in NRI services- Worldwide, Excellence in Remittance Business-Worldwide and Excellence in Private Banking Business-Asia-Pacific Region awards at the prestigious World Finance Awards, UK, 2010. - ICICI Bank launches website in Hindi. - ICICI Bank opens first retail branch in Singapore. - RBI approves the amalgamation of Bank of Rajasthan Ltd with ICICI Bank Ltd. - First private sector Bank to inaugurate its 2000 Branch. - ICICI Bank gets Qualified Full Banking privileges in Singapore. 2011 - ICICI Bank offers cash withdrawal at POS terminals - ICICI Bank & Vodafone Essar ink pact for financial inclusion - ICICI Bank & Aircel sign MoU for financial inclusion - ICICI Bank & Indian Army sign MoU for banking services - ICICI Bank and Intuit launch "Money Manager" - ICICI Bank launches EMV Standard Cards

- ICICI Bank Limited Opens Second Retail Branch in Singapore - ICICI Bank launches the first dual Platinum Credit Card - ICICI Bank closes the first rupee Credit Default Swap transaction

2012 - ICICI Bank opens its second branch in Hong Kong - ICICI Bank rolls out 25 electronic branches and launches many next generation banking solutions - ICICI Bank was the first private sector bank in India to offer PPF account facility at all bank branches. - Among the first banks to introduce account portability and also the only bank to offer portability on two additional channels - Internet Banking and Phone Banking. - ICICI Bank launches first Electronic Toll Collection project on NH-1. A first of its kind project initiated by the Ministry of Road, Transport & Highways, National Highway Authority of India (NHAI) and - ICICI Bank. - ICICI Bank receives approval from RBI to set up an Infrastructure Debt Fund. It is the first debt fund to get government's go ahead. - ICICI Bank launches its official Facebook Page. First bank in India to offer one-of-its kind "Your Bank Account" Applications, which allows access to bank account information on Facebook. 2013 - CLSA maintains ICICI Bank as its top pick in banking space; scrip rallies to 4-year high

Company History - Bank of India 1969 - The Bank was brought into existence by an Ordinance issued on 19th July by the Central Government. In terms of the Ordinance, the Undertaking of `The Bank of India Ltd.' was transferred to

and vested in the new bank. The Ordinance was replaced by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1969. 1970 - The Acquisition and Transfer of Undertakings Act was declared null and valid by the Supreme Court on 10th February. An ordinance was thereupon promulgated which was later replaced by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 which was made effective restrospectively from 19th July, 1969. - Under the `Lead Bank Scheme' the Bank was allotted 30 districts in 5 states - 9 in Maharashtra, 9 in Madhya Pradesh, 2 in Orissa, 4 in Bihar and 6 in U.P. 1985 - Rs 43 crores capital contributed by Government. 1986 - Rs 27 crores capital contributed by Government. 1988 - Rs 35 crores capital contributed by Government. 1989 - The Bank of India Finance Ltd. was incorporated in June as a subsidiary of Bank of India to extend a complete package of professional financial services to the corporate sector, including merchant banking, leasing and investment banking. - Rs 140 crores capital contributed by Government. 1990 - BOI Mutual Fund was estabished, to provide direct services to investors by pooling their resources and investing in capital market securities. - Rs 100 crores capital contributed by Government. 1991

- Rs 110 crores capital contributed by Government. 1993 - Rs 6357 crore capital contributed by Government. 1994 - A new subsidiary of the bank was formed to manage the investment operations of BOI Mutual Fund. It received Certificate of Commencement of Business on 21st February. - Rs 848.38 crores capital contributed by Government. 1995 - In terms of Ministry of Finance the accumulated loss of Rs 1369.91 crores adjusted against paid-up capital. 1996 - Rs 93.47 crores returned to Government as a part of capital restructuring. 1500,00,000 equity shares (prem. of Rs 35 per share) issued to public through prospectus. 1997 - The BOIFIN was associated with 12 issues as Lead Managers/Co-Manager/Arranger. - The Company became Depository Participate of National Securities Depository Ltd., for the purpose of clearing and settlement of trades in the dematerialised segment of BSE. 1998 - As on 31st March, the Bank had sponsered 16 Regional Rural Banks with capital of 5.60 crores and a total branch network of 992 in five states. - Bank of India has been awarded the Gem & Jewellery Export Promotion Council Award. - Bank of India (BOI) has set up a full fledged risk management department at its corporate office. The bank has already integrated its money market and forex operations to set up global treasury which will be better equipped to manage the types of risks arising from capital recent convertibility.

- Four Banks - State Bank of India (SBI), Bank of India (BoI), Oriental Bank of Commerce (OBC) and Hongkong Bank - have introduced term deposits with a minimum maturity of 15 days. - Bank of India (BoI) has tied up with Equifax Venture Infotek Ltd (EVI) to automate its credit card operations to provide electronic solutions to its customers. EVI is a 50:50 joint venture between the US-based Equifax Inc and Venture Infotek. According to the agreement, BoI would provide point-ofsale (POS) terminals at its leading card acceptance establishments all over the country. - Mr. A.M. Ahmadi, former Chief Justice of India, on Monday presented the Bank of India Excellence Awards to five personalities in the fields of finance, literature, management, music and arts and media. - The public sector Bank of India has launched the BOI Navy Card with MasterCard International on the occasion of Navy Day. 1999 - The Mumbai Stock Exchange (BSE) and the Bank of India (BoI) have set up an internal working committee to review the working of the BoI Shareholding and also make it a `self sustaining unit'. - The public sector, Bank of India (BoI), is currently on an exercise of restructuring its subsidiaries. As a part of the restructuring, the bank will be taking stock of the viability of the subsidiaries and try to turn them around. - BoI will enter the insurance partnership with a foreign insurance company. 2000 - Bank of India has introduced floating interest rate on deposits for select customers, besides advancing on Mumbai Inter Bank Offer Rate (MIBOR). - Bank of India (BoI) has unveiled major business initiatives like the introduction of a centralised banking system, floating deposit schemes and cash management services. - Bank of India (BoI) plans to introduce a centralised banking programme which will facilitate anytime and anywhere banking for its customers. - Bank of India and Andhra Bank have become the first public sector banks to receive an in-principle approval to dilute government shareholding in them to 33 per cent through mobilisation of fresh capital via a public issue.

- The Bank has offered a special deposit scheme for investors in BoI Mutual Fund's Double Square Plus (1990) Scheme, which would be redeemed on September 1. - Bank of India has revised its FCNR, NRE and NRNR deposit rate effective from 11th September. - Bank of India has hiked the rates on foreign currency non-resident Indian (FCNR) account effective 2nd October. - Venugopalan, general manager, Bank of India (BoI) has been appointed as the new executive director of Union Bank of India (UBI). - Mr. Onkar Nath Singh has been named executive director of Bank of India for a period of five years. - The Bank has joined Central Depository Services as depository participant. - Bank of India will close down its merchant banking arm, BoI Finance. 2001 - State-Run Bank of India has suspended bullion trading in Ahmedabad after being hit by a payment crisis involving a troubled cooperative bank. -Bank of India has passed a resolution to return Rs 300 crore capital to the government. Chairman K V Krishnamurthy said the depressed share value has been a matter of concern to the management. - Bank of India (BoI) has finalised a comprehensive human resource development (HRD) package for its employees. The scheme is believed to provide impetus to banks business growth and will cost the bank around Rs 30 lakh per annum. - Bank of India (BoI) has reported a 63 per cent rise in net profit at Rs 135.16 crore in the secondquarter ended September 30, 2001. - Bank of India proposes to convert its fully-owned subsidiary in Kenya into a full-fledged bank. The two existing BoI branches in Kenya will also be merged into the entity. According to Mr S.A. Bhat, General Manager, International, BoI. - Bank of India has informed that Shri S.R. Sengupta and Shri A.B. Telang have relinquished their office from Directorship of the Bank with effect from January 01, 2002. This is pursuant to their attaining age of superannuation. 2002

- Bank of India on March 30th returned Rs 150 crore capital to the government, bringing down its capital base from Rs 639 crore to Rs 489 crore. -Bank of India has informed that it has decided to exit from the Mutual Fund Business and therefore the remaining two current Mutual Fund Schemes have been sold to Taurus Mutual Fund. -Deveshwar Kumar nominated by GOI as non official Director of BOI. -Bank of India has informed BSE that the Government of India has nominated Mr Deepak Prabhakar Patil as a Workmen Employee Director on the Board of Directors of Bank of India for a period of three years with effect from August 29, 2002 and thereafter until his successor is appointed or till he ceases to be an Workman Employee of the Bank of India. -Bank of India has informed that the following four persons who have polled the majority votes have been elected as Directors in the EGM held on October 10, 2002.Mr Sadagopan Sowmyanarayanan,Mr Sheth Tarun,Mr Shastri Girish Ramanugrah,Mr Chandra Bhagwantrao Govindrao -Extends its Multi-Branch Banking (MBB) facility to all its branches in Mumbai -Enters film financing sector, becomes the first commercial bank to enter the sector -High Court at Mumbai sanctions amalgamation of BOI Finance Pvt. Ltd. (100% subsidiary) with Bank of India (BOI) -Slashes interest rates on FCNR deposits by 20-35 basis points (bp) -Ties up with ICICI Bank to utilise wide branch network covering 1,000 branches for ICICI Bank's cash management services -Prunes the number of training centres from 14 to 5 -Becomes the bank with third highest Non Performing Assets (NPA) -Reduces deposit rates by 40 to 75 basis points -Decides to merge BOI Asset Management Co. Ltd. (BOIAMC), a wholly owned subsidiary, with the Bank -IBA gives its nod for second phase of BoI VRS

-Reduces Prime Lending Rate (PLR), deposit rates by 50 basis points -Changes the maturity buckets for interest rates on domestic as well as non-resident external rupee (NRE) term deposits -Slashes deposit rates across all maturities -Appoints Deloitte Touche Tohmatsu India Pvt Ltd. as a special recovery agent for recovery of NPAs -Slashes interest rate on Euro-denominated FCNR deposits 2003 -Introduces mobile ATM in Mumbai -Slashes the rate of interest on FCNR US dollar and euro deposits by 10-25 basis points across maturitie effective January 4 -Approves insurance referral business at Hong Kong Centre -Enters into a tie-up with leading information technology players CMC Ltd. and Infrasoft Technologies to extend its multi-branch banking (MBB) facility to another 450 branches in 21 cities -High Court approves Scheme of Amalgamation of BOI AMC with Bank of India -Four state-owned banks (Bank of India (BoI), Indian Bank, Syndicate Bank and United Bank of India) enter into an agreement to share their respectime ATM (automated teller machine) networks -Government clears Bank of India's (BoI) proposal to settle Rs 137 crore outstanding with Ketan Parekh -Introduces 'Starlinks' global debit card in partnership with Visa International and India Switch Company -Finance Ministry, RBI approve compromise formula for bank's due recovery from stock broker Ketan Parekh -Networks 275 out of 2541 branches at a cost of Rs 14 crore -Launches its first off-site ATM in Sathy Main Road in Coimbatore on September 11

-The bank has taken possession of a tea factory in Coonoor under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002. -Bank of India divested Silverline's 45 lakh shares at Rs 8 -Revises interest rates on domestic term deposits with effect from Dec 1 -The Company has tied up with insurers for Bankassurance products - both life insurance and general insurance. The bank launched some of the products on December 09, said it had tied up with ICICI Prudential Life Insurance Company and National Insurance Company. -Bank of India ties up with ICICI prudential 2004 -Board approves increase in Tier II Capital by issue of subordinated bonds -Bank of India & Canara Bank acquire 4% in Mercator Lines Ltd. -Bank Of India has informed that the Govt of India vide its notification dated January 09, 2004 has nominated Mr. V S Das, Chief General Manager-in-charge, Department of Government and Bank Accounts, RBI as Director on the Board of the Bank w.e.f. January 09, 2004 in place of Mr. M P Kothari, Regional Director, RBI. -BoI signs tractor finance agreement with L&T-John Deere -Launches IPO financing, becomes the first public sector bank to do so -Revises interest rates on its FCNR deposits in dollar and euro currencies -Launches Star IPO, a demand loan for investors interested in subscribing to initial public offerings (IPO) approved by the bank -Bank of India (BoI) has raised Rs 200 crore by way of issuing Tier II subordinated bonds. -BoI inks pact with Escort Tractors -BoI inks pact with Punjab Tractors -Bank of India opens first off-site ATM in Tiruchi

-Bank of India introduces new Kisan Samadhan card -BoI ties up with Greaves Cotton 2005 - Bank of India (BoI) enters collaboration with ACIL-Navasarjan Rural Development Foundation (ANARDE), a non-government organisation (NGO) to increase rural penetration and boost lending to the agriculture sector. - Launches an international gold credit card in association with Visa International on January 5, 2005 -BoI unveils new 'Star Diamond Saving Account' -Bank of India appoints Shri M Balachandran as Chairman & Managing Director (CMD) up to April 30, 2007 -BOI signs MoU with LG to finance consumer durables -Bank of India teams up with Nabard arm for agri projects -Bank of India ties up with ICICI Prudential Life Insurance to provide cover to housing loan borrowers against risk of death during the loan tenure. -Bank of India and Banco Popolare Di Verona E Novara signed a Memorandum of Understanding (MoU) for supporting their respective customers doing business in each other's countries. 2006 -BoI inks MoU with Exim Bank -BoI join hands with Andhra Bank to set up Dai-ichi Mutual -Change of address: the Company Secretary Bank of India Share Department, 8th Floor, Star House, C - 5, G. Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. -BoI joins hand with SIDBI to train jewellers 2007 - Bank of India has appointed Shri. A D Parulkar as Executive Director of the Bank.

2008 -Bank of India has informed that the Government of India, Ministry of Finance, Department of Financial Services vide its Notification has nominated Shri. Amit Kumar Motayed as Officer Employee Director in place of Shri. V Eswaran for a period upto January 31, 2011 from the date of notification or until he ceases to be an officer of the Bank of India or until further orders, whichever is the earliest. - Bank of India has appointed Shri. B A Prabhakar as Executive Director of the Bank. He has taken over charge on October 15, 2008. -BoI launches debt waiver scheme -Bank of India on July 23 opened the first branch of its Tanzanian subsidiary, BoI Tanzania at Dar-esSalaam. 2009 - Alok K. Misra was appointed as Chairman and Managing Director succeeding T. S. Narayanasami of Bank of India by the centre. He was the CMD of Oriental Bank of Commerce till now. - Bank of India has informed that the Government of India, Ministry of Finance, Department of Financial Services vide their Notification dated August 05, 2009 has appointed Shri. Alok Kumar Mishra as Chairman and Managing Director of the Bank. He has taken over charge on August 05, 2009. -BoI launches new home loan plan for new borrowers -Bank of India has signed a memorandum of understanding with Tata Motors to provide financing for Tata's entire range of commercial vehicles.

Company History - Canara Bank The Bank is a Government of India undertaking, and carries on all banking business. The Bank was brought into existence by an ordinance passed on the 19th July 1969 by the Central Government. In terms of the ordinance the undertaking of the Canara Bank Ltd was vested to and transferred to the new bank. This ordinance was replaced by the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1969. This Act was declared null & void by the Supreme Court on the 10th of February 1970 and subsequently the Ordinance was promulgated. Then the Banking

Companies(Acquisition and Transfer of Undertaking) Act, 1970 was passed and it was made effective retrospectively from 19th July 1969. 2000 - Canara Bank became the first public sector bank to join the MasterCard ATM network. - Canara Bank has launched its gold deposit scheme in Bangalore, offering 3-3.5 per cent interest on the deposits. - The Canara Bank and Bank of India have envinced interest to provide loan to the Rs 6,500 crore joint venture Bharat Oman Refineries project in Madhya Pradesh. - Public Sector Canara Bank has hiked prime lending rate and MTLR to 12.25 per cent from 11.75 per cent and 12 per cent respectively with effect from 10th August. - The Bank came up with a vanilla bonds issue of Rs 300 crore to increase the tier-II capital before september 30. - Bangalore - based Canara Bank has set up four corporate service branches in Bangalore, Mumbai, Delhi and Chennai and is likely to covert more branches for specialised services. - Canara Bank, the 100 per cent government-owned public sector bank will be roping in an overseas joint venture partner for its mutual fund subsidiary in the next three months. - Canara Bank has entered into an agreement with the Al Mirza group in Oman for opening an exchange house that will be managed by officers deputed by the bank. - Canara Bank will introduce its voluntary retirement scheme on January 1, 2001. - Canbank Factors Ltd., a subsidiary of Canara Bank, has launched its export-factoring activity and has appointed GE Capital International Finance, SPA as is import factor. 2001 - Canbank Factors Ltd., a subsidiary of Canara Bank, has opened its eighth branch in New Delhi. - The Public Sector Canara Bank has entered into an arrangement with the Infrastructure Development Finance Company for financing core sector projects. - Canara Bank has named RV Shastri as its new chairman and Managing Director. 2002 -Drops plan to bring in a joint venture partner in its proposed credit card subsidiary

-Canbank Computer Services Ltd, a subsidiary of Canara Bank, awarded the revised ISO certification, ISO 9001:2000, by BVQI -Launches Laghu Udhyami Credit Card to give its small borrowers credit facilities -Reduces interest rates on NRE and domestic term deposits -Launches 3 ATMs at Nanganallur, Annanagar and Valmikinagar of Tamil Nadu -Reduces interest on housing loan -Slashes Prime Lending Rate to 11.5% from 11.75% -Eight Regional Rural Banks (RRBs) sponsored by Canara Bank report total business of Rs 4,030 crore -Hands over dividend of Rs 80 crore to the Union Government -Reduces its equity capital to Rs 300 crore -Returns 48 per cent (Rs 277.87 crore) of its capital of Rs 577.87 crore to Central Government -Launches 'Anywhere Banking' facility in Hyderabad making it the fifth city in the country to have the facility in addition to Bangalore, Mumbai, Delhi, Kolkata & Chennai -Comes out with public issue of 110,000,000 equity shares of Rs 10 each at a premium of Rs 25 per share aggregating Rs 385 crore 2003 -SBI and Canara Bank tie up to kick off full fledged operations in Moscow -Launches a new credit scheme to encourage solar home lighting systems in Karnataka with assistance from the United Nations Environment Programme (UNEP) -Ties up with Aviva Life Insurance Company to act as Corporate Agent for selling the Life Insurance products of AVIVA without risk participation -Aviva Life Insurance launches sale of its products through Canara Bank -Issues Tier II Capital (Unsecured Redeemable Non-Convertible Subordinated Bonds) aggregating Rs 400 crore

-Launches a floating rate deposit scheme (FRDS) for high networth individuals -Raises Rs 500 cr via Tier II bonds -Strikes a structured deal with Central Board of Trustees (CBoT) to privately place its tier-2 bond issue for Rs 250 crore at 7.25 per cent -Canara Bank Regional Rural Banks witness 16 % growth for 2002-03 -Adds seven more ATMs in Kerala -Tops the recovery list of Non Performing Assets (NPA) among nationalised banks -Reduces interest rates by 2 pc for SSI loans -Ties up with Mahindra & Mahindra for tractor financing -Canara Bank, Central Bank of India (CBI), Indian Overseas Bank (IOB), UCO Bank and Union Bank of India (UBI) form an alliance to launch `Cash Online' ATM network -Eicher Tractors sign MoU with Canara Bank for providing financing solution to farmers buying Eicher Tractors and other farm implements -- Canara Bank along withCentral Bank of India (CBI) , Indian Overseas Bank (IOB), UCO Bank and Union Bank of India (UBI) have formed an alliance to launch `Cash Online' ATM network -Canara Bank has signed a memorandum of understanding (MoU) with the Small Industries Development Bank of India (SIDBI) for co-financing small-scale industries, service sector and for undertaking related infrastructure projects. -Canara Bank unveils special loan scheme for women -Canara Bank raises Rs.250 crore Tier-II capital 2004 -Central Government nominates Smt Supriya Pattnaik, General Manager, Reserve Bank of India, as a Director on the Board of Directors of the Bank with immediate effect in place of Shri C S Murthy -Canara Bank & Bank of India acquire 4% stake in Mercator Lines

-Canara Bank enters into strategic tie-up with Western Union and its primary agent AFL WIZ -Introduces a loan scheme for individuals to subscribe to initial public offers at five cities - Bangalore, Chennai, Kolkata, Delhi and Mumbai - with an aim to cater to the needs of retail investors -Canara Bank opens its first Mahila Banking Branch in Kerala -Canara Bank announced the launch of `E-kisan credit card', an ATM enabled card for farmers -Canara Bank has launched a loan scheme for the medical fraternity - Doctor's Choice - in Bangalore - Canara Bank unveils 2 new ATMs in Thiruvananthapuram - Canara Bank ties up with BAL for auto finance -Canara Bank unveils new ATM in Hayatnagar -Canara Bank unveils new branch in Udupi - Canara Bank signs a Memorandum of Understanding (MoU) with M/s Tractor & Farm Equipment Manufacturers Ltd (TAFE). -Canara Bank has announced the launch of a housing loan scheme designed exclusively for the employees of the Kerala Water Authority (KWA) -Canara Bank has entered into a franchise agreement with Western Union Financial Services for money transfer facility -Canara Bank has launched a 'gold card' scheme for exporters, under which it will offer a three-year credit period with an automatic renewal clause, and with competitive interest and charges -Canara Bank, one of the premier Banks in the country has signed a Memorandum of Understanding (MoU) with M/s Kerala Agro Machinery Corporation Limited (KAMCO), one of the largest manufacturers of power tillers -Canara Bank, one of the premier Banks in the country has signed a Memorandum of Understanding (MoU) with M/s Plastro Plasson Industries (India) Ltd, one of the leading Companies which specializes in manufacturing of micro-irrigation equipments and also undertakes projects on turnkey basis, for financing of micro-irrigation equipments to farmers

-Canara Bank and HDFC Mutual Fund on August 12 signed an agreement for the bank to distribute HDFC's MF products through its network -Canara Bank has informed that the Bank vide agreement dated August 12, 2004 with HDFC Asset Management Company Ltd has entered into a strategic alliance for cross selling of the schemes/products of HDFC Mutual Fund, launched from time to time -Canara Bank, TVS Motor rolls out TVS Canmobile -Canara Bank forges alliance with New Holland Tractors -Al Razouki partners with Canara Bank -Canara Bank launches new schemes 'Cantravel', 'Cantech' -Canara Bank signs agreement with Russian Bank 2005 - On January 3, 2004, launches multi-point interactive video conferencing as a means to review the performances of its circles from its headquarters in Bangalore. -Canara Bank inks bancassurance pact with United India Insurance Co Ltd (UIICL). -Canara Bank signs MoU with NCMSL -Canfin Homes launches three new loan products -Canara Bank appoints Shri M B N Rao as Chairman & Managing Director (CMD) up to June 30, 2008 -Canara Bank sets up ATM -Canara Bank begins operation in Shanghai on August 08,2005. -Canara Bank tied up with i-flex Solutions for core-banking project and IBM will be the systems integration partner. -Canara Bank joins hand with Dakshina Kannada milk co-op 2006

-Canara Bank has signed a memorandum of understanding (MoU) with Tata BP Solar India Ltd, to extend a soft loan for the purchase of water heaters -Canara Bank has informed that in exercise of the powers conferred by clause (b) of sub-section (3) of section 9 of the Banking Companies (Acquisition and transfer of Undertakings) Act, 1970 / 1980 read with sub clause (1) of clause 3 of the Nationalized Banks (Management and Miscellaneous Provisions) Scheme, 1970 / 1980, the Central Government, nominated Shri Amitabh Verma, Joint Secretary (BOA), Ministry of Finance Banking Division, as a Director of the Bank in the place of Shri G C Chaturvedi, vide notification Dated October 31, 2006, with immediate effect and until further orders. -Retained Number One Position in Aggregate Business among Nationalized Banks. -Signed MoUs for Commissioning Two JVs in Insurance and Asset Management with international majors viz., HSBC (Asia Pacific) Holding and Robeco Groep N.V respectively 2007 - Canara Bank has inked a memorandum of understanding with the ICRA Ltd for credit rating small and medium enterprises. The MoU will facilitate extending comprehensive rating services to all the bank's SME customers. This was especially since Canara Bank was aiming to expand its advances to the sector. -Canara Bank has appointed Shri. Alok Kumar Misra, Executive Director of the Bank as Chairman & Managing Director of Oriental Bank of Commerce by the Government of India, Ministry of Finance, Department of Economic Affairs, Banking Division, vide its Notification dated June 04, 2007. - Canara Bank has appointed Shri D L Rawal, General Manager, Punjab National Bank, as a whole time director (designated as the Executive Director) of the Bank from the date of his taking charge i.e. from June 06, 2007 and until further orders or till the date of his superannuation i.e. upto October 31, 2011, vide notification dated June 06, 2007. - Canara Bank has rolled out two new schemes for their High Networth Individuals - SB Gold (Savings Bank) and Can-Premium Current Account. The schemes offer various services like free debit and credit cards, anywhere banking facility, internet and mobile banking facility with free funds transfer, telebanking and issue of demand drafts at concessional charges, among others. SB Gold scheme, which was first launched in Bangalore last year, has been extended to the bank's customers across the country.

- Canara Bank, HSBC Insurance (Asia-Pacific) Holdings and Oriental Bank of Commerce have formally signed agreement to jointly establish life insurance company in India. - Canara Bank announced a 0.50 per cent cut in floating interest rates on home loans, indicating easing

cost of funds that prompted segment leader HDFC too to rollback rates last week. 2008 - Canara Bank has informed that in exercise of the powers conferred by clause (e) Sub-Section 3 of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, read with sub- clause (2)(a) of clause 9 of the Nationalized Banks (Management and Miscellaneous Provisions) Scheme, 1970, the Central Government has appointed Shri. Devender Dass Rustagi, Special Assistant, Canara Bank, Recovery Section, Circle Office, Nehru Place, New Delhi as Workmen Employee Director on the Board of Directors of Canara Bank, vide Notification dated September 15, 2008, for a period of three years from the date of Notification or until further orders whichever is earlier. -The Bank crossed the coveted Rs. 3 lakh crore in aggregate business -The Banks 3rd foreign branch at Shanghai commissioned 2009 - Canara Bank has appointed Shri. Jagdish Pai K L, General Manager, Bank of India as a whole time director (designated as Executive Director) of Canara Bank with effect from the date of his taking over charge and up to June 30, 2011 i.e. the date of his superannuation or until further orders, whichever is earlier, vide notification dated February 04, 2009. - Canara Bank has entered into an alliance with Hyundai Motor India Ltd to finance the passenger vehicles manufactured by the company. The bank will extend the finance facility to the buyers through its branches across the country as well as through the 251 Hyundai dealers. - Canara Bank has informed BSE that in exercise of the powers conferred by clause (a) of sub-section (3) of section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980, read with sub-clause (1) of clause 3, sub-clause (1) clause 8 of the Nationalized Banks (Management and Miscellaneous Provisions) Scheme, 1970/1980, the Central Government, after consultation with the Reserve Bank of India, has appoints Shri. H S U Kamath, General Manager Union Bank of India as a whole time director (designated as Executive Director) of Canara Bank with effect from the date of his taking over charge and up to December 31, 2013 i.e., the date of his superannuation or until further orders, whichever is earlier, vide notification dated March 26, 2009. He has taken charge as Executive Director of the Bank w.e.f. March 26, 2009. - Canara Bank has has appointed the following six audit firms as Statutory Central Auditors of the Bank for the year 2009-10: 1. M/s. M Anandam & Co., Chartered Accountants, Secunderabad.2. M/s. N Sankaran & Co., Chartered Accountants, Chennai.3. M/s. S Bhandari & Co., Chartered Accountants, Jaipur.4. M/s. Manubhai & Co., Chartered Accountants, Ahmedabad.5. M/s. R K Kumar & Co.,

Chartered Accountants, Chennai.6. M/s. Nandy Halders & Ganguly, Chartered Accountants, Kolkata.Out of the above, the first two firms are continuing Statutory Central Auditors, while the remaining firms have been appointed in place of M/s. S N Mukherji & Co.,, M/s. De Chakraborty & Sen, M/s. Satyanarayana & Co., and M/s. Parakh & Co., who have completed their term. 2010 - Canara Bank has nominated Shri Khalid Luqman Bilgrami as part-time non-official Director under Chartered Accountant category, on the Board of Directors of Canara Bank.

Company History - IDBI Bank Ltd. 1964 - The Company was Incorporated on 1st July, at Mumbai. The Bank was established as a wholly owned subsidiary of the Reserve Bank of India on 1st July, under a special statute, viz., Industrial Development Bank of India Act. 1965 - With effect from 1st April, the Bank introduced a scheme for rediscounting usance bills/promissory notes arising out of sale of indigenous machinery on deferred payment basis. - The Bank decided to supplement its refinance operations with a measure of risk-sharing with other institutions on a systematic basis and introduced a participation scheme for this purpose, with effect from 1st April, 1966. - The Development Assistance Fund was established on 27th March, in terms of Notification dated 16th March, issued by the Government of India. 1972

- The IDBI took initiative in establishing a technical consultancy service centre at the State level in Kerala in February called the Kerala Industrial and Technical Consultancy Organisation and contributed 51% to its paid-up capital of Rs 2 lakhs. 1973 - North Eastern Industrial and Technical Consultancy Organisation, Ltd. (NEITCO), was sponsored by the IDBI in May. Another technical consultancy organisation, viz., Bihar Industrial and Technical Consultancy Organisation, Ltd. (BITCO), was set up. - Refinance facilities are provided to eligible banks, which are authorised dealers in foreign exchange, against medium-term export credits granted to exporters in the private sector, who are manufacturers, recognised export houses or other exporters of standing. - The Bank as a apex institution, has also been vested with the responsibility of strengthening the resources position of the term financing institutions with a view to enabling them to expand and diversify their activities. - The Bank received various lines of credit from IDA/World Bank from time to time beginning from the year in US Dollars. 1976 - With a veiw to promoting fuller utilisation of capacity, technological upgradation and export development, the Government of India established in March, the Technical Development Fund (TDF). - Two Seed Capital Assistance Schemes were introduced by IDBI during the year viz. (i) SFC's Special Share Capital Scheme and (ii) IDBI's own scheme. 1977 - IDBI introduced in January, at the instance of the Government of India, a scheme for providing rupee assistance, to industrial units receiving import licences, under the TDF. - IDBI, apart from giving resource support for setting up of IFCI, UTI and SFCs, helped in establishing Shipping Credit and Investment Corporation of India, Ltd., Stock Holding Corporation of India Ltd., Securities and Exchange Board of India, Discount and Finance House of India, Ltd., Tourism Finance Corporation of India Ltd., Over The Counter (OTC) Exchange of India, Biotech Consortium India Ltd., and Indian Investment Management Company Ltd.

1982 - 55,00,000 shares issued. 1983 - 130,00,000 shares issued. 1984 - IDBI introduced equipment finance scheme in September. - 30,00,000 shares issued. 1985 - A new scheme known as Equipment Refinance Scheme was introduced with effect from July 1st. - The Bank introduced a new scheme called the Foreign Currency Refinance scheme. Under this Scheme, the Bank would extend foreign currency refinance facility to SIDCs/SIICs under the Bank's Normal Refinance Scheme. - A special scheme of assistance for installing in-house quality testing facilities was introduced under SIDF. Presently, this scheme is being operated by SIDBI. - 30,00,000 shares issued. 1986 - Small industries development fund was set up in May to pay concentrated attention to the provision of financial and non-financial inputs to the small scale sector. - 30,00,000 shares issued. 1987 - The National Equity Fund Scheme was introduced in August for providing equity type support to new tiny and small scale industrial units which are engaged in manufacturing activities and also for rehabilitation of potentially viable sick SSI units. - 20,00,000 shares issued.

1988 - 45,00,000 shares issued. 1989 - 97,00,000 shares issued. 1991 - With effect from 1st April, DAF was merged with the General Fund. - The Bank's resources can be augmented through issue of bonds and debentures with or without Government guarantee. - IDBI introduced 3-year 9% capital for sale to the public in the domestic market. - 66,00,000 shares issued. 1992 - The Bank issued unsecured bonds for a minimum aggregate amount of Rs 300 crores as follows: Deep Discount Bond had a face value of Rs 1,00,000 was issued at a deeply discounted price of Rs 2,700 with a maturity period of 25 years from the date of allotment, Double Option Bond had a face value of Rs 5,000 bears an interest of 15% payable at the end of 10th year on redemption with a premium of Rs 250 per bond. Part A of Rs 5,000 and Part B of Rs 16,500 are tradable separately on Stock Exchanges at Ahmedabad Mumbai, Bangalore, Calcutta, Delh and Mumbai and Regular Return Bond had a face value of Rs 5,000 where interest on principal sum is payable half-yearly. These bonds are redeemable at a premium of 5% at the end of 10 years from the date of allotment. - The bank entered the area of merchant banking to provide professional advice and services to industry for raising resources from capital market, acquisition of assets on lease and mergers/take-overs of existing units. - The Bank set up a foreign exchange dealing room to deal with all foreign exchange transactions. The bank had set up Investor Services of India Ltd. with a view to providing registrar and transfer services based on high technology system. - In order to provide wider range of direct finance to meet the specific requirements of clients, the bank introduced new products such as Asset Credit and Equipment Finance. Also introduce equipment leasing to meet the increasing demand for such services.

- 50,00,000 shares issued. 1993 - Authorised Capital reclassified. Equity Shares sub-divided. 2530,00,000 Pref. shares issued. Under Section 4 of IDBI Act, 1964, Government of India by the notification in Official Gazette date 16.11.1994 converted 2530,00,000 No. of equity shares into Preference shares. 1994 - The Bank obtained the membership of National Stock Exchange. IDBI Bank Ltd. promoted and incorporated in September as a commercial bank with an authorised capital of Rs 500. - The Bank had set up a Mutual Fund as a trust with a view to offering innovative investment products to investors backed by high quality servicing. - 17,30,93,300 shares allotted to public. 1995 - 17 New ventures were sanctioned. The beneficiary industries were electronics, industrial automation, industrial products and machinery, computer software etc. - The bank entered into an Umbrella Grant Agreement with the World Bank for US $ 50 million aimed at phasing out use of ozone Depleting Substances in industry as part of ongoing efforts to reduce environmental degradation. - Loan was approved by the World Bank as part of the financial sector development of select commercial banks underwrite the bank acts as pass through Agent. - The Bank offered 16,80,00,000 No. of Equity shares of Rs 10 each to Public at a premium of Rs 120 each along with 1,44,20,000 No. of equity shares of Rs 10 each at a price of Rs 130 per share was offered for sale by Government of India. Out of the above 3,36,00,000 shares offered to UTI, Exim Bank and IRBI. - 5,80,000 shares offered to employees, 10,02,20,000 shares were offered to public along with 19,78,000 shares not taken up in various categories (all were taken up along with unsubscribed portion of shares offered to other categories). 1997

- The Bank accepted 68 debenture trusteeship assignments in respect of bonds and debentures aggregating to Rs 2,743 crores. 1997 - IDBI, became the first financial institution to apply NSDL as DP. - IDBI has signed an agreement with National Securities Depository Ltd (NSDL) to get its equity shares admitted for dematerialisation. - IDBI has signed a $50-million bilateral seven-year loan facility arranged by Asahi Finance Ltd with Asahi Bank Ltd, Hong Kong as the lender. - The Reserve Bank of India has shot down the IDBI's proposal to privately place equity shares of its subsidiary, IDBI Bank, with the shareholders of the financial institution. - The largest financial institution of the country IDBI has merged its foreign exchange and domestic treasury operations following rapid deregulation of the money and foreign exchange markets in the country. - The 500 MW Pench thermal power project, promoted by Pench Power Ltd, has tied up its financing arrangement with IDBI. - The IDBI has signed a $150 million line of credit with the Export-Import Bank of Japan (EXIM-J) at Tokyo. - IDBI is set to become the first all-India financial institution to float capital gains bonds. 1998 - The Industrial Development Bank of India (IDBI) has commissioned a study on the country's debt market. - The IDBI has tied up a $150 million line of credit with the Export Import Bank of Japan for financing Indo-Japanese joint venture projects in India. - The IDBI is set to enter the capital market with a mega Rs 1,000-1,500 crore debt issue (Flexibond 4). This will be IDBI's maiden retail issue in the current fiscal. - American Express Bank, the travel related and financial services company, has entered into a strategic alliance for financial services with IDBI Bank.

- IDBI Bank has entered into a strategic alliance with leading travel and financial service company American Express Bank. - The Industrial Development Bank of India would enter the capital market with a public issue of four crore shares with a face value of Rs 40 crore. - IDBI may tie the knot with US based $75.9 billion Principal Financial Group for management of provident & pension funds in the country. - The Industrial Development Bank of India has tied up with 8 commercial banks for extension of loans against its Flexibonds V issue slated to be launched from December 21. 1999 - IDBI Bank Ltd, came out with a maiden public offering of four crore equity shares of Rs 10 each at a premium of Rs 8 per share aggregating Rs 72 crore, said four lakh shares were reserved for its employees and another 40 lakh shares were reserved for IDBI's equity holders on a competitive basis. The issue will close on February 16, 1999. The shares are proposed to be listed on BSE, NSE, and the Indore Stock Exchange. - IDBI Bank, promoted by two premier financial institutions - Industrial Development Bank of India (IDBI) and Small Industries Development Corporation of India (SIDBI) - is coming out with a public issue of 40 million equity shares of Rs.10 each at a premium of Rs.8 per share aggregating Rs.72 crores. - THE IDBI is all set to launch the sixth issue of Flexibonds, from February 22 to mobilise Rs. 1,500 crores, inclusive of a greenshoe option of Rs. 750 crores. - American Express Bank (Amex) has entered into a strategic alliance with IDBI Bank for its personal financial services (PFS) division to jointly explore the development of products such as smart card and debit card, and market complementary products and services to customers of both the banks. - The Board for Industrial and Financial Reconstruction (BIFR) has declared ATV Projects a sick company and appointed IDBI as operating agency (OA) for preparing the rehabilitation package for the company. - IDBI has succeeded in entering into one-time settlement for 77 cases for fiscal year 1998-99 as compared to 45 cases in the previous year. - The IDBI has decided to enter the market for the first time this fiscal to borrow Rs 1500 crore through its Flexibond-VII issue.

- A Memorandum of Understanding (MoU) between IDBI and Principal Financial Group was signed in Mumbai. 2000 - The Company proposal for the forfeiture of 3,03,100 No. of equity shares of Rs. 10/- each for nonpayment of allotment money. - The Bank has been made the nodal agency for disbursing the Montreal Protocol-approved $80 million compensation package to four Indian companies, including SRF Ltd., and Gujarat Flurocarbonds. - IDBI and CIDC would set up a joint working group to chalk out modalities for lending to the construction industry and risk assessment of the business. - The Company has proposed to undertake a capital restructuring exercise to reduce the Government stake to 51 per cent through an American Depository Share issue. - IDIB Principal Asset Management Company, the 50:50 joint venture between Industrial Development Bank of India and Principal Financial Group-USA, has brought about several changes in its top management. - The company is launching a special deposit scheme- IDBI Suvidha - to mop-up Rs 2,200 crore worth of outflow on account of premature redemption of the discount bonds issued five years back. - Crisil has assigned the highest safety rating of `AAA' to various bonds issue of the company. - Crisil has assigned the highest safety rating of `AAA' to various bonds issue of the company. - IDBI has become the first all-India financial institution to qualify for the ISO 9002 certification for its treasury operations. - Industrial Development Bank of India and the Export-Import bank of the United States have signed an memorandum of understanding for financing in the amount of $300 million to support import of USsourced goods for Indian borrowers. - Hughes Tele.com (India) has tied up a Rs 250-crore loan with the Industrial Development Bank of India. - The Industrial and Development Bank of India has sold 36,500 No. of equity shares of Pan Foods Ltd. to the promoters at a price of Rs 10 per share. - Industrial Development Bank of India (IDBI), one of the country's leading financial institutions,

launched a novel investment concept of asset allocation "future goals" in a 50:50 joint venture with the US-based principal Financial group. - IDBI has appointed I-Flex Solutions Ltd, the information technology arm of Citibank, to implement an integrated banking solutions package in a phased manner over 12-18 months. - Industrial Development Bank of India has set up two internal task forces, one to explore opportunities to enter the insurance sector, while the other to lead IDBI Intech, a newly form IT subsidiary. - Industrial Development Bank of India is considering hiving off its venture capital scheme as a separate company before the end of the year. - 18,074,300 partly paid up equity shares of face value of Rs 10/- each were forfeited on August 25. Consequently, (i) the aggregate face value of Rs 180,743,000 has been reduced from the Subscribed and Paid up equity capital, (ii) allotment money in Arrears of Rs 135,557,250 has been written down fully and (iii) Forfeited shares account has been credited by Rs 45,185,750 being the amount actually paid up on the forfeited shares. - The Bank is re-entering the retail market after about eight months, with its Flexibonds-9 issue. - The Company proposes to exercise the call option and redeem Easy Exit Bond and Regular Income Bond at face value plus interest accrued and outstanding at the end of 5 years from the date of allotment, i.e. March 18, 2001. - IDBI issued bonus equity shares in the ratio of 3:5 that is, three bonus shares for every five equity shares held. 2001 - India Post and Industrial Development Bank of India (IDBI) Principal Asset Management Company have entered into a joint partnership to make available current and future investment opportunities through post offices across India. - The Industrial Development Bank of India and Morgan Guaranty Trust Company of New York have entered into a long-term rupee interest rate swap. - The Industrial Development Bank of India has launched a new company - "IDBI Trusteeship Services Ltd." for carrying out trusteeships and other related business. - Industrial Development Bank of India has formed a new company -- IDBI Trusteeship Services Ltd. for carrying out trusteeship and related businesses.

- IDBI has sold 1,40,845 No. of equity shares for Rs 15 each of Pennar Profiles to P Udaya Bhaskara Reddy, a strategic investor, as part of the arrangements enteredinto by the promoters of Pennar Profiles with IDBI. - The Bank has launched a non-convertible debentures issue to raise at least Rs 500 crore. - The Government has re-appointed Mr S.K. Chakraborty as the acting Chairman and Managing Director of Industrial Development Bank of India (IDBI). Mr Chakraborty has been given an extension of three months beginning May 1 or till a regular CMD is appointed. -Credit Rating and Information Services of India Ltd (Crisil) has downgraded the outstanding bond issues and the certificate of deposit programme of the Industrial Development Bank of India. -Industrial Development Bank of India has picked up over 30 per cent equity stake in a Chennai-based high-end animation and motion graphics company, MUV Technologies, by investing Rs 2.7 crore. MUV Technologies, which has already set up the studio, is engaged in the development, production and creation of high concept, professional computer animation, visual effects and motion graphics. - The Credit Rating Information Services of India Ltd (Crisil) has assigned a rating of AA+, indicating high safety to the the Industrial Development Bank of Indias (IDBI) Rs 2,500-crore Flexibonds and Rs 6,343 crore Omni bonds programme - IDBI bank has plans to open over200 atms soon in a bid to expand its operations in India and thus position itself to become a fast growing entity. -The Finance Ministry did a last-minute volte face on July 30, asking Mr S.K. Kapur to temporarily head the Industrial Development Bank of India (IDBI). This is the fourth time that the Ministry has hesitated from appointing a full-time Chairman for the top term-lender. 2001 - India's largest term lender Industrial Development Bank of India raised Rs 55 crore ($11.68 million) through a private placement of 90-day commercial paper, debt dealers said. 2002 - Industrial Development Bank of India has informed that Mr T M Nagarajan has been appointed as Whole Time Director (designated as Deputy Managing Director) of IDBI for the period from the date of taking charge and upto September 30,2002.

-Industrial Development Bank of India has informed that Govt of India, vide notification dated July 19, 2002 has appointed Shri D C Gupta, Secretary Financial Sector, Ministry of Finance, Dept of Economic Affairs as a Director on the Board of Industrial Development Bank of India wef July 19, 2002. -Industrial Development Bank of India has informed BSE that the shareholders other than Central Government have elected the following three Directors in the AGM held on August 02, 2002 Mr Ravi Veera Gupta Mr Manohar Gopal Bhide Mr Jamshed J Irani -Appointed as the lead manager to the 1000 mw Maithon Power Company -Board accords in-principal approval for group's entry into non-life/reinsurance broking business -Receives from the Asian Development Bank a line of credit worth $100 million -Slashes interest rates on Flexibonds by 25 basis points -Gives revamping package for Natco Pharma Ltd. -Enters domestic market with Omni bonds worth Rs 250 cr -Sets up a body of Rs 100 crore exclusively for providing support to the film industry -Promoters of Visaka Industries Ltd buy-back 4,63,858 equity shares of face value Rs.10/- each held by Industrial Development Bank of India at a price of Rs.23/- per share -ICRA assigns downward rating to IDBI long-term programmes -FIs, banks given more power to recover NPAs through Asset Reconstruction Ordinance -Comes out with the issue of Flexibonds-14 with four bonds on July 26 to collect a total of Rs 200 crore -Refuses to accept GE-Bechtel offer to restart Dabhol Power Company (DPC) -Mops up Rs 337 cr by securitising loans to three firms -Buys back Float Rate Notes of $250 mn -Hits market with 9.4% interest for five-year retail bonds -Reports drop in non-performing assets (NPAs) at Rs 1,300 crore

-Raises Rs 415 cr through Flexibonds-15 -Government gives nod for the restructuring package for the company by repealing the IDBI Act and facilitating the conversion of the development financial institution into a stand-alone bank -Endorses proposal to purchase DPC power at Rs 2.80/unit -Reduces Flexibonds interest rate by 25-85 basis points -Sells 2,98,174 fully paid equity shares of Rs 10/- each of Infotech Enterprises, reduces the holding in the company to 4.51% 2003 -Refunds $100,000 deposit amount to DPC bidders with a view to sell assets of DPC -IDBI board okays 50 % Asset Management Company (AMC) stake sell off to Principal Financial Group of the USA -Offloads 25 lakh Discount and Finance House of India (DFHI) equity shares to State Bank of India (SBI) -Seizes salt refinery of Ganesh Benzoplast under Securitisation Act -Centre permits IDBI to reissue Statutory Liquidity Ratio (SLR) bonds -Divests its 50% stake in AMC & trustee company in favour of Principal Financial Group of the USA for Rs 94 crore -Takes possession on the second resort of Suman Motels Ltd. under the Securitisation Act -Modifies its financing pattern for films by doing away with profit-sharing or overflow, and the completion bond guarantee -Acquires entire stake of Tata Finance Ltd. in Tata Homefinance Ltd. for Rs 49.98 crore, enters housing finance sector -Offloads its stake in Gujarat Borosil Ltd. to Vulcan Exports Ltd. -Sells 7.56 crore shares in Mangalore Refinery & Petrochemicals Ltd. (MRPL) to Oil & Natural Gas

Corporation Ltd. (ONGC) -Signs a formal subscription Agreement on July 7, 2003 with Nepal Development Bank Ltd. (NDBL), a private sector development bank in Nepal. Buys 10% stake in NDBL -Acquires the knit processing unit of Suditi Industries Ltd on July 4 which is situated close to Navi Mumbai under the Securitisation Act -Sues Spectrum Power Generation Limited (SPGL) for allotment of shares worth Rs 23.25 crore in SPGL -J K Corp allots 26,53,500 shares to IDBI by way of conversion of part of rupee term loans into equity shares of the company under restructuring scheme -IDBI, IFCI ink deal to launch SLR bonds -Lok Sabha introduces IDBI (Transfer of Undertaking and Repeal) Bill, 2002 on August 14 which will pave the way for the transformation of the institution into a bank -Acquires CMM Studios under Securitisation Act -Appointed P P Vora, chairman and managing director, IDBI, as the chairman of it's new housing finance arm -IDBI Homefinance mops up $20 million through external commercial borrowings -Clears restructuring package for Stone India Ltd. -IDBI Homefinance reduces home loan rates up to 150 basis points -Ties up with Andhra Bank to sell Governtment of India (GOI) saving bonds -Acquires 1,62,87,668 shares amounting to 5.51% of the total paid up capital of Recron Synethetics Ltd. -UTI Chairman & Managing Director (CMD) Mr. M Damodaran takes charge as CMD of IDBI and holds concurrent charge from October 1 as part of an interim arrangement -Mr P P Vora has withdrawn from the board of IDBI Bank wef November 4, 2003. Further, Industrial Development Bank of India (IDBI) has notified nomination of Mr M Damodaran,

CMD, IDBI as its nominee director on the Board of the bank wef November 4, 2003 in place of Mr P P Vora. -Lok Sabha clears Industrial Development Bank (transfer of undertaking & repeal) Bill of 2002 2004 -IDBI rejigs debt borrowing program -IDBI gets a bonanza out of IFCI-PNB amalgamation -Industrial Development Bank of India (IDBI) has informed that the Government of India, Ministry of Finance vide notification dated February 4, 2004 states that in supersession to the notification dated September 29, 2003 and consequent upon the approval of the Appointment Committee of the Cabinet, it has decided to entrust the additional charge of the post of Chairman and Managing Director (CMD), IDBI to Shri M. Damodaran, Chairman, Unit Trust of India w.e.f. October 1, 2003 to May 31, 2004. -Standard & Poor's (S&P) Ratings Services on February 19 assigned Industrial Development Bank of India's (IDBI) proposed $300 million senior unsecured notes a 'BB' rating. An obligation rated "BB" is less vulnerable to non-payments and other speculative issues. However, it faces major ongoing uncertainties or exposures to adverse business, financial or economic conditions, which could lead to obligour's inadequate capacity to meet its financial commitments on the obligation. --Industrial Development Bank of India [IDBI] has acquired 17,60,000 shares amounting to 12.11% of the total paid up capital of Soma Textiles Limited.

2004 -The promoters of Eastern Threads Ltd (ETL) have purchased 4 lakh equity shares of face value of Rs 10 each of ETL, from Industrial Development Bank of India, at a price of Re 1 per share. The transaction constituted over one per cent of the paid up capital of the ETL. -IDBI acquires 46 lakh shares of Mysore Cements -Mr Damodaran has been appointed CMD at IDBI with effect from June 1, 2004 till May 31, 2007 -IDBI - Launch of sixth tranche of IDBI Omni bonds (2004-2005) 2005

-Industrial Development Bank of India Ltd (IDBI) has informed that the Public Issue of IDBI Flexibonds - 23, which was opened for subscription on March 21, 2005 has been closed on March 29, 2005. -IDBI enters into CO-Financing tie-up with SIDBI. 2006 -IDBI signs MoU with Fortis -IDBI bags "IT Team of the Year Award 2005". -IDBI sets up new branch in Andheri -IDBI - Tripartite MOU with Federal Bank & Forties Insurance International -IDBI bags Asiamoney's "Best India Deal of the Year Award 2005. -IDBI Launches No Frills 'Sabka' Savings Bank Account. 2007 - Industrial Development Bank Of India Limited has informed that as per provisions of Article 134 to 138 of the Articles of Association of IDBI Ltd., read with Sections 255 and 256 of the Companies Act, 1956, the shareholders have re-appointed the following two directors after retirement by rotation on the Board of Directors of IDBI Ltd. in the 3rd Annual General Meeting of IDBI Ltd. held on June 22, 2007. (1) Shri Hira Lal Zutshi and (2) Shri A. Sakthivel -IDBI Wins Three Awards at the ABCI -IDBI signs MOU with IFC for co-operation in Clean Development Mechanism (CDM) Projects -IDBI, Federal Bank and Fortis Sign Joint Venture Agreement To Establish A New Life Insurance Company In India -IDBI Launches new 600 days Suvidha Plus FD Scheme

2008 -Industrial Development Bank Of India Limited has submitted to a copy of the Resolution passed by the Board by circulation on March 12, 2008 in respect of change of name of the Bank to "IDBI Bank Limited" by passing a Special Resolution through Postal Ballot in terms of Section 192A of the Companies Act, 1956. -Company name has been changed from Industrial Development Bank of India Ltd to IDBI Bank Ltd. -IDBI bags two Special IT Awards from IBA -IDBI ties up with Motilal Oswal Securities for online trading 2009 - IDBI Bank has slashed its benchmark prime-lending rate (BPLR) by 25 basis points to 12.75 per cent. The reduction will come into effect from July 1 and will apply to all loans linked to the BPLR, including home loans, according to a press release from the bank. The bank cut deposit rates by 25-50 basis points earlier this week. -IDBI Bank bags IBA's prestigious Banking Technology award -IDBI Bank Ltd and Tata Motors Limited (TML) sign MoU for Vehicle Loan Financing 2010 - IDBI Bank has opened its first overseas branch at the Dubai International Financial Centre.

Company History - Axis Bank Ltd. 1993 - The Bank was incorporated on 3rd December and Certificate of business on 14th December. The Bank transacts banking business of all description. UTI Bank Ltd. was promoted by Unit Trust of India, Life Insurance Corporation of India, General Insurance Corporation of India and its four subsidiaries. - The bank was the first private sector bank to get a license under the new guidelines issued by the RBI.

1997 - The Bank obtained license to act as Depository Participant with NSDL and applied for registration with SEBI to act as `Trustee to Debenture Holders'. - Rupees 100 crores was contributed by UTI, the rest from LIC Rs 7.5 crores, GIC and its four subsidiaries Rs 1.5 crores each. 1998 - The Bank has 28 branches in urban and semi urban areas as on 31st July. All the branches are fully computerised and networked through VSAT. ATM services are available in 27 branches. - The Bank came out with a public issue of 1,50,00,000 No. of equity shares of Rs 10 each at a premium of Rs 11 per share aggregating to Rs 31.50 crores and Offer for sale of 2,00,00,000 No. of equity shares for cash at a price of Rs 21 per share. Out of the public issue 2,20,000 shares were reserved for allotment on preferencial basis to employees of UTI Bank. Balance of 3,47,80,000 shares were offered to the public. - The company offers ATM cards, using which account-holders can withdraw money from any of the bank's ATMs across the country which are inter-connected by VSAT. - UTI Bank has launched a new retail product with operational flexibility for its customers. - UTI Bank will sign a co-brand agreement with the market, leader, Citibank NA for entering into the highly promising credit card business. - UTI Bank promoted by India's pioneer mutual fund Unit Trust of India along with LIC, GIC and its four subsidiaries. 1999 - UTI Bank and Citibank have launched an international co-branded credit card. - UTI Bank and Citibank have come together to launch an international co-branded credit card under the MasterCard umbrella. - UTI Bank Ltd has inaugurated an off site ATM at Ashok Nagar here, taking the total number of its off site ATMs to 13.m

2000 - The Bank has announced the launch of Tele-Depository Services for its depository clients. - UTI Bank has launch of `iConnect', its Internet banking Product. - UTI Bank has signed a memorandum of understanding with equitymaster.com for e-broking activities of the site. - Infinity.com financial Securities Ltd., an e-broking outfit is typing up with UTI Bank for a banking interface. - Geojit Securities Ltd, the first company to start online trading services, has signed a MoU with UTI Bank to enable investors to buy\sell demat stocks through the company's website. - Indiabulls has signed a memorandum of understanding with UTI Bank. - UTI Bank has entered into an agreement with Stock Holding Corporation of India for providing loans against shares to SCHCIL's customers and funding investors in public and rights issues. - ICRA has upgraded the rating og UTI Bank's Rs 500-crore certificate of deposit programme to A1+. - UTI Bank has tied up with L&T Trade.com for providing customised online trading solution for brokers. 2001 - UTI Bank launched a private placement of non-convertible debentures to raise up to Rs 75 crore. UTI Bank has opened two offsite ATMs and one extension counter with an ATM in Mangalore, taking its total number of ATMs across the country to 355. - UTI Bank has recorded a 62 per cent rise in net profit for the quarter ended September 30, 2001, at Rs 30.95 crore. For the second quarter ended September 30, 2000, the net profit was Rs 19.08 crore. The total income of the bank during the quarter was up 53 per cent at Rs 366.25 crore. 2002 - UTI Bank Ltd has informed BSE that Shri B R Barwale has resigned as a Director of the Bank w.e.f. January 02, 2002. A C Shah, former chairman of Bank of Baroda, also retired from the banks board in the third quarter of last year. His place continues to be vacant. M Damodaran took over as the director of the board after taking in the reins of UTI. B S Pandit has also joined the banks board subsequent to

the retirement of K G Vassal. - UTI Bank Ltd has informed that Shri Paul Fletcher has been appointed as an Additional Director Nominee of CDC Financial Service (Mauritius) Ltd of the Bank.And Shri Donald Peck has been appointed as an Additional Director (nominee of South Asia Regional Fund) of the Bank. - UTI Bank Ltd has informed that on laying down the office of Chairman of LIC on being appointed as Chairman of SEBI, Shri G N Bajpai, Nominee Director of LIC has resigned as a Director of the Bank. 2002 - B Paranjpe & Abid Hussain cease to be the Directors of UTI Bank. - UTI Bank Ltd has informed that in the meeting of the Board of Directors following decisions were taken: Mr Yash Mahajan, Vice Chairman and Managing Director of Punjab Tractors Ltd was appointed as an Additional Director with immediate effect. Mr N C Singhal former Vice Chairman and Managing Director of SCICI was appointed as an Additional Director with immediate effect. -ABN Amro, UTI Bank in pact to share ATMs. -UTI Bank Ltd has informed BSE that a meeting of the Board of Directors of the Bank is scheduled to be held on October 24, 2002 to consider and take on record the unaudited half yearly/quarterly financial results of the Bank for the half year/Quarter ended September 30, 2002. -UTI Bank Ltd has informed that Shri J M Trivedi has been appointed as an alternate director to Shri Donald Peck with effect from November 2, 2002. 2003 -UTI Bank Ltd has informed BSE that at the meeting of the Board of Directors of the company held on January 16, 2003, Shri R N Bharadwaj, Managing Director of LIC has been appointed as an Additional Director of the Bank with immediate effect. - UTI Bank, the private sector bank has opeaned a branch at Nellore. The bank's Chairman and Managing Director, Dr P.J. Nayak, inaugurating the bank branch at GT Road on May 26. Speaking on the occasion, Dr Nayak said, "This marks another step towards the extensive customer banking focus that we are providing across the country and reinforces our commitment to bring superior banking services, marked by convenience and closeness to customers. -UTI Bank Ltd. has informed the Exchange that at its meeting held on June 25, 2003 the BOD have decided the following: 1) To appoint Mr. A T Pannir Selvam, former CMD of Union Bank of India and

Prof. Jayanth Varma of the Indian Institute of Management, Ahmedabad as additional directors of the Bank with immediate effect. Further, Mr. Pannir Selvam will be the nominee director of the Administrator of the specified undertaking of the Unit Trust of India (UTI-I) and Mr. Jayanth Varma will be an Independent Director. 2) To issue Non-Convertible Unsecured Redeemable Debentures upto Rs.100 crs, in one or more tranches as the Bank's Tier - II capital. -UTI has been authorised to launch 16 ATMs on the Western Railway Stations of Mumbai Division. -UTI filed suit against financial institutions IFCI Ltd in the debt recovery tribunal at Mumbai to recover Rs.85cr in dues. -UTI bank made an entry to the Food Credit Programme, it has made an entry into the 59 cluster which includes private sector, public sector, old private sector and co-operative banks. -Shri Ajeet Prasad, Nminee of UTI has resigned as the director of the bank. -Banks Chairman and MD Dr.P.J.Nayak inaugurated a new branch at Nellore. -UTI bank allots shares under Employee Stock Option Scheme to its employees. -Unveils pre-paid travel card 'Visa Electron Travel Currency Card' -Allotment of 58923 equity shares of Rs 10 each under ESOP. -UTI Bank ties up with UK govt fund for contract farming -Shri B S Pandit, nominee of the Administrator of the Specified Undertaking of the Unit Trust of India (UTI-I) has resigned as a director from the Bank wef November 12, 2003. -UTI Bank unveils new ATM in Sikkim 2004 -Comes out with Rs. 500 mn Unsecured Redeemable Non-Convertible Debenture Issue, issue fully subscribed -UTI Bank Ltd has informed that Shri Ajeet Prasad, Nominee of the Administrator of the Specified Undertaking of the Unit Trust of India (UTI - I) has been appointed as an Additional Director of the Bank w.e.f. January 20, 2004. -UTI Bank opens new branch in Udupi

-UTI Bank, Geojit in pact for trading platform in Qatar -UTI Bank ties up with Shriram Group Cos -Unveils premium payment facility through ATMs applicable to LIC & UTI Bank customers -Metaljunction (MJ)- the online trading and procurement joint venture of Tata Steel and Steel Authority of India (SAIL)- has roped in UTI Bank to start off own equipment for Tata Steel. -DIEBOLD Systems Private Ltd, a wholly owned subsidiary of Diebold Incorporated, has secured a major contract for the supply of ATMs and services to UTI Bank -HSBC completes acquisition of 14.6% stake in UTI Bank for $67.6 m -UTI Bank installs ATM in Thiruvananthapuram -Launches `Remittance Card' in association with Remit2India, a Web site offering money-transfer services 2005 - UTI Bank enters into a bancassurance partnership with Bajaj Allianz General for selling general insurance products through its branch network. -UTI Bank launches its first Satellite Retail Assets Centre (SRAC) in Karnataka at Mangalore. 2006 -UTI Bank unveils priority banking lounge - UTI Bank launches operations of UBL Sales, its Sales Subsidiary - Inaugurates its first office in Bengaluru -UTI Bank announces the launch of its Credit Card Business - UTI Bank becomes the first Indian Bank to successfully issue Foreign Currency Hybrid Capital in the International Market - UTI Bank Business Gold Debit Card MasterCard Launched - Designed for business related spending by SMEs and self employed professionals

2007 -AXIS Bank Ltd has informed that consequent upon handing over charge as Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI), Shri. S B Mathur, the Nominee Director of SUUTI has resigned as a Director of the Bank w.e.f. December 06, 2007. -AXIS Bank Ltd has informed that Fitch Ratings on December 14, 2007, has upgraded the Bank's National Long-term rating to 'AAA(ind)' from 'AA+(ind)'. -AXIS Bank Ltd hasappointed Shri K N Prithviraj as an Additional Director on the Board at Directors of the Bank. - Company name has been changed from UTI Bank Ltd toAxis Bank Ltd. 2008 - Axis Bank launches Platinum Credit Card, India's first EMV chip based card - Axis Bank set up its branch at Ilanji at Meenakshi Nagar on the Coutralam-Madurai road on April 16. 2009 - Axis Bank today said its board has recommended the appointment of Shikha Sharma, currently chief of ICICI group's life insurance business, as its next managing director and CEO. - Axis Bank has set up a new branch at Perumbavoor. The bank has a network of 832 branches along with 8 extension counters and 3622 ATMs across the country. - Axis Bank, on Wednesday entered into a strategic alliance with Motilal Oswal, the financial services firm, in order to facilitate the online trading for the bank's customers. - AXIS Bank Ltd has informed that the Board of Directors of the Bank at its meeting held on June 01, 2009, inducted Smt. Shikha Sharma as an Additional Director of the Bank. - Axis bank has received final clearance from the Securities and Exchange Board of India (SEBI) to begin its mutual fund operations and will launch debt and equity schemes soon whereas IDBI Bank is awaiting the regulator's permit for an entry. - Axis Bank opened the new branch at Irinjalakuda while it has a network of 892 branches, 8 extension counters and 3,806 ATMs across the country.

2010 - Axis Bank Limited has informed that at the meeting of the Board of Directors held on January 15, 2010, the following decisions were taken: (1) To appoint Dr. Adarsh Kishore, former Finance Secretary, Government of India and former Executive Director, International Monetary Fund representing Bangladesh, Bhutan, India and Sri Lanka, as the Non-Executive Chairman of the Bank, subject to RBI approval; (2) To appoint Shri S.B. Mathur, former Chairman, LIC and the National Stock Exchange of India, as an Additional Independent Director, with immediate effect. - AXIS Bank Ltd has appointed Shri M. S. Sundara Rajan, former CMD, Indian Bank as an Additional Independent Director with immediate effect. - Axis bank acquires 4 percent stake in Max New York Life - Axis Bank has bought a property in central Mumbai from Bombay Dyeing where it will shift its corporate headquarters. Its worth Rs.782 crore. - Axis Bank is acquiring investment banking and securities unit of Enam Securities Pvt Ltd in an all stock deal for Rs.2,067 Cr (around $456 Mn) in order to expand its broking and investment banking business. 2011 - Axis Bank launches online trading platform AxisDirect - Axis Bank has launches pre-paid VISA card i.e. MY MONEY CARD. - Axis Bank opens new representative office in Abu Dhabi 2012 - Axis Bank partners with NIIT IFBI to introduce PG Diploma in Retail Banking. - Axis Bank inducts Schroders as a 25% partner in Axis AMC. - Axis Bank, Axis Capital, joined hands with Baird, an international, employee-owned financial services firm, to ofer investment banking services.

Axis bank

Director Report
Mar2011 Mar 2012

The Board of Directors is pleased to present the Eighteenth Annual Report of the Bank together with the Audited Statement of Accounts, Auditors'' Report and the report on business and operations of the Bank for the financial year ended 31st March 2012.
FINANCIAL PERFORMANCE The financial highlights for the year under review are presented below: (Rs in crores) PARTICULARS Deposits Out of which - Savings Bank Deposits - Current Account Deposits Advances Out of which - Retail Advances - Non-retail Advances Total Assets/Liabilities Net Interest Income Other Income Out of which - Trading Profit (1) - Fee and other income Operating Expenses (excluding depreciation) Profit before depreciation, provisions and tax Depreciation Provision for Tax Other Provisions and Write offs 51,667.96 39,754.07 169,759.54 40,850.31 36,917.09 142,407.83 26.48% 7.68% 19.21% 2011-12 220,104.30 2010-11 189,237.80 GROWTH 16.31%

37,570.33 132,189.21 285,627.79 8,017.75 5,420.22

27,759.23 114,648.60 242,713.37 6,562.99 4,632.13

35.34% 15.30% 17.68% 22.17% 17.01%

361.56 5,058.66

496.97 4,135.16

(27.25%) 22.33%

5,664.86

4,489.84

26.17%

7,773.11 342.24 2,045.63

6,705.28 289.59 1,747.17

15.93% 18.18% 17.08%

1,143.03

1,280.03

(10.70%)

Net Profit Appropriations: Transfer to Statutory Reserve Transfer to/(from) Investment Reserve Transfer to Capital Reserve Transfer to/(from) General Reserve Proposed Dividend Surplus carried over to Balance Sheet (1) Excluding Merchant Exchange Profit KEY PERFORMANCE INDICATORS Interest Income as a percentage of working funds* Non-Interest Income as a percentage of working funds* Net Interest Margin Return on Average Net Worth Operating Profit as a percentage of working funds* Return on Average Assets Profit per employee** Business (Deposits less inter-bank deposits Advances) per employee** Net non-performing assets as a percentage of net customer assets***

4,242.21

3,388.49

25.19%

1,060.55

847.12

25.19%

51.90

(14.94) 4.76

770.08

338.85 670.36

14.88%

2,359.68

1,542.34

52.99%

2011-12

2010-11

8.71%

7.49%

2.15% 3.59% 21.22%

2.29% 3.65% 20.13%

2.94% 1.68% Rs 14.34 lacs

3.17% 1.68% Rs 14.35 lacs

Rs 12.76 crores Rs 13.66 crores

0.25%

0.26%

- Working funds represent average total assets.

** Productivity ratios are based on average number of employees for the year. *** Customer assets include advances and credit substitutes. Previous year figures have been regrouped wherever necessary. The Bank continued to show a steady growth both in business and earnings with a net profit of Rs4,242.21 crores for the year ended 31st March 2012, registering a growth of 25.19% over the net profit of Rs3,388.49 crores last year. The strong growth in earnings was a result of robust business growth across all banking segments indicative of a clear strategic focus. During the year, the Basic Earnings Per Share (EPS) was at Rs102.94 and a Return on Equity (ROE) at 21.22%. During the year, the total income of the Bank increased by 38.55% to reach Rs27,414.87 crores as compared to Rs19,786.94 crores last year. Operating revenue increased by 20.03% to Rs13,437.97 crores while operating profit increased by 15.82% to Rs7,430.87 crores. The growth in earnings was mainly due to a rise in core income streams such as net interest income (NII) and fee income. NII increased by 22.17% to Rs8,017.75 crores as compared to Rs6,562.99 crores last year. Fee, trading and other income increased by 17.01 % to Rs5,420.22 crores from Rs4,632.13 crores last year. The strong growth in income was partly offset by an increase in operating expenses including depreciation by 25.69% to Rs6,007.10 crores. During the year, the growth in NII may be attributed to an expansion in the balance sheet size and healthy low-cost Current Account and Savings Bank (CASA) deposits. The total earning assets on a daily average basis increased by 24.30% to Rs223,206 crores, as compared to Rs179,573 crores last year. This was partly offset by a rise in funding costs due to hardening of general interest rates, particularly on term deposits during the year. The steady growth of low-cost CASA deposits, which on a daily average basis increased by 18.96% to Rs70,845 crores from Rs59,551 crores last year, helped in containing the cost of funds. Overall, the daily average cost of funds in the year increased to 6.28% from 4.96% last year. During the year, the cost of deposits increased to 6.47% from 4.96% last year primarily due to an increase in cost of term deposits by 211 basis points (from 6.81 % to 8.92%) as well as the cost of savings bank deposits. During the year, the yield on earning assets increased by 125 basis points to 9.66% from 8.41% last year. Other income comprising fees, trading profit and miscellaneous income increased by 17.01% to Rs5,420.22 crores in 2011-12 from Rs4,632.13 crores last year and constituted 40.34% of operating revenue of the Bank. Fee income is a significant part of the earnings and is generated from a diverse set of businesses in the Bank. The main sources of fee income are client- based merchant foreign exchange trade, service charges from account maintenance, transaction banking (including cash management services), syndication and placement fees, processing fees from loans and commission on non- funded products (such as letters of credit and bank guarantees), inter-change fees on ATM-sharing arrangements and fee income from the distribution of third-party personal investment products. During the year, proprietary trading

profits fell by 27.25% to Rs361.56 crores from Rs496.97 crores last year, owing to adverse market conditions in the debt and equity markets. Miscellaneous income dropped by 3.79%, mainly due to lower recoveries of loans written-off in earlier years. During the year, such recoveries accounted to Rs291.84 crores. During the year, the operating revenue of the Bank increased by 20.03% to Rs13,437.97 crores, as compared to Rs11,195.12 crores last year. The core income streams (NII, fee and miscellaneous income) constituted 97.31% of the operating revenue, reflecting the stability and sustainability of the Bank''s earnings. Operating expenses increased by 25.69% to Rs6,007.10 crores from Rs4,779.43 crores last year, as a result of the growth of the Bank''s network and other infrastructure required for supporting the existing and new businesses. The Cost to Income ratio of the Bank was 44.70% compared to 42.69% last year. During the year, the operating profit of the Bank increased by 15.82% to Rs7,430.87 crores from Rs6,415.69 crores last year. During this period, the Bank created total provisions (excluding provisions for tax) of Rs1,143.03 crores compared to Rs1,280.03 crores last year. Of this, the Bank provided Rs860.43 crores towards loan/investment losses compared to Rs955.12 crores last year, while the provision for standard assets was Rs150.30 crores. The Bank also provided Rs88.86 crores compared to Rs15.06 crores last year against restructured assets. During the year, the Bank restructured loans of Rs1,300.29 crores. The Bank continued to maintain a healthy asset-quality with a ratio of Gross NPAs to gross customer assets of 0.94%, as compared to 1.01 % last year, and a Net NPA ratio (Net NPAs as percentage of net customer assets) of 0.25% compared to 0.26% last year. With higher levels of provisions built over and above regulatory norms during the year, the Bank has maintained its provision coverage to 80.91% (after considering prudential write-offs). The Bank has also shown an all-round improvement in various financial parameters and ratios during the year. Basic Earnings Per Share (EPS) was Rs102.94 as compared to Rs82.95 last year, while the Diluted Earnings Per Share was Rs102.20 compared to Rs81.61 last year. Return on Equity (RoE) improved to 21.22% from 20.13% last year and Book Value Per Share increased from Rs462.77 to Rs551.99. Return on Assets (RoA) is maintained at 1.68% as last year. The hardening of interest rates led to a contraction in the net interest margin (NIM) by 6 basis points for the year to 3.59% from 3.65% last year. On quarter-on- quarter basis, the NIM was 3.28% in Q1, 3.78% in Q2, 3.75% in Q3 and 3.55% in Q4. The Bank has shown robust growth in several key balance sheet parameters for the year ended 31st March 2012. The total assets increased by 17.68% to Rs285,628 crores on 31st March 2012 from Rs242,713 crores on 31st March 2011. Total deposits increased by 16.31% and stood at Rs220,104 crores. Savings Bank deposits increased by 26.48% to Rs51,668 crores, while Current Account deposits increased by 7.68% to Rs39,754 crores. Low-cost demand deposits: Current Accounts and Savings Bank (CASA) deposits were Rs91,422 crores as on 31st March 2012, as compared to Rs77,767 crores last year. As on 31st March 2012, CASA deposits constituted 41.54% of total deposits as compared to 41.10% last year. On a daily average basis, Savings Bank deposits increased by 20.43% to Rs43,442 crores, while Current Account deposits increased by

16.71 % to Rs27,403 crores. The percentage share of CASA in total deposits, on a daily average basis, was 37.65% compared to 39.40% last year. The total advances of the Bank increased by 19.21% to Rs169,760 crores. Out of this, corporate advances (comprising large, infrastructure and mid-corporate accounts) increased by 19.93% to Rs91,053 crores and SME loans increased by 11.16% to Rs23,795 crores. Agricultural lending (including micro finance) stood at Rs17,340 crores, increasing 0.11% over the last year. Retail loans increased by 35.34% to Rs37,570 crores. The percentage share of retail loans to total advances has increased to 22.13% from 19.49% last year. The total investments of the Bank increased by 29.45% to Rs93,192 crores and investments in government and approved securities, held mainly for SLR requirement, increased by 32.43% to Rs58,533 crores. Other investments, including corporate debt securities, increased by 24.70% to Rs34,659 crores. As on 31st March 2012, the total assets of the Bank''s overseas branches stood at Rs32,302 crores, constituting 11.31% of the Bank''s total assets. During the year, the Bank continued to expand its distribution network to enlarge its reach in geographical centres with potential for growth, especially in the areas with potential for low-cost CASA deposits, lending to retail, agriculture and SME segments and the distribution of third-party products. This year, the Bank has added 231 new branches and 1 extension counter, taking the total number of branches and extension counters (ECs) to 1,622, of which 674 branches/ECs are in semi-urban and rural areas and 948 branches are in metropolitan and urban areas. The Bank is present in all the States and Union Territories (except Lakshadweep), covering a total of 1,050 centres. The Bank has also increased its ATM network to 9,924, as compared to 6,270 ATMs last year. In addition to domestic branches, during the year the Bank opened an international branch office in Colombo, Sri Lanka to finance cross-border trade and manufacturing activities. This is in addition to the existing branches at Singapore, Hong Kong and DIFC (Dubai International Finance Centre) and representative offices at Shanghai, Dubai and Abu Dhabi. CAPITAL & RESERVES During the year, the Bank has raised capital of Rs3,425 crores by way of sub-ordinated bonds (unsecured redeemable non-convertible debentures) qualifying as Tier II capital. The raising of this non- equity capital has helped the Bank continue its growth strategy and has strengthened its capital adequacy ratio. The Bank is well capitalised with an overall capital adequacy ratio (CAR) of 13.66% at the end of the year, well above the benchmark requirement of 9% stipulated by Reserve Bank of India (RBI). Of this, Tier I CAR was 9.45%, as against 9.41 % last year, while the Tier II CAR was at 4.21%, as against 3.24% last year. During the year, a total of 2,658,109 equity shares were allotted to employees of the Bank pursuant to the exercise of options under its Employee Stock Option Scheme. The paid-up capital of the Bank rose to Rs413.20 crores, as compared to Rs410.55 crores last year. The shareholding pattern of the Bank as of 31st March 2012 was as under: Sr. No. Name of Shareholders % of Paid-up Capital

i.

Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI) Life Insurance Corporation of India (LIC) General Insurance Corporation and four PSU insurance companies Overseas investors (including FIIs/OCBs/NRIs) Foreign Direct Investment (GDR issue) Other Indian financial institutions/mutual funds/banks Others Total

23.53 9.69(1)

ii. iii.

4.16 33.19 8.54

iv. v. vi.

6.45 14.44 100.00

vii.

(1) Save and except 4,00,40,156 shares equivalent to 9.69% of the total paid up capital of the Bank held by LIC, all other holdings are not considered for arriving at the Promoter''s shareholding. The Bank''s shares are listed on the NSE and the BSE. The GDRs issued by the Bank are listed on the London Stock Exchange (LSE). The Bonds issued by the Bank under the MTN programme are listed on the Singapore Stock Exchange. The listing fees relating to all stock exchanges for the current year have been paid. DIVIDEND The Diluted Earnings Per Share (EPS) for 2011-12 has risen to Rs102.20 from Rs81.61 last year. In view of the overall performance of the Bank and the objective of rewarding shareholders with cash dividends while retaining capital to maintain a healthy capital adequacy ratio to support future growth, the Board of Directors has recommended a higher dividend of Rs16.00 per equity share, compared to Rs14.00 per equity share declared last year. This dividend shall be subject to tax on dividend to be paid by the Bank. This increase reflects our confidence in the Bank''s ability to consistently grow earnings over time. BOARD OF DIRECTORS During the year, some changes in the composition of the Board of Directors have taken place. Shri J. R. Varma ceased to be a Director of the Bank at the conclusion of the last Annual General Meeting with effect from 17th June 2011. Shri S. K. Roongta, resigned as a Director of the Bank with effect from 20th June 2011. Shri R. B. L. Vaish tendered his resignation as a Director on completion of his tenure as LIC Nominee with effect from 5th September 2011. Shri S. K. Chakrabarti, Deputy Managing Director, retired from the services of the Bank on 30th September 2011 and accordingly ceased to be a Director of the Bank with effect from 1st October 2011. Shri M. V. Subbiah resigned

as a director with effect from 26th April, 2012. Prof. Samir K. Barua, Director, Indian Institute of Management, Ahmedabad was appointed as an Additional Independent Director of the Bank with effect from 22nd July 2011. Shri A. K. Dasgupta was nominated by LIC as its Nominee Director in place of Shri R. B. L. Vaish and was accordingly appointed as an Additional Director of the Bank with effect from 5th September 2011. Shri Som Mittal, President of NASSCOM was appointed as an Additional Independent Director of the Bank with effect from 22nd October 2011. We report with sadness the demise of Dr. R. H. Patil who passed away on 12th April 2012. The Board of Directors places on record its deep appreciation and gratitude to Dr. R. H. Patil, Shri M. V. Subbiah, Shri J. R. Varma, Shri S. K. Roongta, Shri R. B. L. Vaish and Shri S. K. Chakrabarti for the valuable services rendered by them during their tenure as Directors of the Bank. In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Bank, Smt. Rama Bijapurkar and Shri V. R. Kaundinya retire by rotation at the Eighteenth Annual General Meeting and, being eligible, offer themselves for re-appointment as Directors of the Bank. The Board of Directors of the Bank at its meeting held on 13th February 2012, has re-appointed Smt. Shikha Sharma as Managing Director & CEO for a further period of three years i.e. from 1st June 2012 till 31st May 2015. The re-appointment is subject to approval of Reserve Bank of India and the shareholders. Further, the Board of Directors of the Bank at its meeting held on 27th April, 2012, has decided to appoint Shri V. Srinivasan and Shri Somnath Sengupta, Executive Directors of the Bank as the Whole-time Directors of the Bank with effect from the date as may be approved by RBI. SUBSIDIARIES The Bank has set up six wholly-owned subsidiaries: Axis Securities and Sales Ltd., Axis Private Equity Ltd., Axis Trustee Services Ltd., Axis Asset Management Company Ltd., Axis Mutual Fund Trustee Ltd., and Axis U.K. Ltd. Axis Securities and Sales Ltd. is primarily in the business of marketing of credit cards and retail asset products and also provides retail broking services. The primary objective of Axis Securities and Sales Ltd. is to build a specialised force of sales personnel and optimise operational efficiency by providing greater control over the sales functions, as compared to a Direct Sales Agent (DSA) model as well as undertake retail broking business. Axis Private Equity Ltd. primarily carries on the activities of managing equity investments and provides venture capital support to businesses. Axis Trustee Services Ltd. is engaged in trusteeship activities (e.g. acting as debenture trustee and as trustee to various securitisation trusts). Axis Asset Management Company Ltd. undertakes the activities of managing the mutual fund business. Axis Mutual Fund Trustee Ltd. was formed to act as the trustee for the mutual fund business. Axis U.K. Ltd. is a private limited company registered in the UK. It was formed with the main purpose of filing an application with Financial Services Authority (FSA), UK for a banking license in the UK and for the creation of necessary infrastructure for the subsidiary to commence banking

business in the UK. As of 31st March 2012, Axis U.K. Ltd. has not commenced operations. In terms of the General Circular No. 2/2011 dated 8th February 2011 issued by the Ministry of Corporate Affairs, Government of India, the copies of Directors'' Reports, Auditors'' Reports and the financial statements of the six subsidiaries have not been attached to the accounts of the Bank for the financial year ended 31st March 2012. Any shareholder who may be interested in obtaining a copy of the aforesaid documents may write to the Company Secretary at the Registered Office of the Bank. These documents will also be available for examination by shareholders of the Bank at its Registered Office. The documents related to individual subsidiaries will similarly be available for examination at the respective registered offices of the companies. In line with the Accounting Standard 21 (AS-21) issued by the Institute of Chartered Accountants of India, the consolidated financial results of the Bank along with its subsidiaries for the year ended 31st March 2012 are enclosed as an Annexure to this report. PROPOSED ACQUISITION OF ENAM SECURITIES PVT. LTD. On 17th November, 2010, the Board of Directors of the Bank had approved the acquisition of certain financial services business undertaken by Enam Securities Private Limited (ESPL) directly and through its wholly owned subsidiaries, by Axis Securities and Sales Limited (ASSL), a wholly owned subsidiary of the Bank by way of a demerger. However, pursuant to conditions prescribed by the Reserve Bank of India, certain modifications have been carried out to the demerger structure in terms of a revised Scheme of Arrangement under Sections 391-394 and other relevant provisions of the Companies Act, 1956. Accordingly, the acquisition will now comprise (a) a demerger of the financial services businesses from ESPL to the Bank, in consideration of which the Bank will issue shares to the shareholders of ESPL, and (b) immediately upon completion of the demerger under the Scheme, a simultaneous sale of the financial services businesses will be undertaken from the Bank to ASSL for a cash consideration, with both the aforesaid steps occurring simultaneously. The Reserve Bank of India has on 30th March, 2012, conveyed its no objection to the Scheme. Further, on 27th April, 2012, the Board of Directors of the Bank have approved the reassessment of the valuation of the ESPL business at Rs1,396 crores and consequently, in consideration for the demerger of the financial services business of ESPL, the Bank will issue shares in the ratio of 5 equity shares of the Bank (aggregating 12,090,000 equity shares) of the face value of Rs10 each for every 1 equity share (aggregating 2,418,000 equity shares) of Rs10 each held by the shareholders of ESPL. The sale of the financial services business will be simultaneously undertaken from the Bank to ASSL for a cash consideration of Rs274 crores only. The appointed date under the Scheme is 1st April, 2010, and the parties shall proceed with filing the Revised Scheme and other necessary documents with the relevant High Courts and other regulatory authorities for their approval. EMPLOYEE STOCK OPTION PLAN (ESOP) The Bank has instituted an Employee Stock Option Scheme to enable its employees and the employees of its subsidiaries including Whole-time

Directors, to participate in the future growth and financial success of the Bank. Under the Scheme 40,517,400 options can be granted to employees. The employee stock option scheme is in accordance with the Securities and Exchange Board of India (Employee Stock Option and Employee Stock Purchase Scheme) Guidelines, 1999. The eligibility and number of options to be granted to an employee is determined on the basis of the employee''s work performance and is approved by the Board of Directors. The Bank''s shareholders approved plans for the issuance of stock options to employees in February 2001, June 2004, June 2006, June 2008 and June 2010. Under the first two plans and upto the grant made on 29th April 2004, the option conversion price was set at the average daily high-low price of the Bank''s equity shares traded during the 52 weeks preceding the date of grant at the Stock Exchange which has had the maximum trading volume of the Bank''s equity share during that period. Under the third plan and with effect from the grant made by the Bank on 10th June 2005, the pricing formula has been changed to the closing price on the day previous to the grant date. The Remuneration and Nomination Committee granted options under these plans on eleven occasions: 1,118,925 during 2000-01, 1,779,700 during 2001-02, 2,774,450 during 2003-04, 3,809,830 during 2004-05, 5,708,240 during 2005-06, 4,695,860 during 2006-07, 6,729,340 during 2007-08, 2,677,355 during 2008-09, 4,413,990 during 2009-10, 2,915,200 during 2010-11 and 3,268,700 during 2011-12. The options granted, which are non-transferable, vest at rates of 30%, 30% and 40% on each of three successive anniversaries following the grant, subject to standard vesting conditions, and must be exercised within three years of the date of vesting. As of 31st March 2012, 24,368,087 options had been exercised and 11,428,248 options were in force. Other statutory disclosures as required by the revised SEBI guidelines on ESOPs are given in the Annexure to this report. CORPORATE GOVERNANCE The Bank is committed to achieve the highest standards of corporate governance, and it aspires to benchmark itself with international best practices in this regard. The corporate governance practices followed by the Bank are enclosed as an Annexure to this report. The Bank has adopted a major part of the recommendations contained in the Corporate Governance Voluntary Guidelines 2009 issued by the Ministry of Corporate Affairs and is examining the possibility of implementing the remaining recommendations. DIRECTORS'' RESPONSIBILITY STATEMENT The Board of Directors hereby declares and confirms that: - The applicable accounting standards have been followed in the preparation of the annual accounts and proper explanations have been furnished, relating to material departures. - Accounting policies have been selected and applied consistently and

reasonably, and prudent judgements and estimates have been made so as to give a true and fair view of the state of affairs of the Bank and of the Profit and Loss of the Bank for the financial year ended 31st March 2012. - Proper and sufficient care has been taken for the maintenance of adequate accounting records, in accordance with the provisions of the Companies (Amendment) Act, 2000, for safeguarding the assets of the Bank, and for preventing and detecting fraud and other irregularities. - The annual accounts have been prepared on a going concern basis. - The Bank has in place a system to ensure compliance of all laws applicable to the Bank. STATUTORY DISCLOSURE Considering the nature of activities of the Bank, the provisions of Section 217(1 )(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption do not apply to the Bank. The Bank is, however, constantly pursuing its goal of technological upgradation in a cost-effective manner for delivering quality customer service. The statement containing particulars of employees as required under Section 217(2A) of the Companies Act, 1956 and the rules hereunder is given in an Annexure appended hereto and forms part of this report. In terms of Section 219(1 )(iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Bank. AUDITORS M/s Deloitte Haskins & Sells, Chartered Accountants, Statutory Auditors of the Bank will retire on the conclusion of the Eighteenth Annual General Meeting and are eligible for re-appointment, subject to the approval of Reserve Bank of India and the shareholders. As recommended by the Audit Committee of the Board, the Board of Directors has proposed the appointment of M/s Deloitte Haskins & Sells, Chartered Accountants as Statutory Auditors for the financial year 2012-13. The shareholders are requested to consider their appointment on the remuneration to be decided by the Audit Committee of the Board. ACKNOWLEDGEMENTS The Board of Directors places on record its gratitude to the Reserve Bank of India, other government and regulatory authorities, financial institutions and correspondent banks for their strong support and guidance. The Board acknowledges the support of the shareholders and also places on record its sincere thanks to its valued clients and customers for their continued patronage. The Board also expresses its appreciation to all employees of the Bank for their strong work ethic, excellent performance, professionalism, teamwork, commitment and initiative, which has led to the Bank making commendable progress in

today''s challenging environment. For and on behalf of the Board of Directors Place : Mumbai Date : 27th April, 2012 Adarsh Kishore Chairman

Company History - Punj. NationlBak YEAR EVENTS 1996 - A package was developed for corporate customers for fast remittance of funds from different upcountry branches to the controlling office. - The concept of 'Chief Host' introduced by the bank for resolving customers' complaints in the minimum possible time, has resulted in substantial improvement in customer service. - The company also entered into new activity of arranging Mergers, Acquisitions and Takeovers which has been quite rewarding in terms of return. 2000 - The Credit Rating Information Services of India has suspended its rating for the fixed deposit programmes of Amruntanjan Finance. - The Bank has introduced a scheme for providing finance against mortgage of immovable property. - Punjab National Bank and Bank of Baroda will tie up to form a subsidiary for a foray into life insurance business, banking industry. - PNB has launched a gold import scheme. The gold will be imported through an arrangement with Commerzbank. - ICRA has assigned an `LAAA' rating to Punjab National Bank's (PNB) Rs 240 crore long-term subordinated bond issue (Series V). - The Bank is the first amongst the public sector banks to come out with Voluntary Retirement Scheme.

- Punjab National Bank has become the latest big player to enter the credit card market. The card will have two variants -- Gold and Classic. - An International Co-branded Credit Card of Punjab National Bank and Hongkong & Shanghai Banking Corporation has been launched in New Delhi. - Primary market dealers PNB Gilts Ltd is launching a retail scheme in the first week of January to rope in individuals as investors for govt. securities. It has recently tied up with Punjab National Bank and will be using the huge network of 2000 branches of the bank all over the country for distribution and receipt of forms for investment in govt. securities. - Mr. T S Narayansami has taken over as executive director of Punjab National Bank. 2002 - Punjab National Bank incorporated its branch in M.G. Road, Bangalore named as Mid-Corporate Branch (MCD) to provide its corporate clients with a credit limit of Rs 3.5 crore and above. - Punjab National Bank is in a joint venture with Infosys for the implementation of a Centralised Banking Solution for it. The bank plans to implement Centralised Banking Solutions establishing connectivity between its branches to cover 1,500 to 2,000 branches and all ATMs by 2004. - -Punjab National Bank has informed that the first AGM of the shareholders of the Bank was held on August 05, 2002. The Chairman declared the following candidates elected as Directors: Dr Pritam Singh , Sh Mohanjit Singh. - Punjab National Bank has informed that Ms. Malathi Mohan, Asstt. General Manager has been nominated as Company Secretary in place of Mr. Ramesh Kumar Kochar. - Punjab National Bank has launched a special loan scheme called 'Fin-Basket', a composite package of retail loans, for a minimum size of Rs 5 lakhs. - Punjab National Bank (PNB) has been presented with the `Best Bank Award' for excellence in banking technology. - Punjab National Bank (PNB) tied up with Cisco Systems for networking 3,870 branches as part of its Rs 150 crore plan. 2003 - Punjab National Bank (PNB) has taken over Kozhikode-based Nedungadi Bank Ltd (NBL) on Feb 1.

All the 174 branches of the previous private bank are now working as PNB branches - Punjab National Bank (PNB) has entered into an alliance with New India Assurance for selling its general insurance products. - Punjab National Bank has informed that Shri V K Sibal, a director on the Board of the Bank has resigned from the Board. Ministry of Finance, Govt. of India, vide its letter dated May 09, 2003 has conveyed the acceptance of resignation w.e.f. May 07, 2003. - Punjab National Bank has informed the Exchange that the Bank has signed a Memorandum of Understanding (MOU) on June 24, 2003 with Principal Financial Services Inc. (USA) and Vijaya Bank for joint venture partnership in Life Insurance, Pensions and Asset Managements (MF) business. - Punjab National Bank (PNB) has formed a strategic alliance with Infrastructure Leasing and Financial Services Ltd (IL&FS) to set up a private equity fund for investing in domestic companies. - Punjab National Bank has informed that it is setting up its Representative Office at London. The office was scheduled to be inaugurated on August 21, 2003. Further, the Bank has been granted license to open Offshore Banking Unit at Seepz, Mumbai. - New Delhi: Punjab National Bank has entered an agreement with Oriental Bank of Commerce, Indian Bank, UTI Bank and Global Trust Bank for sharing ATMs spread across the country. -Inks pact with Principal Financial Group of USA to foray into insurance business and pension fund -Principal Financial Group (Mauritius) Limited enters into a joint venture agreement with Punjab National Bank (PNB) and Vijaya Bank to sell long-term mutual funds and related financial services in India. The new company to be called Principal PNB Asset Management Company (in association with Vijaya Bank) -Receives approval from RBI for opening an Offshore Banking Unit (OBU) at SEZ, Noida (U.P) -Punjab National Bank (PNB) has decided to amalgamate its merchant banking arm 'PNB Caps' with itself. -PNB unveils a scheme to help SSIs to get ISO 9000. - Board of Directors approved investment of Rs 250 million in the units of 'Leverage India Fund' managed by IL&FS Investments Managers Ltd, and has entered into MoU with IL&FS and IL&FS Investment Managers to sponsor the Fund.

-Shri K D Khera, Director representing Non Workmen Employees of the bank, ceases to be Director on the Board of the Bank wef October 31, 2003 on attaining age of superannuation. -The Ministry of Finance, Government of India, vide their notification dated November 25, 2003, Shri Anand Swarup Agarwal has been nominated as part-time non official Director of the bank for a period of 3 years from the date of notification. 2004 -Ministry of Finance, Government of India vide their notification dated January 9, 2004 has informed that Dr. K.V. Rajan, Chief General Manager, RBI, Kanpur has been nominated as RBI nominee director of the Bank in place of Sh. V.K. Sharma with immediate effect. -PNB acquires Hindustan Transmission Product Limited (HTPL) assets under Sarfaesi -IFCI merger with PNB's would help each other -Delhi based Punjab National Bank (PNB) and Bangalore-based Vijaya Bank enter into a four-way partnership with Principal Financial of the US and Berger Paints to set up an insurance broking company --Export Credit Guarantee Corporation of India Ltd (ECGC) and Punjab National Bank (PNB) sign a corporate agency agreement for marketing ECGC's export credit insurance products through the network of PNB branches -Punjab National Bank has informed that the bank has signed agreement with M/s NCR Corporation India Pvt Ltd for providing clearance of Intercity cheques within 48 hours after the cheque is presented, at selected centers using cheque truncation, where there is Image based Cheque Clearing System. -Punjab National Bank (PNB) has enlisted the services of computer industry giant Intel to evaulate its current and future technolgical requirements. An MoU was signed for the deployment of various ITrelated solutions today between the bank and Intel. -ICICI Bank and Punjab National Bank have signed a memorandum of understanding (MoU) for ATM network sharing, giving customers an access to over 2,200 ATMs in India - PNB accomplishes RTGS installation - PNB implements Loans and Advances Data Desk for Evaluations and Reports, (LADDER) system for rationalisation of returns, asset classification and provisioning, credit monitoring and NPA management

- LP Agrwal, Ranjan Dhawan, I D Singh, P K Mitra, K S Bajwa, V P Chowdhary and B P Chopra appointed as General Managers on June 9, 2004 - PNB mandates TCS to deploy HR Solutions -Tata Consultancy Services (TCS) has joined hands with PeopleSoft to handle a Rs 5-10 crore worth project mandated by Punjab National Bank (PNB) to implement human capital management and payroll solution. -Punjab National Bank has informed that the Bank has entered into money transfer arrangement with Western Union Through their agent M/s Weizmann Forex Ltd -Punjab National Bank has informed that the Bank branch at Kabul, Afghanistan has commenced soft opening on July 26, 2004 -PNB in ally with NMCE launches new loan scheme -PNB JV with Principal Financial Group of USA -Tractor manufacturer Escorts tied up with Punjab National Bank for sponsorship of a farmer training centre in Haryana -Launches corporate internet banking facility on November 18, 2004. 2005 -Government of India, Ministry of Finance (Banking Division), New Delhi vide its Notification dated April 30, 2005, appoints Shri S C Gupta as Chairman & Managing Director (CMD) of the Bank. -PNB unveils ATM at Edappal 2006 -Punjab National Bank today tied up with MasterCard International to launch a signature-based debit card. -PNB opens branch in Uttaranchal -Punjab National Bank (PNB) has tied up with Indian Airlines for online booking of air tickets. -Punjab National Bank has informed that Shri Rakesh Singh, Joint Secretary (IF), Ministry of Finance has been appointed Government nominee Director on the Board of the Bank w.e.f. October 20, 2006 under Clause 9(3)(b) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970.

-PNB ties up with IDBI Capital -Punjab National Bank has informed that Sh. A S Agarwal, Government nominee Director on the Board of the Bank w.e.f. November 25, 2003, has demitted the office on November 24, 2006 on completion of his tenure of 3 years. 2007 -Punjab National Bank has appointed Shri Ramesh Kumar Kochar as Company Secretary of the Bank. - Punjab National Bank has informed that the Government of India, Ministry of Finance, Department of Economic Affairs (Banking Division), New Delhi vide Notification dated June 06, 2007 has appointed Shri. Jag Mohan Garg as a Whole-time-Director (designated as Executive Director) on the Board of Punjab National Bank from the date of his taking over charge of his post or until further orders or till the date of his superannuation i.e. upto July 31, 2010 whichever is earlier. -Punjab National Bank is entering into an MoU with India Infrastructure Finance Co. (IIFC) on October 17, 2007 with an aim to extend its cooperation and support to IIFC in areas of creating a deal flow of infrastructure projects. 2008 - Punjab National Bank entered into a memorandum of understanding (MoU) with IL&FS Cluster Development Initiative Ltd in order to provide impetus to financing of industrial infrastructure projects. -Punjab National Bank (PNB), has tied up with Networth Stock Broking Ltd (NSBL) for an Internet trading alliance. - Punjab National Bank cut its prime lending rate by 50 bps. - Punjab National Bank has opened its 69th branch at Khammam. - Punjab National Bank has announced the opening of its 133rd branch in Kerala at Sana Towers, Medical College Junction, Kozhikode. All 133 branches in the State are networked under the core banking solution including this branch. - Punjab National Bank has informed that Government of India has nominated Shri Vinod Kumar Mishra as part-time non-official Director on the Board of the Bank for a period of three years from the date of Notification of his appointment or until further orders, whichever is earlier.

2009 - The Punjab National Bank has opened a new branch at Leicester in Britain. Leicester has a large section of people of Indian origin. The branch has been opened this week in the Belgrave Commercial Centre, in the heart of what is called the Golden Mile - the heart of Asians business and culture. It is also popularly known as 'Little India'. - Punjab National Bank has informed that Government of India, Ministry of Finance, Deptt. of Financial Services vide notification No. F. No. 9/22/2008-BO.I dated March 26, 2009 has appionted Shri Nagesh Pydah and Shri M. V. Tanksale as Executive Directors (Whole time Directors) on the Board of the Bank. The said Executive Directors will hold office from the date of taking charge up to the date of superannuation or until further orders, whichever is earlier. 1) Name : Shri Nagesh Pydah, Date of taking charge : March 26, 2009, Date of superannuation : February 29, 2012. 2) Name : Shri M.V. Tanksale, Date of taking charge : March 26, 2009, Date of superannuation : July 31, 2013. - Punjab National Bank (PNB) has set up its second branch in Hong Kong, which will focus on retail banking operations. 2009 - Punjab National Bank (PNB) has entered into a pact with Ashok Leyland to extend finance to the latter's commercial vehicle customers. - Sh. K R Kamath, has been appointed as Chairman and Managing Director (MD) of the Bank by Government of India, Ministry of Finance, Deptt. Of Economic Affairs (Banking Division) vide notification dated October 27, 2009 for a period of 5 years from the date of taking charge and / or until further orders, whichever is earlier. Accordingly, Shri. K R Kamath has taken charge of Chairman and Managing Director on October 28, 2009. 2010 - Punjab National Bank has appointed Shri Mohinder Paul Singh as Workmen Employees Director on the Board of the Bank w.e.f. January 28, 2010. - Punjab National Bank has forged an alliance with Oriental Insurance Company Limited, to offer a floater Health Insurance Policy covering the proposer and family under one sum insured . - Punjab National Bank has unveiled a festival bonanza offering home loan at 8.5 per cent, a teaser rate to attract new customer. The concessional rate of 8.5 per cent has been fixed for three years for housing loans up to Rs. 50 lakh. As per the existing rate-card, loans up to Rs. 30 lakh attract a lowest rate of 9.25 per cent with a repayment period of 5 years while loans above Rs. 30 lakh is available at 10 per

cent for similar maturity. - Oriental Insurance Company (OICL) and Punjab National Bank launched 'PNB-oriental Royal Mediclaim Policy', exclusively for the bank customers - Punjab National Bank has completed the transaction for acquisition of 63.64% stake in JSC Dana Bank Kazakhstan. - Punjab National Bank - Reserve Bank of India has issued Certificate of Registration No. N-13.01980 in the name of INDIA FACTORING & FINANCE SOLUTIONS PVT. LTD. (Joint Venture Company) permitting to commence & carry on the business of Non-Banking Financial Institution. - Punjab National Bank signed a Memorandum of Agreement with Principal Financial Group of Mauritius and Vijaya Bank for restructuring of their existing joint ventures subject to statutory approvals. 2011 - Acquistion Of 33% Stake In Metlife By Punjab National Bank - PNB - Agreement with Weizmann Forex Ltd & BFC Forex & Financial Services Ltd - PNB has launched two new deposit schemes- FCNR Premium Linked Deposit Scheme and NRE Rupee Flexible Deposit Scheme- which would provide special benefits to the NRIs. - PNB & Metlife partner for life insurance venture. - PNB's Mega Recovery Camps receives excellent response from small agricultural borrowerr in recovering the loan amount. - PNB Bagged Golden Peacock National Training Award 2011 - PNB bags Most Socially Responsive Bank Award 2011 2012 - In a move to bring cheers for the loan seekers, India's second largest public sector lender, Punjab National Bank (PNB) has reduced interest rates on housing and car loans by up to 50 basis point - PNB raised interest rates on domestic and NRE term deposits

- PNB sold stake to LIC for Rs 1,590 cr - PNB Awarded Overall Best Corporate Social Responsibility Awards 2012 - PNB Awarded SKOCH Award on Financial Inclusion 2012 2013 India's second largest public sector lender Punjab National Bank (PNB) acquired 30 per cent stake in Metlife India Insurance Co. Ltd.

Director Report
Mar2011 Mar 2012

PNB remained frontrunner in the Indian Banking with its Total Business, Total Deposits and Total Advances growing over 21% on YoY basis. This is higher than the growth achieved by the Banking System in India. This performance is combined with the consistently higher Book Value per Share and Earnings per Share. This impressive performance was largely due to the Bank''s focus on ''Building a Customer Experience'' with thrust on Retail, SMEs, Agriculture, Students, Inclusive approach to Banking, Cost effective Organizational Structure, Better Asset Liability Management, prudent Risk Management, strengthening Recovery Mechanisms and various Cost Control Measures.
We believe that Customer Experience is not just about Customer Service. It is also about physical as well as emotional elements. When both these elements are measured against customers'' expectations, one can have the Best Customer Experience. For this, ''Customer Loyalty'' is our watchword. Today PNB has a country wide presence with a network of 5670 branches and more than 6000 ATMs that provide its 7.2 crore customers a unique banking experience. This has also earned the Bank a strong brand equity and customers'' loyalty. PNB is amongst India''s most trusted brands and features at the 25th place amongst the Top 50 most valuable corporate brands by Brand Finance-ET and 195th amongst top 500 global banks as per Brand Finance Global Banking 500 for 2011. More importantly, during 2011-12, PNB has been recognized as the ''Best in Corporate Social Responsibility (CSR) Overall'' by World HRD Congress and been recognized as the ''Best Socially Responsive Bank'' by Business World & PwC. Besides, Golden Peacock National Training Award has also been conferred upon the Bank by the Institute of Directors. Above all, the Bank was recognized as the ''Best Bank'' by Business India. In this backdrop, your Directors take pleasure in placing the Bank''s Annual Report for 2011-12 along with its audited annual financial statements. OUR PERFORMANCE 1. FINANCIAL HIGHLIGHTS

1.1. BALANCE SHEET (Crore) Particulars 2010-11 21509 Capital & Reserves 555005 Total Business 312899 Deposits 120325 Low cost Deposits (Savings and Current) 242107 Advances 23621 Retail Credit 75652 Priority Sector Credit 40.67 -% of Adjusted Net Bank Credit (ANBC) 35462 Agricultural credit -% of Adjusted Net Bank Credit (ANBC) 1.2. PROFIT 19.30 19.34 45917 29.5 40.70 95898 26.8 29196 23.6 293775 21.3 134129 11.5 379588 21.3 673363 21.3 2011-12 (%)/Growth (%) 27818 29.3

(Crore) Particulars 2010-11 FY 2010-11 9056 Operating profit 4622 Provisions 4433 Net profit 1.3. INCOME & EXPENDITURE (Crore) 2010-11 Particulars FY 2010-11 26986 Interest income Interest/discount on advances/bills 5638 Income on investments 3613 Non-interest income 2045 Commission, Exchange & Brokerage 11807 Net Interest Income 30599 40631 32.8 13414 13.6 2375 16.1 4203 16.3 7692 36.4 21105 28447 34.8 2011-12 FY 2011-12 36428 (%) Growth (%) 35.0 4884 10.2 5730 24.0 2011-12 FY 2011-12 10614 Growth (%) 17.2

Total Income 15179 Interest expended Interest paid on deposits 6364 Total Operating expenses Establishment expenses 21543 Total Expenses 9056 Operating profit 4622 Provisions and contingencies 4433 Net profit Note: Difference in totals is due to rounding off 1.4 KEY RATIOS (Percentage) PARTICULARS 2010-11 4.57 Average cost of funds 8.12 Average yield on funds 8.89 2011-2012 5.62 4884 10.2 5730 24.0 10614 17.2 30016 39.3 4461 4723 5.9 7003 10.0 13795 21396 55.1 23014 51.6

22.13 Return on Equity 3.96 Net Interest Margin 1.34 Return on Assets 41.27 Cost to Income Ratio 1.91 Operating expenses to Average Working Funds 2.72 Operating profit to Average Working Funds 140.6 Earnings per share (Rs) 632.5 Book value per share (Rs) 0.85 Net NPAs to Net advances 73.21 Provision Coverage Ratio 12.42 CRAR - Basel II 2. OPERATIONAL HIGHLIGHTS DURING THE YEAR

18.52

3.84

1.19

39.75

1.71

2.59

154.2

777.4

1.52

62.73

12.63

- Bank has expanded its wealth management services by foraying into Life Insurance business and tie-up with Metlife India Insurance Company Ltd.

- Bank has expanded its international foray to 10th destination viz. Sydney, Australia. Further we are exploring possibilities for presence in Maldives, South Africa, Bangladesh, Myanmar, Singapore and Brazil. - Taking forward its mission of "Banking for the unbanked", under Financial Inclusion Plan, Bank has covered all its 4588 villages allotted under the Swabhiman campaign of Govt. of India through Business Correspondents. - Bank has made a positive contribution towards community by further streamlining its CSR activities. Towards this, ''PNB Prerna'', an association/body of wives of top executives of the Bank to carry forward the CSR agenda of the Bank, has completed one year of its existence. - Bank is establishing e-lobbies for providing 24 x 7 banking Services and is also opening GenNext Branches to cater to the needs of younger generation. - Bank has made its technology platform more robust with necessary up-gradations. It has successfully migrated to next version of Finacle (7.0.25) for better Customer service. - Various customer friendly initiatives were introduced by the Bank to provide quality experience to our esteemed customers, like Introduction of Cash Deposit machines, Self Service passbook printing terminals, SMS alerts, ''PNB Welcome Kit'' for HNI / salaried account holders, etc. - Bank continued its expansion by adding over 450 branches and 950 ATMs during the year. - Bank introduced many new customer segments like new schemes like ''PNB weavers deposit product like ''PNB scheme'', etc. 3. DIVIDEND customized offers targeting special education loan scheme ''PNB Pratibha'', MSME Credit card'' and ''PNB Super Trade'', new term 1111 days'', ''prospective senior citizen

The Board of Directors has recommended a dividend of 220% for the year 2011-12. 4. CORPORATE GOVERNANCE

The Bank is committed to best practices in Corporate Governance by adhering to high standards of transparency, accountability, ethical business practices, operational efficiencies and social responsiveness for maximizing interest of all the stakeholders. As a listed entity, Bank is complying with various regulatory requirements. Bank has complied with the guidelines of Reserve Bank of India and SEBI on the matters relating to Corporate Governance, which

has been examined by the Statutory Central Auditors. PNB follows practices that provide its financial stakeholders a high level of assurance on the quality of Corporate Governance. These best practices are reaffirmed by CGR-2 rating of the rating agency, ICRA Ltd reflecting a high level of assertion on the quality of corporate governance of the Bank. 5. BOARD OF DIRECTORS

As on 31.03.2012, there are 12 Directors on the Board of the Bank including 3 whole time Directors, i.e Chairman and Managing Director and two Executive Directors. During the Year 2011-12, the following changes took place in the composition of Board of Directors: - Shri M.A. Antulay, part time non official Director was reappointed on 20.05.2011. - Shri M.V. Tanksale, Executive Director demitted the office on 28.06.2011 on his elevation as Chairman & Managing Director of Central Bank of India. - Smt. Usha Ananthasubramanian was appointed as Executive Director of the Bank on 18.07.2011. - Shri Anurag Jain, GOI Nominee Director was nominated by the Govt. of India on 03.08.2011 in the position earlier held by Smt. Ravneet Kaur. - Shri B.B. Choudhary, Director under Chartered Accountant category, was appointed by the Govt. of India on 23.09.2011. - Shri V.K. Mishra, part time non official Director ceased to be Director on the Board of the Bank w.e.f. 05.12.2011 on completion of his tenure. - Shri D.K. Singla, Shri T.N. Chaturvedi and Shri G.R. Sundaravadivel, Shareholder Directors, demitted their offices on 27.12.2011 on completion of their tenure on the Board of the Bank. - 3 new Shareholder Directors namely, Shri M.N. Gopinath, Shri D.K. Singla and Dr. Sunil Gupta have been elected as Shareholder Directors in the EGM held on 20.03.2012. The Board welcomes Smt. Usha Ananthasubramanian, Executive Director, Shri Anurag Jain, Shri B.B. Choudhary and Shri M.A. Antulay (re-nominated), Shri M.N. Gopinath, Shri D.K. Singla (re-elected) and Dr. Sunil Gupta, as Directors on the Board of the Bank. The Board also wishes to place on record its appreciation for the valuable contributions made by Shri M.V. Tanksale, the then Executive Director, Shri V.K. Mishra, Shri T.N. Chaturvedi and Shri G.R. Sundaravadivel,

the Directors. 6. Details of various meetings held up to 31st March, 2012: Number of Meetings held upto March, 2012 13 S. No. Meeting Number of Meetings held upto March, 2012 24

S. Meeting No.

Board Meeting

11

Share Transfer Committee

Management Committee

19

12

Shareholders''/ Investors'' Grievances Committee Directors Promotion Committee 1

Committee of Directors to review vigilance & non-vigilance cases Audit Committee of Board

13

11

14

Appellate & Reviewing Authority Steering Committee Vision 2013

Risk Management Committee Special Committee of Board to Monitor and Follow Fraud cases of Rs. 1.00 crore and above

15

16

Nomination Committee 1

IT Committee of the Board

17

Insurance Joint Venture Committee

PA. Committee

18

Organisational Transformation & Business Excellence Programme

Remuneration Committee

19

Credit Approval Committee

10

Customer Service Committee

7.

ACKNOWLEDGMENTS

The Board of Directors thank the Government of India, Reserve Bank of India, Securities and Exchange Board of India, Stock Exchanges, Bank''s customers, public and the shareholders for valuable support, continued patronage and confidence reposed in the bank. The Board also wishes to place on record its appreciation for the valuable contribution of the members of the Bank''s staff at all levels and look forward to their continued involvement in achieving the future goals. For and on behalf of Board of Directors CHAIRMAN AND MANAGING DIRECTOR

J.2 Associate Banks

SBIs five Associate Banks had a market share of 5.88% in deposits and 6.00% in advances as on last Friday of March 2011. Table : Performance Highlights of Associate Banks (ABs) (Rs. in Crs) As on 31.03.2010 Total Assets 3,18,580 As on 31.03.2011 3,68,283 Change (%) 15.60

Agg. Deposits Total Advances Operating Profit Net Profit Credit Deposit Ratio Capital Adequacy Ratio Gross NPA Net NPA Return on Equity

2,72,790 2,04,573 5,841.90 2,958.80 74.15% 13.66 3,504.68 1,692.96 18.97%

3,11,645 2,40,423 7,568.68 3,598.43 77.29% 13.25 5,066.50 2,443.69 19.08%

14.24 17.52 29.56 21.62 4.23 -0.41 44.56 44.34 0.11

J.3 SBI Commercial & International Bank Ltd.

(SBICI)

As at the end of March 2011, the aggregate Deposits and total Advances of SBICI stood at Rs. 453.27 crores and Rs. 271.43 crores respectively. The Bank recorded an operating and net profit of Rs. 5.25 crores and Rs. 4.21 crores respectively. The net NPA as at the end of March 2011 was NIL. J.4 SBI Capital Markets Limited (SBICAP) SBICAP is a full service investment banking outfit offering Project Advisory Services, arrangement of Structured Finance, Capital Market Services like Equity Issuances, Mergers & Acquisitions and arrangement of Private Equity, etc. SBICAP is a leader in India in Project Finance with over 40% market share. The following are some of the many awards / recognitions won by the Company during the year: - Bank of the year award 2010 for Asia Pacific Region for the 3rd consecutive year by Thomson Reuters. - Loan House of the Year Award for the 2nd consecutive year by IFR Asia. - Euromoney Project Finance Indian Deals awards - Indian Petrochemical Deal of the Year 2010- ONGC Mangalore Petrochemicals - Indian Industrial Deal of the Year 2010 Dungsam Cement - Indian Oil & Gas Deal of the Year 2010- GSPC KG Offshore

- Ranked No 1 Global Mandated Lead Arrangers for 2010 by PFI ( Thomson Reuters) for the second successive year. - Ranked No 1 Global Lead Arrangers for the second successive year by Dealogic. - Ranked 1st with an impressive market share of 13.3% for the 1st quarter of calendar 2011 on the Asia Ex-Japan Syndicated Loans Table as per Bloomberg. - Ranked 2nd in terms of issues handled and 3rd in terms of amount raised during the financial year 2010-11. - Ranked 1st in Rights Issues- both in terms of number of issues and amount raised - Ranked 1st in number of PSU Divestment Issues. The company has posted PAT of Rs. 374.72 crores as on 31.03.2011 as against Rs. 137.12 crores as on 31.03.2010 thus recording YoY growth of 173%. Also declared an interim dividend of 400%. J.4.1 SBICAP Securities Limited (SSL) SSL, a wholly owned subsidiary of SBI Capital Markets Ltd., besides offering equity broking services to retail and institutional clients both in cash as well as in Futures and Options segments, is also engaged in Sales & Distribution of other financial products like Mutual Funds, etc. SSL has 100 branches and offers Demat, e-broking, e-IPO and e-MF services to both retail and institutional clients. SSL currently has more than 1.89 lac customers in their books. The Company has posted a profit of Rs.4.59 crores as on 31.03.2011 during the current year. J.4.2 SBICAPS Ventures Limited (SVL) SVL is a wholly owned subsidiary of SBI Capital Markets Ltd. SVL earned a net profit of Rs. 0.59 crore during 2010-11. SVL sold its stake in SS Ventures Services Ltd., a venture capital fund set up jointly by SVL and SBI Holdings Inc (Softbank), Japan and its stake in India Japan Fund to SBI Holdings Inc and Knowledge Investments (Mauritius) Ltd at a total consideration of Rs. 3.47 crores and Rs. 2.60 lac respectively. J.4.3 SBICAP (UK) Ltd. ( SUL) SUL is a wholly owned subsidiary of SBI Capital Markets Ltd. During the year SUL has booked a revenue of Rs. 2.16 crores and has posted a net profit of Rs. 0.20 crore despite the global recessionary scenario. SUL is positioning itself as a Relationship outfit for SBI Capital Markets in UK and Europe. Relationships are being built with FIIs,

Financial Institutions, Law Firms, Accounting Firms, etc to market the business products of SBICAP. J.4.4 SBICAP TRUSTEE Co. Ltd. (STCL) SBICAP TRUSTEE Co Ltd (STCL), a wholly owned subsidiary of SBI Capital Markets Ltd., which has commenced security trustee business with effect from 1st August 2008 has earned a gross income of 8.31 Rs.crores and a Net Profit of Rs. 4.43 crores during 2010-11 as against Gross Income of Rs. 3.78 crores and Net Profit of Rs. 1.94 crores during 2009-10. J.5 SBI DFHI Ltd. (SBI DFHI) - SBI acquired Asian Development Banks and Industrial Investment Bank of Indias stake (4.69% and 0.47% respectively) in SBI DFHI during the course of the year. - SBI group holds 72.17 % share in the Company, which is a primary dealer. - For the period ended 31st March 2011, the Companys PAT was Rs. 56.94 crores as against Rs. 89.23 crores during March 2010. The lower profit is mainly attributed to the impact of hikes in Repo rates by RBI and yield on investments remaining stagnant. - The market share of SBIDFHI has increased from 2.71% as on 31.03.2010 to 3.41% as on 31.03.2011. - The secondary market turnover during the year was Rs. 97,885 crores as against Rs. 78,911 crores during the corresponding period in 2010 (YoY growth of 24%). J.6 SBI Cards & Payments Services Pvt. Ltd. (SBICSPL)

- SBI Cards, the only stand-alone credit card issuing company in India, is a joint venture between State Bank of India and GE Capital Corporation, wherein SBI holds 60% stake. - The "Cards in Force" (CIF) of the Company stands at 23 lac and the receivables are at Rs. 1,795 crores at the end of March 2011. - The Company has posted a net profit of Rs. 7.10 crores as on March 2011 as against a loss of Rs. 152.4 crores as on 31.03.2010. - SBI Card has emerged as the most trusted brand by being the undisputed Gold Award winner in Readers Digest Trusted Brands Survey 2010 for the third year in a row. Table : The Performance Highlights of the Associate Banks as on 31.03.2011 are as under: (Rs. in Crs)

Name of the Bank

SBIs share Deposits in the capital (%)

Advances Operating Profit

Net Profit

State Bank of Bikaner & Jaipur Hyderabad Mysore Patiala Travancore All 5 Banks 75.00 100.00 92.33 100.00 75.00 53319 90178 42779 67771 57598 311645 41744 65437 34440 52331 46471 240423 1140.25 550.88

2319.47 1166.24 1173.75 1759.24 1175.97 500.62 652.96 727.73

7568.68 3598.43

- SBI Card has won the CNBC Awaaz Consumer Awards 2010. J.7 SBI Life Insurance Company Limited (SBILIFE) - SBI Life is Joint Venture Company between SBI and BNP Paribas in which SBI holds 74% stake. - SBI Life has a unique multi-distribution model comprising Bancassurance, Retail Agency & Institutional Alliances and Group Corporate Channels for distribution of insurance products. - Gross Premium of the Company Crossed Rs. 12,000 crores with YoY growth of 28%. - SBI Life has a market share of 19.22% of the total market share of private insurers which stood at 31.30% as on 31.03.2011. Overall market share (including Life Insurance Corporation of India) of SBI Life stood at 6.02% as at 31st March 2011. - Recorded a PAT of Rs. 366.30 crores as on 31.03.2011 as against Rs. 276.46 crores as on 31.03.2010. - The Assets under Management of SBI Life recorded a growth of 40% YoY to reach Rs. 40,162 crores as on 31st March 2011. - SBI Life expanded its branch network by adding 135 branches during the year bringing the total number of branches to 629. - ICRA has reaffirmed iAAA rating to the company indicating highest claim paying ability. - CRISIL has reaffirmed its highest financial rating AAA/ Stable. The following are some of the awards / recognitions achieved by the

Company during 2010-11: - NDTV Profit business leadership 2010-11 award for organizational excellence. - Bloomberg UTV Award for Financial Excellence 2010-11. - Outlook Money Award Runner Up for the Best Life Insurance Company 2010-11. - ICS Quality Champion Award 2010-11. - IS0 9001:2000 certification for superior claim process. J.8 SBI Funds Management (P) Ltd. (SBIFMPL) - SBIFMPL, the Mutual Fund arm of SBI, is the 6th largest Fund House in terms of "Assets Under Management" and a leading player in the market with 6 million investors. - The schemes of the Fund House have performed consistently over the years and have emerged as the preferred investment for investors. - The company has posted a PAT of Rs. 78.85 crores as on 31.03.2011 registering a YoY growth of 4%. - The average "Assets Under Management" (AUM) of the company stood at Rs. 41,672 crores as against Rs. 37,417 crores as on March 2010 achieving a YoY growth of 11% as against the growth of 6% for the Mutual Fund Industry. J.9 SBI Global Factors Ltd. (SBIGFL) - SBIGFL is one of the leading factoring companies in India which has the highest market share (over 90%) in export & import factoring. - During the year ended 31st March 2011, the turnover of the company decreased to Rs. 7,605 crores from Rs. 12,978 crores as on 31st March 2010 due to the sluggish growth in industrial production during the year impacting the top line growth. - The company incurred a loss of Rs. 125.62 crores during the year ended 31.03.2011 as against a profit of Rs. 6.58 crores earned on 31.03.2010 mainly on account of slow down in economy and due to higher provisioning for NPAs and Write-offs. J.10 SBI Pension Funds Pvt. Ltd. (SBIPF) SBIPF is one of the three Fund Managers appointed by Pension Fund Regulatory & Development Authority (PFRDA) for management of Pension Funds under the New Pension System for Central Government (except Armed Forces) and State Government Employees. SBIPF, a wholly owned

subsidiary of the State Bank Group, commenced its operations from April 2008. The total "Assets Under Management" of the company as on 31st March 2011 were Rs. 3,764.11 crores (YoY growth of 65%). As at 31st March 2011, SBIPF was managing 44% of the corpus under the Central Govt Scheme, 39 % under State Govt scheme and 64% under the informal sector. The Company recorded a net profit of Rs. 0.32 lac. Important Developments during the year in Associates & Subsidiaries: - State Bank of Indore, one of the Associate Banks, was acquired on 26th August 2010 after the final approval from RBI and GoI. - State Bank of Mysore raised Rs. 583.20 crores equity through a Rights Issue during the year. - State Bank of Bikaner & Jaipurs Rights Issue for raising Rs. 780 crores was open from 28th March to 11th April 2011. Support & Control Operations K Information Technology L Risk Management & Internal Controls M Customer Service & Corporate Social Responsibility N Corporate Communication & Change O Right to Information Act P Human Resources Q Business Process Re-engineering R Official Language S KYC/AML/CFT Measures T Fraud Prevention & Monitoring U Compensation Policy for deficiency in Service V Banks Outsourcing Policy W Super Circle of Excellence X Green Banking Initiatives K. INFORMATION TECHNOLOGY

Networking: The Bank has implemented a secure, robust scalable WAN architecture network built with equipments owned by SBI, connecting

19,347 Branches/Offices and 25,005 ATMs of State Bank Group through leased lines, VSATs and CDMA technology. Core Banking: CBS roll out across the domestic branches is supported with a state-of-the-art centralized infrastructural setup and a robust Primary / DR setup, providing uninterrupted continuity of Banks operations. It facilitates the scalability for future growth, interfacing with multiple alternate channels, reduction in transaction costs, improved operating efficiency. Milestones of 52 millions peak transactions in a day, 1,861 Transactions per second and managing 258 million accounts have been achieved in recent months. Operatives have been provided with tools for on-line real time transaction verification. E-Trade internet based front end application has been rolled out for corporate customers for processing various trade finance transactions. ATM: State Bank Group crossed an important milestone of rolling out 25,000th ATM during the year. Apart from Cash Withdrawal, Balance enquiry, Mini statement and Card to Card transfer, several value added services such as Utility Bill Payment, Temple/Trust Donations, Fee Payment, Mobile top up, Cash/ Cheque deposit (at select ATMs), Cheque book request, Payment of Insurance premium, SBI Credit Card Bill Payment etc. are also being offered at 25,005 ATMs of the State Bank Group. Usage of debit cards at PoS terminal has increased significantly. Bunch Note Acceptor (for direct acceptance of cash), Multifunction kiosks (for offering non-cash ATM transactions, Internet Banking transaction, passbook printing etc.), low cost rural ATMs and solar powered ATMs have also been rolled out. Internet Banking: The Banks Internet Banking solution is a comprehensive suite of products for both Retail and Corporate users. Some of the new features enabled during the year include online nomination and closure of e-TDR/STDR, opening closing of e-RD, viewing of Form 26 (Annual statement 26 for income tax credits), stop payment of cheques, request for multicity cheque book, registration of mobile number in Core Banking account for SMS alerts of core transactions, online issuance of gift cards and top up, online validation of PAN while making tax payment, display of notional interest in housing loan account etc. Payment Systems Group: The volume of RTGS and NEFT transactions has increased significantly. Contact Centre operates on 24x7 basis from two locations Bengaluru and Vadodara. Contact Centre is currently providing the following services: Complaint Management System, Pension Management System, Lead Management System, Account Enquiry Services, Payment Tracking System, Card Tracking Services, Hotlisting of Cards, ATM PIN Regeneration, Providing MMID (Mobile Money Identifier) information under IMPS (Interbank Mobile Payment Services), Balance and Statement on mobile. In respect of Prepaid Cards, the facility of placing request and funding for procurement of Gift Card has been enabled through Internet Banking portal (www.onlinesbi.com).

Mobile Banking: A host of Mobile Banking services, such as Fund Transfers, Enquiry Services, Demat Account Enquiry, Cheque book request, Bill payment, Mobile top up, DTH recharge, SBI Life Premium Payment, E-tag recharge to pay toll tax, Merchant payments and Inter Bank Mobile Payment Services (IMPS) are currently being offered. IMPS has been added during the year. Mobile Banking Services are currently SMS, GPRS, WAP, USSD and SMS banking. during the last quarter of the year. crossed one million by the end of the offered under five channels viz. SMS Banking has been introduced The Mobile Banking user base has year.

Enterprise Data Warehouse: The Phase II of the Enterprise Data Warehouse Project (EDWP) has commenced. While a few business critical reports are already provided by EDWP, the end users will have access to all regular and ad hoc reports required for operational and decision making requirements through a web portal in a phased manner. Information Security: Bank has implemented a robust IT Policy and Information System Security Policy which is in line with the international best practices. These policies are reviewed periodically and suitably strengthened in order to address emerging threats. Regular security drills and employee awareness programs are conducted to ensure security and increase awareness among staff. Business Continuity Management System (BCMS) has been implemented at Global IT centre, Belapur. Foreign Offices: 131 branches in 23 countries, including 2 OBUs in India, run their operations on common banking application software Finacle, with their databases connected to a central Data Centre backed up by a synchronized Disaster Recovery site. The Rupee remittances from foreign centres are routed through the central Payment Hub for credit to accounts maintained with State Bank Group. The NEFT mechanism is used for credits to accounts with other banks. The foreign offices also use the centralized SWIFT infrastructure for their financial messages. All foreign offices use Internet Banking channel, and 113 ATMs at various locations abroad cater to the Banks overseas customers with most of the ATMs connected to centralized ATM Switch in India. RRB Computerisation: Out of 18 RRBs sponsored by the Bank, 10 RRBs have been computerised on CBS platform using BaNCS application software through the ASP model. Awards & Accolades: During the year, The Bank has received the following national and international awards in recognition of its technology implementation:

- The Banker Innovation in Banking Technology Awards 2010 State Bank of India was declared Winner in Innovation in Eco-IT category for its GREEN ATM installation. - The NASSCOM CNBC IT User Award 2010 in the Banking Vertical for its various IT initiatives. - IDRBT Banking Technology Excellence Awards 2009: The Bank won two awards in Best Use of Technology for Financial Inclusion and Mobile Banking and Payment Applications. - Best IT Implementation Awards 2010 by PC Quest: SBIs Project Green IT @ SBI was rated as the Best Green IT Project for its GREEN ATM installation. - Skoch Award 2010- in the "Virtual Corporation Award" category for its project E-Payment Solution which covers all our E-Governance initiatives on Corporate Internet Banking Platform. - Silver EDGE Award for its "Data Centre Consolidation Project" of Foreign Offices Department. - Amaron Quanta Express Uptime Champion Awards 2010 (Banking and Finance Category) the award recognizes organizations who have implemented solutions that guarantee an optimal infrastructure uptime 24x7. - VISA 2009 Global Service Award-the Banks ATM cum debit card was declared to have the lowest transaction response time. - IBA Technology Award: Best Customer Initiative, Counter, Best Online Banking, Best Risk Management (Runner up). L. RISK MANAGEMENT & INTERNAL CONTROLS Risk Management in SBI L.1 Risk Management Structure - An independent Risk Governance Structure is in place for Integrated Risk Management covering Credit, Market, Operational and Group Risks. This framework visualises empowerment of Business Units at the operating level, with technology being the key driver, enabling identification and management of risk at the place of origination. - The Risk Management Committee of the Board (RMCB) has the overall responsibility to monitor and manage Enterprise Wide Risk. The Credit Risk Management Committee (CRMC), Market Risk Management Committee (MRMC), Operational Risk Management Committee (ORMC), Group Risk Management Committee (GRMC) and Asset Liability Management Committee (ALCO) support RMCB. - MD & Group Executive (Associates & Subsidiaries) and MD & Group Executive (International Banking) are the members of RMCB, while MD & Group Executive (National Banking) and MD & Chief Financial Officer are

invited to attend all the meetings of the Committee. The Deputy Managing Director & Chief Credit and Risk Officer head CRMC, MRMC, ORMC and GRMC. ALCO is headed by the Managing Director & Chief Financial Officer. - Risk Management is perceived as an enabler for business growth and in strategic business planning, by aligning business strategy to the underlying risks. This is achieved by constantly re-assessing the inter-dependencies / interfaces amongst each silo of Risk and business functions. - Bank is in the process of implementing Enterprise Risk Management (ERM) that will integrate all the Risk Management functions of the Bank, explore inter-dependencies amongst various risk types and act as a support system to strategic decision-making process. L.2 Basel II Implementation - In accordance with RBI guidelines, the Bank has migrated to the Basel II framework, with the Standardised Approach for Credit Risk and Basic Indicator approach for Operational Risk w.e.f. March 31, 2008, having already implemented the Standardised Duration Method for Market Risk w.e.f. March 31, 2006. - Simultaneously, the Bank is updating and fine- tuning its Systems and Procedures, Information Technology (IT) capabilities, Risk Assessment and Risk Governance structure to meet the requirements of the Advanced Approaches under Basel II. - Various initiatives such as new Credit Risk Assessment Models, independent validation of Internal Ratings, loss data collection and computation of market risk Value at Risk (VaR) and improvement in Loan Data Quality would facilitate efficient use of Capital as well as smooth transition to Advanced Approaches. - Risk Awareness exercises are being conducted across the Bank to enhance the degree of awareness at the Operating levels, in alignment with better risk management practices, Basel II requirements and over-arching aim of conservation and optimum use of capital. - Keeping in view the changes that the Banks portfolios may undergo in stressed situations, the Bank has in place a policy, which provides a framework for conducting the Stress Tests at periodic intervals and initiating remedial measures wherever warranted. The scope of the tests is constantly reviewed to include more stringent and new scenarios. L.3 Credit Risk Management - Credit Risk Management process encompasses identification, assessment, measurement, monitoring and control of the Credit Exposures. Well-defined basic risk measures such as CRA (Credit Risk Assessment) models, Industry Exposure norms, Counter-party Exposure limits, Substantial Exposure limits, etc., have been put in place.

- Credit Risk components such as Probability of Default (PD), Loss Given Default (LGD) and Exposure at Default (EAD) are being computed. - Frequency of Stress Tests in respect of Credit Risk has been increased from Annual to Half-yearly, to identify Credit Risk at an early stage and to initiate appropriate measures to contain/ mitigate Credit Risk. L.4 Market Risk Management - Market Risk Management is governed by the Board approved policies for investment, Private Equity & Venture Capital, trading in Bonds, Equities, Foreign Exchange and Derivatives. - Exposure, Stop Loss, Modified Duration, PV01 and Value at Risk (VaR) limits have been prescribed. These limits, along with other Management Action Triggers, are tracked daily and necessary action initiated, as required, to keep Market Risk within approved limits. L.5 Operational Risk Management - The Bank manages operational risks by having in place and maintaining a comprehensive system of internal controls and policies. - The main objectives of the Banks Operational Risk Management are to continuously review systems and control mechanisms, create awareness of operational risk throughout the Bank, assign risk ownership, alignment of risk management activities with business strategy and ensuring compliance with regulatory requirements. - The Operational Risk Management policy of the Bank establishes a consistent framework for systematic and pro-active identification, assessment, measurement, monitoring and mitigation of operational risk. The Policy applies to all business and functional areas within the Bank, and is supplemented by operational systems, procedures and guidelines which are periodically updated. L.6 Group Risk Management - The State Bank Group is recognised as a major Financial Conglomerate and as a systemically important financial intermediary, with significant presence in various financial markets. - Accordingly, it is imperative, both from the regulatory point of view as well as from the Groups own internal control and risk management point of view, to oversee the functioning of individual entities in the Group and periodically assess the overall level of risk in the Group. This facilitates optimal utilization of capital resources and adoption of a uniform set of risk practices across the Group Entities. - The Group Risk Management Policy applies to all Associate Banks, Banking and Non-banking Subsidiaries and Joint Ventures of the State Bank Group under the jurisdiction of specified regulators and complying

with the relevant Accounting Standards, where the SBI has investment in equity shares of 30% and more with control over management. - With a view to enabling the Group Entities to assess their material risks and adequacy of the risk management processes and capital, all Group members, including Non-banking Subsidiaries are encouraged to align their policies and practices with the Group, follow Basel prescriptions and international best practices. L.7 Asset Liability Management - The Asset Liability Management Committee (ALCO) of the Bank is entrusted with the evolvement of appropriate systems and procedures in order to identify and analyse balance sheet risks and setting of benchmark parameters for efficient management of these risks. - ALM Department, being the support group to ALCO, monitors the Banks market risk such as liquidity risk, interest rate risk etc., by analysing various ALM reports / returns. The ALM department reviews the ALM Policy and complies with the Banks / RBIs policy guidelines on an ongoing basis. - The Market Related Fund Transfer Pricing Mechanism has been implemented for evaluating the business performance of the branches of the Bank. L.8 Internal Controls The Bank has in-built internal control systems with well-defined responsibilities at each level. The Bank carries out mainly two streams of audits - Inspection & Audit and Management Audit covering different facets of Internal Audit requirement. Apart from these, Credit Audit is conducted for units with large credit limits and Concurrent Audit is carried out at branches having large deposits, advances and other risk exposures and selected BPR Outfits. Expenditure Audit, involving scrutiny of accounts and correctness of expenditure incurred, is conducted at Corporate Centre Establishments, Local Head Offices, Zonal Offices, On Locale Regional Offices, Regional Business Offices, Lead Bank Offices, etc. To verify the level of rectification of irregularities by branches, audit of compliance at select branches is also undertaken. The Information System Audit (IS Audit) of the centralised IT establishments is being conducted. L.8.1 Risk Focussed Internal Audit (RFIA) The inspection system plays an important and critical role of introducing international best practices in the internal audit function which is regarded as a critical component of Corporate Governance. Inspection & Management Audit Department undertakes a critical review of the entire working of auditee units. Risk Focussed Internal Audit,

an adjunct to risk based supervision as per RBI directives, is in vogue in the Banks audit system. L.8.2 Inspection & Audit of branches All domestic branches have been segregated into 3 groups on the basis of business profile and risk exposures. While audit of Group I branches and credit oriented BPR entities (excepting SARC) is administered by Central Audit Unit (CAU) at Inspection & Management Audit Department headed by a General Manager (CAU), audit of branches in Group II & Group III category and other BPR entities are conducted by ten Zonal Inspection Offices, located at various Centres, each of which is headed by a General Manager (I&A). The audit of branches and BPR entities is conducted as per the periodicity approved by Audit Committee of the Board (ACB) which is well within RBI norms. During the period from 01.04.2010 to 31.03.2011, 7,871 domestic branches (Group I: 86 Group II: 1,421; & Group III: 6,364) were audited. L.8.3 Audit of BPR entities In the wake of introducing various BPR initiatives, audit process for the BPR entities has been developed and introduced. Taking into account the processes involved in each of the entities, exclusive Audit Report Formats, with appropriate audit queries, have been introduced. These entities are being evaluated on risk parameters. During the period from 01.04.2010 to 31.03.2011, 323 BPR entities (Group I: 138 & Group II: 185) were audited. L.8.4 Cluster Audit A number of Centres have been brought under the gamut of BPR and several branches are linked with BPR entities. To be able to identify and mitigate the risk at such branches, where the process is still underway, the department has introduced an initiative called Cluster Audit wherein a simultaneous audit of BPR entities and identified branches linked to the BPR in a particular centre is taken up . During the period from 01.04.2010 to 31.03.2011, Cluster Audit was conducted in 46 Centres covering 1,188 Branches & 125 BPR entities. This brought to light the audit health of the centre. L.8.5 Management Audit With the introduction of Risk Focussed Internal Audit, Management Audit has been reoriented to focus on the effectiveness of risk management in the processes and the procedures followed in the Bank. Management Audit universe comprises of Corporate Centre Establishments; Circles / Apex Training Institutions, Associate Banks; Subsidiaries (Domestic / Foreign); Joint Ventures (Domestic / Foreign), Regional Rural Banks sponsored by the Bank (RRBs). During the period from 01.04.2010 to 31.03.2011, Management Audit of 45 domestic offices/establishments was carried out.

L.8.6 Credit Audit Credit Audit aims at achieving continuous improvement in the quality of Commercial Credit portfolio of the Bank through critically examining individual large commercial loans with exposures of Rs. 5 crores and above. Credit Audit System (CAS), which has been aligned with Risk Focussed Internal Audit, assesses whether the Banks laid down policies in the area of credit appraisal, sanction of loans and credit administration are meticulously complied with. CAS also provides feedback to the business unit by way of warning signals about the quality of advance portfolio in the unit and suggests remedial measures. It also comments on the risk rating awarded and whether it is in order. Credit Audit carries out a review of all individual advances above the cut off limit within 6 months of sanction/enhancement/ renewal as off-site audit and a post sanction audit once in 12 months as on-site. During the period 01.04.2010 to 31.03.2011, Credit Audit (on-site) was conducted in 456 Branches, covering 5,733 accounts with aggregate exposures of Rs. 5,72,958 crores. Credit Audit (Off-site) was conducted in 14 Circles (including MCROs/CAG functioning in the geographical area of the respective Circles) during the same period, covering 6,875 proposals (domestic) with aggregate exposure of Rs. 8,43,864 crores. L.8.7 Information System Audit: Since April 2006, all the Branches are being subjected to Information Systems (IS) audit to assess the IT related risks as part of audit of the branch. A Handbook on Self Audit of Information Systems was introduced to facilitate branches for evaluating the efficiency level of IT systems. IS Audit of centralised IT establishments has commenced in January 2007. During the period from 01.04.2010 to 31.03.2011, IS Audit of 40 centralised IT establishments was completed. L.8.8 Foreign Offices Audit: Home Office Audit was carried out at 40 Branches / offices during 01.04.2010 to 31.03.2011, which included Inspection and Audit of 31 Branches, Management Audit of 4 Representative offices, 1 Subsidiary and 4 Regional Offices. L.8.9 CONCURRENT AUDIT SYSTEM: Concurrent Audit system is essentially a control process integral to the establishment of sound internal accounting functions, effective controls and overseeing of operations. It works as a tool for the Controllers of operations for scrutiny of day-to-day operations. Concurrent Audit System is reviewed on an on-going basis as per the RBI directives so as to cover 30-40% of the Banks Deposits and 60-70% of the Banks Advances and other risk exposures. Inspection & Audit department prescribes the processes, guidelines and formats for the conduct of concurrent audit at branches and BPR entities. As on 31.03.2011, the system covers 30.15 % of deposits and 75.21 % of advances and other risk exposures of the Bank.

L.9 Vigilance The main objective of vigilance activity in the Bank is not to reduce but enhance the level of managerial efficiency and effectiveness in the organization. Risk taking is integral part of the banking business. Therefore, every loss does not necessarily become subject matter of vigilance enquiry. Motivated or reckless decisions that cause damage to the Bank are essentially dealt as vigilance ones. While vigilance aims at punishing the delinquent employees, it also protects the legitimate and bonafide business decisions taken by them and any other action devoid of malafides. The Vigilance Department in the Bank functions on these principles. Based on the principle "Prevention is Better Than Cure", the Vigilance Department is actively involved in the preventive measures, which aim at taking steps, which are essential for avoiding recurrence of similar nature of frauds in the Bank. At the same time, Vigilance department is taking proactive measures to prevent the incidences of frauds arising in CBS environment. Considering the size of the Organization, we have set up vigilance departments at each of the 14 Circles, headed by Deputy General Managers. At Corporate Centre, Vigilance set up is headed by Chief Vigilance Officer of the rank of Chief General Manager. The department reports to the Chairman directly and conducts its affairs independently. The guidelines of the Central Vigilance Commission (CVC) are followed in letter and spirit in its functioning. M. CUSTOMER SERVICE & CORPORATE SOCIAL RESPONSIBILITY

M.1. CUSTOMER SERVICE - Several transformation exercises for different categories of employees were conducted such as Parivartan, SBI Citizen, Udan, Jagruti etc. towards better understanding of interpersonal relationships mainly with the customers. - The Grievance Redressal Policy of the Bank is formulated on the basis of the Model Policy Framed by Indian Banks Association and provisions of the revised Code of Commitments to Customers released by Banking Codes and Standards Board of India in August 2009. Branches are required to redress customer grievances within three weeks of receipt against the time limit of 30 days prescribed in the Code. - The Standing Committee on Customer Service constituted at the Local Head Offices with representatives from customers including Senior Citizens review the overall position of Customer Service in the Circle. Analysis of the consolidated data for Customer Grievances for all Circles is being put up to the Customer Service Committee of the Central Board every quarter to identify common systemic issues that

require rectification, and also review the remedial measures taken by the Bank for improving the Customer Service. - The Contact Centre of the Bank has been enhanced to provide wholesome help to customers including - Enquiries on products and services, - Account related information, balance enquiry, - ATM card related information including blocking of cards, - Income tax refund related queries, - Demat account information, - Pension related information to pensioners. - A web based Complaint Management System (CMS) launched in December 2009 helps customers to register their ATM related complaints at the Toll Free number of Contact Centre. The complaints are resolved by the ATM Switch Centre and branches within RBI stipulated time limit of 12 days. As pension related complaints continue to be the major area of complaints, CMS facility has now also been extended for acceptance of complaints relating to pensions, deceased accounts, Lockers and NRI accounts. - The Bank has launched a mobile and web based service for customer grievance redressal - SMS Unhappy Service. Any customer, who wants to lodge a complaint, sends an SMS "UNHAPPY" to a specified number. The Bank responds to the SMS by calling back to the customer on the same mobile number and records the details of the complaint and sends to respective Branches who are required to advise resolution within 48 hours. M.2. CORPORATE SOCIAL RESPONSIBILITY (CSR) Corporate Social Responsibility has been a part of the State Bank of India since 1973 under the name of Community Service Banking covering various social, environmental and welfare activities. The stated CSR Philosophy is as follows: - The Bank is a corporate citizen, with resources at its command and benefits which it derives from operating in society in general. It, therefore, owes a solemn duty to the less fortunate and under-privileged members of the same society. - Staff members are encouraged to make their contribution by understanding the aspirations of the public around them and by endeavouring to evolve measures to remove indisputable social and developmental lacunae. This will lead to their self-development and

improvement of the Banks image besides development of the Community. During the financial year 2010-2011, numerous welfare and social activities were implemented both in Banking and Non-Banking areas with the basic aim of raising the quality of life in the community, especially in and around the area of operation of the branches. Particular attention was given to ameliorating the condition of the downtrodden and under- privileged common man. Currently, the focus areas under Community Service Banking are: - Health - Education - Adoption of the Girl Child - Womens empowerment - Child development - Welfare and rehabilitation of poor and handicapped - Assistance to poor and under privileged - Entrepreneur development programmes - Vocational guidance - Thrust for assistance to IT education in Rural/Tribal/unreached areas - Environment Protection - Assistance during natural calamities Projects during 2010-11 a) Natural Calamities Donations amounting to Rs. 2 crores were made to UP Chief Ministers Relief Fund for providing relief and rehabilitation to victims of Natural Calamities. b) Community Service Banking 2,547 projects have been assisted with Rs. 25.95 crores covering the areas of Health, Education, Assistance for Sports, Handicapped, Environment and Assistance to tribals & other underprivileged members of society.

c) Adoption of the Girl Child Societys preference for the boy child has resulted in a large number of instances when the girl child is deprived of familial attention, education, affection, healthcare and in extreme cases, even food. In order to supplement the efforts of the Govt., to change this concept, branches adopt Girl Children in the age group of 6 to 14 years, who are orphans / destitute / physically handicapped / belong to poor families. This initiative started in 2008 with 8,338 children has in its role 17,627 girl children at present with an assistance of Rs. 3.49 crores extended during the year 2010-11 under Community Service Banking. Apart from financial assistance, individual employees from the Bank / spouses of employees adopt one or two children for care, mentoring, counselling, to try and fulfil the role of a guide. This includes periodic visits to the schools by Staff Members, talking to the girl child to understand her difficulties, academic or otherwise, and offering solutions. A close liaison is also maintained with the teachers and the academic progress of the girl child is monitored. If felt necessary, timely corrective action is suggested. While gradually increasing the coverage, the Bank has emphasised that individual care and attention to the adopted children as originally envisaged, should not be diluted. d) Research & Development Fund The Bank set up the Research & Development Fund in 1977 with the primary objective of supporting research work relevant broadly to the activities of the Bank. In the year 2010, State Bank of India Chair on Energy and Environment has been instituted for Rs. 50 lac in IIT Kanpur with particular emphasis towards innovations in the field of solar energy. This step demonstrates Banks concern for energy and environmental issues. Besides, the Bank has also made an annual contribution of GBP 100,000 towards a Chair set up by the Bank jointly with RBI at the Asia Research Centre at London School of Economics. An amount of Rs. 2 crores has been earmarked for SBI Chair for Public Leadership set up in Indian School of Business, Hyderabad. M.3. SBI CHILDRENS WELFARE FUND The Fund matching children projects was set up with donations from the employees of SBI with contributions from the Bank to assist underprivileged and poor in their overall development. During the year 2010-11, 6 were assisted with Rs. 5.62 lac.

M.4. EDUCATION PARTNERING WITH MCGM

The Municipal Corporation of Greater Mumbai (MCGM) has launched a project to transform and upgrade the outcome of education in schools run by the Municipal Corporation. The Bank has agreed to support this project as a partner for a period of 2 years as this project may evolve as a model for replication across the country. Contribution to the tune of Rs. 3.97 crores has been made by the Bank towards this project in 2010-11. M.5. SBI YOUTH FOR INDIA (Harnessing Youth Power for Rural Development) SBI Youth for India is a fellowship programme initiated, funded and managed by the State Bank of India in partnership with reputed NGOs. The Programme seeks to help India secure an equitable and sustainable growth path by: - Providing educated Indian youth with an opportunity to touch lives and create positive change at the grass root level in rural India. - Providing NGOs working on development projects in rural India with educated manpower whose skill sets can be used to catalyze rural development. - Promoting a forum for the Programme alumni to share ideas and contribute to rural development throughout their professional life. Project Work - The selected candidates are assigned a project according to their interest/skill and as per the need of the respective NGO. - Throughout the project, they will be provided a mentor from the partner NGO who will help them to address the challenges in the project assigned. - In consultation with their mentor, they will have to define an outcome that they intend to achieve at the end of the project and will then have to work towards it. The programme offers the candidates a wide variety of projects to choose from. The project will cover a whole gamut of areas like Cluster Development, Watershed Development, Environment Protection, Biotechnology, Computer Literacy, Womens Empowerment, Dairy Husbandry, Bio-Diversity, Eco-Technology, Insurance, Coastal Research Systems etc. The Bank seeks to make a lasting impact in the rural scenario through this program. N. CORPORATE COMMUNICATION & CHANGE

- Following the earlier Parivaritan initiatives, Intervention II & III under Citizen SBI, were implemented during the year. While Intervention II emphasized on the collective fulfillment, Intervention III was about identifying opportunities, thereby paving the way for business development and lasting relationships. - The Intervention IV was conceived as a Senior Management Citizenship Vision Programme to bring about recognition of the critical changes required in SBI by way of policies/processes. O. RIGHT TO INFORMATION ACT 2005 (RTI ACT 2005) Suitable structure has been put in place at Branches/ Administrative Offices/ Regional Business Offices/Local Head Offices for handling requests and appeals under RTI Act 2005. Further, an exclusive RTI Department has been created in Corporate Centre to handle and co-ordinate various issues under the Act. For convenience of the public, the Bank has also created an RTI link on its website http://www.statebankofindia.com and http://www.sbi.co.in. P. HUMAN RESOURCES (HR)

HR INITIATIVES A number of key initiatives have been taken by the Bank during the current year to motivate the employees to perform better so as to achieve the Banks growth plans. PERSONNEL MANAGEMENT - Defined Contribution Pension Scheme (DCPS) was introduced for all categories of employees recruited w.e.f 01.08.2010. - Pursuant to Industry-wise settlement / Joint Note dated 27.04.2010, pension benefits will be extended to the Retirees of e-SBS and e- SBIN, who opt for pension as the second option. - Revision made in Terms & Conditions of Contractual officers-Management Trainees, Chartered Accountants, Credit Analysts (WB/CAG) and Customer Relationship Executives (WB/MCG). CADRE MANAGEMENT - Policy for recruitment of Probationary Officers (POs) reviewed and methodology of one-tier written examination in respect of POs for SBI & Associate Banks was made applicable to reduce the cycle of recruitment. - 3,746 Probationary Officers were recruited during the year, out of which 2,294 POs have joined the Bank till 31.03.2011. - Contractual employees viz. CRE(PB), CRE(ME), OMRs etc. were absorbed in the Bank as permanent officers in Junior Management Grade as one

time measure. - 487 Management Executives recruited directly in MMGS-II grade to meet the specialized needs of the Bank. Recruitment - 25,327 clerical staff were recruited during the year out of which 18,628 have joined the Bank till 31.03.2011. This is the largest recruitment exercise undertaken in the Banking sector and will further augment the staff strength in tandem with the Banks branch expansion drive and manpower requirement on account of promotion and retirement etc. This will not only help in reducing the age profile of staff but will also provide an opportunity for greater mobility and marketing thrust across the Bank to achieve its growth plans. Industrial Relations - Excellence in Industrial Relations was maintained with both the Officers and Staff Federations by maintaining healthy dialogue / discussions with them during the year. Issues raised by the Federations were properly examined and adequately responded to. HRMS - Salary processing for 2.05 lac employees across SBI and pension processing of 1.12 lac IBI/SBI Pensioners have been centralised. - The Training Management System, Centralised PF accounting & processing, leave and attendance management, fixed assets management etc. will improve the employee management and also make the HR processes more efficient. STRATEGIC TRAINING UNIT The Strategic Training Unit (STU), operationalized on 5th April 2010, has taken a number of initiatives towards giving a new dimension to the training philosophy of the Bank. Some of the major initiatives in this regard are as follows: - A website of STU has been launched to which the entire training system has been linked. - Under the leadership Pipeline, Jagriti Programme was launched covering all AGMs having more than 2 years of residual service. - E-learning through HRMS portal has been expanded over 158 courses currently. - A new initiative in Distance Learning has been taken by SBSC by introducing Mobile Learning. STAFF STRENGTH AS ON 31.03.2011

Category Officers Clerical Sub-staff TOTAL

Total 79,728 1,02,701 40,504 2,22,933

% 35.77 46.07 18.16 100.00

IMPLEMENTATION OF PERSONS WITH DISABILITIES (PWD) ACT 1995 Our Bank provides reservation to persons with disabilities (PWDs) as per the guidelines of the Government of India and section 33 of the PWD Act 1995. The total number of persons with disabilities who were employed as on 31.03.2011 was 2,525, consisting of 530 officers, 1,754 clerical and 241 sub-staff. REPRESENTATION OF SCHEDULED CASTES AND SCHEDULED TRIBES As on the 31st March 2011, 43,657 (19.58%) of the Banks total staff strength, belonged to Scheduled Caste and 15,812 (7.09%) belonged to Scheduled Tribes. In order to discuss issues relating to reservation policy and effectively redress the grievances of the SC/ST employees, Liaison Officers have been designated at all Local Head Offices of the Bank as also at the Corporate Centre at Mumbai. Senior officials of the Bank hold regular meetings at periodic intervals with the representatives of National Federation of SBI SC/ST Employees at Corporate Centre as also with the representatives of Circle level SC/ST Welfare Associations at the Local Head Offices and Administrative Offices where issues pertaining to implementation of reservation policies are discussed. This has ensured redressal of grievances to a large extent. Government of India representative inspected the reservation roasters for SCs/STs/OBCs/ PWDs at all the 14 Circles and found this maintained satisfactorily. The Bank has been conducting workshops on reservation policy for SCs/STs/OBCs to impart up-to-date knowledge/ latest operatives about the reservation policy and related areas to the SC/ST cell officers, representatives of SC/ST welfare Association and the Liaison officers. Pre-recruitment and pre-promotion training programmes are being conducted to enable SC/ST candidates to achieve the prescribed standards to effectively compete with other candidates. Q. BUSINESS PROCESS RE-ENGINEERING (BPR)

Following various BPR initiatives carried out during the last few years, the Bank was able to improve performance in key business areas and quality of customer service. Many of the large sized branches have been split into smaller branches to enable them to offer focused service to specific segment of customers. The endeavour of BPR initiatives in the Bank is to continuously usher in changes / uniform business processes to ensure prompt, efficient delivery of products and services to our customers. All these initiatives have helped the Bank in creating a new operating architecture capable of meeting global competition. R. OFFICIAL LANGUAGE

The implementation of official language policy in the Bank is not only a statutory requirement but also a business need. The Bank made all possible efforts to comply with the statutory provisions relating to the official language policy of the Govt. of India during the year and took several initiatives to provide benefit of Banks different schemes to the masses through Hindi and other Indian languages. Many special workshops were conducted for newly recruited clerical staff and Probationary Officers to equip them with functional knowledge of the official language Hindi. In order to encourage the staff to use Hindi in their day to day work, Quarterly Shabdavali Smaran and many more competitions were organised during the year. Bank has enhanced the amount of honorarium paid to staff members on passing different Hindi exams. Many staff members have taken advantage of these incentive schemes which will help in encouraging the use of Hindi in the Bank. Bank hosted quarterly meetings of the Ministry of Finance and Reserve Bank of India and an Annual Conference of all the public sector banks and financial institutions successfully during the year which received lavish appreciation from these two regulatory authorities. On the other hand, the Bank took various initiatives in its endeavour to deliver its products and services to the masses in Hindi and other Indian languages. These include advertisements through Newspapers/ Magazines, pamphlets (Print Media) through Electronic Medium (TV/Films etc.) and also by way of Exhibition (Banner, Hoardings etc.) in Hindi and other Indian regional languages. The Committee of Parliament on Official Language also appreciated the efforts being made by the Bank for promoting the use of Hindi. Banks In-House Hindi magazine Prayas has once again bagged first prize for the year 2009-10. Banks Hindi House Journal Prayas has bagged first prize in this competition for the fifth time in recent years.

S.

KYC/AML/CFT MEASURES

- The Bank has put in place the Board approved revised policy on Know Your Customer (KYC) / Anti Money Laundering (AML) / Combating Financing of the Terrorism (CFT) measures in line with Master Circular issued by Reserve Bank of India on the subject. The main components of the Policy are as follows: - Customer Acceptance - Customer Identification - Monitoring of Transactions - Training of personnel - Preservation of Records - Procedural Guidelines to facilitate implementation of the Policy have also been circulated after approval of the Central Board. - Monitoring of Transactions is done with a view to submit undernoted reports to Financial Intelligence Unit-India mandated by rules of Prevention of Money Laundering Act, 2002. - Cash Transaction Reports (CTRs) - Counterfeit Currency Reports (CCRs) - Suspicious Transaction Reports (STRs) - Training on KYC/AML is being imparted on an ongoing basis in the Bank. In addition to exclusive KYC/AML programmes, all training programmes/seminars/workshops, have a KYC/AML session included in the programme. Further, the Bank has decided to observe 1st August every year as "KYC Compliance and Fraud Prevention day" to maintain appropriate awareness and involvement levels across the Bank as also to create proper understanding of KYC issues among the members of public. T. FRAUD PREVENTION AND MONITORING

The measures taken for prevention of frauds are as under : - The KYC Compliance and Fraud Prevention day was observed on 2nd August 2010, as 1st August was Sunday. - The Bank has introduced detailed process of tallying Admin Cash Balance with Physical Cash balance in ATM. - SBIMF Warrants are being paid through Dividend Warrant Payment Module on CBS and not by purchasing Warrants as DDP

- The Preventive Vigilance Committees are formed at the branches having staff strength of 10 or more (including SAM branches) and at CPCs/Cells irrespective of their staff strength, as per the revised scheme approved by the Vigilance Department at Corporate Centre. - Encourage/popularize Whistle Blower concept. - Advise Controllers to ensure that secrecy of passwords is not compromised. - Fraud Analysis Cell (FAC) has been created at Jaipur to monitor transactions through alerts being thrown by the software. - Ensure swift conclusion of staff accountability exercise, especially in cases with insider involvement. U. COMPENSATION POLICY FOR DEFICIENCY IN SERVICE

As a premier Bank of the nation, SBI always strives to create and maintain highest standards of customer service and in any unlikely event of any slippage in services extended to customers, the Bank has put in place a Board approved Compensation Policy to compensate for such slippages. The policy ensures that appropriate financial compensation is provided to the recipients to these services, without requesting for it. V. BANKS OUTSOURCING POLICY

RBI have permitted banks to outsource non-core functions and the Bank has accordingly put in place a Board approved Outsourcing Policy. W. SUPER CIRCLE OF EXCELLENCE (SCE)

The concept of Super Circle of Excellence (SCE) has been conceived to impart focus on a subset of branches to deliver high growth, improve efficiency, ensure high quality of customer service and also act as a forum for sharing of best practices. As on 31.03.2011, there were 703 branches in Super Circle of Excellence, which include 592 NBG branches (339 Metro branches + 253 Urban branches) and 111 RBG branches (27 Rural + 84 Semi Urban). The SCE branches focus mainly on Retail business and the performance in all focus areas is benchmarked with the performance of non-SCE branches of the Bank as well as competitor banks. The focus of this subset is also on marketing and promotion of technological products, increasing cross selling and other income, containment of overheads & NPAs, providing customer service of the highest order, strengthening HNI customer base, pushing for Financial Planning & Advisory Services and devising strategies to improve the Banks Market Share. The performance of SCE branches is measured every month on a multi dimensional efficiency matrix.

While the share of SCE branches in terms of number of branches has come down from 5.64% in March 2010 to 5.22% in March 2011, the contribution to overall Bank business has increased from 12.34% to 12.41% in PER Domestic deposits, 16.44% to 17.98% in PER advances and 13.11% to 16.11% in cross selling income. X. GREEN BANKING INITIATIVES

- As part of the Banks on going Green Banking initiatives, windmill project has been successfully commissioned and power thus generated is being consumed by our branches/offices in the States of Maharashtra, Gujarat and Tamilnadu. This reduces dependence on polluting thermal power to the extent of renewable power generated by the Banks windmills. - The imperatives of sustainable usage of resources, including energy and efficient disposal of wastes have been effectively propagated amongst the stakeholders, in the form of adopting energy efficiency measures, efficient usage of paper and water, installation of Solar ATMs, introduction of Green Channel Banking (Paperless Banking). - The Bank has been encouraging customers by extending project loans on concessionary interest rates to reduce Green House gases (GHGs) emissions; by adopting efficient manufacturing practices through acquisition of latest technology. The Bank also arranges consultancy services by roping in the services of empanelled CDM consultants in CDM (Clean Development Mechanism) registration process. The Bank has also launched a loan product to facilitate upfront finance to the project developers by way of securitisation of Carbon Emission Reduction (CER) receivables. - The Bank has initiated a pilot project to determine its Carbon footprint levels, which will help in determining the Banks resource consumption pattern and enable the Bank to take effective steps to implement various measures for sustainable usage in a cost effective way. - Special drive for fruit bearing tree plantation during monsoons was taken up across all Circles, which has been very successful and sustained efforts are being made to ensure the survival of the plants as well. RESPONSIBILITY STATEMENT The Board of Directors hereby states : i. that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; ii. that they have selected such accounting policies and applied them consistently and made judgements and estimates as are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank as on the 31st March 2011, and of the profit and loss of the

Bank for the year ended on that date; iii. that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Banking Regulation Act, 1949 and State Bank of India Act, 1955 for safeguarding the assets of the Bank and preventing and detecting frauds and other irregularities; and iv. that they have prepared the annual accounts on a going concern basis. ACKNOWLEDGEMENT During the year, Shri S.K. Bhattacharyya, Managing Director, (under section 19(b)) ceased to be a director on the Banks Board consequent to his superannuation on 31st October 2010. Further, consequent to the amendment to Section 20(3A) of SBI Act, 1955 restricting the term of office of Directors nominated under section 19(d) by Govt. of India to three years coming into force with effect from 15th September 2010, Dr. Deva Nand Balodhi and Prof. Md. Salahuddin Ansari ceased to be directors from the Central Board as on that date. Shri Ashok Chawla, Govt. Nominee, ceased to be a director on the Banks Central Board consequent to his superannuation on 31st January 2011. Dr. (Mrs.) Vasantha Bharuchas term of three years, as Director on the Central Board, ended on 24th February 2011. Shri O.P Bhatt, Chairman, retired on attaining superannuation, as at the close of business on 31.03.2011. Shri G.D. Nadaf was nominated to the Board under Section 19 (cb) with effect from 4th November 2010 as Officer Employee Director. Shri Shashi Kant Sharma was nominated as Govt. Nominee Director, under Section 19(e), vide Notification dated 18th February 2011 vice Shri Ashok Chawla. Shri Rashpal Malhotra was nominated to the Board under Section 19(d) with effect from 10th May 2011 by Central Govt. The Directors place on record their appreciation of the contribution made by Shri O.P. Bhatt, Shri S.K. Bhattacharyya, Dr. Deva Nand Balodhi, Prof. Md. Salahuddin Ansari, Shri Ashok Chawla & Dr. (Mrs.) Vasantha Bharucha to the deliberations of the Board and welcome Shri G.D. Nadaf, Shri Shashi Kant Sharma and Shri Rashpal Malhotra on the Board. The Directors also express their gratitude for the guidance and cooperation received from the Government of India, RBI, SEBI, IRDA and other government and regulatory agencies. The Directors also thank all the valued clients, shareholders, banks and financial institutions, stock exchanges, rating agencies and other stakeholders for their patronage and support, and take this opportunity to express their appreciation of the dedicated and committed team of employees of the Bank. For and on behalf of the

Central Board of Directors Pratip Chaudhuri Chairman Date : 17th May, 2011

Icici bank

The Directors have pleasure in presenting the Eighteenth Annual Report of ICICI Bank Limited along with the audited statement of accounts for the year ended March 31, 2012.
FINANCIAL HIGHLIGHTS The financial performance for fiscal 2012 is summarised in the following table: Rs billion, except percentages Net interest income and other income Provisions & contingencies1 Profit before tax Profit after tax 1. Excludes provision for taxes. Rs billion, except percentage Consolidated profit after tax Appropriations The profit after tax of the Bank for fiscal 2012 is Rs 64.65 billion after provisions and contingencies of Rs 15.83 billion, provision for taxes of Rs 23.38 billion and all expenses. The disposable profit is Rs 114.83 billion, taking into account the balance of Rs 50.18 billion brought forward from the previous year. Your Directors have recommended a dividend at the rate of Rs 16.50 per equity share of face value Rs 10 for the year and have appropriated the disposable profit as follows: Rs billion To Statutory Reserve, making in all Rs 89.92 billion1 Fiscal 2011 Fiscal 2012 Fiscal 2011 60.93 Fiscal 2012 76.43 % Change 25.4% Fiscal 2011 Fiscal 2012 % Change

156.65 22.87 67.61 51.51

182.36 15.83 88.03 64.65

16.4% (30.8)% 30.2% 25.5%

12.88

16.17

To Special Reserve, created and maintained in terms of Section 36(1) (viii) of the Income Tax Act, 1961, making in all Rs 38.19 billion To Capital Reserve, making in all Rs 21.84 billion To/(from) Investment Reserve To General Reserve, making in all Rs 49.87 billion2 Dividend for the year (proposed) - On equity shares @ Rs 16.50 per share (@ Rs 14 per share for fiscal 2011)3 - On preference shares (Rs) - Corporate dividend tax Leaving balance to be carried forward to the next year

5.25

6.50

0.83 (1.16)

0.38 -

0.02

16.15

19.02

35,000 2.02

35,000 2.20

50.18

70.54

1. Includes Rs 2.00 billion at March 31, 2011 on account of amalgamation of erstwhile The Bank of Rajasthan Limited with ICICI Bank Limited. 2. Includes transfer to Reserve Fund and Investment Fund account Rs 10.7 million for fiscal 2012 (Rs 0.4 million for fiscal 2011) in accordance with regulations applicable to Sri Lanka branch and transfer to General Reserve Rs 3.2 million for fiscal 2012 (Rs 2.6 million for fiscal 2011). 3. Includes dividend for the prior year paid on shares issued after the balance sheet date and prior to the record date. SUBSIDIARY COMPANIES At March 31, 2012, ICICI Bank had 17 subsidiaries as listed in the following table: Domestic Subsidiaries ICICI Prudential Life Insurance Company Limited ICICI Lombard General Insurance Company Limited Intermational Subsidiaries ICICI Bank UK PLC

ICICI Bank Canada

ICICI Prudential Asset Management Company Limited ICICI Prudential Trust Limited ICICI Securities Limited ICICI Securities Primary Dealership Limited ICICI Venture Funds Management Company Limited ICICI Home Finance Company Limited ICICI Investment Management Company Limited ICICI Trusteeship Services Limited ICICI Prudential Pension Funds Management Company Limited1 1. 2. 3.

ICICI Bank Eurasia Limited Liability Company ICICI Securities Holdings Inc.2 ICICI Securities Inc.3 ICICI International Limited

Subsidiary of ICICI Prudential Life Insurance Company Limited. Subsidiary of ICICI Securities Limited. Subsidiary of ICICI Securities Holdings Inc.

The Ministry of Corporate Affairs (MCA) vide its Circular No.51/12/2007-CL-III dated February 8, 2011 has granted general exemption under Section 212(8) of the Companies Act, 1956 to companies from attaching the accounts of their subsidiaries in their annual reports subject to fulfilment of certain conditions prescribed. The Board of Directors of the Bank at its Meeting held on April 27, 2012 noted the provisions of the circular of MCA and passed the necessary resolution granting the requisite approvals for not attaching the balance sheet, profit & loss account, report of the board of directors and report of the auditors of each of the subsidiary companies to the accounts of the Bank. The Bank will make available these documents/details upon request by any Member of the Bank. These documents/details will be available on the Bank''s website (www.icicibank.com) and will also be available for inspection by any Member of the Bank at its Registered Office and Corporate Office and also at the registered offices of the concerned subsidiaries. As required by Accounting Standard-21 (AS-21) issued by the Institute of Chartered Accountants of India, the Bank''s consolidated financial statements included in this Annual Report incorporate the accounts of its subsidiaries and other consolidating entities. A summary of key financials of the Bank''s subsidiaries is also included in this Annual Report. DIRECTORS

RBI, vide its letter dated January 3, 2012, approved the reappointment of K. Ramkumar as an Executive Director of the Bank for a further period of two years, i.e. from February 1, 2012 till January 31, 2014. The Members approved his appointment at the Fifteenth Annual General Meeting (AGM) held on June 29, 2009 for a period of five years from February 1, 2009 up to January 31, 2014. RBI, vide its letter dated April 19, 2012, approved the re- appointment of K. V. Kamath, Chanda Kochhar and N. S. Kannan as Chairman, Managing Director & CEO and Executive Director & CFO of the Bank respectively for a further period of two years i.e. from May 1, 2012 till April 30, 2014. The Members approved the appointment of K. V Kamath as Chairman and Chanda Kochhar as Managing Director & CEO through postal ballot on February 13, 2009 for a period of five years from May 1, 2009 up to April 30, 2014. The appointment of N. S. Kannan as Executive Director & CFO was approved by the Members at the Annual General Meeting held on June 29, 2009 for a period of five years from May 1, 2009 up to April 30, 2014. With effect from May 1, 2012, K. V Kamath, Chairman is classified as a non-executive independent Director. In terms of the definition of independent director as defined in Clause 49 of the Listing Agreement executed with the stock exchanges, a director who has been an executive of the Company in the immediately preceding three financial years would not be classified as an independent director. Pursuant to the said clause, K. V Kamath who was appointed as a Chairman with effect from May 1, 2009 was classified as a non-executive, non-independent Director as he had been an executive of the Bank upto April 30, 2009 in his capacity as Managing Director & CEO of the Bank. V. Prem Watsa retired by rotation on June 27, 2011 at the last AGM and did not seek re-appointment. The Board placed on record its appreciation of the valuable guidance provided by Prem Watsa to the Bank. The Board, at its Meeting held on January 31, 2012, appointed Swati Piramal, Director-Strategic Alliances and Communications in Piramal Healthcare Limited as an additional Director effective January 31, 2012. Swati Piramal holds office up to the date of the forthcoming AGM and is eligible for appointment. The Government of India has nominated Arvind Kumar, Joint Secretary, Department of Financial Services, Ministry of Finance, Government of India, as a Director on the Board of the Bank effective July 22, 2011, in place of Anup K. Pujari. The Board placed on record its appreciation of the valuable guidance provided by Anup K. Pujari to the Bank. In terms of Article 128A of the Articles of Association of the Bank, Arvind Kumar is not liable to retire by rotation. In terms of the provisions of the Companies Act, 1956 and the Articles of Association of the Bank, Homi Khusrokhan, V Sridar and N. S. Kannan would retire by rotation at the forthcoming AGM and are eligible for re-appointment. Homi Khusrokhan, V Sridar and N. S. Kannan have offered themselves for re-appointment.

AUDITORS The auditors, S. R. Batliboi & Co., Chartered Accountants, will retire at the ensuing AGM. As recommended by the Audit Committee, the Board has proposed the appointment of S. R. Batliboi & Co., Chartered Accountants as statutory auditors for fiscal 2013. Their appointment has been approved by RBI vide its letter dated April 9, 2012. You are requested to consider their appointment. PERSONNEL As required by the provisions of Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in the Annexure to the Directors'' Report. APPOINTMENT OF NOMINEE DIRECTORS ON THE BOARDS OF ASSISTED COMPANIES Erstwhile ICICI Limited (ICICI) had a policy of appointing nominee directors on the boards of certain borrower companies based on loan covenants, with a view to enable monitoring of the operations of those companies. Subsequent to the merger of ICICI with ICICI Bank, the Bank continues to nominate directors on the boards of assisted companies. Apart from the Bank''s employees, experienced professionals from various fields are appointed as nominee directors. At March 31, 2012, ICICI Bank had 15 nominee directors of whom 13 were employees of the Bank, on the boards of 25 assisted companies. The Bank has a Nominee Director Cell for maintaining records of nominee directorships. RISK MANAGEMENT FRAMEWORK The Bank''s risk management strategy is based on a clear understanding of various risks, disciplined risk assessment and measurement procedures and continuous monitoring. The policies and procedures established for this purpose are continuously benchmarked with international best practices. The Board of Directors has oversight on all the risks assumed by the Bank. Specific Committees have been constituted to facilitate focused oversight of various risks, as follows: - The Risk Committee of the Board reviews risk management policies of the Bank in relation to various risks. The Risk Committee reviews various risk policies pertaining to credit, market, liquidity, operational and outsourcing risks, review of the Bank''s stress testing framework and group risk management framework. The Committee reviews the risk profile of the Bank through periodic review of the key risk indicators and risk profile templates and annual review of the Internal Capital Adequacy Assessment Process (ICAAP). The Committee also reviews the risk profile of its overseas banking subsidiaries annually. The Risk Committee reviews the Bank''s compliance with risk management guidelines stipulated by the Reserve Bank of India and of the status of implementation of the advanced approaches under the Basel framework. The Risk Committee also reviews the stress-testing framework as part of the ICAAP The stress-testing framework included a wide range of

Bank-specific and market (systemic) scenarios. Linkage of macroeconomic factors to stress test scenarios was documented as a part of ICAAP The ICAAP exercise covers the domestic and overseas operations of the Bank, the banking subsidiaries and the material non- banking subsidiaries. The Risk Committee also reviews the Liquidity Contingency Plan (LCP) for the Bank and the threshold limits. During the year the Bank has also finalised the approach towards Enterprise Risk Management framework. - Apart from sanctioning credit proposals, the Credit Committee of the Board reviews developments in key industrial sectors and the Bank''s exposure to these sectors as well as to large borrower accounts. The Credit Committee also reviews the non-performing loans, accounts under watch, overdues and incremental sanctions. - The Audit Committee of the Board provides direction to and monitors the quality of the internal audit function and also monitors compliance with inspection and audit reports of Reserve Bank of India and statutory auditors. - The Asset Liability Management Committee is responsible for managing liquidity and interest rate risk and reviewing asset-liability position of the Bank. A summary of reviews conducted by these Committees are reported to the Board on a regular basis. Policies approved from time to time by the Board of Directors/Committees of the Board form the governing framework for each type of risk. The business activities are undertaken within this policy framework. Independent groups and sub-groups have been constituted across the Bank to facilitate independent evaluation, monitoring and reporting of various risks. These groups function independently of the business groups/sub-groups. The Bank has dedicated groups, namely, the Risk Management Group, Compliance Group, Corporate Legal Group, Internal Audit Group and the Financial Crime Prevention & Reputation Risk Management Group, with a mandate to identify, assess and monitor all of the Bank''s principal risks in accordance with well-defined policies and procedures. Risk Management Group is further organised into the Credit Risk Management Group, Market Risk Management Group and Operational Risk Management Group. These groups are completely independent of all business operations and coordinate with representatives of the business units to implement ICICI Bank''s risk management policies and methodologies. The internal audit and compliance groups are responsible to the Audit Committee of the Board. DIRECTORS'' RESPONSIBILITY STATEMENT The Directors confirm: 1. that in the preparation of the annual accounts, the applicable accounting standards have been followed, along with proper explanation relating to material departures;

2. that they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit or loss of the Bank for that period; 3. that they have taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the provisions of the Banking Regulation Act, 1949 and the Companies Act, 1956 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities; and 4. that they have prepared the annual accounts on a going concern basis. ACKNOWLEDGEMENTS ICICI Bank is grateful to the Government of India, RBI, SEBI, IRDA and overseas regulators for their continued co-operation, support and guidance. ICICI Bank wishes to thank its investors, the domestic and international banking community, rating agencies and stock exchanges for their support. ICICI Bank would like to take this opportunity to express sincere thanks to its valued clients and customers for their continued patronage. The Directors express their deep sense of appreciation of all the employees, whose outstanding professionalism, commitment and initiative has made the organisation''s growth and success possible and continues to drive its progress. Finally, the Directors wish to express their gratitude to the Members for their trust and support. For and on behalf of the Board K. V Kamath May 14, 2012 Chairman

Director Report
Mar2010 Mar 2011 Mar2012

The Directors have pleasure in presenting the Seventeenth Annual Report of ICICI Bank Limited with the audited statement of accounts for the year ended March 31, 2011.
FINANCIAL HIGHLIGHTS The financial performance for fiscal 2011 is summarised in the following table: Rs. billion, except percentages Fiscal 2010 Fiscal 2011 % change

Net interest income and other income Provisions & contingencies1 Profit before tax Profit after tax of the Bank 1. Excludes provision for taxes.

155.92 43.87 53.45 40.25

156.65 22.87 67.61 51.51

0.5% (47.9)% 26.5% 28.0%

Rs. billion, except percentages Consolidated profit after tax Appropriations

Fiscal 2010 46.70

Fiscal 2011 60.93

% change 30.5%

The profit after tax of the Bank for fiscal 2011 is Rs. 51.51 billion after provisions and contingencies (excluding provision for taxes) of Rs. 22.87 billion and all expenses. The disposable profit is Rs. 86.15 billion, taking into account the balance of Rs. 34.64 billion brought forward from the previous year. Your Directors have recommended a dividend at the rate of Rs. 14 per equity share of face value Rs. 10 for the year and have appropriated the disposable profit as follows: Rs. billion To Statutory Reserve, making in all Rs. 73.75 billion1 To Special Reserve created and maintained in terms of Section 36(1) (viii) of the Income-tax Act, 1961, making in all Rs. 31.69 billion To Capital Reserve, making in all Rs. 21.46 billion To/(from) Investment Reserve, making in all Nil To General Reserve, making in all Rs. 49.80 billion Dividend for the year (proposed) On equity shares @ Rs. 14 per share (@ Rs. 12 per share for fiscal 2010)2 On preference shares (Rs.) Fiscal 2010 Fiscal 2011

10.07

12.88

3.00

5.25

4.44

0.83

1.16

(1.16)

0.01

--

13.38 35,000

16.15 35,000

Corporate dividend tax Leaving balance to be carried forward to the next year3

1.64 34.64

2.02 50.18

1. Includes Rs. 2.00 billion on amalgamation of The Bank of Rajasthan Limited with ICICI Bank Limited. 2. Includes dividend for the prior year paid on shares issued after the balance sheet date and prior to the record date. 3. After taking into account transfer to Reserve Fund Rs. 0.4 million for fiscal 2011, making in all Rs. 11.3 million. Internet Banking Our comprehensive Internet Banking service is designed to give our customers a convenient banking experience from the comfort of their homes or offices. Our Internet Banking offering has evolved over time not only to enable basic online transactions but also to provide cutting edge features. Innovative features, such as applying for a new account, opening a fixed deposit and the Money Manager, help our customers to manage almost all their financial needs online. Further, our Internet Banking service goes beyond fulfilling the routine banking needs of customers by enabling them to buy mutual funds, insurance, forex and gold online. MERGER OF THE BANK OF RAJASTHAN LIMITED WITH ICICI BANK The Bank of Rajasthan Limited (Bank of Rajasthan), a banking company incorporated within the meaning of Companies Act, 1956 and licensed by Reserve Bank of India (RBI) under the Banking Regulation Act, 1949 was amalgamated with ICICI Bank Limited (ICICI Bank/the Bank) with effect from close of business on August 12, 2010 in terms of the Scheme of Amalgamation (the Scheme) approved by RBI vide its order DBOD No. PSBD 2599/16.01.056/2010-11 dated August 12, 2010 under sub section (4) of section 44A of the Banking Regulation Act, 1949. The consideration for the amalgamation was 25 equity shares of ICICI Bank of the face value of T 10 each fully paid-up for every 118 equity shares of Rs. 10 each of Bank of Rajasthan. Accordingly, ICICI Bank allotted 31,323,951 equity shares to the shareholders of Bank of Rajasthan on August 26, 2010 and 2,860,170 equity shares, which were earlier kept in abeyance pending civil appeal, on November 25, 2010. SUBSIDIARY COMPANIES At March 31, 2011, ICICI Bank had 17 subsidiaries as listed in the following table: Domestic Subsidiaries ICICI Prudential Life Insurance ICICI Bank UK PLC International Subsidiaries

Company Limited ICICI Lombard General Insurance Company Limited ICICI Prudential Asset Management Company Limited ICICI Prudential Trust Limited ICICI Securities Limited ICICI Securities Primary Dealership Limited ICICI Venture Funds Management Company Limited ICICI Home Finance Company Limited ICICI Investment Management Company Limited ICICI Trusteeship Services Limited ICICI Prudential Pension Funds Management Company Limited1 1. 2. 3. Subsidiary of ICICI Prudential Life Insurance Company Limited. Subsidiary of ICICI Securities Limited. Subsidiary of ICICI Securities Holdings Inc. ICICI Bank Canada

ICICI Bank Eurasia Limited Liability Company ICICI Securities Holdings Inc.2 ICICI Securities Inc.3

ICICI International Limited

The Ministry of Corporate Affairs (MCA) vide its Circular No.51/12/2007-CL-lll dated February 8, 2011 has granted general exemption under Section 212(8) of the Companies Act, 1956 to companies from attaching the accounts of their subsidiaries in their annual reports subject to fulfillment of certain conditons prescribed. The Board of Directors of the Bank at its Meeting held on April 28, 2011 noted the provisions of the circular of MCA and passed the necessary resolution granting the requisite approvals for not attaching the balance sheet, profit & loss account, report of the board of directors and report of the auditors of each of the subsidiary companies to the accounts of the Bank for fiscal 2011. The Bank will make available these documents/details upon request by any Member of the Bank. These documents/details will be available on the Banks website (www.icicibank.com) and will also be available for inspection by any Member of the Bank at its Registered Office and Corporate Office and also at the registered offices of the concerned subsidiaries. As required by Accounting Standard-21 (AS-21) issued by

the Institute of Chartered Accountants of India, the Banks consolidated financial statements included in this Annual Report incorporate the accounts of its subsidiaries and other consolidating entities. A summary of key financials of the Banks subsidiaries is also included in this Annual Report. DIRECTORS The RBI vide its letter dated June 24, 2010 approved the appointment of Rajiv Sabharwal as an Executive Director of the Bank. The Members approved his appointment at the Sixteenth Annual General Meeting (AGM) held on June 28, 2010. Narendra Murkumbi retired by rotation on June 28, 2010 at the last AGM and did not seek re-appointment. The valuable guidance and contribution made by Narendra Murkumbi was recognised by the Board. Pursuant to the provisions of the Banking Regulation Act, 1949, M. K. Sharma retired from the Board effective January 31, 2011 on completion of eight years as a non-executive Director of the Bank. The Board placed on record its deep appreciation and gratitude for his guidance and contribution to the Bank. In terms of the provisions of the Companies Act, 1956 and the Articles of Association of the Bank, V Prem Watsa, M. S. Ramachandranand K. Ramkumar would retire by rotation at the forthcoming AGM and are eligible for re-appointment. M. S. Ramachandran and K. Ramkumar have offered themselves for re-appointment. V. Prem Watsa has expressed his desire not to seek re-appointment as a Director as his maximum permissible tenure of eight years as a non-executive Director of the Bank would end on January 28, 2012. A Resolution is proposed to the Members in the Notice of the current AGM to this effect and also not to fill up the vacancy caused by the retirement of V Prem Watsa at this meeting or any adjourned meeting thereof. AUDITORS The auditors, S.R. Batliboi & Co., Chartered Accountants, will retire at the ensuing AGM. As recommended by the Audit Committee, the Board has proposed the appointment of S.R. Batliboi & Co., Chartered Accountants as statutory auditors for fiscal 2012. Their appointment is subject to approval of RBI. You are requested to consider their appointment. PERSONNEL As required by the provisions of Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in the Annexure to the Directors Report. APPOINTMENT OF NOMINEE DIRECTORS ON THE BOARDS OF ASSISTED COMPANIES Erstwhile ICICI Limited (ICICI) had a policy of appointing nominee

directors on the boards of certain borrower companies based on loan covenants, with a view to enable monitoring of the operations of those companies. Subsequent to the merger of ICICI with ICICI Bank, the Bank continues to nominate directors on the boards of assisted companies. Apart from the Banks employees, experienced professionals from various fields are appointed as nominee directors. At March 31, 2011, ICICI Bank had 19 nominee directors of whom 16 were employees of the Bank, on Mobile Banking Our innovations in Mobile Banking have transformed the mobile phone into a personal banking assistant for our customers. Be it simple SMS alerts, service requests using Instant Messaging or the iMobile application, our wide range of Mobile Banking services takes care of our customers varied needs. Today, customers can use their mobile phones not only to check account balances and transfer funds but also to apply for a loan. Our innovative Mobile Banking service takes convenience to a different level by enabling customers to buy flight and movie tickets and also shop for apparels, books and flowers. ATM The ICICI Bank ATM is much more than just a money-dispensing machine. Our state-of-the-art technology has led to redefining convenience for the customer. With newly introduced innovative features, our ATM is now equipped to take care of banking needs that go beyond basic cash withdrawal. Today our ATMs offer services such as opening fixed deposits, payment of credit card & utility bills, payment of insurance premium, mobile re-charges and Ultra Fast Cash which facilitates withdrawal of Rs. 5,000 in a single click. We have used technology to transform our vast network of ATMs to provide greater convenience & efficiency to our customers, thereby almost making them a network of mini branches. the boards of 34 assisted companies. The Bank has a Nominee Director Cell for maintaining records of nominee directorships. RISK MANAGEMENT FRAMEWORK The Banks risk management strategy is based on a clear understanding of various risks, disciplined risk assessment and measurement procedures and continuous monitoring. The policies and procedures established for this purpose are continuously benchmarked with international best practices. The Board of Directors has oversight on all the risks assumed by the Bank. Specific Committees have been constituted to facilitate focused oversight of various risks, as follows: - The Risk Committee of the Board reviews risk management policies of the Bank in relation to various risks. The Risk Committee reviews various risk policies pertaining to credit, market, liquidity, operational and outsourcing risks, review of the Banks stress testing framework and group risk management framework. The Committee reviews

the risk profile of the Bank through periodic review of the key risk indicators and risk profile templates and annual review of the Internal Capital Adequacy Assessment Process. The Committee also reviews the risk profile of its overseas banking subsidiaries annually. The Risk Committee reviews the Banks compliance with risk management guidelines stipulated by the Reserve Bank of India and of the status of implementation of the advanced approaches under the Basel framework. The Risk Committee also reviews the stress-testing framework as part of the Internal Capital Adequacy Assessment Process (ICAAP). The stress testing frame work included a wide range of Bank-specific and market (systemic) scenarios. Linkage of macroeconomic factors to stress test scenarios was documented as a part of ICAAP The ICAAP exercise covers the domestic and overseas operations of the Bank, the banking subsidiaries and the material non- banking subsidiaries. The Risk Committee also reviews the Liquidity Contingency Plan (LCP) for the Bank and the threshold limits. - Apart from sanctioning credit proposals, the Credit Committee of the Board reviews developments in key industrial sectors and the Banks exposure to these sectors as well as to large borrower accounts. The Credit Committee also reviews the non-performing loans, accounts under watch, overdues and incremental sanctions. - The Audit Committee of the Board provides direction to and also monitors the quality of the internal audit function and also monitors compliance with inspection and audit reports of RBI and statutory auditors. - The Asset Liability Management Committee is responsible for managing liquidity and interest rate risk and reviewing the asset-liability position of the Bank. A summary of reviews conducted by these committees are reported to the Board on a regular basis. Policies approved from time to time by the Board of Directors/Committees of the Board form the governing framework for each type of risk. The business activities are undertaken within this policy framework. Independent groups and sub-groups have been constituted across the Bank to facilitate independent evaluation, monitoring and reporting of various risks. These groups function independently of the business groups/sub-groups. The Bank has dedicated groups namely the Risk Management Group (RMG), Compliance Group, Corporate Legal Group, Internal Audit Group and the Financial Crime Prevention and Reputation Risk Management Group (FCPRRMG), with a mandate to identify, assess and monitor all of the Banks principal risks in accordance with well-defined policies and procedures. RMG is further organised into Credit Risk Management Group, Market Risk Management Group and Operational Risk Management Group. These groups are completely independent of all business operations and coordinate with representatives of the business units to implement ICICI Banks risk management policies and methodologies. The internal audit and compliance groups are responsible

to the Audit Committee of the Board. CORPORATE GOVERNANCE The corporate governance framework in ICICI Bank is based on an effective independent Board, the separation of the Boards supervisory role from the executive management and the constitution of Board Committees, generally comprising a majority of independent/non-executive Directors and chaired by independent/non-executive Directors, to oversee critical areas. EMPLOYEE STOCK OPTION SCHEME In fiscal 2000, ICICI Bank instituted an Employee Stock Option Scheme (ESOS) to enable the employees and Directors of ICICI Bank and its subsidiaries to participate in future growth and financial success of the Bank. As per the ESOS, as amended from time to time, the maximum number of options granted to any employee/Director in a year is limited to 0.05% of ICICI Banks issued equity shares at the time of the grant, and the aggregate of all such options is limited to 5% of ICICI Banks issued equity shares on the date of the grant (equivalent to 57.59 million shares at April 28, 2011). Options granted for fiscal 2003 and earlier years vest in a graded manner over a three-year period, with 20%, 30% and 50% of the grants vesting in each year, commencing not earlier than 12 months from the date of grant. Options granted lot fiscal 2004 to 2008 vest >n a graded manner over.a four year period, with 20%, 20%, 30% and 30% of the grants vesting in each year, commencing not earlier than 12 months from the date of grant. Options granted in April 2009 vest in a graded manner over a five year period with 20%, 20%, 30% and 30% of grant vesting each year commencing from the end of 24 months from the date of grant. Options granted in April 2010 vest in a graded manner over a four year period with 20%, 20%, 30% and 30% of the grant vesting each year commencing from the end of 12 months from the date of grant. On the basis of the recommendation of the Board Governance, Remuneration and Nomination Committee (BGRNC), the Board at its Meeting held on October 29, 2010 approved a grant of approximately 3.1 million options as a special measure to eligible employees and wholetime Directors of ICICI Bank and certain of its subsidiaries. Each option confers on the beneficiary a right to apply for one equity share of face value of Rs. 10 of ICICI Bank at Rs. 967.00 which was the average closing price of the ICICI Bank stock on the stock exchange during the six months up to October 28, 2010. 50% of the options granted would vest on April 30, 2014 and the balance 50% on April 30, 2015. The Bank has received approval of RBI for the above grant of options to wholetime Directors of the Bank. The Board further at its meeting held on April 28, 2011 approved a grant of approximately 4.25 million options for fiscal 2011 to eligible employees and wholetime Directors (options granted to wholetime Directors being subject to RBI approval). Each option confers on the

employee a right to apply for one equity share of face value of Rs. 10 of ICICI Bank atRs. 1,106.85 which was closing puce on the stock exchange which recorded the highest trading volume in ICICI Bank shares on April 27, 2011. These options would vest over a four year period, with 20%, 20%, 30% and 30% respectively of the grant of vesting each year commencing from the end of 12 months from the date of grant. Options can be exercised within 10 years from the date of grant or five years from the date of vesting, whichever is later. The price of the options granted prior to June 30, 2003 is the closing market price on the stock exchange, which recorded the highest trading volume on the date of grant. The price for options granted on or after June 30, 2003 till July 21, 2004 is equal to the average of the high and low market price of the equity shares in the two week period preceding the date of grant of the options, on the stock exchange which recorded the highest trading volume during the two week period. The price for options granted on or after July 22, 2004 (other than the grants made on October 29, 2010) is equal to the closing price on the stock exchange which recorded the highest trading volume preceding the date of grant of options. The above disclosure is in line with the SEBI guidelines, as amended from time to time. No employee was granted options during any one year equal to or exceeding 0.05% of the issued equity shares of ICICI Bank at the time of the grant. The diluted earnings per snare :US) pursuant to Issue of shares on exercise of options calculated in accordance with AS-20 was Rs. 45.06 in fiscal 2011 against basic EPS of Rs. 45.27. The Bank recognised a compensation cost of Rs. 2.9 million in fiscal 2011 based on the intrinsic value of options. However if ICICI Bank had used the fair value of options based on binomial tree model, compensation cost in the year ended March 31, 2011 would have been higher by Rs. 905.8 million and proforma profit after tax would have been Rs. 50.60 billion. On a proforma basis, ICICI Banks basic and diluted earnings per share would have been Rs. 44.47 and Rs. 44.27 respectively. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO, UNDER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956. The provisions of Section 217(1)(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption do not apply to the Bank. The Bank has, however, used information technology extensively in its operations. IMPLEMENTATION OF CIRCULAR ISSUED BY MINISTRY OF CORPORATE AFFAIRS ON "GREEN INITIATIVES IN CORPORATE GOVERNANCE" The Bank has implemented the Green Initiative as per Circular No. 17/2011 dated April 21, 2011 and Circular No. 18/2011 dated April 29, 2011 issued by the Ministry of Corporate Affairs to enable electronic delivery of notices/documents and annual reports to shareholders. DIRECTORS RESPONSIBILITY STATEMENT

The Directors confirm: 1. that in the preparation of the annual accounts, the applicable accounting standards have been followed, along with proper explanation relating to material departures; 2. that they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit or loss of the Bank for that period; 3. that they have taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the provisions of the Banking Regulation Act, 1949 and the Companies Act, 1956 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities; and 4. that they have prepared the annual accounts on a going concern basis. ACKNOWLEDGEMENTS ICICI Bank is grateful to the Government of India, RBI, SEBI and overseas regulators for their continued co- operation, support and guidance. ICICI Bank wishes to thank its investors, the domestic and international banking community, rating agencies and stock exchanges for their support. ICICI Bank would like to take this opportunity to express sincere thanks to its valued clients and customers for their continued patronage. The Directors express their deep sense of appreciation of all the employees, whose outstanding professionalism, commitment and initiative has made the organisations growth and success possible and continues to drive its progress. Finally, the Directors wish to express their gratitude to the Members for their trust and support. For and on behalf of the Board K. V. Kamath May 13, 2011 Chairman

Director Report
Mar2009 Mar 2010 Mar2011

The Directors have pleasure in presenting the Sixteenth Annual Report of ICICI Bank Limited with the audited statement of accounts for the year ended March 31, 2010.
FINANCIAL HIGHLIGHTS The financial performance for fiscal 2010 is summarised in the following table: Rs. billion, except percentages Fiscal 2009 Fiscal 2010 % change

Net interest income and other income Operating profit Provisions & contingencies1 Profit before tax Profit after tax Consolidated profit after tax Excludes provision for taxes. Appropriations

159.70 89.25 38.08 51.17 37.58 35.77

155.92 97.32 43.87 53.45 40.25 46.70

(2.4) 9.0 15.2 4.5 7.1 30.6

The profit & loss account shows a profit after tax of Rs. 40.25 billion after provisions and contingencies of Rs. 43.87 billion and all expenses. The disposable profit is Rs. 68.35 billion, taking into account the balance of Rs. 28.10 billion brought forward from the previous year. Your Directors have recommended a dividend at the rate of Rs. 12 per equity share of face value Rs. 10 for the year and have appropriated the disposable profit as follows: Rs. billion Fiscal 2009 To Statutory Reserve, making in all Rs. 58.86 billion Fiscal 2010

9.40

10.07

To Special Reserve created and maintained in terms of Section 36(1) (viii) of the Income-tax Act, 1961, making in all Rs. 26.44 billion 2.50 To Capital Reserve, making in all Rs. 20.63 billion To Investment Reserve, making in all Rs. 1.16 billion To General Reserve, making in all Rs. 49.79 billion Dividend for the year (proposed) - On equity shares @ Rs. 12 per share (@ Rs. 11 per share for fiscal 2009) On preference shares (Rs.) Corporate dividend tax

3.00

8.18

4.44

---

1.16 0.01

12.25 35,000 1.51

13.38 35,000 1.64

Leaving balance to be carried forward to the next year2

28.10

34.64

1. Includes dividend for the prior year paid on shares issued after the balance sheet date and prior to the record date. 2. After taking into account transfer to Reserve Fund Rs. 2.2 million for fiscal 2010, making in all Rs. 10.9 million. MERGER OF THE BANK OF RAJASTHAN LIMITED WITH ICICI BANK The Board of Directors of ICICI Bank and the Board of Directors of The Bank of Rajasthan Limited (Bank of Rajasthan) at their respective Meetings held on May 23, 2010, approved the scheme of amalgamation of Bank of Rajasthan with ICICI Bank. The amalgamation is subject to approval of RBI and Members of both the Banks. Approval of the Members of ICICI Bank is being sought at an extraordinary general meeting scheduled on June 21, 2010. The proposed amalgamation would substantially enhance ICICI Banks branch network, already the largest among Indian private sector banks, and especially strengthen its presence in northern and western India. It would combine Bank of Rajasthans branch franchise with ICICI Banks strong capital base, to enhance the ability of the merged entity to capitalise on the growth opportunities in the Indian economy. About Bank of Rajasthan Bank of Rajasthan is a listed old Indian private sector bank with its corporate office at Mumbai in Maharashtra and registered office at Udaipur in Rajasthan. At March 31, 2009, Bank of Rajasthan had 463 branches and 111 ATMs, total assets of Rs. 172.24 billion, deposits of Rs. 151.87 billion and advances of Rs. 77.81 billion. It made a net profit of Rs. 1.18 billion in fiscal 2009 and a net loss of Rs. 0.10 billion in the nine months ended December 31, 2009. Around 40% of the branches of the Bank of Rajasthan are located in rural and semi-urban areas. SUBSIDIARY COMPANIES At March 31, 2010, ICICI Bank had 17 subsidiaries as listed in the following table: Domestic Subsidiaries ICICI Prudential Life Insurance Company Limited ICICI Lombard General Insurance Company Limited ICICI Prudential Asset Management International Subsidiaries ICICI Bank UK PLC

ICICI Bank Canada

ICICI Bank Eurasia Limited

Company Limited ICICI Prudential Trust Limited ICICI Securities Limited ICICI Securities Primary Dealership Limited ICICI Venture Funds Management Company Limited ICICI Home Finance Company Limited ICICI Investment Management Company Limited ICICI Trusteeship Services Limited ICICI Prudential Pension Funds Management Company Limited1 1. 2. 3.

Liability Company ICICI Securities Holdings Inc.2 ICICI Securities Inc.3

ICICI International Limited

Subsidiary of ICICI Prudential Life Insurance Company Limited. Subsidiary of ICICI Securities Limited. Subsidiary of ICICI Securities Holdings Inc.

ICICI Wealth Management Inc., a subsidiary of ICICI Bank Canada, has been dissolved effective December 31, 2009. As approved by the Central Government vide letter dated April 9, 2010 under Section 212(8) of the Companies Act, 1956, copies of the balance sheet, profit & loss account, report of the board of directors and report of the auditors of each of the subsidiary companies have not been attached to the accounts of the Bank for fiscal 2010. The Bank will make available these documents/details upon request by any Member of the Bank. These documents/details will be available on the Banks website www.icicibank. com and will also be available for inspection by any Member of the Bank at its Registered Office and Corporate Office and also at the registered offices of the concerned subsidiaries. As required by Accounting Standard-21 (AS-21) issued by the Institute of Chartered Accountants of India, the Banks consolidated financial statements included in this Annual Report incorporate the accounts of its subsidiaries and other entities. A summary of key financials of the Banks subsidiaries is also included in this Annual Report. DIRECTORS The Members at their Fifteenth Annual General Meeting held on June 29, 2009, approved the appointment of Sandeep Bakhshi, Deputy Managing Director, N. S. Kannan, Executive Director & CFO and K. Ramkumar,

Executive Director. Reserve Bank of India (RBI) vide its letter dated July 2, 2009 approved the appointment of Sandeep Bakhshi. RBI vide its letter dated June 16, 2009 approved the appointment of N. S. Kannan and K. Ramkumar. T. S. Vijayan, Chairman, Life Insurance Corporation of India, and a non-executive Director of the Bank resigned from the Board effective November 24, 2009. Pursuant to the provisions of the Banking Regulation Act, 1949, P. M. Sinha retired from the Board effective January 22, 2010 and L. N. Mittal, Anupam Puri and Marti Subrahmanyam retired from the Board effective May 3, 2010 on completion of eight years as non-executive Directors of the Bank. The Board placed on record its deep appreciation and gratitude for their guidance and contribution to the Bank. The Board at its Meeting held on January 21, 2010 appointed Homi R. Khusrokhan, former Managing Director, Tata Chemicals Limited and V. Sridar, former Chairman, National Housing Bank and former Chairman & Managing Director, UCO Bank, as additional Directors effective January 21, 2010. Further, the Board at its Meeting held on April 30, 2010 appointed Tushaar Shah, Senior Fellow at the International Water Management Institute and former Director of the Institute of Rural Management as an additional Director effective May 3, 2010. Homi R. Khusrokhan, Tushaar Shah and V. Sridar hold office upto the date of the forthcoming Annual General Meeting (AGM) and are eligible for appointment. Sonjoy Chatterjee, Executive Director resigned from the services of the Bank effective April 30, 2010. The Board at its Meeting held on April 30, 2010 approved a proposal for the appointment of Rajiv Sabharwal as a wholetime Director of the Bank subject to approval of RBI. Approval of the Members is being sought at the current AGM for the appointment of Rajiv Sabharwal as a wholetime Director of the Bank for a period of five years effective only from the date of receipt of RBI approval. In terms of the provisions of the Companies Act, 1956 and the Articles of Association of the Bank, K. V. Kamath, Sridar Iyengar and Narendra Murkumbi would retire by rotation at the forthcoming AGM and are eligible for re-appointment. K. V. Kamath and Sridar Iyengar have offered themselves for re-appointment. Narendra Murkumbi has expressed his desire not to seek re-appointment as a Director. A resolution is proposed to the Members in the Notice of the current AGM to this effect and also not to fill up the vacancy caused by the retirement of Narendra Murkumbi at this meeting or any adjourned meeting thereof. AUDITORS The auditors, B S R & Co., Chartered Accountants, will retire at the ensuing AGM. They had been statutory auditors of the Bank for the last four years, which is the maximum term of appointment of auditors permitted by RBI. As recommended by the Audit Committee, the Board has proposed the appointment of S. R. Batliboi & Co., Chartered Accountants as statutory auditors for fiscal 2011. Their appointment has been

approved by RBI vide its letters dated April 20, 2010 and May 13, 2010. You are requested to consider their appointment. PERSONNEL As required by the provisions of Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in the Annexure to the Directors Report. APPOINTMENT OF NOMINEE DIRECTORS ON THE BOARDS OF ASSISTED COMPANIES Erstwhile ICICI Limited (ICICI) had a policy of appointing nominee directors on the boards of certain borrower companies based on loan covenants, with a view to enable monitoring of the operations of those companies. Subsequent to the merger of ICICI with ICICI Bank, the Bank continues to nominate directors on the boards of assisted companies. Apart from the Banks employees, experienced professionals from various fields are appointed as nominee Directors. At March 31, 2010, ICICI Bank had 24 nominee directors, of whom 20 were employees of the Bank, on the boards of 39 assisted companies. The Bank has a Nominee Director Cell for maintaining records of nominee directorships. RISK MANAGEMENT FRAMEWORK The Banks risk management strategy is based on a clear understanding of various risks, disciplined risk assessment and measurement procedures and continuous monitoring. The policies and procedures established for this purpose are continuously benchmarked with international best practices. The key principles underlying our risk management framework are as follows: - The Board of Directors has oversight on all the risks assumed by the Bank. Specific Committees of the Board have been constituted to facilitate focused oversight of various risks. The Risk Committee reviews risk management policies of the Bank in relation to various risks and regulatory compliance issues. It reviews key risk indicators covering areas such as credit risk, interest rate risk, liquidity risk, and foreign exchange risk and the limits framework, including stress test limits, for various risks. It also carries out an assessment of the capital adequacy based on the risk profile of the Banks balance sheet and reviews the status with respect to implementation of Basel II norms. The Credit Committee reviews developments in key industrial sectors and Banks exposure to these sectors as well as to large borrower accounts. The Audit Committee provides direction to and also monitors the quality of the internal audit function. The Asset Liability Management Committee is responsible for managing the balance sheet and reviewing asset-liability position of the Bank. - Policies approved from time to time by the Board of Directors/Committees of the Board form the governing framework for each type of risk. The business activities are undertaken within this policy framework.

- Independent groups and sub-groups have been constituted across the Bank to facilitate independent evaluation, monitoring and reporting of various risks. These groups function independently of the business groups/sub-groups. The Bank has dedicated groups namely the Global Risk Management Group (GRMG), Compliance Group, Corporate Legal Group, Internal Audit Group and the Financial Crime Prevention and Reputation Risk Management Group (FCPRRMG), with a mandate to identify, assess and monitor all of the Banks principal risks in accordance with well-defined policies and procedures. GRMG is further organised into the Global Credit Risk Management Group, the Global Market Risk Management Group and the Global Operational Risk Management Group. These groups are completely independent of all business operations and coordinate with representatives of the business units to implement ICICI Banks risk management methodologies. The internal audit and compliance groups are responsible to the Audit Committee of the Board. DIRECTORS RESPONSIBILITY STATEMENT The Directors confirm: 1. that in the preparation of the annual accounts, the applicable accounting standards have been followed, along with proper explanation relating to material departures; 2. that they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit or loss of the Bank for that period; 3. that they have taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the provisions of the Banking Regulation Act, 1949 and the Companies Act, 1956 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities; and 4. that they have prepared the annual accounts on a going concern basis. ACKNOWLEDGEMENTS ICICI Bank is grateful to the Government of India, RBI, SEBI and overseas regulators for their continued co-operation, support and guidance. ICICI Bank wishes to thank its investors, the domestic and international banking community, rating agencies and stock exchanges for their support. ICICI Bank would like to take this opportunity to express sincere thanks to its valued clients and customers for their continued patronage. The Directors express their deep sense of appreciation of all the employees, whose outstanding professionalism, commitment and

initiative has made the organisations growth and success possible and continues to drive its progress. Finally, the Directors wish to express their gratitude to the Members for their trust and support. For and on behalf of the Board K. V. Kamath May 24, 2010 Chairman

Director Report
Mar2008 Mar 2009 Mar2010

The Directors have pleasure in presenting the Fifteenth Annual Report of ICICI Bank Limited with the audited statement of accounts for the year ended March 31, 2009.
FINANCIAL HIGHLIGHTS The financial performance for fiscal 2009 is summarised in the following table: Rs. billion, except percentages Fiscal 2008 Fiscal 2009 % change

Net interest income and other income Operating profit Provisions & contingencies1 Profit before tax Profit after tax Consolidated profit after tax 1. Excludes provision for taxes.

161.15 79.61 29.05 50.56 41.58 33.98

159.70 89.25 38.08 51.17 37.58 35.77

-0.9 12.1 31.1 1.2 -9.6 5.3

Appropriations The profit & loss account shows a profit after tax of Rs. 37.58 billion after provisions and contingencies of Rs. 38.08 billion and all expenses. The disposable profit is Rs. 61.94 billion, taking into account the balance of Rs. 24.36 billion brought forward from the previous year. Your Directors have recommended a dividend at the rate of Rs. 11.00 per equity share of face value Rs. 10 for the year and have appropriated the disposable profit as follows: Rs. billion To Statutory Reserve, making in all Rs. 48.79 billion To Special Reserve created and maintained in terms of Section 36(1) (viii) of the Income-tax Act, 1961, making in all Rs. 23.44 billion To Capital Reserve, making in all Rs. 16.19 billion Dividend for the year (proposed) On equity shares @ Rs. 11 per share (@ Rs. 11 per share for fiscal 2008)2 On preference shares (Rs.) Corporate dividend tax Leaving balance to be carried forward to the next year3 Fiscal 2008 Fiscal 2009

10.40

9.40

1.75 1.27 12.28 35,000 1.50 24.36

2.50 8.18 12.25 35,000 1.51 28.10

1. Includes Rs. 0.20 billion transferred on amalgamation of The Sangli Bank Limited with the Bank. 2. Includes dividend for the prior year paid on shares issued after the balance sheet date and prior to the record date. 3. After taking into account transfer to Reserve Fund Rs. 4.2 million for fiscal 2009, making in all Rs. 8.8 million. SUBSIDIARY COMPANIES At March 31, 2009, ICICI Bank had 17 subsidiaries as listed below: Domestic Subsidiaries ICICI Prudential Life Insurance Company Limited ICICI Lombard General Insurance Company Limited

ICICI ICICI ICICI ICICI ICICI ICICI ICICI ICICI

Prudential Asset Management Company Limited Prudential Trust Limited Securities Limited Securities Primary Dealership Limited Venture Funds Management Company Limited Home Finance Company Limited Investment Management Company Limited Trusteeship Services Limited

International Subsidiaries ICICI Bank UK PLC ICICI Bank Canada ICICI Wealth Management Inc.1 ICICI Bank Eurasia Limited Liability Company ICICI Securities Holdings Inc.2 ICICI Securities Inc.3 ICICI International Limited 1. 2. 3. Subsidiary of ICICI Bank Canada. Subsidiary of ICICI Securities Limited. Subsidiary of ICICI Securities Holdings Inc.

ICICI Prudential Pension Funds Management Company Limited has been incorporated on April 22, 2009 as a 100% subsidiary of ICICI Prudential Life Insurance Company Limited. As approved by the Central Government vide letter dated April 20, 2009 under Section 212(8) of the Companies Act, 1956, copies of the balance sheet, profit & loss account, report of the board of directors and report of the auditors of each of the subsidiary companies have not been attached to the accounts of the Bank for fiscal 2009. The Bank will make available these documents/details upon request by any Member of the Bank. These documents/details will be available on the Banks website www.icicibank.com and will also be available for inspection by any Member of the Bank at its Registered Office and Corporate Office and also at the registered offices of the concerned subsidiaries. As required by Accounting Standard-21 (AS-21) issued by the Institute of Chartered Accountants of India, the Banks consolidated financial statements included in this Annual Report incorporate the accounts of its subsidiaries and other entities. A summary of key financials of the Banks subsidiaries is also included in this Annual Report. DIRECTORS N. Vaghul retired as non-executive Chairman of the Board of Directors on completion of his term on April 30, 2009. He assumed office as Chairman & Managing Director of erstwhile ICICI Limited (ICICI) in 1985. ICICI Bank was established in 1994 as a subsidiary of ICICI under his leadership. He laid down his executive position and became non-executive Chairman of ICICI in 1996. He became Chairman of ICICI Bank in 2002 following the merger of ICICI with the Bank. The Board

placed on record its deep appreciation for his guidance and leadership to the ICICI Group for over two decades, as it transformed itself from a project finance company into a diversified financial services group. K. V. Kamath completed his term as Managing Director & CEO on April 30, 2009. He assumed office as Managing Director & CEO of ICICI in 1996 and became Managing Director & CEO of ICICI Bank in 2002 following the merger of ICICI with the Bank. The Board placed on record its deep appreciation for his outstanding leadership of the ICICI Group since 1996, and of the growth and successful diversification achieved by the Group during his tenure as Managing Director & CEO. The Board at its Meeting held on December 19, 2008 appointed K. V. Kamath as non-executive Chairman for a period of five years effective May 1, 2009. Further, the Board also appointed Chanda D. Kochhar as Managing Director & CEO for a period of five years effective May 1, 2009. Her term as Joint Managing Director & CFO expired on March 31, 2009 and the Board approved extension of her term till April 30, 2009. Reserve Bank of India (RBI) vide its letter dated March 12, 2009 approved the appointments/re-appointment of the following Directors of the Bank: - Appointment of K. V. Kamath as non-executive Chairman for a period of three years w.e.f. May 1, 2009. - Re-appointment of Chanda D. Kochhar as Joint Managing Director & CFO for a period of one month w.e.f. April 1,2009. - Appointment of Chanda D. Kochhar as Managing Director & CEO for a period of three years w.e.f. May 1,2009. Approval of the Members to the above appointments was sought and obtained by way of postal ballot, the result of which was declared on February 13, 2009. Madhabi Puri Buch, Executive Director resigned from the Board on her appointment as Managing Director & CEO of ICICI Securities Limited effective February 1, 2009. The Board placed on record its appreciation of her contribution to the Bank. The Board at its Meeting held on January 24, 2009 appointed N. S. Kannan as additional Director of the Bank effective May 1, 2009 and K. Ramkumar as additional Director of the Bank effective February 1, 2009. N. S. Kannan was Executive Director of ICICI Prudential Life Insurance Company Limited and K. Ramkumar was the Group Chief Human Resources Officer of ICICI Bank. N. S. Kannan and K. Ramkumar have been appointed as wholetime Directors designated as Executive Director & Chief Financial Officer and Executive Director respectively, for a period of five years. Their appointments are subject to the approval of RBI and the Members. V. Vaidyanathan, Executive Director resigned from the Board on his appointment as Managing Director & CEO of ICICI Prudential Life Insurance Company Limited effective May 1, 2009. The Board placed on record its appreciation of his contribution to the Bank and his

leadership role in building the Banks retail business. The Board at its Meeting held on April 25, 2009 appointed Sandeep Bakhshi as additional Director of the Bank designated as Executive Director effective May 1, 2009 for a period of five years. Sandeep Bakhshi was earlier Managing Director & CEO of ICICI Lombard General Insurance Company Limited. The Board has vide circular resolution passed on May 8, 2009 designated Sandeep Bakhshi as Deputy Managing Director effective from the date of his appointment to the Board. His appointment is subject to the approval of RBI and the Members. Government of India has nominated Anup K. Pujari, Joint Secretary, Department of Economic Affairs, Ministry of Finance, Government of India, as a Director on the Board of ICICI Bank effective January 27, 2009, in place of Arun Ramanathan. The Board placed on record its appreciation of the invaluable guidance provided by Arun Ramanathan to the Bank. In terms of Article 128A of the Articles of Association, Anup K. Pujari is not liable to retire by rotation. The Board at its Meeting held on April 25, 2009 appointed M. S. Ramachandran, former Chairman, Indian Oil Corporation, as an additional Director effective April 25, 2009. M. S. Ramachandran holds office upto the date of the forthcoming Annual General Meeting (AGM) but is eligible for appointment. In terms of the provisions of the Companies Act, 1956 and the Articles of Association of the Bank, Anupam Puri, M. K. Sharma, P. M. Sinha and V. Prem Watsa would retire by rotation at the forthcoming AGM and, being eligible, offer themselves for re-appointment. AUDITORS The auditors, B S R & Co., Chartered Accountants, will retire at the ensuing AGM. As recommended by the Audit Committee, the Board has proposed the appointment of B S R & Co. as statutory auditors for fiscal 2010. Their appointment has been approved by RBI vide its letter dated April 2, 2009. You are requested to consider their appointment. PERSONNEL As required by the provisions of Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in the Annexure to the Directors Report. APPOINTMENT OF NOMINEE DIRECTORS ON THE BOARDS OF ASSISTED COMPANIES ICICI had a policy of appointing nominee directors on the boards of certain borrower companies based on loan covenants, with a view to enable monitoring of the operations of those companies. Subsequent to the merger of ICICI with ICICI Bank, the Bank continues to nominate directors on the boards of assisted companies. Apart from the Banks employees, experienced professionals from various fields are appointed as nominee Directors. At March 31, 2009, ICICI Bank had 30 nominee

Directors, of whom 23 were employees of the Bank, on the boards of 41 assisted companies. The Bank has a Nominee Director Cell for maintaining records of nominee directorships. EMPLOYEE STOCK OPTION SCHEME In fiscal 2000, ICICI Bank instituted an Employee Stock Option Scheme (ESOS) to enable the employees and Directors of ICICI Bank and its subsidiaries. As per the ESOS as amended from time to time, the maximum number of options granted to any employee/Director in a year is limited to 0.05% of ICICI Banks issued equity shares at the time of the grant, and the aggregate of all such options is limited to 5% of ICICI Banks issued equity shares on the date of the grant (equivalent to 55.7 million shares at April 25, 2009). Options granted for fiscal 2003 and earlier years vest in a graded manner over a three-year period, with 20%, 30% and 50% of the grants vesting in each year, commencing not earlier than 12 months from the date of grant. Options granted for fiscal 2004 to 2008 vest in a graded manner over a four-year period, with 20%, 20%, 30% and 30% of the grants vesting in each year, commencing not earlier than 12 months from the date of grant. Options can be exercised within 10 years from the date of grant or five years from the date of vesting, whichever is later. The price of the options granted prior to June 30, 2003 is the closing market price on the stock exchange, which recorded the highest trading volume on the date of grant. The price for options granted on or after June 30, 2003 till July 21, 2004 is equal to the average of the high and low market price of the equity shares in the two week period preceding the date of grant of the options, on the stock exchange which recorded the highest trading volume during the two week period. The price for options granted on or after July 22, 2004 is equal to the closing price on the stock exchange which recorded the highest trading volume preceding the date of grant of options. The above pricing is in line with the SEBI guidelines, as amended from time to time. On the basis of the recommendation of the Board Governance & Remuneration Committee, the Board at its Meeting held on April 25, 2009 approved a grant of approximately 1.7 million options for fiscal 2009 to eligible employees. Each option confers on the employee a right to apply for one equity share of face value of Rs. 10 of ICICI Bank at Rs. 434.10, which was the closing price on the stock exchange, which recorded the highest trading volume in ICICI Bank shares on April 24, 2009. These options would vest over a five year period, with 20%, 20%, 30% and 30% respectively of the grant vesting each year commencing from the end of the second year from the date of the grant. No options have been granted to wholetime Directors for fiscal 2009. Particulars of options granted by ICICI Bank upto April 25, 2009 are given below: Options granted Options vested Options exercised 52,668,955 32,068,304 24,271,617

Number of shares allotted pursuant to exercise of options 24,271,617 Options forfeited/lapsed 7,718,099 Extinguishment or modification of options Nil Amount realised by exercise of options (Rs.) 4,682,588,988 Total number of options in force 20,679,239 No employee was granted options during any one year equal to or exceeding 0.05% of the issued equity shares of ICICI Bank at the time of the grant. The diluted earnings per share (EPS) pursuant to issue of shares on exercise of options calculated in accordance with AS-20 was Rs. 33.70 in fiscal 2009 against basic EPS of Rs. 33.76. Since the exercise price of ICICI Banks options is the last closing price on the stock exchange, which recorded the highest trading volume preceding the date of grant of options, there is no compensation cost in fiscal 2009 based on the intrinsic value of options. However, if ICICI Bank had used the fair value of options based on the Black-Scholes model, compensation cost in fiscal 2009 would have been higher by Rs. 1,411.7 million and proforma profit after tax would have been Rs. 36,169.6 million. On a proforma basis, ICICI Banks basic and diluted earnings per share would have been Rs. 32.49 and Rs. 32.43 respectively. The key assumptions used to estimate the fair value of options granted during the fiscal 2009 are given below: Risk-free interest rate Expected life Expected volatility Expected dividend yield 7.62% 2 38.90% 1.20% 9.24% 6.4 years 45.23% 3.57%

In respect of options granted in fiscal 2009, the weighted average exercise price of the options and the weighted average fair value of the options were Rs. 912.30 per option and Rs. 331.19 per option respectively. DIRECTORS RESPONSIBILITY STATEMENT The Directors confirm: 1. that in the preparation of the annual accounts, the applicable accounting standards have been followed, along with proper explanation relating to material departures; 2. that they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit or loss of the Bank for that period; 3. that they have taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the provisions of the Banking Regulation Act, 1949 and the Companies Act, 1956 for safeguarding the assets of the Bank and for preventing and detecting

fraud and other irregularities; and 4. that they have prepared the annual accounts on a going concern basis. ACKNOWLEDGEMENTS ICICI Bank is grateful to the Government of India, RBI, SEBI and overseas regulators for their continued co-operation, support and guidance. ICICI Bank wishes to thank its investors, the domestic and international banking community, investment bankers, rating agencies and stock exchanges for their support. ICICI Bank would like to take this opportunity to express sincere thanks to its valued clients and customers for their continued patronage. The Directors express their deep sense of appreciation of all the employees, whose outstanding professionalism, commitment and initiative has made the organisations growth and success possible and continues to drive its progress. Finally, the Directors wish to express their gratitude to the Members for their trust and support. For and on behalf of the Board K. V. Kamath Chairman

May 8, 2009

Director Report
Mar2007 Mar 2008 Mar2009

The Directors have pleasure in presenting the Fourteenth Annual Report of ICICI Bank Limited with the audited statement of accounts for the year ended March 31, 2008.
Financial Highlights The financial performance for fiscal 2008 is summarised in the following table: Rs. billion, except percentages Fiscal 2007 Fiscal 2008 161.15 79.61 29.05 50.56 41.58 33.98 % change 28.3% 35.5% 30.5% 38.6% 33.7% 23.1%

Net interest income and other income 125.65 Operating profit 58.74 Provisions & contingencies 22.26 Profit before tax 36.48 Profit after tax 31.10 Consolidated profit after tax 27.61 1. Excludes provision for taxes.

Appropriations The profit & loss account shows a profit after tax of Rs. 41.58 billion after provisions and contingencies of Rs. 29.05 billion and all expenses. The disposable profit is Rs. 51.56 billion, taking into account the balance of Rs. 9.98 billion brought forward from the previous year. Your Directors have recommended a dividend rate of 110% (Rs. 11 per equity share of face value Rs. 10) for the year and have appropriated the disposable profit as follows: Rs. billion Fiscal 2007 Fiscal 2008 To Statutory Reserve, making in all Rs. 39.391 billion To Special Reserve created and maintained in terms of Section 36(1)(viii) of the Income-tax Act, 1961, making in all Rs. 20.94 billion To Capital Reserve, making in all Rs. 8.01 billion Dividend for the year (proposed) On equity shares @ 110% (@100% for fiscal 2007) On preference shares (Rs.) Corporate dividend tax Balance to be carried forward to the next year

7.80

10.40

4.50

1.75

1.21

1.27

9.01 35,000 1.53 9.98

12.282 35,000 1.50 24.36

1. Includes Rs. 0.20 billion transferred on amalgamation of The Sangli Bank Limited with the Bank. 2. Includes dividend for fiscal 2007 paid on shares issued pursuant to exercise of employee stock options after the balance sheet date and prior to the record date. 3. After taking into account transfer to Reserve Fund Rs. 3.14 million for fiscal 2008, making in all Rs. 4.53 million. ISSUANCE OF EQUITY CAPITAL In fiscal 2008, ICICI Bank successfully concluded a capital raising exercise, raising a total of about Rs. 200.00 billion through a simultaneous public issue in India and issue of American Depositary Shares (ADS) in the United States. The public issue in India was subscribed 11.5 times and the ADS issue was subscribed over 5 times. The domestic issue was priced at Rs. 940, representing a premium of 3.6% to the average closing price from the announcement to the pricing date and the ADS was priced at USD 49.25, representing a premium of 6.6% over the domestic issue price. SUBSIDIARY COMPANIES At March 31, 2008, ICICI Bank had 17 subsidiaries as listed below:

Domestic Subsidiaries ICICI ICICI ICICI ICICI ICICI ICICI ICICI ICICI ICICI ICICI Securities Limited Securities Primary Dealership Limited Prudential Life Insurance Company Limited Lombard General Insurance Company Limited Prudential Asset Management Company Limited Prudential Trust Limited Venture Funds Management Company Limited Home Finance Company Limited Investment Management Company Limited Trusteeship Services Limited

International Subsidiaries ICICI Bank UK PLC ICICI Bank Canada ICICI Wealth Management Inc.1 ICICI Bank Eurasia Limited Liability Company ICICI Securities Holdings Inc.2 ICICI Securities Inc.3 ICICI International Limited As approved by the Central Government vide letter dated May 15, 2008 under Section 212(8) of the Companies Act, 1956, copies of the balance sheet, profit & loss account, report of the board of directors and report of the auditors of each of the subsidiary companies have not been attached to the accounts of the Bank for fiscal 2008. The Bank will make available these documents/details upon request by any Member of the Bank. These documents/details will be available on the Banks website www.icicibank.com and will also be available for inspection by any Member of the Bank at its Registered Office and Corporate Office and also at the registered offices of the concerned subsidiaries. As required by Accounting Standard- 21 (AS-21) issued by the Institute of Chartered Accountants of India, the Banks consolidated financial statements included in this Annual Report incorporate the accounts of its subsidiaries and other entities. A summary of key financials of the Banks subsidiaries is also included in this Annual Report. DIRECTORS R. K. Joshi, former Chairman of General Insurance Corporation of India, and an independent Director of the Bank, passed away on July 4, 2007. The Board deeply mourns the untimely demise of R. K. Joshi and places on record its appreciation for the contribution made by him in enriching the deliberations of the Board during his association with the Bank. Nachiket Mor, Deputy Managing Director, opted for early retirement effective October 19, 2007, to dedicate himself to the social initiatives of the ICICI Group. He has been appointed as President of the ICICI Foundation for Inclusive Growth. The Board places on record its appreciation for the contribution made by him towards the growth

and development of the ICICI Group. At its Meeting held on October 19, 2007, the Board elevated Chanda D. Kochhar, Deputy Managing Director as Joint Managing Director & Chief Financial Officer and appointed Sonjoy Chatterjee, Managing Director & CEO, ICICI Bank UK PLC, as an additional Director of the Bank. Sonjoy Chatterjee has been appointed as a wholetime Director designated as Executive Director, for a period of five years, effective October 22, 2007. Reserve Bank of India (RBI) has vide its letter dated December 3, 2007, approved his appointment. Approval of the Members is being sought at the forthcoming Annual General Meeting (AGM). Vinod Rai, Secretary (Financial Sector), Department of Financial Services, Ministry of Finance, Government of India was nominated as a Director of the Bank by Government of India effective January 3, 2003. He resigned from the Board effective January 6, 2008, consequent to his appointment as the Comptroller & Auditor General of India (CAG). The Board places on record its appreciation of the role played by Vinod Rai during his tenure as a Director and his guidance and contribution as a Member of the Board. Arun Ramanathan, Secretary (Financial Sector), Department of Financial Services, Ministry of Finance, Government of India was nominated as a Director of the Bank by Government of India effective January 18, 2008. In terms of Article 128A of the Articles of Association, Arun Ramanathan is not liable to retire by rotation. In terms of the provisions of the Companies Act, 1956 and the Articles of Association of the Bank, Sridar Iyengar, T. S. Vijayan, L. N. Mittal and Narendra Murkumbi would retire by rotation at the forthcoming AGM and, being eligible, offer themselves for re-appointment. AUDITORS The auditors, B S R & Co., Chartered Accountants, will retire at the ensuing AGM. As recommended by the Audit Committee, the Board has proposed the appointment of B S R & Co. as stautory auditors for fiscal 2009. You are requested to consider their appointment. Their appointment has been approved by RBI vide its letter dated April 21, 2008. PERSONNEL As required by the provisions of Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of the employees are set out in the Annexure to the Directors Report. APPOINTMENT OF NOMINEE DIRECTORS ON THE BOARD OF ASSISTED COMPANIES Erstwhile ICICI Limited (ICICI) had a policy of appointing nominee directors on the boards of certain borrower companies based on loan covenants, with a view to enable monitoring of the operations of those companies. Subsequent to the merger of ICICI with ICICI Bank, the Bank

continues to nominate directors on the boards of assisted companies. Apart from the Banks employees, experienced professionals from various fields are appointed as nominee Directors. At March 31, 2008, ICICI Bank had 60 nominee Directors, of whom 39 were employees of the Bank, on the boards of 84 assisted companies. The Bank has a Nominee Director Cell for maintaining records of nominee directorships. CORPORATE GOVERNANCE ICICI Bank has established a tradition of best practices in corporate governance. The corporate governance framework in ICICI Bank is based on an effective independent Board, the separation of the Boards supervisory role from the executive management and the constitution of Board Committees, generally comprising a majority of independent Directors and chaired by an independent Director, to oversee critical areas. I. Philosophy of Corporate Governance

ICICI Banks corporate governance philosophy encompasses not only regulatory and legal requirements, such as the terms of listing agreements with stock exchanges, but also several voluntary practices aimed at a high level of business ethics, effective supervision and enhancement of value for all stakeholders. Whistle Blower Policy ICICI Bank has formulated a Whistle Blower Policy for the ICICI Group. In terms of this policy, employees of ICICI Bank and its group companies are free to raise issues, if any, on breach of any law, statute or regulation by the Bank and on the accounting policies and procedures adopted for any area or item and report them to the Audit Committee through specified channels. This mechanism has been communicated and posted on the Banks intranet. Prevention of Insider Trading In accordance with the requirements of Securities and Exchange Board of India (SEBI) (Prohibition of Insider Trading) Regulations, 1992, ICICI Bank has instituted a comprehensive code of conduct for prevention of insider trading. Code of Business Conduct and Ethics The Board of Directors of the Bank adopted a new Group Code of Business Conduct and Ethics (the Group Code) primarily by strengthening and providing illustrative guidance on the existing Code of Business Conduct and Ethics approved earlier by the Board. The Group Code aims at ensuring consistent standards of conduct and business ethical practices across the constituents of the ICICI Group. Consequently, each constituent of the ICICI Group would review their respective codes and update the same in accordance with the Group Code. This Code is also available on the website of the Bank www.icicibank.com. In terms of Clause 49 of the Listing Agreement, a confirmation from the Managing

Director & CEO regarding compliance with the Code by all the Directors and senior management is given on page 32 of the Annual Report. CEO/CFO Certification In terms of Clause 49 of the Listing Agreement, the certification by the Managing Director & CEO and Joint Managing Director & Chief Financial Officer on the financial statements and internal controls relating to financial reporting has been obtained. Board of Directors ICICI Bank has a broad-based Board of Directors, constituted in compliance with the Banking Regulation Act, 1949, Companies Act, 1956 and listing agreements entered into with stock exchanges and in accordance with best practices in corporate governance. The Board functions either as a full Board or through various committees constituted to oversee specific operational areas. The Board has constituted nine committees, namely, Audit Committee, Board Governance & Remuneration Committee, Credit Committee, Customer Service Committee, Fraud Monitoring Committee, Risk Committee, Share Transfer & Shareholders/ Investors Grievance Committee, Strategy Committee and Committee of Directors. A majority of these Board Committees are chaired by independent Directors and mainly consist of independent Directors. At March 31, 2008, the Board of Directors consisted of 16 members. There were five meetings of the Board during fiscal 2008 on April 28, July 21, and October 19 in 2007 and January 19 and March 7-8 in 2008. The names of the Directors, their attendance at Board Meetings during the year and the number of other directorships and board committee memberships held by them at March 31, 2008 are set out in the following table: Board Meetings attended during the year Attendance at last AGM (July 21, 2007)

Name of Director

Independent Directors N. Vaghul, Chairman Sridar Iyengar R. K. Joshi (upto July 4, 2007) L. N. Mittal Narendra Murkumbi Anupam Puri Arun Ramanathan (w.e.f. January 18, 2008)(a) Vinod Rai (upto January 6, 2008)(a) M. K. Sharma P. M. Sinha Marti G. Subrahmanyam(b) T. S. Vijayan

5 5 1 3 5 3 1 5 4 4 2

Present Present N.A. Absent Present Present N.A. Absent Present Present Present Absent

V. Prem Watsa Number of other directorships Of Indian companies 11 4 N.A. 2 3 N.A. 2 3 2 7 Of other companies 6 3 N.A. 8 5 5 N.A. 1 1 4 5 14

Present Number of other committee3 12 memberships

3(1) 4(2) N.A. 1 1(1) N.A. 3(1) 1 1(1) Board Meetings attended during the year

Name of Director Wholetime Directors K. V. Kamath Kalpana Morparia (upto May 31, 2007) Chanda D. Kochhar Nachiket Mor (upto October 18, 2007) V. Vaidyanathan Madhabi Puri Buch (w.e.f. June 1, 2007) Sonjoy Chatterjee (w.e.f. October 22, 2007) Number of other directorships Of Indian companies 4 N.A. 2 N.A. 3 Of other companies 4 N.A. 4 N.A. -

5 1 5 3 5 4 2

Attendance at last AGM (July 21, 2007)

Number of other committee3 memberships

Present N.A. Present Present Present

N.A. 1 N.A. 1

Present N.A.

2 -

None of the Directors of the Bank were members in more than 10 committees nor acted as Chairperson of more than five committees across all companies in which they were Directors. II. Audit Committee

Terms of Reference The Audit Committee provides direction to the audit function and monitors the quality of internal and statutory audit. The responsibilities of the Audit Committee include overseeing the financial reporting process to ensure fairness, sufficiency and credibility of financial statements, recommendation of appointment and removal of central and branch statutory auditors and chief internal auditor and fixation of their remuneration, approval of payment to statutory auditors for other services rendered by them, review of functioning of Whistle Blower Policy, review of the quarterly and annual financial statements before submission to the Board, review of the adequacy of internal control systems and the internal audit function, review of compliance with inspection and audit reports and reports of statutory auditors, review of the findings of internal investigations, review of statement of significant related party transactions, review of management letters/letters on internal control weaknesses issued by statutory auditors, reviewing with the management, the statement of uses/application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilised for the purposes other than those stated in the offer document/prospectus/notice and the report submitted by the monitoring agency, monitoring the utilisation of proceeds of a public or rights issue and making appropriate recommendations to the Board to take steps in this matter, discussion on the scope of audit with external auditors and examination of reasons for substantial defaults, if any, in payment to stakeholders. The Committee is also empowered to appoint/oversee the work of any registered public accounting firm, establish procedures for receipt and treatment of complaints received regarding accounting and auditing matters, engage independent counsel as also provide for appropriate funding for compensation to be paid to any firm/advisors. In addition, the Audit Committee also exercises oversight on the compliance of risk management framework by providing directions to the regulatory compliance function of the Bank. Composition The Audit Committee comprises three independent Directors and is chaired by Sridar Iyengar. There were six meetings of the Committee during the year. The details of the composition of the Committee and attendance at its Meetings are set out in the following table: Name of Member Sridar Iyengar, Chairman M. K. Sharma, Alternate Chairman Number of meetings attended 6 5

Narendra Murkumbi III. Board Governance & Remuneration Committee

Terms of Reference The functions of the Committee include recommendation of appointments to the Board, evaluation of the performance of the Managing Director & CEO and wholetime Directors on pre-determined parameters, recommendation to the Board of the remuneration (including performance bonus and perquisites) to wholetime Directors, approval of the policy for and quantum of bonus payable to the members of the staff, framing of guidelines for the Employees Stock Option Scheme and recommendation of grant of ICICI Bank stock options to the employees and wholetime Directors of ICICI Bank and its subsidiary companies. Composition The Board Governance & Remuneration Committee comprises five independent Directors and is chaired by N. Vaghul. There were four meetings of the Committee during the year. The details of the composition of the Committee and attendance at its Meetings are set out in the following table: Name of Member N. Vaghul, Chairman Anupam Puri M. K. Sharma P. M. Sinha Marti G. Subrahmanyam Number of meetings attended 4 2 4 4 2

1. Also participated in two meetings through tele-conference. Remuneration policy The Board Governance & Remuneration Committee determines and recommends to the Board the amount of remuneration, including performance bonus and perquisites, payable to the wholetime Directors. The recommendations of the Committee are based on evaluation of the wholetime Directors on certain parameters. The following table sets out the details of remuneration (including perquisites, bonus and retiral benefits) paid to wholetime Directors for fiscal 2008 and details of stock options granted for the three years ended March 31, 2008: K. V. Kamath Kalpana Morparia

Break-up of remuneration (Rupees) Basic Performance bonus for fiscal 20085

12,720,000 4,324,800

1,420,000 482,800

Allowances and perquisites Chanda D. Kochhar 6,600,000 2,244,000 4,475,244 V. Vaidyanathan 6,000,000 2,040,000 4,562,191 Nachiket Mor 3,619,355 1,232,361 3,808,666 Madhabi Puri Buch 5,700,000 1,700,000 6,504,225

6,140,299

4,447,950

Sonjoy Chatterjee4 2,483,333 841,639 509,418 K. V. Kamath Kalpana Morparia 170,400 177,485 NA 200,000 165,000

Contribution to provident fund Contribution to superannuation fund Stock options (Numbers) Fiscal 20085 Fiscal 2007 Fiscal 2006 Chanda D. Kochhar 792,000 990,000 180,000 175,000 125,000 V. Vaidyanathan 720,000 125,000 150,000 75,0007 1. 2. Nachiket Mor 434,323 NA 175,000 125,000 Madhabi Puri Buch 684,000 125,000 100,0007 75,0007

1,526,400 1,908,000 270,000 300,000 250,000

Sonjoy Chatterjee 298,000 372,500 125,000 75,0007 37,5007

Remuneration paid upto May 31, 2007. Remuneration paid upto October 18, 2007.

3. Total remuneration paid for fiscal 2008 which includes the payment prior to her being appointed Executive Director effective June 1, 2007. Excludes performance bonus of Rs. 490,000 for the period of fiscal 2008 prior to her being appointed Executive Director, which was paid in

April 2008. 4. Excludes remuneration paid by ICICI Bank UK PLC prior to his being appointed Executive Director of ICICI Bank effective October 22, 2007. 5. Pending RBI approval.

6. Includes leave travel allowance availed during the year: K.V. Kamath Rs. 2,650,000, Kalpana Morparia Rs. 295,833, Chanda D. Kochhar Rs. 2,500,000, Nachiket Mor Rs. 753,425, V. Vaidyanathan Rs. 1,250,000, Madhabi Puri Buch Rs.1,950,000, leave encashment: Kalpana Morparia Rs. 3,786,667 and Nachiket Mor Rs. 1,080,000 and superannuation allowance: Kalpana Morparia Rs. 35,515, Nachiket Mor Rs. 542,903, V. Vaidyanathan Rs. 900,000 and Madhabi Puri Buch Rs. 855,000. 7. Prior to appointment as wholetime Director.

Perquisites (evaluated as per Income-tax Rules wherever applicable and otherwise at actual cost to the Bank) such as the benefit of the Banks furnished accommodation, gas, electricity, water and furnishings, club fees, personal insurance, use of car and telephone at residence or reimbursement of expenses in lieu thereof; medical reimbursement, leave and leave travel concession, education benefits, provident fund, superannuation fund and gratuity, were provided in accordance with the scheme(s) and rule(s) applicable from time to time. If accommodation owned by the Bank is not provided, the concerned wholetime Director is eligible for house rent allowance of Rs. 100,000 per month and maintenance of accommodation, including furniture, fixtures and furnishings provided by the Bank. As provided under Article 132 of the Articles of Association of the Bank, the fees payable to a Director (other than to the nominee of Government of India) for attending a Meeting of the Board or Committee thereof are decided by the Board of Directors from time to time within the limits prescribed by the Companies Act, 1956 or the Central Government. The Board of Directors has approved the payment of Rs. 20,000 as sitting fees for each meeting of Board or Committee attended. This amount is within the limits prescribed by the Ministry of Corporate Affairs vide its Notification dated July 24, 2003. Approval of the Members for payment of sitting fees to the Directors was obtained at the AGM held on August 20, 2005. Information on the total sitting fees paid to each of the independent Directors during fiscal 2008 for attending Meetings of the Board and its Committees is set out in the following table: Name of Director N. Vaghul Sridar Iyengar R. K. Joshi L. N. Mittal Narendra Murkumbi Anupam Puri Amount (Rupees) 740,000 320,000 20,000 60,000 820,000 100,000

Name of Director M. K. Sharma P.M. Sinha Marti G. Subrahmanyam T. S. Vijayan V. Prem Watsa Total

Amount (Rupees) 1,180,000 260,000 180,000 40,000 160,000 38,80,000

The details of shares and convertible instruments of the Bank, held by the non- wholetime Directors as on March 31, 2008 are set out in the following table: V. Customer Service Committee

Terms of reference The functions of this Committee include review of customer service initiatives, overseeing the functioning of the Customer Service Council and evolving innovative measures for enhancing the quality of customer service and improvement in the overall satisfaction level of customers. Composition The Customer Service Committee comprises five Directors including four independent Directors and the Managing Director & CEO. It is chaired by N. Vaghul. There were four meetings of the Committee during the year. The details of the composition of the Committee and attendance at its Meetings are as follows: Name of Member N. Vaghul, Chairman Narendra Murkumbi M. K. Sharma P. M. Sinha K. V. Kamath VI. Number of meetings attended 4 3 4 1 4

Fraud Monitoring Committee Terms of reference

The Committee monitors and reviews all frauds involving an amount of Rs. 10.0 million and above. Composition The Fraud Monitoring Committee comprises five Directors, namely, M. K. Sharma, Narendra Murkumbi, K. V. Kamath, Chanda D. Kochhar and V. Vaidyanathan and is chaired by M. K. Sharma, an independent Director. There were nine meetings of the Committee during the year. The details of the composition of the Committee and attendance at its Meetings are as follows:

Name of Member M. K. Sharma, Chairman Narendra Murkumbi K. V. Kamath Kalpana Morparia (upto May 31, 2007) Chanda D. Kochhar V. Vaidyanathan (w.e.f. June 1, 2007)

Number of meetings attended 8 6 9 3 8 3

N. Vaghul, Sridar Iyengar, L. N. Mittal, Anupam Puri, P. M. Sinha and Marti G. Subrahmanyam attended one Meeting as invitees. VII. Risk Committee

Terms of reference The Committee reviews ICICI Banks risk management policies in relation to various risks (portfolio, liquidity, interest rate, off-balance sheet and operational risks), investment policies and strategy and regulatory and compliance issues in relation thereto. The Committee also reviews key risk indicators covering areas such as credit risk, interest rate risk, liquidity risk, foreign exchange risk and internal audit. Composition The Risk Committee comprises five Directors including four independent Directors and the Managing Director & CEO. It is chaired by N. Vaghul. There were five meetings of the Committee during the year. The details of the composition of the Committee and attendance at its Meetings are set out in the following table: Name of Member N. Vaghul, Chairman Sridar Iyengar Marti G. Subrahmanyam V. Prem Watsa K. V. Kamath Number of meetings attended 5 5 3 3 3

1. Also participated in one meeting through tele-conference. Narendra Murkumbi, M. K. Sharma and P. M. Sinha attended one Meeting as invitees. VIII. Share Transfer & Shareholders/Investors Grievance Committee Terms of reference The functions and powers of the Committee include approval and rejection of transfer or transmission of equity and preference shares, bonds, debentures and securities, issue of duplicate certificates, allotment of shares and securities issued from time to time, including those under stock options, review and redressal of shareholders and

investors complaints, delegation of authority for opening and operation of bank accounts for payment of interest, dividend and redemption of securities and the listing of securities on stock exchanges. Composition The Share Transfer & Shareholders/Investors Grievance Committee comprises four Directors and is chaired by M. K. Sharma, an independent Director. There were 12 meetings of the Committee during the year. The details of the composition of the Committee and attendance at its Meetings are given below: Name of Member Number of meetings attended 12 7 1 12 6

M. K. Sharma, Chairman Narendra Murkumbi Kalpana Morparia (upto May 31, 2007) Chanda D. Kochhar Madhabi Puri Buch (w.e.f. June 1, 2007)

Sandeep Batra, Senior General Manager & Company Secretary is the Group Compliance Officer. 19,248 shareholder complaints received in fiscal 2008 were processed. At March 31, 2008, 7 complaints were pending. IX. Strategy Committee

Terms of reference The functions of the Committee are to evaluate various strategic opportunities, including acquisitions/ divestitures, restructuring and other strategic initiatives for the Bank and its subsidiaries and recommend the same to the Board. Composition The Strategy Committee comprises five Directors N. Vaghul, M. K. Sharma, Narendra Murkumbi, K. V. Kamath and Chanda D. Kochhar. The Committee is chaired by N. Vaghul. The Strategy Committee was constituted by the Board at its Meeting held on March 7-8, 2008 and no meetings of the Committee were held during fiscal 2008. X. Committee of Directors

Terms of reference The powers of the Committee include approval of credit proposals as per authorisation approved by the Board, approvals in respect of borrowings and treasury operations and premises and property related matters. Composition The Committee of Directors comprises of all five wholetime Directors

and is chaired by K. V. Kamath, Managing Director & CEO. XI. Other Committees

In addition to the above, the Board has from time to time constituted various committees namely, Asset- Liability Management Committee, Committee for Identification of Wilful Defaulters, Grievance Redressal Committee for borrowers identified as Wilful Defaulters (all comprising certain wholetime Directors and executives) and Committee of Executives, Compliance Committee, Product & Process Approval Committee, Regional Committees for India and overseas operations, Outsourcing Committee, Operational Risk Management Committee and other Committees (all comprising executives). These committees are responsible for specific operational areas like asset-liability management, approval of credit proposals, approval of products and processes and management of operational risk, under authorisation/ supervision of the Board and its Committees. XII. General Body Meetings The details of General Body Meetings held in the last three years are given below: General Body Meeting Eleventh AGM Day, Date Saturday, August 20, 2005 Saturday July 22, 2006 Saturday, January 20, 2007 Saturday July 21, 2007 Venue Professor Chandravadan Mehta Auditorium, General Education Centre, Opposite D. N. Hall Ground, The Maharaja Sayajirao University, Pratapgunj, Vadodara 390 002. Special Resolution

Twelfth AGM

Extraordinary General Meeting (EGM)

Thirteenth AGM

Time 1.30 p.m. 1.30 p.m.

2.00 p.m. 1.30 p.m.

The details of Special Resolutions passed at the General Body Meeting of shareholders in the last three years are given below:

General Body Meeting Eleventh AGM Twelfth AGM EGM Thirteenth AGM Resolution

Day August 20, 2005 July 22, 2006 January 20, 2007 July 21, 2007

* Amendment to the Articles of Association of the Company for re-classification of the authorised share capital. * Approval for issue of preference shares subject to applicable laws and regulations. * Merger of The Sangli Bank Limited with ICICI Bank Limited (passed by the requisite majority as provided under Section 44A of the Banking Regulation Act, 1949). * Approval for issue of preference shares subject to applicable laws and regulations. * Amendment to the Articles of Association of the Company for deleting the reference to the definition of group Postal Ballot Though not mandatorily required, to facilitate wider participation in the approval process, approval of shareholders was sought through postal ballot for the following Resolutions: 1. Ordinary Resolution for alteration in the authorised share capital and consequent alteration in the Memorandum of Association. 2. 3. Special Resolution for alteration in the Articles of Association. Special Resolution for raising capital.

N. L. Bhatia, Practicing Company Secretary, NL Bhatia & Associates was appointed as the Scrutinizer for conducting the postal ballot process. The notice dated April 28, 2007 was sent to the Members and the last date for receipt of postal ballot forms by the Scrutinizer was June 7, 2007. Till that date, 16,589 forms were received. According to the Scrutinizers report the first two Resolutions were passed by majority of 99.9% and the third Resolution was passed by majority of 82.9%. The result of the postal ballot was declared on June 8, 2007 and published on June 9, 2007 in the Financial Express (Ahmedabad, Bangalore, Chandigarh, Chennai, Coimbatore, Hyderabad, Kochi, Kolkata, Mumbai, New Delhi and Pune editions) and in Vadodara Samachar (Vadodara) for the information of Members. The Bank has followed the procedure as prescribed under Companies (Passing of the Resolution by Postal Ballot), Rules, 2001.

At present, no special resolution is proposed to be passed through postal ballot. XIII. Disclosures 1. There are no materially significant transactions with related parties i.e., directors, management, subsidiaries, or relatives conflicting with the Banks interests. The Bank has no promoter. 2. Penalties or strictures imposed on the Bank by any of exchanges, Securities & Exchange Board of India (SEBI) or statutory authority, for any non-compliance on any matter capital markets, during the last three years are detailed the stock any other relating to below:

* On April 10, 2007, the Eastern Magistrates Court, Hong Kong fined the Bank a sum of HKD 40,000, details of which are given in Note 35 of the Notes to Accounts. * During fiscal 2006, RBI had imposed a penalty of Rs. 0.5 million on the Bank citing contravention of RBI instructions relating to opening of accounts, monitoring of transactions for adherence of know your customer/anti money laundering norms, and non-adherence to normal banking practices under section 47A(1)(b) of the Banking Regulation Act, 1949. Other than the on the Bank by authority, for markets during aforementioned, no penalties or strictures were imposed any of the stock exchanges, SEBI or any other statutory any non-compliance on any matter relating to capital the last three years.

XIV. Means of Communication It is ICICI Banks belief that all stakeholders should have access to complete information regarding its position to enable them to accurately assess its future potential. ICICI Bank disseminates information on its operations and initiatives on a regular basis. ICICI Banks website (www.icicibank.com) serves as a key awareness facility for all its stakeholders, allowing them to access information at their convenience. It provides comprehensive information on ICICI Banks strategy, business segments, financial performance, operational performance, share price movements and the latest press releases. ICICI Banks dedicated investor relations personnel respond to specific queries and play a proactive role in disseminating information to both analysts and investors. In accordance with SEBI and Securities Exchange Commission (SEC) guidelines, all information which could have a material bearing on ICICI Banks share price is released through leading domestic and global wire agencies. The information is also disseminated to the National Stock Exchange of India (NSE), the Bombay Stock Exchange Limited (BSE), New York Stock Exchange (NYSE), Luxembourg Stock Exchange, Singapore Stock Exchange and Japan Securities Dealers Association from time to time. ICICI Bank also circulates its half-yearly results to all

its shareholders. As required by SEBI and the listing agreements, ICICI Bank files its financial and other information on the Electronic Data Information Filing and Retrieval (EDIFAR) website maintained by the National Informatics Centre (NIC). ICICI Banks quarterly financial results are published in the Financial Express (Ahmedabad, Bangalore, Chandigarh, Chennai, Kochi, Kolkata, Mumbai and New Delhi editions) and in Vadodara Samachar (Vadodara). The financial results, official news releases and presentations are also available on the website of ICICI Bank. The Managements Discussion & Analysis forms part of the Annual Report. General Shareholder Information Fourteenth AGM Day, Date Saturday, July 26, 2008 Venue Professor Chandravadan Mehta Auditorium, General Education Centre, Opposite D. N. Hall Ground, The Maharaja Sayajirao University, Pratapgunj, Vadodara 390 002. Financial Calendar Book Closure Dividend Payment Date : April 1 to March 31 : July 12, 2008 to July 26, 2008 : July 28, 2008 Time 1.30 p.m.

Listing of equity shares/ADSs on Stock Exchanges (with stock code) Stock Exchange Code for ICICI Bank Bombay Stock Exchange Limited (BSE) 532174 Phiroze Jeejeebhoy Towers & Dalal Street, Mumbai 400 001 6321741 National Stock Exchange of India Limited (NSE) ICICIBANK Exchange Plaza, Bandra-Kurla Complex Bandra (East), Mumbai 400 051 New York Stock Exchange (ADSs)2 IBN 11, Wall Street, New York, NY 10005, United States of America 1. 2. FII segment of BSE. Each ADS of ICICI Bank represents two underlying equity shares.

ICICI Bank has paid annual listing fees for the relevant periods on its capital to BSE, NSE and NYSE where its equity shares and ADSs are listed. Share Transfer System ICICI Banks investor services are handled by 3i Infotech Limited (3i Infotech). 3i Infotech operates in the following main areas of business: software consultancy and development, IT-enabled services, IT infrastructure and network and facilities management services. 3i Infotech has received the ISO-9001 certification for its transaction processing activities. ICICI Banks equity shares are traded only in dematerialised form. During the year, 2,343,651 equity shares of ICICI Bank involving 16,872 certificates were transferred into electronic mode. At March 31, 2008, 99.02% of ICICI Banks paid-up equity share capital (including equity shares represented by ADS constituting 28.58% of the paid-up equity share capital) comprising 1,101,827,673 equity shares had been dematerialised. Physical share transfers are registered and returned generally within a period of seven days from the date of receipt, if the documents are correct and valid in all respects. The number of equity shares of ICICI Bank transferred during the last three years (excluding electronic transfer of shares in dematerialised form) is given below: Fiscal 2006 Number of transfer deeds Number of shares transferred 7,994 437,044 Fiscal 2007 4,804 256,196 Fiscal 2008 4,430 257,167

As required under Clause 47(c) of the listing agreements entered into by ICICI Bank with stock exchanges, a certificate is obtained every six months from a practising Company Secretary, with regard to, inter alia, effecting transfer, transmission, sub-division, consolidation, renewal and exchange of equity shares and bonds in the nature of debentures within one month of their lodgement. The certificates are forwarded to BSE and NSE, where the equity shares are listed, within 24 hours of issuance and also placed before the Share Transfer and Shareholders/Investors Grievance Committee. In terms of SEBIs circular no. D&CC/FITTC/CIR-16 dated December 31, 2002, a Secretarial Audit is conducted on a quarterly basis by a firm of Chartered Accountants, for the purpose of, inter alia, reconciliation of the total admitted equity share capital with the depositaries and in the physical form with the total issued/paid up equity capital of ICICI Bank. Certificates issued in this regard are placed before the Share Transfer and Shareholders/Investors Grievance Committee and forwarded to BSE and NSE, where the equity shares of ICICI Bank are listed.

Registrar and Transfer Agents The Registrar and Transfer Agent of ICICI Bank is 3i Infotech Limited. Investor services related queries may be directed to Jayendra Pai at either of the addresses below: * Infotech Limited International Infotech Tower 5, 3rd Floor Tel No.: +91-22-6792 8000 Mumbai 400 008 Fax : +91-22-6792 8099 E-mail : investor@icicibank.com Infotech Limited Park Maratha Mandir Annex Dr. A. R. Nair Road Navi Mumbai 400 703 Mumbai Central

Queries relating to the operational and financial performance of ICICI Bank may be addressed to: Rakesh Jha/ Pankaj Jain ICICI Bank Limited ICICI Bank Towers Bandra-Kurla Complex Mumbai 400 051 Tel No. : +91-22-2653 1414 Fax No. : +91-22-2653 1175 E-mail : ir@icicibank.com Information on Shareholding COMPLIANCE CERTIFICATE OF THE AUDITORS ICICI Bank has annexed to this report, a certificate obtained from the statutory auditors, B S R & Co., Chartered Accountants, regarding compliance of conditions of corporate governance as stipulated in Clause 49 of the listing agreement. EMPLOYEE STOCK OPTION SCHEME In fiscal 2000, ICICI Bank instituted an Employee Stock Option Scheme (ESOS) to enable the employees and Directors of ICICI Bank and its subsidiaries to participate in the future growth and financial success of the Bank. As per the ESOS as amended from time to time, the maximum number of options granted to any employee/director in a year is limited to 0.05% of ICICI Banks issued equity shares at the time of the grant, and the aggregate of all such options is limited to 5% of ICICI Banks issued equity shares on the date of the grant (equivalent to 55.6 million shares at April 26, 2008). Options granted for fiscal 2003 and earlier years vest in a graded manner over a three-year period, with 20%, 30% and 50% of the grants vesting in each year, commencing not earlier than 12 months from the

date of grant. Options granted for fiscal 2004 onwards vest in a graded manner over a four-year period, with 20%, 20%, 30% and 30% of the grants vesting in each year, commencing not earlier than 12 months from the date of grant. Options can be exercised within 10 years from the date of grant or five years from the date of vesting, whichever is later. The price of the options granted prior to June 30, 2003 is the closing market price on the stock exchange, which recorded the highest trading volume on the date of grant. The price for options granted on or after June 30, 2003 till July 21, 2004 is equal to the average of the high and low market price of the equity shares in the two week period preceding the date of grant of the options, on the stock exchange which recorded the highest trading volume during the two week period. The price for options granted on or after July 22, 2004 is equal to the closing price on the stock exchange which recorded the highest trading volume preceding the date of grant of options. The above pricing is in line with the SEBI guidelines, as amended from time to time. DIRECTORS RESPONSIBILITY STATEMENT The Directors confirm: 1. that in the preparation of the annual accounts, the applicable accounting standards have been followed, along with proper explanation relating to material departures; 2. that they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit or loss of the Bank for that period; 3. that they have taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the provisions of the Banking Regulation Act, 1949 and the Companies Act, 1956 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities; and 4. that they have prepared the annual accounts on a going concern basis. ACKNOWLEDGEMENTS ICICI Bank is grateful to the Government of India, RBI, SEBI and overseas regulators for their continued co-operation, support and advice. ICICI Bank wishes to thank its investors, the domestic and international banking community, investment bankers, rating agencies and stock exchanges for their support. ICICI Bank would like to take this opportunity to express sincere thanks to its valued clients and customers for their continued patronage. The Directors express their deep sense of appreciation of all the employees, whose outstanding professionalism, commitment and

initiative has made the organisations growth and success possible and continues to drive its progress. Finally, the Directors wish to express their gratitude to the Members for their trust and support. For and on behalf of the Board Place : Mumbai Date : May 27, 2008 N. VAGHUL Chairman

Hdfc

Director Report
Mar2010 Mar 2012

The Directors have great pleasure in presenting the Eighteenth Annual Report on the business and operations of your Bank together with the audited accounts for the year ended March 31, 2012.
FINANCIAL PERFORMANCE (Rs in crore) For the year ended March 31, 2012 March 31, 2011 Deposits and Other Borrowings Advances Total Income Profit before Depreciation and Tax Net Profit Profit brought forward Total Profit available for Appropriation Appropriations: Transfer to Statutory Reserve Transfer to General Reserve Transfer to Capital Reserve Transfer to / (from) Investment Reserve Proposed Dividend 1,291.8 516.7 (41.7) 1,009.1 981.6 392.6 0.4 15.6 767.6 270,553.0 195,420.0 32,530.0 8,055.7 5,167.1 6,174.2 11,341.3 222,980.5 159,982.7 24,263.4 6,316.1 3,926.4 4,532.8 8,459.2

Tax Including Surcharge and Education Cess on Dividend Dividend (including tax/cess thereon) pertaining to previous year paid during the year Balance carried over to Balance Sheet

163.7

124.5

2.1 8,399.6

2.6 6,174.2

The Bank posted total income and net profit of Rs 32,530.0 crore and Rs 5,167.1 crore respectively for the financial year ended March 31, 2012 as against Rs 24,263.4 crore and Rs 3,926.4 crore respectively in the previous year. Appropriations from net profit have been effected as per the table given above. DIVIDEND Your Bank has had a dividend policy that balances the dual objectives of appropriately rewarding shareholders through dividends and retaining capital in order to maintain a healthy capital adequacy ratio to support future growth. It has had a consistent track record of moderate but steady increase in dividend declarations over its history with the dividend payout ratio ranging between 20% and 25%. Consistent with this policy and in recognition of the overall performance during this financial year, your directors are pleased to recommend a dividend of Rs 4.30 per equity share of Rs 2 for the year ended March 31, 2012 as against Rs 3.30 per equity share of Rs 2 (which was Rs 16.50 per share of Rs 10 before the share split) for the previous year ended March 31, 2011. This dividend shall be subject to tax on dividend to be paid by the Bank. AWARDS As in the past years, awards and recognition were conferred on your Bank by leading domestic and international organizations and publications during the financial year ended March 31, 2012. Some of them are: The Asian Banker International Excellence in Retail Financial Services Awards 2012 - Best Retail Bank in India - Best Bancassurance Business in India - Best Risk Management in India Business World Best Bank Award 2011 - Best Bank

CNBC TV18 Best Bank and Financial Institution Awards 2011 - Best Bank - Aditya Puri - Outstanding Finance Professional CNBC TV18 Financial Advisor Award 2011 - Best Performing Bank (Private) DSCI (Data Security Council of India) Excellence Awards 2011 - Security in Bank Dun & Bradstreet Banking Awards 2011 - Best Private Sector Bank - SME Financing Euromoney Awards for Excellence 2011 - Best Bank in India Finance Asia Country Awards 2011 - Best Bank in India - Best Cash Management Bank in India - Best Trade Finance Bank in India Financial Express Best Bank Survey 2010-11 - Best in Strength and Soundness Institute of Chartered Accountants of India Awards 2011 - Excellence in Financial Reporting International Data Corporation Financial Insights Innovation Awards 2011 - Excellence in Customer Experience Skoch Foundation Financial Inclusion Awards 2012 - SHG/ JLG linkage program RATINGS Instrument Rating Rating Agency

Comments

Fixed Deposit Program

CARE AAA (FD)

CARE

Represents instruments considered to be ''of the best credit quality, offering highest safety for timely servicing of debt obligations, and carry minimal credit risk''. Instruments with this rating are considered to have very strong degree of safety regarding timely payment of financial obligations. Such instruments carry lowest credit risk.

tAAA (ind)

FITCH

Certificate of Deposits

CARE A1

CARE

Instruments with this rating are considered to have very Program strong degree of safety regarding timely payment of financial obligations. Such instruments carry lowest credit risk. Instruments with this rating are considered to have very strong degree of safety regarding timely payment of financial obligations. Such instruments carry lowest credit risk.

A1

(ind)

FITCH

Long term unsecured, subordinated (Lower Tier II) Bonds

CARE AAA

CARE

Represents instruments considered to be ''of the best credit quality, offering highest safety for timely servicing of debt obligations, and carry minimal credit risk''.

AAA (ind) with a Stable outlook

FITCH

Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk.

Tier I Perpetual Bonds

CARE AAA

CARE

Represents instruments considered to be ''of the best credit quality, offering highest safety for timely servicing of debt obligations, and carry minimal credit risk'' Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk.

AAA Stable Stable outlook

CRISIL

Upper Tier II Bonds

CARE AAA

CARE

Represents instruments considered to be ''of the best credit quality, offering highest safety for timely servicing of debt obligations, and carry minimal credit risk'' Instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk.

AAA stable

CRISIL

CARE - Credit Analysis & Research Limited FITCH - Fitch Ratings India Private Limited (100% subsidiary of Fitch Inc.) CRISIL - CRISIL Ltd. (A Standard & Poor''s company) ISSUANCE OF EQUITY SHARES During the year under review, 205.6 lac shares (post sub- division, each equity share of Rs 2) were allotted to the employees of your Bank pursuant to the exercise of options under the Employee Stock Option Schemes of the Bank. These include the shares allotted under the Employee Stock Option Schemes of the erstwhile Centurion Bank of Punjab. EMPLOYEE STOCK OPTIONS The information pertaining to Employee Stock Options is given in an

annexure to this report. CAPITAL ADEQUACY RATIO Your Bank''s total Capital Adequacy Ratio (CAR) calculated in line with Basel II framework stood at 16.5%, well above the regulatory minimum of 9.0%. Of this, Tier I CAR was 11.6%. SUBSIDIARY COMPANIES Your Bank has two subsidiaries, HDFC Securities Limited (''HSL) and HDB Financial Services Limited (''HDBFS''). HSL is primarily in the business of providing brokerage services through the internet and other channels with a focus to emerge as a full-fledged financial services provider through a distribution of a bouquet of financial services products. The company continued to strengthen its distribution franchise and as on March 31, 2012 had a network of 184 branches across the country. During the year under review, the company''s total income amounted to Rs 210.0 crore as against Rs 260.5 crore in the previous year. The operations resulted in a net profit after tax of Rs 54.1 crore. HDBFS is a non-deposit taking non-bank finance company (''NBFC''), the customer segments being addressed by HDBFS are typically underserviced by the larger commercial banks, and thus create a profitable niche for the company to operate. Apart from lending to individuals, the company grants loans to small and medium business enterprises and micro small and medium enterprises, the principle businesses of HDBFS are as follows: - Loans - The company offers a range of loans in the secured and unsecured loans space that fulfill the financial needs of its target segment - Insurance Services - HDBFS is a corporate agent for HDFC Standard Life Insurance Company and sells standalone insurance products as well as products such as Loan Cover and Asset Cover. - Collections - BPO Services - The Company runs 6 call centres with a capacity of over 1700 seats. These centres cover collection requirements at over 200 towns through its calling and field teams. Currently the company has a contract with your Bank for collection services. As on March 31, 2012, HDBFS had 180 branches in 135 cities in order to distribute its products and services. During the financial year ended March 31, 2012, the company''s total income increased by over 141% to Rs 431.8 crore as compared to Rs 178.9 crore in the previous year. During the same period the company''s net profit was Rs 51.1 crore as compared to Rs 15.8 crore in the previous year. In terms of the approval granted by the Government of India, the provisions contained under Section 212 (1) of the Companies Act, 1956

shall not apply in respect of the Bank''s subsidiaries. Accordingly, a copy of the balance sheet, profit and loss account, report of the Board of Directors and the report of the auditors of HSL and HDBFS have not been attached to the accounts of the Bank for the year ended March 31, 2012. Shareholders who wish to have a copy of the annual accounts and detailed information on HSL and HDBFS may write to the Bank for the same. Further, the said documents shall also be available for inspection by shareholders at the registered offices of the Bank, HSL and HDBFS. INTERNAL AUDIT AND COMPLIANCE Your Bank has Internal Audit and Compliance functions which are responsible for independently evaluating the adequacy of all internal controls and ensuring operating and business units adhere to internal processes and procedures as well as to regulatory and legal requirements. The audit function also pro- actively recommends improvements in operational processes and service quality. To ensure independence, the audit department has a reporting line to the Chairman of the Board of Directors and the Audit and Compliance Committee of the Board and only a dotted line to the Managing Director. To mitigate operational risks, the Bank has put in place extensive internal controls including restricted access to the Bank''s computer systems, appropriate segregation of front and back office operations and strong audit trails. The Audit and Compliance Committee of the Board also reviews the performance of the audit and compliance functions and reviews the effectiveness of controls and compliance with regulatory guidelines. CORPORATE SOCIAL RESPONSIBILITY Your Bank has a defined guiding principle for all its social initiatives: ''Changing Lives by empowering individuals through Finance, Education and Training''. An essential element of the Bank''s Corporate Responsibility is its community initiatives which aim at empowering individuals at the bottom of the pyramid through developmental initiatives such as education and livelihood support. In the field of education its interventions are aimed at mainstreaming of school children and ensuring the quality of education they receive. Your Bank has undertaken a multitude of initiatives for retaining children in school and arrest the rate of dropouts. As part of this initiatives, pre-primary schools are run in communities with the objective of preparing and enrolling these children into mainstream education. Apart from providing basic nutritional and health needs, regular parent and community meetings are an integral part of this program which is currently running in Kolkata, Hyderabad and Delhi. Your Bank in partnership with NGOs and the government has adopted state-run schools by providing educational support to the children and to train staff to ensure better levels of learning and lower rate of drop-out in state-run schools in Pune and Mumbai. Also needy and

deserving children are identified based on set criteria and provided with educational support to cover the cost of their education in state-run schools. In a unique initiative supported by the Bank, 30 children from government schools have been integrated to DPS School in Ahmedabad. Your Bank launched its Educational Crisis Scholarship Support (ECSS) in 2011 to reach out to students, studying in private / government-aided schools, who due to personal / family constraints, are unable to continue bearing the cost of education and are at risk of dropping out of school. Your Bank also undertakes programs that cover around 500 children through ''afterschool class'' and out-of school children through ''bridge class'' in Pune, Delhi and Kolkata, a rehabilitation program in Kashmir, Kolkata and Mumbai, where development, training and placement assistance is provided to differently abled individuals, so that they can lead a life of dignity, and financial literacy programs for children which are run in 458 schools in rural areas of Maharashtra, Tamil Nadu and Orissa to inculcate values of money and concept of savings. Your Bank has also created a financial literacy module which is run by its employee volunteers. ''Power of Banking'' is a two- hour-long interactive module designed for school children studying in Vth to VIIIth standards and covers simple concepts about money such as budgeting, saving and banking. Power of banking has also been redesigned to introduce financial concepts and values associated with money to street children. Your Bank''s livelihood initiatives are aimed at training and capacity development of youth and women in the age group of 18-30 years from economically weaker sections of society and to empower them to gain access to opportunities for sustainable livelihoods and growth. Your Bank''s livelihood support programs are aimed at empowering competencybased, skill-oriented technical and vocational training. Such training programs have been carried out in Andhra Pradesh, Maharashtra and Gujarat. In Kolkata, your Bank has supported the setting up of a physiotherapy training unit where visually challenged candidates undergo a diploma in physiotherapy. In a pilot project undertaken in the same city, interest-free loans were given to school drop-outs who underwent training as laboratory technicians and were successfully placed in hospitals through industry interface. In addition to projects implemented through NGO partners, your Bank also drives direct community initiatives through its employees. Changing Lives through Employee Engagement Employees are an integral part of all volunteering programs. With an organization of over sixty thousand people, your Bank believes that it is in a unique position to leverage theknowledge base, skills and resources of its employees to ''Change Lives''. While employees are part of all the community-based interventions, the Bank also provides opportunities for employees to contribute through special programs that are centrally driven. Payroll Giving: Under this program, employees are provided with an easy

and convenient system to donate small amounts on monthly basis and accumulate it to reach a corpus thatallows them individually to donate to a charity of their choice. Your Bank matches their contribution, thereby endorsing the charity they choose to support. Currently, we have employees who have cumulatively supported over 50,000 individuals. Make A Difference Day: Your Bank celebrates ''Make A Difference Day'' annually as a community volunteering day where employees identify NGOs in their region and interact with beneficiaries. Employees conduct activities, competitions and workshops for the underprivileged community. ''Make A Difference Day'' is celebrated as an opportunity for the employees to leave their laptops, conferences calls and emails and direct their passion, determination and skills for the benefit of communities. HDFC Bank Fellowship: Your Bank supports the ''Teach for India'' movement which is a nationwide campaign aiming to bridge the educational gap in India by placing young professionals in low-income schools to teach full-time for two years, advocating educational equity. Each year, two employees are selected for the fellowship and are given a two-year sabbatical, during which they continue to receive their basic salary. Blood Donation: Employees of your Bank have been actively organizing blood camps at all India level since 2007. The journey started with a collection of 4,385 units of blood and today has increased to 25,758 units. Identifying a need for preserving the blood especially in rural areas, employees initiated a drive to identify and support the setup of blood banks. This year too, your bank supported this initiative and set up four blood banks. Environmental Sustainability Your Bank believes in taking responsibility for the effects of its operations on society and on the environment. It regards climate change mitigation and environmental improvements as essential elements of a sustainable business philosophy and this belief embodies the Bank''s approach to reduction of carbon emissions. It has conducted an inventory of energy-related emissions from its office buildings and retail branches and is taking steps to manage Green House Gas (GHG) emissions. Your Bank is also a signatory to the Carbon Disclosure Project (CDP). An important aspect of your Bank''s GHG management strategy is behavioral modifications and employees are constantly being made aware of the importance of conservation. Through all these measures, the Bank has embarked on a mission to make tangible and meaningful difference to people''s lives. It will continue to walk the path and not rest till this goal is achieved. FINANCIAL INCLUSION Over the last few years, your Bank has been working on a number of initiatives to promote Financial Inclusion across identified sections

of rural and urban, under-banked and un- banked consumers. These initiatives target segments of the population that have limited or no access to the formal banking system for their basic banking and credit requirements, by building a robust and sustainable model that provides relevant services and viable and timely credit that ultimately results in economically uplifting its customers and substituting the borrowings at usurious rates. The Bank''s initiatives in the rural or deeper geography dovetails in to the bank''s financial inclusion plans and also compliments the bank''s Corporate Social Responsibility initiative where the endeavor has been to provide banking services which are viable both for the customer and the bank. The Banks financial inclusion initiatives have been integrated across its various businesses, across product groups. By March 31, 2012 your Bank has brought over 5 million households who were hitherto excluded from basic banking services under the fold of this program. Rural Initiative The Bank offers products and services such as savings, current, fixed & recurring deposits, loans, ATM facilities, investment products such as mutual funds and insurance, electronic funds transfers, drafts and remittances etc in its branches located in rural and under banked locations. The Bank also leverages some of these branches as hubs for other inclusion initiatives such as direct linkages to self-help groups and to promote Joint liability Group Loans, POS terminals and information technology enabled kiosks, as well as other ICT initiatives such as mobile banking in these locations. The Bank covers over 6,000 villages in the country through various distribution set ups, these include branches and business correspondents. Around half of the above villages are those having a population of less than 2,000 that have typically been financially excluded from the formal banking sector. A number of retail credit products such as two-wheeler loans, car loans, mortgages etc. that are consumption products in urban centers happen to be means of income generation for rural consumers. Apart from loans directly linked to agriculture such as pre and post harvest credit, there are many other credit products that the Bank uses to aid financial betterment in rural locations. Your Bank has extended provision of its retail loans to large segments of the rural population where the end use of the products acquired (by availing Bank''s loans) is used for income generating activities. For example, loans for tractors, commercial vehicles, two wheelers etc. supplement the farmer''s income by improving productivity and reducing expenses. No Frills Savings Accounts A savings account is the primary requirement for the provision of other banking services, the account promotes the habit of savings, provides security, and inculcates confidence among the target segment in the banking sector. This product was launched by the Bank with a specific objective to

provide customers a platform that enables them to inculcate the habit of savings. By not insisting on a requirement of a minimum balance, the entry barrier into the banking system has been removed, thereby giving the hitherto unbanked person to start experiencing benefits of banking. These accounts are offered only to customers who do not have any other bank account (are un-banked) or who are either beneficiaries of a government welfare scheme or have annual incomes less than a defined threshold (constitute the bottom of the economic pyramid). Apart from the basic no frills savings account your Bank also offers these segments other accounts such as no frills salary accounts and limited KYC accounts. Given the specific segment that is being targeted, being a customer who does not have any other Bank account, this product truly addresses the cause of Financial Inclusion. Additionally the Bank also periodically tracks the behavior in these accounts to ensure that the accounts opened maintain a balance and are active. The total number of No Frills Savings Accounts opened as on March 2012 was at 7.60 lac accounts as against 5.53 lac accounts as on March 2011. Sustainable Livelihood Financing Over the last one year, your Bank has accelerated its direct linkage program to self-help groups, where the Bank itself works at the grass root level with women in villages, conducts financial literacy programs, forms groups and then funds these groups for income generation activities. This enables the delivery of viable credit to the rural poor in a sustainable manner & at the same time also inculcates the saving and banking habits. Till date the Bank has lent to over 73,000 Self Help Groups and over 1,10,000 Joint Liability groups covering approximately 11.7 Lac households. Your Bank also disburses loans to its rural customers under the mutual guarantee micro loan product which is now termed as Joint liability group product. This product works on the principle of group guarantees and provides clean (not backed by any collateral) loans to the borrowers based on a guarantee by other borrowers. Agriculture and Allied Activities A large portion of India''s un-banked population relies on agriculture as the main source of livelihood. We believe provision of credit to farmers through various methods that your Bank has employed replaces the traditional money lending channel, while at the same time providing income generating activities. The Bank provides various loans to farmers through its suite of specifically designed products such as the Kisan Gold Card, tractor and cattle loans etc. In addition, the Bank offers post-harvest cash credit, warehouse receipt financing and bill discounting facilities to mandi (markets for grain and other agricultural produce) participants and farmers. These facilities enable the mandi participants to make timely payments to farmers. The Bank carries out this business through over 400 branches that are located in close proximity to mandis.

The Bank targets specific sectors to capture supply chain of certain crops from the production stage to the sales stage. On the basis of these cashflows, your Bank is able to finance specific needs of the farmers. This is further supported by using Business Correspondents closer to their respective locations and helping them to create a savings and banking habit. This model has currently been implemented with dairy and sugarcane farmers. The initiative currently underway includes the appointment of dairy societies and sugarcane co-operatives as business correspondents, through whom the Bank opens accounts of individual farmers attached to these societies. The societies route all payments to the farmers through this account. Gold Loans The Gold loan product is an offering which allows customers a reliable source of credit at the time of need. In the absence of this, either, credit would not have been available to these customers or would have been available at higher rates in form of unsecured loans. Gold loans provide a source of monetizing the household gold and at the same time provides an alternate source of funds. It provides financial independence to small traders, small entrepreneurs and house wives. It also substitutes borrowing at usurious rates, particularly by small borrowers and weaker sections. Small and Micro Enterprises The Bank offers complete banking solutions to micro, small and medium scale enterprises across industry segments including manufacturers, retailers, wholesalers / traders and services. The entire suite of financial products including cash credit, overdrafts, term loans, bills discounting, export packing credit, letter of credit, bank guarantees, cash management services and other structured products are made available to these customers. One of the means to financial inclusion is by supporting small and micro enterprises which in turn provide employment opportunities to the financially excluded. Though indirect, we believe this model may in many instances be more effective than providing subsidies that are often unsustainable, or never reach the intended beneficiary. Promoting Financial Awareness In addition to providing various products and services to the financially excluded, the Bank believes that imparting education and training to these target segments is equally essential to ensure transparency and create awareness. To this effect the Bank has put in place various training programs, these are conducted by Bank staff in local languages and cover not only the customers but also various intermediaries such as the Bank''s business correspondents. Through these programs the Bank provides credit counseling and information on parameters like savings habit, better utilization of savings, features of savings products, credit utilization, asset creation, insurance, income generation program etc. During the financial year ended March 31, 2012, over 5,400 financial awareness programs covering over

1,40,000 households were conducted. The bank also facilitates need based capacity building and market place for the customers with the objective of sustaining their livelihood in holistic manner. HUMAN RESOURCES The total number of employees of your Bank was 66,076 as of March 31, 2012. The Bank continued to focus on training its employees both - on the job as well as through training programs conducted by internal and external faculty. The Bank has consistently believed that broader employee ownership of its equity shares has a positive impact on its performance and employee motivation. Your Bank lists ''people'' as one of its stated core values. The Bank believes in empowering its employees and constantly takes various measures to achieve this objective. STATUTORY DISCLOSURES The information required under Section 217(2A) of the Companies Act, 1956 and the rules made thereunder as amended, are given in an annexure and forms part of this report. In terms of section 219(1)(iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid annexure. Any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the Registered Office of the Bank. The Bank had 66076 employees as on March 31, 2012. 120 employees employed throughout the year were in receipt of remuneration of more than Rs 60 lac per annum and 12 employees employed for part of the year were in receipt of remuneration of more than Rs 5 lac per month. The provisions of Section 217(1)(e) of the Act relating to conservation of energy and technology absorption do not apply to your Bank. The Bank has, however, used information technology extensively in its operations. The report on the Corporate Governance is annexed herewith and forms part of this report. The Ministry of Corporate Affairs has issued "Corporate Governance Voluntary Guidelines" in December 2009. While these guidelines are recommendatory in nature, the Bank has adopted most of these guidelines as detailed in the Corporate Governance Report. The Bank will examine the possibilities of adopting the remaining guidelines in an appropriate manner. RESPONSIBILITY STATEMENT The Board of Directors hereby state that i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) We have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as on March 31, 2012 and of the profit of the Bank for the year ended on that date; iii) We have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Bank and for preventing and detecting the fraud and other irregularities; iv) We have prepared the annual accounts on a going concern basis. DIRECTORS Dr. Pandit Palande and Mr.Partho Datta will retire by rotation at the ensuing Annual General Meeting and are eligible for re-appointment. Mr. Keki Mistry, who had ceased to be a director from the closing hours of business on March 26, 2011 on completing the permitted tenure of eight years under the Banking Regulation Act, 1949, was re-appointed as an additional director by the Board during the year in accordance with the relevant applicable guidelines of the Reserve Bank of India and holds office up to the conclusion of the ensuing Annual General Meeting. The Bank has received a notice pursuant to Section 257 of the Companies Act, 1956 from a shareholder proposing the candidature of Mr. Keki Mistry as Director of the Bank at the ensuing Annual General Meeting. The brief resume/details relating to Directors who are to be reappointed are furnished in the report on Corporate Governance. AUDITORS The Auditors, M/s. BSR & Co., Chartered Accountants will retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment. Members are requested to consider their re-appointment on an annual remuneration (statutory audit fees) of Rs 1,05,60,000 (Previous year: Rs 96,00,000) plus service tax as applicable, which is approved by the Audit and Compliance Committee of the Board. ACKNOWLEDGEMENT Your Directors would like to place on record their gratitude for all the guidance and co-operation received from the Reserve Bank of India and other government and regulatory agencies. Your Directors would also like to take this opportunity to express their appreciation for the hard work and dedicated efforts put in by the Bank''s employees and look forward to their continued contribution in building a World Class Indian Bank. On behalf of the Board of Directors

Mr. C. M. Vasudev Mumbai, April 18, 2012 Chairman

Director Report
Mar2009 Mar 2010 Mar2012

The Directors have great pleasure in presenting the Sixteenth Annual Report on the business and operations of your Bank together with the audited accounts for the year ended March 31, 2010.
FINANCIAL PERFORMANCE (Rs. in crores) For the March 31, 2010 Deposits and Other Borrowings Advances Total Income Profit before Depreciation and Income Tax Net Profit Profit brought forward Total Profit available for Appropriation Appropriations Transfer to Statutory Reserve Transfer to General Reserve Transfer to Capital Reserve Transfer from Investment Fluctuation Reserve Proposed Dividend 737.2 294.9 199.5 561.2 224.5 93.9 180,320.1 125,830.6 19,980.5 year ended March 31, 2009 151,975.2* 98,883.0 19,622.9

4,683.5 2,948.7 3,455.6

3,659.2 2,245.0 2,574.6

6,404.3

4,819.6

(1.5) 549.3

(13.9) 425.4

Tax Including Surcharge and Education Cess on Dividend Dividend (including tax/cess thereon) pertaining to previous year paid during the year

91.2

72.3

0.9

0.6 3,455.6

Balance carried over to Balance Sheet 4,532.8 * Change pursuant to reclassification

The Bank posted total income and net profit of Rs. 19,980.5 crores and Rs. 2,948.7 crores respectively for the financial year ended March 31, 2010 as against Rs. 19,622.9 crores and Rs. 2,245.0 crores respectively in the previous year. Appropriations from net profit have been effected as per the table given above. DIVIDEND Your Bank has had a consistent dividend policy that balances the dual objectives of appropriately rewarding shareholders through dividends and retaining capital, in order to maintain a healthy capital adequacy ratio to support future growth. It has had a consistent track record of moderate but steady increases in dividend declarations over its history with the dividend payout ratio ranging between 20% and 25%. Consistent with this policy, and in recognition of the Banks overall performance during this financial year, your directors are pleased to recommend a dividend of Rs. 12 per share for the financial year ended March 31, 2010, as against Rs. 10 per share for the year ended March 31, 2009. This dividend shall be subject to tax on dividend to be paid by the Bank. AWARDS As in the past years, awards and recognition were conferred on your Bank by leading domestic and international organizations during the fiscal year ended March 31, 2010. Some of them are: Asian Banker Excellence Awards 2009 - Best retail bank in India (4th year in a row) - Excellence in automobile lending The Asset Triple A Awards - Best cash management bank in India Euromoney Private Banking and Wealth Management poll 2010 - Best local bank in India (2nd year in a row)

- Best private banking services overall Financial Insights Innovation Awards 2010 - Innovation in branch operations Global Finance Award - Best trade finance provider in India (2010) Business Today Best Employer Survey - Listed in the top 10 best employers in the country Business World Best Bank Awards 2009 - Most tech-savvy bank Outlook Money NDTV Profit Awards 2009 - Best bank Forbes Asia - Fab 50 companies in Asia-Pacific UTI MF-CNBC TV18 Financial Advisor Awards 2009 - Best performing bank Wall Street Journal survey of Asias best 200 companies 2009 - Rated amongst Indias 10 most admired companies - Rated 3rd in terms of Financial Reputation FE Best Bank Awards 2009 - Best in strength and soundness award Asia Money 2009 awards - Best domestic bank in India RATINGS Instrument Fixed Deposit Program Rating Rating CARE AAA (FD) tAAA (ind) with a Agency CARE1 FITCH2

stable outlook Certificate of Deposit Long term unsecured, subordinated (Tier II) bonds PR 1+ CARE AAA CARE CARE

AAA (ind) with a stable outlook Tier I perpetual Bonds CARE AAA AAA / Stable Upper Tier II Bonds CARE AAA AAA / Stable

FITCH

CARE CRISIL3 CARE CRISIL

Instrument Fixed Deposit Program

Comments Represents instruments considered to be of the best quality, carrying negligible investment risk. Indicates the strongest capacity for timely payment of financial commitments relative to other issuers or issues in the country.

Certificate of Deposit

Long term unsecured, subordinated (Tier II) bonds

Representing superior capacity for repayment of short term promissory obligations Represents instruments considered to be of the best quality, carrying negligible investment risk. Represents the best credit risk relative to all other issuers or issues in the country.

Tier I perpetual Bonds

Represents instruments considered to be of the best quality, carrying negligible investment risk.

Judged to offer the highest degree of safety with regard to timely payment of financial obligations. Any adverse changes in circumstances are most unlikely to affect the payments of the instrument. Upper Tier II Bonds Represents instruments considered to be of the best quality, carrying negligible investment risk. Judged to offer the highest degree of safety with regard to timely payment of financial obligations. Any adverse changes in circumstances are most unlikely to affect the payments of the instrument. 1 - CARE Credit Analysis & Research Limited 2 - FITCH Fitch Ratings India Private Limited (100% subsidiary of Fitch Inc.) 3 - CRISIL CRISIL Ltd. (A Standard & Poors company) ISSUANCE OF EQUITY SHARES AND WARRANTS Post merger of the erstwhile Centurion Bank of Punjab with your Bank, 26,200,220 warrants convertible into an equivalent number of equity shares were issued to HDFC Limited on a preferential basis at a rate of Rs. 1,530.13 each. This was done in order to enable the promoter group to restore its shareholding percentage in the Bank to the pre-merger level in line with shareholder and regulatory approvals. On November 30, 2009 the said warrants were converted by HDFC Limited and consequently the Bank issued them 26,200,220 equity shares. During the year under review, 61.59 lac shares were allotted to the employees of your Bank pursuant to the exercise of options under the employee stock option scheme of the Bank. These include the shares allotted under the employee stock option scheme of the erstwhile Centurion Bank of Punjab. EMPLOYEE STOCK OPTIONS The information pertaining to Employee Stock Options is given in an annexure to this report. CAPITAL ADEQUACY RATIO Your Banks total Capital Adequacy Ratio (CAR) calculated in line with the Basel II framework stood at 17.4%, well above the regulatory minimum of 9.0%. Of this, Tier I CAR was 13.3%. SUBSIDIARY COMPANIES Your Bank has two subsidiaries, HDFC Securities Limited (HSL) and HDB

Financial Services Limited (HDBFS). HSL is primarily in the business of providing brokerage services through the internet and other channels. HDBFS is a non-deposit taking non-bank finance company (NBFC), for the establishment of which the Bank received Reserve Bank of India (RBI) approval during the fiscal year ended March 31, 2008. In terms of the approval granted by the Government of India, the provisions contained under Section 212(1) of the Companies Act, 1956 shall not apply in respect of the Banks subsidiaries. Accordingly, a copy of the balance sheet, profit and loss account, report of the Board of Directors and the report of the Auditors of HSL and HDBFS have not been attached to the accounts of the Bank for the year ended March 31, 2010. Shareholders who wish to have a copy of the annual accounts and detailed information on HSL and HDBFS may write to the Bank for the same. Further, the said documents shall also be available for inspection by shareholders at the registered offices of the Bank, HSL and HDBFS.

CORPORATE SOCIAL RESPONSIBILITY Your Bank is a socially responsible corporate citizen committed to deliver a positive impact across social, economic and environmental parameters. The Bank acknowledges its responsibility on the manner that its activities influence its consumers, employees, and stake holders, as well as the environment. Your Bank strives to proactively encourage community growth and development thereby contributing in building a sustainaible future. Your Banks CSR initiatives range across the spectrum of purely operational and financial parameters at one end to social and altruistic at the other. Together, these elements go towards fulfilling its CSR objectives. The Bank seeks to achieve its corporate and social objectives by focusing on the following strategic areas Environmental Responsibility Employee Engagement Community Initiatives Environmental Responsibility Your Bank is aware of its role of an influencer towards the environment, which is embodied in its approach to Carbon Emission Reduction. The Bank demonstrates this commitment to contribute positively to the environment and sustainable development by calculating its carbon footprint and preparing a carbon management plan to reduce it. In addition, in order to create awareness amongst employees on climate change and the need to reduce and recycle, various

drives to conserve the environment including tree plantation are organized on a regular basis. Employee Engagement The Banks employees are encouraged to volunteer time and skills through the Corporate Volunteering Program. This year your Banks employees have engaged in activities such as academic support classes, held English speaking courses and helped in organizing special events in order to celebrate festivals with the underprivileged. Additionally the Bank has facilitated employee donations to charities of their choice through Give India, a donation platform that enables individuals to support social causes by donating to over 200 charities that have been screened for transparency and credibility. The bank makes a donation matching the amounts donated by its employees on a monthly basis. Community Initiatives As a responsible Corporate Citizen your Bank strives for community empowerment through socio-economic development of underprivileged and marginalized sections of society. The Bank partners with NGOs across India to support educational initiatives and livelihood training programs. In the year ended March 31, 2010 the Bank supported a variety of educational programs ranging from educational sponsorships for girls, adoption of state-run schools, running of academic support classes and reading classes. The Bank also supports projects that provide skills training to school dropouts, youth, women and other disadvantaged groups. The Banks social development programs have so far touched the lives of over 73,000 children and 700 women and youth. FINANCIAL INCLUSION Over the last few years, your Bank has been working on a number of initiatives to promote Financial Inclusion across identified sections of rural, under-banked and un-banked consumers. These initiatives target segments of the population that have limited or no access to the formal banking system for their basic banking and credit requirements, by building a robust and sustainable model that provides relevant services and viable and timely credit that ultimately result in the economic upliftment of its customers. The Banks financial inclusion initiatives have been integrated across its various businesses, across product groups. Over the next five years your Bank will endeavor to bring 10 million households currently excluded from basic banking services under the fold of this program. Rural Initiative The Bank has approximately 33% of its branches in rural and underbanked locations. In these branches the Bank offers products and services such as savings, current, fixed & recurring deposits, loans, ATM facilities, investment products such as mutual funds and insurance, electronic funds transfers, drafts & remittances, etc. The Bank also leverages

these branches as hubs for other inclusion initiatives such as direct linkages to self help groups and joint liability groups, bank on wheels, point of sale (POS) terminals and information technology enabled kiosks, and other information & communication technology (ICT) backed initiatives in these locations. A number of retail credit products such as two-wheeler loans, car loans, mortgages etc. are typically consumption products in urban centers. These however are means of income generation for of rural consumers. We believe that apart from agricultural loans, there are many other credit products that the Bank can use to aid financial betterment in rural locations. The Bank has extended provision of its retail loans to large segments of the rural population where the end use of the products acquired (by availing our loans) are used for income generating activities. For example, loans for tractors, commercial vehicles, etc. supplement the farmers income by improving productivity and reducing expenses. No Frills Savings Accounts A savings account is the opening requirement for the provision of other banking services; the account promotes the habit of saving, provides a security, and inculcates confidence among the target segment in the banking sector. The Bank provides No Frills savings accounts through all its branches as a stepping stone towards financial inclusion. These accounts are offered only to customers who do not have any other bank account (are un-banked) and who are either beneficiaries of a government welfare scheme or have annual incomes less than a defined threshold (constitute the bottom of the economic pyramid). Apart from the basic no frills savings account your Bank also offers these segments other accounts such as no frills salary accounts and limited KYC accounts. Lending to self help groups and Microfinance Institutions Your Bank has been working with various self help groups in order to cover a wider consumer base than through its own branch network. The groups that the Bank partners work with the objective of providing credit for income generation activities, (often by providing training, vocational guidance, and marketing support to their members). Leveraging their distribution, credit expertise and on-ground knowledge, the Bank funds these groups who in turn lend to the end consumer. Till date the Bank has lent to over 45,000 self help groups covering approximately 7 lakh households supporting their income generation activities. The Bank works with these groups either by appointing business correspondents or through its own branch network. To this effect the Bank has opened 27 branches catering exclusively to this target segment. The Bank also extends loans to Microfinance Institutions for on-lending to financially excluded households or in many cases to them through self help groups. This program is currently spread across the country

covering 18 states with tie-ups with 110 accredited microfinance institutions. The above institutions typically face challenges in the areas of funding, credit underwriting and scaling up of operations. The Bank brings in the necessary expertise related to these areas and enters into a symbiotic arrangement that benefits all parties involved. As on March 31, 2010 with a micro lending book of over Rs. 1,400 crores the Banks micro lending initiative has reached approximately 2 million households. Agriculture and Allied Activities A large portion of Indias un-banked population relies on agriculture as their main source of livelihood. We believe provision of credit to marginal farmers through various methods that your Bank has employed replaces the traditional money lending channel, while at the same time providing income generating activities. The Bank provides various loans to farmers through its suite of specifically designed products such as the Kisan Gold Card, tractor, cattle loans etc. In addition the Bank offers post-harvest cash credit, warehouse receipt financing and bill discounting facilities to mandi (markets for grain and other agricultural produce) participants and farmers. These facilities enable the mandi participants to make timely payments to farmers. The Bank carries out this business through approximately 200 branches that are located in close proximity to mandis. The Bank targets specific sectors to capture supply chain of certain crops from the production stage to the sales stage. On the basis of these cashflows, your Bank is able to finance specific needs of the farmers. This is further supported by using business correspondents closer to their respective locations and helping them to create a savings and banking habit. This model has currently been implemented with dairy and sugarcane farmers. The initiative currently underway includes the appointment of milk societies as BCs, through whom the Bank opens accounts of individual farmers attached to these societies. The societies route all payments to the farmers through this account. Small and Micro Enterprises One of the means to financial inclusion is by supporting small and micro enterprises which in turn provide employment opportunities to the financially excluded. Though indirect, we believe this model may in many instances be more effective than providing subsidies that are often unsustainable, or never reach the intended beneficiary. The Bank offers complete banking solutions to micro, small and medium scale enterprises across industry segments including manufacturers, retailers, wholesalers / traders and services. The entire suite of financial products including cash credit, overdrafts, term loans, bills discounting, export packing credit, letter of credit, bank guarantees, cash management services and other structured products are made available to these customers. Promoting Financial Awareness

In addition to providing various products and services to the financially excluded, that Bank believes that imparting education and training to these target segments is equally essential to ensure transparency and create awareness. To this effect the Bank has put in place various training programs, these are conducted by Bank staff in local languages and cover not only the customers but also various intermediaries such as the Banks business correspondents. Through these programs the Bank provides credit counseling and information on parameters like savings habit, better utilization of savings, features of savings products, credit utilization, asset creation, insurance, income generation program etc. HUMAN RESOURCES The total number of employees of your bank were 51,888 as of March 31, 2010. The Bank continued to focus on training its employees, both on-the-job as well as through training programs conducted by internal and external faculty. The Bank has consistently believed that broader employee ownership of its shares has a positive impact on its performance and employee motivation. HDFC Bank lists people as one of its stated core values. The Bank believes in empowering its employees and constantly takes various measures to achieve this. STATUTORY DISCLOSURES The information required under Section 217(2A) of the Companies Act, 1956 and the rules made there under, are given in the annexure appended hereto and forms part of this report. In terms of section 219(1)(iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid annexure. Any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the Registered Office of the Bank. The Bank had 51,888 employees as on March 31, 2010. 630 employees employed throughout the year were in receipt of remuneration of Rs. 24 lacs per annum and 35 employees employed for part of the year were in receipt of remuneration of more than Rs. 2 lacs per month. The provisions of Section 217(1)(e) of the Act relating to conservation of energy and technology absorption do not apply to your Bank. The Bank has, however, used information technology extensively in its operations. The report on the Corporate Governance is annexed herewith and forms part of this report. The Ministry of Corporate Affairs has issued Corporate Governance Voluntary Guidelines in December 2009. While these guidelines are recommendatory in nature, the Bank has adopted most of these guidelines as detailed in the Corporate Governance Report. The Bank will examine the possibilities of adopting the remaining guidelines in an appropriate manner.

RESPONSIBILITY STATEMENT The Board of Directors hereby state that i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; ii) We have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as on March 31, 2010 and of the profit of the Bank for the year ended on that date; iii) We have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Bank and for preventing and detecting the fraud and other irregularities; iv) We have prepared the annual accounts on a going concern basis. DIRECTORS Mr. C.M.Vasudev and Dr. Pandit Palande will retire by rotation at the ensuing Annual General Meeting and are eligible for re-appointment. The Board at its meeting held on 15th January 2010 re-appointed Mr. Aditya Puri as Managing Director of the Bank for a period of 3 years from 1st April 2010 to 31st March 2013 subject to the approval of the shareholders at the ensuing Annual General Meeting and the Reserve Bank of India. The Reserve Bank of India has since approved the re-appointment of Mr. Puri as Managing Director and the terms of re-appointment are being placed before the shareholders for approval at the ensuing Annual General Meeting. The Board at its meeting held on 24th April 2010 also approved the re-appointment of Mr. Harish Engineer and Mr. Paresh Sukthankar as Executive Directors for further periods from the expiry of their current terms subject to the approval of the shareholders at the ensuing Annual General Meeting and the Reserve Bank of India. The brief resume/details relating to Directors who are to be appointed/re-appointed are furnished in the report on Corporate Governance. AUDITORS M/s. Haribhakti & Co., Chartered Accountants have been the Statutory Auditors of your Bank since 2006. As per the regulations of the Reserve Bank of India, the same auditors cannot be re-appointed for a period beyond four years. It is proposed to appoint M/s. BSR & Co., Chartered Accountants as the new Statutory Auditors of the Bank, subject to the approval of the members and the Reserve Bank of India. Your Directors

place on record their sincere appreciation of the professional services rendered by M/s.Haribhakti & Co., as Statutory Auditors of the Bank. ACKNOWLEDGEMENT Your Directors would like to place on record their gratitude for all the guidance and co-operation received from the Reserve Bank of India and other government and regulatory agencies. Your Directors would also like to take this opportunity to express their appreciation for the hard work and dedicated efforts put in by the Banks employees and look forward to their continued contribution in building a World Class Indian Bank. On behalf of the Board of Directors Jagdish Capoor Chairman

Mumbai, April 24, 2010

Director Report
Mar2008 Mar 2009 Mar2010

The Directors have great pleasure in presenting the Fifteenth Annual Report on the business and operations of your Bank together with the audited accounts for the year ended March 31, 2009.
Financial Performance (Rs. in crores) For the year ended March 31, 2009 March 31, 2008 Deposits and Other Borrowings 145,497.4 Advances 98,883.0 Total Income 19,622.9 Profit before Depreciation and Tax 3,659.2 Net Profit 2,245.0 Profit brought forward 2,574.6 Total Profit available for Appropriation 4,819.6 Appropriations Transfer to Statutory Reserve 561.2 Transfer to General Reserve 224.5 Transfer to Capital Reserve 93.9 Transfer to Investment Fluctuation Reserve (13.9) Proposed Dividend 425.4 Tax including Surcharge and Education Cess on Dividend 72.3 Education Cess on Dividend paid for Prior Year 0.6 Balance carried over to Balance Sheet 3,455.6 105,363.5* 63,426.9 12,398.2 2,552.4 1,590.2 1,932.0 3,522.2 397.5 159.0 38.5 301.3 51.2 0.1 2,574.6

* Change pursuant to reclassification The Bank posted total income and net profit of Rs. 19,622.9 crores and Rs. 2,245.0 crores respectively for the financial year ended March 31, 2009 as against Rs. 12,398.2 crores and Rs. 1,590.2 crores respectively in the previous year. Appropriations from the net profit have been effected as per the table given above. Dividend Your Bank has had a. consistent dividend policy of balancing the dual objectives of appropriately rewarding shareholders through dividends and retaining capital to maintain a healthy capital adequacy ratio to support future growth. It has had a consistent track record of moderate but steady increases in dividend declarations over its history with the dividend payout ratio ranging between 20% and 25%. Consistent with this policy, and in recognition of the overall performance during 2008-09, your directors are pleased to recommend a dividend of 100% for the year ended March 31, 2009, as against 85% for the year ended March 31, 2008. This dividend shall be subject to tax on dividend to be paid by the Bank. Awards Your Bank continued to receive awards and gain recognition from leading domestic and international organizations during the fiscal 2008-09. Some of them are: - Euromoney Annual Survey : The Best local Bank. Also Ranked 1st in Relationship Management and 2nd in private banking services overall. - Business India : Best Bank 2008. - Forbes Asia : One of the Fab 50 Companies in Asia Pacific. - Nasscom IT User Award 2008: Best IT Adoption in the Banking Sector. - Asian Banker Excellence in Retail Financial Services: Best Retail Bank 2008. - Asiamoney : Best Local Cash Management Bank Award. - Microsoft & Indian Express Group : Security Strategist Award 2008. - World Trade Center Award of Honour : For outstanding contribution to international trade services. Ratings The Bank has its deposit programs rated by two rating agencies - Credit Analysis & Research Limited (CARE) and Fitch Ratings India

Private Limited. The Banks Fixed Deposit programme has been rated CARE AAA (FD) [Triple A] by CARE, which represents instruments considered to be "of the best quality, carrying negligible investment risk". CARE has also rated the banks Certificate of Deposit (CD) programme "PR 1+" which represents "superior capacity for repayment of short term promissory obligations". Fitch Ratings India Pvt. Ltd. (100% subsidiary of Fitch Inc.) has assigned the "tAAA (ind )" rating to the Banks deposit programme, with the outlook on the rating as "stable". This rating indicates "highest credit quality" where "protection factors are very high". - The Bank also has its long term unsecured, subordinated (Tier II) Bonds rated by CARE and Fitch Ratings India Private Limited and its Tier I perpetual Bonds and Upper Tier II Bonds rated by CARE and CRISIL Ltd. CARE has assigned the rating of "CARE AAA" for the subordinated Tier II. Bonds while Fitch Ratings India Pvt. Ltd. has assigned the rating "AAA(ind)" with the outlook on the rating as "stable". CARE has also assigned "CARE AAA [Triple A] for the Banks Perpetual bond and Upper Tier II bond issues. CRISIL has assigned the rating "AAA/Stable" for the Banks perpetual Debt programme and Upper Tier II Bond issue. In each of the cases referred to above, the ratings awarded were the highest assigned by the rating agency for those instruments. Issuance of Equity Shares and Warrants The Reserve Bank of India (RBI) approved the scheme of amalgamation of Centurion Bank of Punjab with your Bank effective May 23, 2008. Consequently, the shareholders of the erstwhile Centurion Bank of Punjab were allotted 69,883,956 equity shares of Rs. 10 each pursuant to the share swap ratio of one equity share of Rs. 10 each of HDFC Bank for every twenty nine equity shares of Re. 1 each held in Centurion Bank of Punjab by them as on June 16, 2008. To enable the promoter group to restore its shareholding percentage in the Bank to the pre-merger level and in line with shareholder and regulatory approvals, during the quarter ended June 30, 2008 your Bank issued 26,200,220 warrants convertible into an equivalent number of equity shares to HDFC Limited on a preferential basis at a rate of Rs. 1,530.13 each. HDFC Limited can exercise the said options until December, 2009. During the year under review, 10.67 lakh shares were allotted to the employees of your Bank pursuant to the exercise of options under the employee stock option scheme of the Bank. These include the shares allotted under the employee stock option scheme of Centurion Bank of Punjab. Other Capital Raising During the Fiscal year 2008-2009 your bank issued Lower and Upper Tier II bonds aggregating to Rs. 2,875 crores. The proceeds from these bond issuances have been included as Tier II capital. Employee Stock Options

The information pertaining to Employee Stock Options is given in an annexure to this report. Capital Adequacy Ratio Your Banks total Capital Adequacy Ratio (CAR) calculated in line with the Basel II framework stood at 15.7%, well above the regulatory minimum of 9.0%. Of this, Tier I CAR was 10.6%. During the year under consideration the Bank raised Tier II capital to maintain a healthy CAR. In the Fiscal year 2008-2009 the Reserve Bank of India revised the risk weights accorded to various asset classes which had a net positive impact on the Capital Adequacy Ratio of your Bank. From the current Financial year the Bank has complied with the standards set out for the standardised approach for credit risk and the Basic Indicator approach for operational risk under Basel II as directed by the Reserve Bank of India. The implementation of the Basel II framework is in harmony with the Banks objective of adopting international best practices in risk management. The Banks CAR as per Basel II is 15.7% as compared to 15.09% calculated as per Basel I. Amalgamation of Centurion Bank of Punjab Limited with the Bank During the year ended March 31, 2009, the Reserve Bank of India accorded its consent to the Scheme of Amalgamation of Centurion Bank of Punjab Limited with your Bank. Pursuant to the order of amalgamation the operations of both Banks were merged with effect from May 23, 2008. The appointed date for the merger was April 01, 2008. During the fiscal year various facets of integration including systems, human resources, branches, operating processes and business plans have been integrated. With the result both banks currently operate as one seamlessly integrated entity. SUBSIDIARY COMPANIES In terms of the approval granted by the Government of India, the provisions contained under Section 212(1) of the Companies Act, 1956 shall not apply in respect of the Banks subsidiaries namely, HDFC Securities Limited (HSL) and HDB Financial Services Limited (HDBFSL). Accordingly, a copy of the Balance Sheet, Profit and Loss Account, Report of the Board of Directors and Report of the Auditors of HSL and HDBFSL have not been attached to the accounts of the Bank for the year ended March 31, 2009. Investors who wish to have a copy of the annual accounts and detailed information on HSL and HDBFSL may write to the Bank for the same. Further, the said documents shall also be available for inspection by the investors at the registered offices of the Bank, HSL and HDBFSL MANAGEMENTS DISCUSSIONS AND ANALYSIS Macro-economic and Industry Developments The Indian economy faced significant slowdown in growth momentum in

2008-09, driven by a severe downturn in the global economy on the back of sustained pressure on the global financial system. For India, estimates of 2008-09 GDP growth range from 6.0%-7.0% against an average growth rate of 8.8% per annum over the period 2003-2008. The key shock to Indias growth has come from external sources, largely by way of lower exports and a marked reduction in inflow of foreign capital. While export growth entered into negative territory in the third quarter of the financial year 2008-2009 against a growth rate of around 27% during the same period last year, foreign inflows are likely to have contracted to USD 16 billion in 2008-09 from almost USD 100 billion in 2007-08. This has dampened domestic investment momentum which was earlier a key growth driver of the Indian economy. Growth in gross capital formation in the last quarter of the financial year 2008-2009 fell to 5.3% from 13.7% a year ago. The industrial sector has been the largest casualty of the marked slowdown in both investment and imports, slowing from a growth rate of 8.9% in the year ended March 31, 2008 to possibly 4-4.5% in the year ended March 31, 2009. Services, particularly financial services and trade & transport - have also been impacted by the cyclical downturn in industry and the external pressure from a tough global financial environment. We expect growth in services to slow down from 10.8% in the fiscal year 2007-2008 to 9.4% in the financial year ended March 31, 2009. In response to the severe pressure on global liquidity in the aftermath of the collapse of Lehman Brothers in October, 2008, liquidity within the domestic Indian banking system also came under substantial pressure. As international credit lines froze, pressure on the domestic banking system intensified. Since then, a series of moves by the Reserve Bank of India to slash the Cash Reserve Ratio (CRR) and the key domestic policy rates have improved the liquidity situation within the banking system. The central bank cut the reverse repo and repo rate by a total of 250 bps and 400 bps respectively since September 2008, and addressed liquidity pressures by cutting the CRR and the Statutory Liquidity Ratio by a total of 400 bps and 100 bps respectively, leading to a liquidity surplus in the Indian banking system since November 2008. Interest rates too have mirrored the broad-based uncertainty in the global economy and markets and have been very volatile since the global crisis intensified last year. The overnight inter- bank call money rate as well as deposit and lending rates spiked up sharply during the October 2008 liquidity shortage spell, impacting domestic growth prospects. Since January 2009, however, inter-bank rates have eased substantially with the overnight call money rate ruling around 3-4%, while longer- tenor yields have moved higher by an average of 160 basis points (bps) in response to concerns over a widening fiscal deficit spurred by an expansionary fiscal policy. Effective lending and deposit rates have broadly tracked the down-trend in policy rates, albeit at a much slower pace. While policy rates have declined by an average of 250-400 bps, the lending rates of banks have broadly scaled lower by 150-225 bps and deposit rates have come down by 100-150 bps. Despite some easing of effective lending rates, credit growth has

moderated over the year, spiking up to a high of 29% in the October-November, 2008 period but falling steadily thereafter to a growth rate of 18.1% in March 2009. While the spike in credit growth in the third quarter of 2008-09 was largely fuelled by demand from oil marketing and fertilizer companies reeling under losses accumulated on the back of firm commodity prices as well as some substitution of foreign sources of funding with domestic bank credit, the decline in economy-wide credit demand in the fourth quarter of 2008-09 was broadly in sync with lower domestic growth. Retail consumer borrowing slipped lower as consumer demand slowed down; pushing growth in the retail loans lower to 14.8% in the financial year ended March 31, 2009 from 18-20% a year ago. Additionally, banks have been more cautious in incremental retail lending in the face of rising delinquencies and higher credit risk perception with the economic slowdown. On the foreign trade side, merchandise exports plummeted over the course of the year driven primarily by sharp deterioration in global growth. Manufacturing export orders, in particular, have felt the brunt of the slowdown in the global economy. In February 2009, domestic exports fell by 2.1.3% on the back of 15% contraction in January 2009 and export growth is expected to slow down from 9% in 2008-2009 to around 3% in 2009-2010. Both oil and non-oil imports have declined in response to a reduction in commodity prices and deceleration in the domestic growth cycle. However, the full impact of this reduction in domestic oil imports is likely to be felt of the financial year 2009- 2010. Thus, the trade deficit position should improve significantly going forward with slower export performance being more than offset by sharp reductions in non-oil and oil imports. We therefore expect a reduction in the trade balance deficit from USD 119 billion in 2008-2009 to around USD 105 billion in 2009-2010. Net invisibles(software exports and private transfers) are another category that could remain flat or decrease marginally in response to slackness in global growth. However, a lower trade balance should act as the main driver in reducing the current account deficit from USD 30.9 billion in the financial year ended March 31, 2009 to USD 14.5 billion for the same period next year. The total balance of payments position in the fiscal year ended March 31, 2009 was in deficit due to strong portfolio outflows and a sharp reduction in foreign currency inflows in categories such as net Foreign Direct Investment (FDI) and External Commercial Borrowing (ECB) flows. In fact, for the first time in 10 years, the capital account showed a negative balance of USD 3.7 billion. The capital account balance is likely to remain under pressure in the next financial year. However, the sharp deficit seen over the last fiscal year is unlikely to be repeated. Short- term trade credit flows could revive from the lows witnessed in the October-December 2008 period and provide some cushion to the capital account. FDI flows could pick up towards the latter half of the financial year ending March 31, 2010 as global investors look for high yielding destinations such as India. Thus, the capital account position is expected to improve next year resulting in a much more comfortable position in the total balance of payments. Indian equity markets have fallen significantly over the course of the last financial year due to a sharp pull out by portfolio flows and risk

aversion buying in the global markets. However, the domestic equity markets could improve towards the latter half of the next financial year once global investors start pricing in a global recession as Indian economic fundamentals still remain strong and attractive in absolute terms. (Sources : Ministry of Finance, RBI, CSO) Risks and Concerns While adequate capital provisioning and stringent prudential regulations have largely shielded the domestic banking system from the global crisis, some cyclical deterioration in asset quality remains a concern for the banking system. Bank credit, particularly in the retail segment, has been an important driver of the consumption boom in India and has played a significant role in pushing up the trend of the growth rate of the Indian economy in the last few years. Recent stress tests have revealed that the banking system as a whole remains robust enough to withstand a sharp increase in asset quality slippage. An increase in delinquencies and non-performing assets will nevertheless restrict the ability of the banks to grow rapidly and both the economy and the banking system will have to align themselves to a less buoyant growth outlook in the year ahead. An increase in Investments has been a crucial anchor of growth in recent years; buoyant global growth conditions have aided fresh investment initiatives in recent years. Foreign capital has had a crucial role to play in providing ready capital specifically streamlined to cater to financing investment initiatives. A lack of such funds is likely to constrain a sustained recovery in investment and capital growth in the year ahead. Another risk that is likely to impact domestic growth conditions is the possible de-stabilizing impact of a sharp fall in exports on industry. Indias export to GDP ratio rose from 12.5% in 2000-01 to 22% in 2007-08. As industry scales back growth expectations, runs down inventories and builds in a lower growth outlook, it is likely to undergo significant re-adjustments and pose as a significant area of concern for both the banking system and the economy at large. At present, a recovery in consumption holds the key to a more stable growth outlook for the Indian economy. High inflation and a tight monetary environment acted as primary dampeners for consumption in the first half of 2008-09, with growth in consumption declining much before the financial crisis acquired global proportion. Growth in private final consumption expenditure fell to 5.3% in Q2FY09 as compared to 7.6% a year ago. Recent monetary easing alongside a sharp fall in inflation is likely to provide some support to consumption in the financial year 2009-10. However, the possibility of contracting personal disposable incomes that may dilute the positives of lower interest rates and prices remains a concern in the year ahead. Opportunities The problems of the international financial system are likely to

persist in 2009-10 and this will impinge on Indias ability to attract external capital. The implication is that the domestic recovery will have to be funded largely by the domestic financial system, particularly banks. This substitution of global funding sources by domestic sources is likely to create a number of opportunities for domestic finance. The Indian corporate sector will, for a while to come, depend more on domestic funding both for operating needs as well as for capacity expansion. Infrastructure spending, for one, will continue to be used as a key countercyclical policy tool. This creates opportunities for banks either directly in project finance or in providing short term funds for companies involved in these projects. Second, the rural sector has fared better than the urban segment in the downturn - rural markets for goods and services (including credit) appear to have been robust. This is partly due to the fact that a number of the countercyclical policy initiatives have had a rural bias (rural roads and irrigation projects for some). Given the dependence of a large fraction of the population on the rural economy and the fact that a number of product markets are under-penetrated, it provides opportunities for sustained growth for a number of sectors. Although growth in retail credit has moderated in the last year, the low penetration levels of retail credit (estimated at less than 12% of GDP), the shift in demographics towards a higher proportion of younger working population, the changing attitudes towards borrowings, higher income levels amongst the growing middle class, and the large pent-up demand for housing, cars etc., all augur well for the long-term, sustainable growth of retail lending in the Indian market. Outlook The Indian economy is likely to continue to see further pressure in the year ahead. Growth is likely to slowdown further from 6.7% in the year ending March 31, 2009 to around 5.8% next year as industrial growth continues to decelerate. Investment momentum is likely to remain subdued amidst flat local demand even as an accommodative monetary policy alongside receding inflationary risks, provide some support to growth. Demand for credit is unlikely to recover till domestic growth conditions improve. However, India will remain one of the fastest growing economies in the world and if risk appetite and global stability were to stage a come-back by the end of 2009-10, India will remain an attractive foreign investment destination. Mission and Business Strategy Our mission is to be "a World Class Indian Bank", benchmarking ourselves against international standards and best practices in terms of product offerings, technology, service levels, risk management and audit & compliance. The objective is to continue building sound customer franchises across distinct businesses so as to be a preferred provider of banking services for target retail and wholesale customer segments, and to achieve a healthy growth in profitability, consistent with the Banks risk appetite. We are committed to do this while ensuring the highest levels of ethical standards, professional

integrity, corporate governance and regulatory compliance. Our business strategy emphasizes the following: Increase our market share in Indias expanding banking and financial services industry by following a disciplined growth strategy focusing on balancing quality and volume growth while delivering high quality customer service; Leverage our technology platform and open scaleable systems to deliver more products to more customers and to control operating costs; - Maintain high standards for asset quality through disciplined credit risk management; Develop innovative products and services that attract our targeted customers and address inefficiencies in the Indian financial sector; Continue to develop products and services that reduce our cost of funds; and Focus on healthy earnings growth with low volatility. Financial Performance The merger of Centurion Bank of Punjab Limited (CBoP) with HDFC Bank was effected during the year with April 1, 2008 as the appointed date. The financial results for the year ended March 2009 are therefore for the merged entity, whilst the results for the year ended March 2008 are on a standalone basis for HDFC Bank and are therefore not comparable. The financial performance during the fiscal year 2008-09 remained healthy with total net revenues (net interest income plus other income) increasing by 42.6% to Rs. 10,711.8 crores from Rs. 7,511.0 crores in 2007-08. The revenue growth was driven both by an increase in net interest income and other income. Net interest income grew by 42.0% primarily due to increase in the average balance sheet size by 46.5% (including the impact of the merger of CBOP) and a net interest margin of 4.2%. Other income registered a growth of 44.1% over that in the previous year to Rs. 3,290.6 crores in the current year, primarily due to fees and commissions, profit/loss on revaluation and sale of investments and income from foreign exchange and derivatives. In 2008-09, commission income increased by 43.3% to Rs. 2,457.3 crores with the main drivers being commission from distribution of third party insurance and mutual funds, fees on debit/credit cards, transactional charges and fees on deposit accounts, processing fees of retail assets and cards, and fees from cash management and trade products. With bond yields having fallen over 100 bps to 150 bps across tenors, the Bank made a profit on sale / revaluation of investments of Rs. 382.6 crores during the year. Foreign exchange and derivatives revenues grew from Rs. 319.8 crores to Rs. 440.5 crores of which, over 80% came from customer foreign exchange transactions. The Bank incurred a loss of Rs. 158.2 crores on account

of derivative transactions during the year ended March 31, 2009. The said loss is primarily attributable to the unwinding of certain trading positions and due to contrary positions taken against bond trading positions as a part of risk strategy. Operating (non-interest) expenses increased from Rs. 3,745.6 crores in 2007-08 to Rs. 5,532.8 crores in 2008-09, due to the organic expansion in the Branch network and the amalgamation of Centurion Bank of Punjab (which had a significantly higher cost-income ratio than HDFC Bank) with your Bank. The Bank now has a significantly larger network and reach across the country as compared to that at the end of the previous financial year. This has resulted in higher infrastructure and staffing expenses. Operating cost to net revenues increased to 51.7%, from 49.9% in the corresponding year. Staff expenses accounted for 40.5% of non-interest expenses in 2008-09, due to an increase in staff strength and increase in average salary levels. Loan loss provisions and provision for standard assets increased from Rs. 1,216.0 crores to Rs. 1,726.3 crores in 2008-09 in line with the increase in non- performing assets and the Banks policy of providing aggressively in excess of the regulatory requirements. The Bank also provided Rs. 152.8 crores as contingent provisions for tax, legal and other contingencies. Net profit increased by 41.2% from Rs. 1,590.2 crores in 2007-08 to Rs. 2,245.0 crores in 2008-09. Return on average net worth was constant at 16.1% even on an enhanced equity base (due to merger with CBoP). The Banks basic earning per share increased from Rs. 46.2 to Rs. 52.9 per equity share. During 2008-09, the Banks total balance sheet increased by 37.6% over that on March 31, 2008 to Rs. 183,270.8 crores. Total Deposits increased from Rs. 100,768.6 crores (as of March 31, 2008) to Rs. 142,811.6 crores (as of March 31, 2009). With Savings account deposits at Rs. 34,914.7 crores and current account deposits at Rs. 28,444.9 crores, demand (CASA) deposits were around 44.4% of total deposits as of March 31, 2009. During 2008-09, gross advances grew by 48.3% to Rs. 100,239.3 crores. This was driven by a growth of 38.3% in wholesale advances to Rs. 39,085.8 crores, and an increase of 55.5% in retail advances to Rs. 61,153.5 crores. Business Segments Update Consistent with its performance in the past, this year too the bank has achieved healthy growth across various operating and financial parameters. The performance reflects the strength and diversity of the banks three primary business franchises - retail banking, wholesale banking and treasury, and of its disciplined approach to risk - reward management. Retail Banking The growth in your Banks retail banking business was robust during the current financial year. The Banks retail deposits grew by over 63.7% to Rs. 99,276.5 crores at the end of the financial year ended March 31, 2009, while its retail assets grew by 55.5% to Rs. 61,153.5 crores during the same period.

The Bank caters to various customer segments with a wide range of products and services, HDFC Bank is a one stop shop financial services provider of deposit products of virtually all types, of retail loans (auto loans, personal loans, commercial vehicle loans, etc.), credit cards, debit cards, depository (custody services), investment advisory, bill payments and several transactional services. Apart from its own products, the Bank sells third party financial products like mutual funds and insurance. Branch Banking This year the Bank significantly expanded its distribution network from 761 branches in 327 cities in March 2008 to 1,412 branches in 528 Indian cities in March 2009. The Banks ATMs increased from 1,977 to 3,295 during the same period. The expansion of the network was due to a combination of organic growth and the amalgamation of Centurion Bank of Punjab. Today your Banks branch network is deeply entrenched across the country with significant density in areas conducive to the growth of its businesses. The Banks focus on semi-urban and under-banked markets continued, with 64% of the Banks branches now outside the top nine Indian cities. The Banks customer base grew in line with the growth in its network and currently stands at over 18 million customers. The number of savings accounts grew almost 70% to approximately 10 million and savings balances which is a good indicator of the Banks retail liability franchise grew 33.5% to Rs. 34,914.7 crores at the end of the current financial year. The Bank continues to provide unique products and services with customer centricity a key objective/The Banks Imperia premium, preferred and classic banking services seeks to address the diverse needs of different customer segments in the personal banking space, with specifically trained personnel and customized products. In order to provide its customers increased choices, flexibility and convenience the Bank continued to make significant headway in its multi channel servicing strategy. The Bank offered its customers the use of ATMs, internet banking, phone banking and mobile banking in addition to its expanded branch network to serve their banking needs. The Bank increased its debit card base by 57.8% this year which translated to increased usage at its ATMs, providing greater convenience to customers while easing the load at the Banks branches and reducing servicing costs. The Bank also made strong inroads in its internet banking with around 20% of its registered customers now using net banking facilities for their banking requirements. Your bank now offers phone banking in over 500 locations in addition to giving its customers the ease of accessing their bank accounts over their mobile phones. The success of the Banks multi-channel strategy is evidenced in the fact that almost 80% of customer initiated transactions are serviced through the non-branch channels. Retail Assets Your Bank continued to grow at a healthy pace in almost all the retail

loan products in which it operates and remains amongst the top lenders in retail assets products in India. The Bank grew its retail asset portfolio in a well balanced manner by focusing on both returns as well as risk. The Banks auto finance business remained a key business driver for its retail asset portfolio. Additionally other key retail loan products exhibited robust growth rates and asset quality. The Bank continued its focus on internal customers for its credit cards portfolio. Although there was an increase in delinquencies for certain segments, credit card losses were lower than industry figures. Overall credit cards remained a profitable business for your Bank with over 4.3 million cards in force as at March 2009. The Bank also has a significant presence in the "merchant acquiring" business with the total number of point-of-sale (POS) terminals installed at over 70,000. In addition to the above products the Bank originates home loans under its arrangement with HDFC Limited, the Bank originated approximately an average Rs. 3,500 crores of these products every month in the financial year ended March 31, 2009. During the year the bank also purchased from HDFC Ltd. under the "loan assignment" route approximately Rs. 4,000 crores of AAA credit enhanced home loans which qualified as priority sector advances. Of these, approximately Rs. 2,000 crores were originated by the Bank. The Bank also distributes life and general insurance products through its tie-ups with insurance companies and mutual fund houses in the country. The success in the distribution of the above products has been demonstrated with the growth in the Banks fee income. The Banks data warehouse, Customer Relationship Management (CRM) and analytics solutions have helped it target existing and potential customers more effectively and cost effectively and offer them products appropriate to their profile and needs. Reduced costs of acquisition apart, this has also led to deepening of customer relationships and greater efficiency in fraud control and collections resulting in lower credit losses. Wholesale Banking The wholesale banking business registered a healthy growth in 2008-09. In this business, the Bank provides its corporate and institutional clients a wide range of commercial and transactional banking products, backed by high quality service and relationship management. The Banks commercial banking business covers not only the top end of the corporate sector but also the emerging corporate segments and some small and medium enterprises (SMEs). The Bank has a number of business groups catering to various segments of its wholesale banking customers with a wide range of banking services covering their working capital and term finance, trade services, cash management, foreign exchange and electronic banking requirements. During financial year 2008-09, growth in the wholesale banking business continued to be driven by new customer acquisition and higher

cross-sell with a focus on optimizing yields and increasing product penetration. Your Banks cash management and vendor & distributor (supply chain) finance products continued to be an important contributor to growth in the corporate banking business. Your Bank further consolidated its position as a leading player in the cash management business (covering all outstation collection, disbursement and electronic fund transfer products across the Banks various customer segments) with volumes growing to over Rs. 22 trillion. Your Bank also strengthened its market leadership in cash settlement services for major stock exchanges and commodity exchanges in the country. The Bank met the overall priority sector lending requirement of 40% of net bank credit. The Banks financial institutions and government business group (FIG) offers commercial and transaction banking products to financial institutions, public sector undertakings, central and state government departments. The main focus for this segment remained offering various deposit and transaction banking products to this segment besides deepening these relationships by offering funded, non-funded treasury and foreign exchange products. International Operations In October 2008, your bank opened its first overseas commercial branch in Bahrain. The branch offers the banks suite of banking services including treasury and trade finance products for corporate clients and wealth management products for Non-resident Indians. The Bahrain branch will serve as your banks gateway into the middle-east tapping the growth potential in this region. Treasury The treasury group is responsible for compliance with reserve requirements and management of liquidity and interest rate risk on the Banks balance sheet. On the foreign exchange and derivatives front, revenues are driven primarily by spreads on customer transactions based on trade flows and customers hedging needs. During 2008-09, revenues from foreign exchange and derivative transactions grew by 37.7% to Rs. 440.5 crores where the revenues were distributed across large corporate, emerging corporate, business banking and retail customer segments for plain vanilla forex products and across primarily large corporate and emerging corporate segments for derivatives. The Bank offers Indian rupee and foreign exchange derivative products to its customers, who use them to hedge their market risks. The Bank enters into forex and derivative deals with counterparties after it has set up appropriate counterparty credit limits based on its evaluation of the ability of the counterparty to meet its obligations in the event of crystallization of the exposure. Appropriate credit covenants are stipulated where required as trigger events to call for collaterals or terminate a transaction and contain the risk. Where the Bank enters into foreign currency derivative contracts with its customers it lays them off in the inter-bank market on a matched basis. For such foreign currency derivatives, the Bank does not have any open positions or assume any market risks but carries only the counterparty credit risk (where the customer has crystallized or mark-to- market losses). The Bank also deals in Indian rupee derivatives on its own account

including for the purpose of its own balance sheet risk management. The Bank recognizes changes in the market value of all rupee derivative instruments (other than those designated as hedges) in the profit and loss account in the period of change. Rupee derivative contracts classified as hedge are recorded on an accrual basis. Given the regulatory requirement of holding government securities to meet the statutory liquidity ratio (SLR) requirement, your Bank has to necessarily maintain a portfolio of government securities. While a significant portion of these SLR securities are held in the "Held-to-Maturity (HTM) category, some of these are held in the "Available for Sale" (AFS) category. In the current year the Bank realized gains on its bond portfolio in a declining interest rate environment. Service Quality Initiatives Your Bank continued to improve customer service in various spheres of its business through Service Quality Initiatives and Quality Projects using Lean Sigma Tool-kit, 5S and other business excellence initiatives. Over 1,500 projects were executed during the year that resulted in a significant reduction of turn around times for various processes, process efficiency improvements, cost reduction, enhanced productivity and ultimately improved customer service. Your Bank has integrated the Customer complaints management processes with the existing service quality initiatives to achieve greater synergies towards driving service excellence. Service quality initiatives include the audit of services and improvement on the areas identified on the basis of customer feedback on experiences at various touch-points. Your Bank also integrated service quality objectives with the Business Objectives of the Bank to bring a coordinated approach towards improving business by delighting customers. New elements were added and renewed improvement schemes were installed using technology to ensure customer convenience, security of transactions and reduce transaction cost. The service quality improvement drive was implemented for business units of the bank as well as key support departments. The Bank plans to use this platform to drive systemic changes and process re-engineering using technology and Service Quality Initiatives to further enhance customer experience and business value. Risk Management & Portfolio Quality The Bank in the course of its business is exposed to various risks, of which the most important are credit risk, market risk (including liquidity risk and price risk) and operational risk. The identification, measurement, monitoring and control of risks remain key aspects of the Banks risk management system. Sound risk management supported by a balanced risk-reward trade-off is critical to achieving the Banks business strategy for business and revenue growth. Specific to credit risk, the Bank has distinct policies and processes in place for the retail and wholesale businesses. The credit cycle in the retail assets business is managed through appropriate front-end credit, operational and collection processes. There are programs for each

product, which define the target customer segments, underwriting standards, security structure etc., to ensure consistency of credit origination patterns. Given its granularity, the retail credit portfolio is managed largely on a portfolio basis, across various products and customer segments. During the year the Bank obtained an ISO 9001:2008 certification for its retail asset underwriting. Credit risk in the wholesale business is managed through target market definition, comprehensive credit assessment, appropriate approval process, ongoing post-disbursement monitoring and remedial management procedures. The risk in the portfolio is managed and mitigated by periodic reviews and diversification across individual borrowers, related borrowers, industries, sectors etc. As of March 31, 2009, the Banks ratio of gross Non-Performing Assets (NPAs) to total customer assets was 1.98%. The Banks ratio of gross NPAs was 1.3% on March 31, 2008, which moved to 1.7% immediately after the merger of CBOP. Of the total gross NPAs on March 31, 2009 around 42% were on account of the merger. Net non-performing assets (gross non-performing assets less specific loan loss provisions, interest in suspense and ECGC claims received) were 0.6% of customer assets as of March 31, 2009. The specific loan loss provisions that the Bank has made for its non- performing assets continue to be more conservative than the regulatory requirement. In accordance with the guidelines issued by Reserve Bank of India on the New Capital Adequacy Framework (Basel II), the Bank has migrated to the Standardised Approach for Credit Risk and the Basic Indicator Approach for Operational Risk effective March 31, 2009. The Bank, simultaneously, progresses on its initiatives towards meeting the standards set out for the more advanced capital approaches under Basel II. These initiatives cover enhancement of the Banks risk management architecture, capabilities, processes, systems and technology in areas such as ratings systems, borrower segmentation, exposure aggregation, risk mapping, risk estimation and capital computation. INTERNAL AUDIT & COMPLIANCE The Bank has Internal Audit & Compliance functions which are responsible for independently evaluating the adequacy of all internal controls and ensuring operating and business units adhere to internal processes and procedures as well as to regulatory and legal requirements. The audit function also pro- actively recommends improvements in operational processes and service quality. To ensure independence, the Audit department has a reporting line to the Chairman of the Board of Directors and the Audit & Compliance Committee of the Board and only indirectly to the Managing Director. To mitigate operational risks, the Bank has put in place extensive internal controls including restricted access to the Banks computer systems, appropriate segregation of front and back office operations and strong audit trails. The Audit & Compliance Committee of the Board also reviews the performance of the Audit & Compliance functions and reviews the effectiveness of controls and compliance with regulatory guidelines. CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility As its operations have grown your bank has retained its focus on various areas of corporate sustainability that impact the socio economic ecosystem that we are part of. HDFC Banks focus in the area of corporate sustainability includes social sustainability & social welfare and financial inclusion. Social Sustainability & Social Welfare Your Bank is committed to making a positive impact across the local communities it is present in and the society at large. The bank has initiated a number of programs to encourage economic, social and educational development within the communities that it operates; while at the same time contributing to several grass root level development programs across these geographies. The foundation of social sustainability is based on creating employment opportunities. Your bank directly employs 52,687 people across the nation while at the same time generating opportunities for thousands of others through its vast network of agents, suppliers and contractors. Your Bank believes that the benefits of economic growth should percolate to all sections of society and the best means to action this is to use education and skills training as the means of intervention to impact its objectives for the overall development of society. In the year 2008-2009 towards its aim of quality education the Bank has supported a variety of educational programs ranging from educational sponsorships for girls, adoption of state-run schools, running of academic support classes and reading classes. Apart from these initiatives the Bank also provide skills training to school dropouts, youth, women and other disadvantaged groups. The Banks social development programs have so far touched the lives of around 17,000 children and 3,000 youth. The Bank has also initiated a Social and Financial literacy Program for school children to educate them on the importance of savings, to enable them differentiate between healthy and unhealthy spending, cultivate financial best practices and to take financial decisions based on real needs. Financial Inclusion Microfinance has, in recent times come to be recognized as one of the key developmental tools that can be harnessed for alleviating poverty through social and economic empowerment of the poor. Your bank was one of the early movers to enter into the microfinance sector five years ago. Considering the huge impact on the livelihoods and empowerment of the rural poor, the bank has adopted different business models in order to reach segments of the rural poor. The Banks microfinance program provides access to financial services such as credit, savings, insurance, money transfers etc. to the poor in a sustainaible and commercially viable manner. bulk lending to Microfinance Institutions

The Bank has successfully implemented the bulk bank linkage model. Under this program which has been growing rapidly the bank extends bulk loans to micro finance institutions for onward lending to women enabling them to undertake income generation activities. The bank in partnership with 104 Microfinance institutions and 203 NGOs has extended credit facilities exceeding Rs. 700 crores in 17 states and has financially included over 2 million rural households creating inroads to alleviate poverty that is prevalent in certain sections of the country. Lending to Self Help Groups As part of its commitment towards social banking and facilitating community development, the Bank has played an active role in providing financial services through Self Help Groups (SHGs) under the business correspondent model and considers it as a potential initiative for delivering financial services to the rural poor in a sustainable manner. Under the SHG bank linkage programme, the bank has financed around 43,000 SHGs with an amount of over Rs. 200 crores and has brought in approximately 6 lakh households under financial inclusion through business correspondent partners. These SHGs are provided with No Frill Savings Account, Closed User Group ATM cards and Point of Sale terminals for delivering financial services using low cost technology at their doorsteps. The bank has also facilitated a platform through online market linkage facility for SHGs undertaking micro entrepreneurial activity. With the view to imparting financial literacy, bank has published financial literacy booklet in regional language and has devised a short film for financial counselling. Health and Hygiene Under its health care project, the bank has provided financial assistance to a number of villages for the construction of basic sanitation facilities. The society formed through this initiative motivated and educated people on the importance of basic sanitation. Villagers were convinced to come together to form federations and manage the funds and their deployment. These village level committees undertook the sanitation project with the support of the Bank. Water security and the provision of safe drinking water is a fundamental requirement for sustainable development. The Bank provides financial support to village level SHG federations comprising 800 families in Sivanarpuram and Keerapalayam part of the Cuddalore district that lack potable water due to iron chlorosis, turbity, microbial contamination etc. This federation along with its technology partner plans to set up a safe drinking water plant. This grass roots approach of introducing applicable technology achieves the twin objectives of providing drinking water a basic right, and also serves as an income generation program. The employees of your Bank form the core of all its CSR programs and continue to contribute actively, through corporate volunteering. Under the banks payroll contribution program amounts donated by the

employees are matched by the bank. In response to the Bihar floods the employees of the bank donated a days basic salary to the prime ministers relief fund. Your Bank continues to focus in designing financially sustainable models that encourage community participation, ownership and wide outreach. The Bank has opened 12 specialised microfinance branches in the states of Tamilnadu, Andhra Pradesh and Orissa to cater to the needs of the above initiatives. HUMAN RESOURCES The total number of employees of your bank increased from 37,836 as on March 31, 2008 to 52,687 as of March 31, 2009. The growth in the employee base was in line with the growth in the banks businesses and distribution both inorganically as well as organically. The Bank continues to focus on training its employees on a continuing basis, both on the job and through training programs conducted by internal and external faculty. The Bank has consistently believed that broader employee ownership of its shares has a positive impact on its performance and employee motivation. HDFC Bank lists people as one of its stated values. The Bank believes in empowering its employees and constantly takes various measures to achieve this. STATUTORY DISCLOSURES The information required under Section 217(2A) of the Companies Act, 1956 and the rules made thereunder, are given in the annexure appended hereto and forms part of this report. In terms of section 219(1)(iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid annexure. Any shareholder interested In obtaining a copy of the said annexure may write to the Company Secretary at the Registered Office of the Bank. The Bank had 52,687 employees as on March 31, 2009. 515 employed throughout the year were in receipt of remuneration of more than Rs. 24.0 lakhs per annum and 54 employees employed for part of the year were in receipt of remuneration of more than Rs. 2.0 lakhs per month. The provisions of Section 217(1)(e) of the Act relating to conservation of energy and technology absorption do not apply to your Bank. The Bank has, however, used information technology extensively in its operations. The report on the Corporate Governance is annexed herewith and forms part of this report. RESPONSIBILITY STATEMENT The Board of Directors hereby state that i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to

material departures; ii) we have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as on March 31, 2009 and of the profit of the Bank for the year ended on that date; iii) we have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Bank and for preventing and detecting frauds and other irregularities; iv) we have prepared the annual accounts on a going concern basis. DIRECTORS Mr. Vineet Jain resigned as a Director of the Bank with effect from December 27, 2008. Your Directors wish to place on record their sincere appreciation of the contribution made by Mr. Jain during his tenure as a Director. Mr. Arvind Pande and Mr. Ashim Samanta retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment. The brief resume/details relating to the Directors who are to be re-appointed are furnished in the report on Corporate Governance. AUDITORS The Auditors M/s. Haribhakti & Co., Chartered Accountants will retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment. Members are requested to consider their re-appointment on remuneration to be decided by the Audit and Compliance Committee of the Board. The re-appointment of Auditors is subject to the approval of the Reserve Bank of India. ACKNOWLEDGEMENT Your Directors would like to place on record their gratitude for all the guidance and co-operation received from the Reserve Bank of India and other Government and Regulatory Agencies. Your Directors would also like to take this opportunity to express their appreciation for the hard work and dedicated efforts put in by the Banks employees and look forward to their continued contribution in building a World Class Indian Bank. On behalf of the Board of Directors Jagdish Capoor Chairman

Mumbai, April 23, 2009

Director Report
Mar2007 Mar 2008 Mar2009

The Directors have great pleasure in presenting the of your Bank together with the audited accounts for the Fourteenth Annual Report on the business and operations year ended March 31, 2008.
Financial Performance (Rs. in crores) For the year ended March 31, 2008 Deposits and Other Borrowings Advances Total Income Profit before Depreciation and Tax Net Profit Profit brought forward Total Profit available for Appropriation Appropriations Transfer to Statutory Reserve Transfer to General Reserve Transfer to Investment Reserve Account (net) Proposed Dividend Tax including Surcharge and Education Cess on Dividend . Dividend paid for Prior Years Balance carried over to Balance Sheet * Change pursuant to reclassification The Bank posted total income and net profit of Rs. 12,398.2 crores and Rs. 1,590.2 crores respectively for the financial year 2007-08 as against Rs. 8,164.2 crores and Rs. 1,141.5 crores respectively in the previous year. Appropriations from the net profit have been effected as per the table given above. Dividend Your Bank has had a consistent dividend policy of balancing the twin objectives of appropriately rewarding shareholders and retaining capital to maintain a healthy capital adequacy ratio to support future growth. It has had a consistent track record of moderate but steady increases in dividend declarations over the last so many years with the dividend payout ratio ranging between 20% and 25%. In line with this, and in recognition of the robust performance during 2007-08, your directors are pleased to recommend a dividend of 85% for the year ended 397.5 159.0 38.5 301.3 51.2 0.1 2,574.6 285.4 114.1 3.0 223.6 38.0 0.4 1,932.0 105,247.5 63,426.9 12,398.2 2,552.4 1,590.2 1,932.0 3,522.2 March 31, 2007 71,113.3 46,944.8 8,164.2* 1,858.4 1,141.5 1,455.0 2,596.5

March 31, 2008, as against 70% for the year ended March 31, 2007. This dividend shall be subject to tax on dividend to be paid by the Bank. Awards As in the past years, awards and recognition have been conferred on your Bank by leading domestic and international organizations during the fiscal 2007-08. Some of them are: - For the fifth consecutive year, your Bank has bagged the Business Todays Best Bank Award. - Outlook Money and NDTV Profits Best Bank in the private sector category. - Bombay Stock Exchange and Nasscom Foundations Business for Social Responsibility Award. - Dun & Bradstreet - American Express Corporate Best Bank Award 2007. There were 26 categories in all, including FMCG, Telecom and Software & IT. - The Financial Express-Ernst & Young Best Bank award in the Private Sector category - Your bank shared the top slot with another bank - The Asia Pacific HRM Congress in Mumbai - Your Bank bagged as many as ten awards including "Organisation with innovative HR Practices". - Business Today Survey conducted by the Monitor Group Innovation Study - Your Bank is one of Indias most innovative 28 companies across ten major business sectors The Asian Banker Excellence in Retail Financial Service Awards-The Best Retail Bank in India Ratings The Bank has its deposit programs rated by two rating agencies - Credit Analysis & Research Limited (CARE) and Fitch Ratings India Private Limited. The Banks Fixed Deposit programme has been rated CARE AAA (FD) [Triple A] by CARE, which represents instruments considered to be "of the best quality, carrying negligible investment risk". CARE has also rated the banks Certificate of Deposit (CD) programme "PR 1+" which represents "superior capacity for repayment of short term promissory obligations". Fitch Ratings India Pvt. Ltd. (100% subsidiary of Fitch Inc.) has assigned the "tAAA (ind)" rating to the Banks deposit programme, with the outlook on the rating as "stable". This rating indicates "highest credit quality" where "protection factors are very high". The Bank also has its long term unsecured, subordinated (Tier II) Bonds rated by CARE and Fitch Ratings India Private Limited and its Tier I perpetual Bonds and Upper Tier II Bonds rated by CARE and CRISIL Ltd. CARE has assigned the rating of "CARE AAA" for the subordinated Tier II

Bonds while Fitch Ratings India Pvt. Ltd. has assigned the rating "AAA(ind)" with the outlook on the rating as "stable". CARE has also assigned "CARE AAA [Triple A] for the Banks Perpetual bond and Upper Tier II bond issues. CRISIL has assigned the rating "AAA/Stable" for the Banks perpetual Debt programme and Upper Tier II Bond issue. In each of the cases referred to above, the ratings awarded were the highest assigned by the rating agency for those instruments. Additional Capital In June 2007, the Bank allotted 1,35,82,000 equity shares of Rs. 10/each at a premium of Rs. 1,013.49 per share on a preferential basis to Housing Development Finance Corporation Ltd. (HDFC) aggregating to Rs. 1,390 crores. In July 2007, the Bank made a public offering of 6,594,504 American Depositary Shares (ADS), each ADS representing three equity shares, at a price of $ 92.10 per ADS aggregating to of Rs. 2,394 crores (net of underwriting discounts and commissions). During the year under review, 16.78 lacs shares were allotted to the employees of your Bank pursuant to the exercise of options under the Employee Stock Option Scheme of the Bank. Employee Stock Options The information pertaining to Employee Stock Options is given in an annexure to this report. Capital Adequacy Ratio Your Banks total Capital Adequacy Ratio (CAR) stood at a healthy 13.6%, well above the regulatory minimum of 9.0%. Of this, Tier I CAR was 10.3%. Amalgamation of Centurion Bank of Punjab Limited with the Bank On March 27, 2008, the shareholders of the Bank accorded their consent to a scheme of amalgamation of Centurion Bank of Punjab Limited with HDFC Bank Limited. The shareholders of the Bank approved the issuance of one equity share of Rs. 10/- each of HDFC Bank Limited for every twenty nine equity shares of Re. 1/- each held in Centurion Bank of Punjab Limited. This is subject to receipt of approvals from the Reserve Bank of India, stock exchanges and other requisite statutory and regulatory authorities. The shareholders also accorded their consent to issue equity shares and/ or warrants convertible into equity shares at the rate of Rs. 1,530.13 each to HDFC and/or other promoter group companies on preferential basis, subject to final regulatory approvals in this regard. The Shareholders of the Bank have also approved an increase in the authorized capital from Rs. 450 crores to Rs. 550 crores. SUBSIDIARY COMPANIES In terms of the approval granted by the Government of India, the provisions contained under Section 212(1) of the Companies Act, 1956 shall not apply in respect of the Banks subsidiaries namely, HDFC Securities Limited (HSL) and HDB Financial Services Limited (HDBFSL).

Accordingly, a copy of the balance sheet, profit and loss account, report of the Board of Directors and Report of the Auditors of HSL and HDBFSL have not been attached to the accounts of the Bank for the year ended March 31, 2008. Investors who wish to have a copy of the annual accounts and detailed information on HSL and HDBFSL may write to the Bank for the same. Further, the said documents shall also be available for inspection by the investors at the registered offices of the Bank, HSL and HDBFSL. MANAGEMENTS DISCUSSIONS AND ANALYSIS Macro-economic and Industry Developments In the 25 years till 2007, the countrys real GDP grew on an average at 6.2% per annum. In the last four years, however, GDP growth has been faster at 8.8% per annum. The real GDP growth for 2007-08 is expected to have been between 8.7-8.9%. Investment expenditure, so crucial to economic growth, increased from 22.8% of GDP in FY02 to 35.9% in FY07. The domestic savings rate increased from 23.5% in FY02 to 34.8% in FY07. The services sector with a share of nearly 60% in Indias GDP and accounting for almost three-fourth in its overall growth, continues to be the key driver. The manufacturing sector has shown good growth too on the back of domestic and exportled demand. The countrys merchandise exports have grown by a healthy 21.6% in the April 07-January 08 period as compared to 23.7% in the corresponding period of previous year. For most part of the year, liquidity in the banking system was volatile but largely in surplus due to strong capital flows and softening credit demand. The Reserve Bank of India (RBI) followed a tight monetary policy to check inflationary pressures arising to a large extent, out of hardening global energy and commodity prices. The RBI increased reserve requirements to suck out excess liquidity from the banking system directly and raised the Cash Reserve Ratio (CRR) by 150 basis points during the financial year ended March 31 2008. Deposit rates remained flat (7.50% to 9.00% p.a.) for most of the first half of the year, but rose by about 0.5% p.a. across tenors in September 2007, primarily due to the onset of the busy credit season and tightening of monetary policy. Longer tenor yields, however fell by roughly 0.5% on the back of falling credit demand. The short tenor deposit rates, however, moved up by 0.25% in December 2007 but did not see the sharp spike that had been experienced in the March 2007 quarter. The yield on the one-year government security (G-sec), which largely reflects the liquidity in the economy, fell by 15 basis points to 7.52% in first half of the financial year. The 10-year G-sec yield dropped by about 40 basis points to 7.6% during the same period. However, high inflation numbers in March 2008, and market apprehensions of large debt issuance by the government pushed the yields up in the second fortnight of March 2008.

Some signs of moderation in growth became apparent in 2007-08. Retail consumer borrowing and spending slowed down in the second half of 2006-07 in the wake of the monetary tightening. This has impacted sectors like automobiles and consumer durables where consumer credit has played a key role in driving demand. Rise in interest rates has also taken its toll on demand for housing and the growth of the real estate sector. Non-food credit clocked a 22% growth in the last fortnight of February 2008 as against 28.9% in the last week of March 2007. However, downward revisions (of 50 basis points on an average) in lending rates in the March 2008 by a number of banks could reverse this trend at least partially. On the foreign trade side, though overall exports showed an accelerated growth during the last year, a number of sectors such as textiles, handicrafts, and leather products saw growth moderating. The rupee appreciated sharply over the last year (by as much as 11%), which was largely responsible for the deceleration in exports. The prospect of a slowdown in the global economy has increased the risk of a prolonged slowdown in exports. Imports however remained robust in 2007-08, growing almost 30% in the first three quarters of the year (as against 22% for the corresponding period last year) on the back of higher global prices of oil and food.This widened the trade deficit to USD 67 billion in April-January FY08 from USD 45 billion in the corresponding period of previous year. Despite the increase in the trade deficit, overall, balance of payments was comfortable due to large capital inflows (comprising mainly foreign direct investment, portfolio inflows and external borrowings). Foreign exchange reserves grew by $107 billion during the year. Indian equity markets gained sharply in the first nine-months of 2007-08. However, as the global financial crisis deepened, benchmark indices fell sharply in the last quarter. Markets are likely to track the global financial markets and remain volatile in 2008-09 although the Indian economic fundamentals still remain strong and attractive in absolute terms. Diminished risk appetite among investors could adversely impact capital inflows into emerging markets like India. (Sources: Ministry of Finance, RBI, CSO) Industry structure and development Indian banks faced a new set of challenges brought about by changes in both the international and domestic environment. International credit markets tightened considerably on the back of rising defaults and foreclosures in the US mortgage market and the resultant risk aversion. Its impact was first felt in the mortgage-linked securities and the inter-bank money markets. A number of large US and European banks reported large loan losses and write- downs. The contagion effects subsequently spread to other asset classes including emerging markets bonds and equities. The expectation is that the turmoil in the financial sector will spill over to the real estate sector. Growth in the G-7 economies, particularly the US is expected to be lower in 2008 and this is likely to impinge on growth in other economies, including

India. The Indian economy appeared to have entered a phase of moderation in 2007-08.The Central Statistical Organisation (CSO) has estimated a decline in the growth rate of Indias Gross Domestic Product (GDP) to 8.7% in 2007-08 from 9.6% in 2006-07. The growth in credit off-take from scheduled commercial banks (measured year on year) has fallen to 21.9% in the last fortnight of February 2008 from 28.2% in the first half of April 2007. Risks and concerns While Indian banks have limited direct exposure to the international markets for mortgage linked securities, they are unlikely to be completely insulated from the turmoil in the global financial markets. Reduced availability of global finance through external commercial borrowings on the back of rising risk aversion in the global markets could affect domestic growth, particularly investments in capacity expansion.This in turn could have some impact on demand for domestic credit. Lower capital inflows could also impact domestic liquidity, which has largely been a function of external capital inflows for most of 2007-08 with the ratio of net foreign exchange assets to reserve money consistently exceeding 100%. The initial moderation in bank credit growth rates in 2007- 08 seems to have been largely confined to the retail segment (housing, consumer durables and auto loans). It is possible that the moderation in growth in 2008-09 could be more broad-based, affecting both retail and certain wholesale segments, due to trends in consumption and capital formation. This has obvious implications for the credit portfolio of the banking system. A low 2.1 % growth in the capital goods component of the index of industrial production (IIP) for January 2008 seems to indicate a further decline in investment demand going forward which could affect overall credit growth for the banking system, particularly in term loans and project finance. Rising global commodity prices created inflationary pressures for most of 2007-08. A benign base-effect and the suppression in the petroleum product prices kept headline wholesale price inflation in a comfort zone for the first three quarters of the year. However, given the focus on managing underlying price pressures rather than headline inflation, monetary policy showed no signs of easing in 2007-08.Thus banks operated in an environment where the central bank did not allow any surplus liquidity in the system, resulting in interest rates remaining firm. Despite the prospect of a slowdown in the global economy, commodity price pressures, particularly those in food and mineral oils, show little sign of abating. As the base-effect wears off, headline inflation is likely to ramp up to well over 7%. So, inflation concerns are likely to influence monetary policy stance going forward and the prospect of an economic slowdown need not entail immediate monetary easing. Thus, the operating environment of banks in 2008- 09 could be a

combination of slower credit growth and some upward bias in interest rates. Opportunities The-financial system in India has witnessed considerably less turmoil and volatility than that in advanced economies. Given this scenario, domestic corporates are more likely to turn to local sources of funding. Cyclical slowdown is unlikely to impact segments of the economy such as agriculture where a structural shift is under way. The rural economy has been the greater focus of government policy in recent years, and significant opportunities lie for banks here where the penetration of credit and financial products is still relatively low. The central and state governments appear to be driving an ambitious programme in the infrastructure sectors.The eleventh five year plan (2007-2012) envisages an investment of USD 500 billion, with approximately USD 80 billion envisaged for 2008-09 alone. This presents a major opportunity for banks and financial institutions to finance these investments. Although growth in retail credit has moderated in the last year, the low penetration levels of retail credit (estimated at less than 12% of GDP), the shift in demographics towards a higher proportion of younger working population, the changing attitudes towards borrowings, higher income levels amongst the growing middle class, and the large pent-up demand for housing, cars etc., all augur well for the long-term, sustainable growth of retail lending in the Indian market. Outlook The Indian economy seems likely to see some moderation in growth rates in 2008-09 relative to 2007-08. It is still likely to experience healthy growth in absolute terms and will probably remain one of the fastest growing economies in the world. Nonetheless, with a lower GDP growth coupled with tighter liquidity conditions (as RBI tackles concerns on inflation) and stable or slightly higher interest rates, system credit growth is likely to be lower than in 2007-08. Downward pressures on economic growth may not immediately translate into an expansionary monetary policy, given the continued risks of inflation from global energy and commodity prices. Thus, slightly slower credit growth could coexist with firm, if not rising, interest rates. Given Indias strong macro-economic fundamentals, however, structural drivers will continue to support growth which is a positive for banks as well. Mission and Business Strategy Our mission is to be "a World Class Indian Bank", benchmarking ourselves against international standards and best practices in terms of product offerings, technology, service levels, risk management and audit & compliance. The objective is to build sound customer franchises across distinct businesses so as to be a preferred provider of banking services for target retail and wholesale customer segments,

and to achieve a healthy growth in profitability, consistent with the Banks risk appetite. We are committed to do this while ensuring the highest levels of ethical standards, professional integrity, corporate governance and regulatory compliance. Our business strategy emphasizes the following: - Increase our market share in Indias expanding banking and financial services industry by following a disciplined growth strategy focusing on balancing quality and volume growth while delivering high quality customer service; - Leverage our technology platform and open scaleable systems to deliver more products to more customers and to control operating costs; - Maintain high standards for asset quality through disciplined credit risk management; - Develop innovative products and services that attract our targeted customers and address inefficiencies in the Indian financial sector; - Continue to develop products and services that reduce our cost of funds; and - Focus on healthy earnings growth with low volatility. Performance Financial

The financial performance during the fiscal year 2007- 08 remained healthy with total net revenues (net interest income plus other income) increasing by 50.7% to Rs. 7,511.0 crores from Rs.4,984.7 crores in 2006-07. The revenue growth was driven principally by an increase in net interest income. Net interest income grew by 50.7% primarily due to increase in the average balance sheet size by 39.8% and an increase in net interest margin from 4.0% to around 4.4%. The key driver in volumes was growth in advances. Margin expansion was contributed by increase in yields across all products partially offset by increase in time deposit costs. The other income (non-interest revenue) increased by 50.6% to Rs. 2,283.2 crores primarily due to fees and commissions, profit/(loss) on revaluation / sale of investment and income from foreign exchange and derivatives income. In 2007-08, commission income increased by 32.7% to Rs. 1,714.5 crores with the main drivers being commission from distribution of third party mutual funds and insurance, fees on debit/credit cards, transactional charges/fees on deposit accounts, processing fees of retail assets and cards, and fees from trade products. The Bank earned a profit on sale / revaluation of investments of Rs. 241.8 crores during the year. Foreign exchange and derivatives revenues grew from Rs. 280.3 crores to Rs. 319.8 crores which largely related to customer transactions. Of this, 80% of the revenues came from plain vanilla foreign exchange transactions. Operating (non-interest) expenses increased from Rs. 2,420.8 crores in 2006-07 to Rs. 3,745.6 crores in 2007- 08, due to higher infrastructure

and staffing expenses in relation to the expansion in the branch network, (including branches which were in the process of being set up and would be commissioned in the June 2008 quarter) and growth in the retail loan and credit card businesses. Operating cost to net revenues increased to 49.9%, from 48.6% in the corresponding year. Staff expenses accounted for 34.7% of non-interest expenses in 2007-08 as against 32.1% in 2006-07, due to an increase in staff strength and increase in average salary levels. A large portion of the increase has been in the direct sales infrastructure which stepped the pace of liability and card account acquisitions substantially during the year. Loan loss provisions and provision for standard assets increased from Rs. 861.0 crores to Rs. 1,216.0 crores in 2007-08 which was broadly in line with the increase in retail loans and the product mix across various loan products. The Bank also provided Rs. 264.4 -crores as contingent provisions for tax, legal and other contingencies. Net profit increased by 39.3% from Rs. 1,141.5 crores in 2006-07 to Rs.1,590.2 crores in 2007-08. Return on average net worth was lower at 16.1% as against the previous year of 19.4% due to expansion of networth as a result of infusion of over Rs. 3,800 crores of capital during the year. The Banks basic earning per share increased from Rs.36.3 to Rs.46.2 per equity share. During 2007-08, the Banks total balance sheet size increased by 46.0% to Rs. 133,177 crores. Total Deposits increased from Rs. 68,298 crores (as of March 31, 2007) to Rs. 100,769 crores (as of March 31, 2008). With Savings account deposits at Rs. 26,154 crores and current account deposits at Rs. 28,760 crores, demand (CASA) deposits were around 54.5% of total deposits as of March 31, 2008. During 2007-08, gross advances grew by 35.8 % to Rs. 67,582 crores. This was driven by a growth of 38.8% in retail advances to Rs. 39,316 crores, and an increase of 31.8% in wholesale advances to Rs.28,266 crores. Business Segment Update: As in the past, this year too the bank has been able to achieve healthy growth across various operating and financial parameters. This performance reflects the strength and diversity of the banks three primary business franchises - retail banking, wholesale banking and treasury, and of its disciplined approach to risk - reward management. The retail banking business continued its growth in 2007- 08. In this business, your Bank has positioned itself as a one-stop shop financial services provider, catering primarily to the middle class, mass affluent and high networth customers. Your Banks range of retail financial products and services is fairly exhaustive and includes deposit products of virtually all types, loans, credit cards, debit cards, depository (custody services), investment advisory, bill payments and several transactional services. Apart from its own products, your Bank sells third party financial products like mutual funds and insurance too. To provide its customers greater flexibility and convenience as well as to reduce servicing costs, the bank has invested in multiple channels - branches, ATMs, phone banking, internet banking and mobile banking. The success of the

Banks multi-channel strategy is evidenced in the fact that almost 83% of customer initiated transactions are serviced through the non-branch channels. Your Banks data warehouse and Customer Relationship Management (CRM) solutions have helped it target existing and potential customers more effectively and cost effectively and offer them products appropriate to their profile and needs. Reduced costs of acquisition apart, this has also led to deepening of customer relationships and lower credit losses. Your Banks total customer base increased to over 11.6 million. On the distribution side, your Bank added 77 new branches during the year to take the total to 761 branches (across 327 cities) as of March 2008 from 684 branches (in 316 cities) in March 2007. 372 new ATMs were also added during 2007-08 taking the size of the ATM network from 1605 to 1977. Your Banks focus on semi-urban and under-banked markets continued, with 58% of the Banks branches now outside the top nine Indian cities. Savings account deposits, which reflect the strength of the retail liability franchise, grew by 33.5% to Rs 26,154 crores in 2007-08. The retail gross loan portfolio grew 38.8% to Rs 39,316 crores during the year. In credit cards, your Bank continued with its strategy of focusing on quality customer acquisitions and improving processes to reduce cycle times and bringing in cost efficiencies. Your Bank had 3.8 million cards in force as at March 2008. It has a significant presence in the "merchant acquiring" business also with the total number of point-ofsale (POS) terminals installed at over 61,000. On housing loans, your Bank continued originating home loans under its arrangement with Housing Development Finance Corporation with monthly home loan origination crossing Rs.550 crores (sanctions) by March 2008. During the year, the Bank did not exercise its option to take any part of the 70% of its HDFC home loan origination that it has the right to take back on its books as "AAA" mortgage backed securities. The wholesale banking business too registered a robust growth in 2007-08. In this business, the Bank provides its corporate and institutional clients a wide range of commercial and transactional banking products, backed by high quality service and relationship management. Banks commercial banking business covers not only the top end of the corporate sector but also the emerging corporate segments and other small and medium enterprises (SMEs). The Bank now has four business groups catering to various SME customers with a wide range of banking services covering their working capital and term finance, trade services, cash management, foreign exchange and electronic banking requirements. During financial year 2007-08, growth in the wholesale banking business continued to be driven by new customer acquisition and higher cross-sell with a focus on optimizing yields and increasing product penetration. Your Banks cash management and vendor & distributor finance products continued to be an important contributor to growth in the corporate banking business. Your Bank further consolidated its position as a leading player in the cash management business (covering all outstation collection, disbursement and electronic fund transfer

products across the Banks various customer segments) with volumes growing to over Rs. 24 trillion an increase of more than 80% over the volumes in FY 2006-07. Your Bank also strengthened its market leadership in cash settlement services for major stock exchanges and commodity exchanges in the country. Yet again, your Bank met the overall priority sector lending requirement of 40% of net bank credit and improved its performance in certain sub- limits where it fell short of the requirements. Your Bank also achieved healthy growth in its agriculture and micro-finance portfolios. With products including the Kisan Gold Card, rural supply chain initiatives and commodity finance the Bank is well positioned to meet its customers requirements across the entire agriculture financing cycle. Your Banks experience with its hub and spoke model for rural markets has been positive so far. Through this route, your Bank has targeted potential outreach locations within a certain radius of its semi-urban and rural branches, distributing a set of products that includes savings accounts, fixed deposits, two-wheeler and auto loans, kisan card crop loans, tractor loans and warehouse receipt loans. The Bank has also rolled out special rural fixed deposit and savings account products.The specially designed rural savings account includes features such as mobile banking, net banking, instant alerts and payable-at-par cheque books. The Bank also has specialised Agri Desks at certain branches across the country which works as a single point contact for farmers. The Bank has relationships with 110 micro finance institutions and has extended credit facilities, whereby 1.61 million households have been beneficiaries of financial inclusion. In addition, the Bank under the direct SHG linkage programme, has credit-linked and financed over 32,000 Self-Help Groups with roughly half a million households benefiting from this. The treasury group manages the Banks balance sheet and is responsible for compliance with reserve requirements and management of liquidity and interest rate risk. On the foreign exchange and derivatives front, revenues are driven primarily by spreads on customer transactions based on trade flows and customers hedging needs. During 2007- 08, revenues from foreign exchange and derivative transactions grew by 14.1% to Rs. 319.8 crores where the revenues were distributed across large corporate, emerging corporate, business banking and retail customer segments for plain vanilla forex products and across primarily large corporate and emerging corporate segments for derivatives. The Bank offers Indian rupee and foreign exchange derivative products to its customers, who use them to hedge their market risks. The Bank enters into forex and derivative deals with counterparties after it has set up appropriate counterparty credit limits based on its evaluation of the ability of the counterparty to meet its obligations in the event of crystallization of the exposure. Appropriate credit covenants may be stipulated where required as trigger events to call for collaterals or terminate a transaction and contain the risk. In the event of any customer default, the Bank, at the minimum, conforms to the Reserve Bank of India guidelines with regard to provisioning requirements for non-performing assets. On a conservative basis, the Bank may make

incremental provisions based on its assessment of impairment of the credit. Where the Bank enters into foreign currency derivative contracts with its customers it lays them off in the inter-bank market on a matched basis. For such foreign currency derivatives, the Bank does not have any open positions or assume any market risks but carries only the counterparty credit risk (where the customer has crystallized or mark-to-market losses). The Bank also deals in Indian rupee derivatives on its own account including for the purpose of its own balance sheet risk management. The Bank recognizes changes in the market value of all rupee derivative instruments (other than those designated as hedges) in the profit and loss account in the period of change. Rupee derivative contracts classified as hedge are recorded on an accrual basis. Given the regulatory requirement of holding government securities to meet the statutory liquidity ratio (SLR) requirement, your Bank has to necessarily maintain a large portfolio of government securities. While a significant portion of these SLR securities are held in the "Held-to-Maturity (HTM) category, to the extent some of these are held in the "Available for Sale" (AFS) category, this enables the Bank to realise gains in a declining interest rate environment and exposes the Bank to losses or depreciation in value of investments when yields rise. Service Quality Initiatives Your Bank continued to seek and drive process improvement in all spheres of business through structured Quality Projects using Lean Sigma Project Management Methodology. Over 1,000 projects were executed during the year that resulted in substantial Cost and Turn Around Times reduction, and productivity and process efficiency improvement. Service Quality initiatives were refined to capture and improve upon real customer experiences at various touch- points. New elements were added and renewed improvement schemes installed to provide customer delight. Your Bank launched a Service Quality improvement drive for some of the key support departments as well. Customer feedback was taken into account to introduce new services using technology to ensure customer convenience, secured transactions and, reduced cost of transactions. Your Bank plans to use this platform to drive systemic changes and process re-engineering using technology, Lean Six Sigma tool-kit, 5 S and other business excellence initiatives to further enhance customer experience and value to business. Risk Management & Portfolio Quality Taking on various types of risk is integral to the banking business. Sound risk management and balancing risk- reward trade-offs are therefore critical to a banks success. Business and revenue growth have therefore to be weighed in the context of the risks implicit in the Banks business strategy. Of the various types of risks the Bank is exposed to, the most important are credit risk, market risk (which includes liquidity risk and price risk) and operational risk. The

identification, measurement, monitoring and management of risks remain a key focus area for the Bank. For credit risk, distinct policies and processes are in place for the retail and wholesale businesses. In retail loan businesses, the credit cycle is managed through appropriate front-end credit, operational and collection processes. For each product, programs defining customer segments, underwriting standards, security structure etc., are specified to ensure consistency of credit buying patterns. Given the granularity of individual exposures, retail credit risk is managed largely on a portfolio basis, across various products and customer segments. For wholesale credit exposures, management of credit risk is done through target market definition, appropriate credit approval processes, ongoing post-disbursement monitoring and remedial management procedures. Overall portfolio diversification and reviews also facilitate mitigation and management. The Risk Monitoring Committee of the Board monitors the Banks risk management policies and procedures, vets treasury risk limits before they are considered by the Board, and reviews portfolio composition and impaired credits. From an industry concentration perspective, as of March 31, 2008, the following table gives industry wise classification of the loans and investments outstanding (excluding SLR investments, equity shares, Bank certificate of deposits and mutual fund units). (Rs.Crores) Funded exposure Automobiles and Auto Ancillaries Transportation Trade Banks and Financial Institutions Other Financial Intermediaries Food Processing Metals and Metal Products Engineering Other industries 2 % each of loans and investments outstanding (43 industries) Retail-Except where otherwise classified Total 5,203 5,144 4,111 3,152 2,644 1,695 1,560 1,487 16,235 33,130 74,361 % to total exposure 7.0% 6.9% 5.5% 4.2% 3.6% 2.3% 2.1% 2.0% 21.8% 44.6% 100.0%

Note: Classification of exposure to real estate sector under Exposures in Sensitive Sectors (as disclosed in Notes to the Financial Statements) is as per the RBI guidelines. This includes not only exposure to borrowers in the real estate industry but also exposures to borrowers in other industries, where the exposures are primarily secured by real estate and investment in home finance institutions and securitisation. As of March 31, 2008, the Banks ratio of gross nonperforming assets (NPAs) to total customer assets was 1.29%. Net non-performing assets (gross non-performing assets less specific loan loss provisions, interest in suspense and ECGC claims received) were 0.42% of customer assets as of March 31, 2008. The specific loan loss provisions that the Bank has made for its non- performing assets continue to be more

conservative than the regulatory requirement. The Basel Committee on Banking Supervision (BCBS) released the International Convergence of Capital Measurement & Capital Standards in June 2004, providing the New Framework for Capital Adequacy (Basel II). Pursuant to this Accord, Reserve Bank of India came out with its final guidelines in April 2007. In terms of these guidelines, Indian banks having operational presence outside India are required to migrate to the selected approaches (Standardised Approach for credit risk and Basic Indicator Approach for operational risk) with effect from March 31, 2008. All other scheduled commercial banks are required to migrate to these approaches no later than March 31, 2009. The Bank is in preparedness to adopt the above approaches as per the final guidelines issued in April 2007. Meanwhile, Reserve Bank of India has published its amendments to the final guidelines in March 2008. The Bank has examined these amendments and is in the process of reconfiguring its systems and processes to account for these changes. While the Bank, to begin with, will migrate to the above approaches defined in the Reserve Bank of India guidelines, the initiatives undertaken are geared towards enabling the Bank comply with the standards set out for the more advanced capital approaches under Basel II. These initiatives include augmentation of the risk management systems in terms of architecture, capabilities, technology, etc., in areas such as ratings systems, borrower segmentation, exposure consolidation, risk mapping, risk estimation, capital computation, etc. The Bank has been investing appropriately in augmenting its risk management systems and capabilities. The implementation of the Basel II framework is in harmony with the Banks objective of adopting international best practices in risk management. INTERNAL AUDIT & COMPLIANCE The Bank has Internal Audit & Compliance functions which are responsible for independently evaluating the adequacy of all internal controls and ensuring operating and business units adhere to internal processes and procedures as well as to regulatory and legal requirements. The audit function also pro-actively recommends improvements in operational processes and service quality. To ensure independence, the Audit department has a reporting line to the Chairman of the Board of Directors and the Audit & Compliance Committee of the Board and only indirectly to the Managing Director. To mitigate operational risks, the Bank has put in place extensive internal controls including restricted access to the Banks computer systems, appropriate segregation of front and back office operations and strong audit trails. The Audit & Compliance Committee of the Board also reviews the performance of the Audit & Compliance functions and reviews the effectiveness of controls and compliance with regulatory guidelines. SOCIAL INITIATIVES In keeping with the HDFC Group philosophy, your Bank has always believed in making a difference to society at large. As a responsible corporate citizen, it has been your Banks vision to empower the community through socio- economic development of underprivileged and weaker sections of society. During 2007-08 your Bank further intensified its efforts in this direction. Most of the Banks social activities revolve around educational initiatives (including school

adoption projects, educational sponsorships of girl children, primary education to first generation learners etc.) and initiatives in the field of livelihood training and support. In the latter area, the Bank has been working with NGOs in providing non-formal vocational and technical education programs as well as skill up gradation courses to enable sustainable employment and income generation for economically weaker sections. To further integrate some of its Corporate Social Responsibility (CSR) initiatives with its banking operations, the Bank has started outsourcing some non-core back office operations to certain small semi-urban locations. This creates jobs for the local educated youth in those towns with obvious gains for the families (as the youth is gainfully employed without having to relocate to distant cities) and also gives a boost to the local economy in those locations. Where relevant, the Bank coordinates its CSR activities with its microfinance and self - help group (SHG) financing. The Bank has relationships with 110 micro finance institutions and has extended credit facilities, whereby 1.61 million households have been beneficiaries of financial inclusion. In this regard, your Bank has also appointed around 150 NGOs across the country as business correspondents (BCs) to provide SHG - Bank linkage to help tribals, physically challenged, beggars, etc. to earn a livelihood and join the mainstream. The Bank under the direct SHG linkage programme, has credit linked over 32,000 SHGs and thereby roughly another half a million households have been brought under Financial Inclusion. Employees are a key part of your Banks social initiatives and are encouraged to participate in these activities, contributing their time and skills. The Bank also administers a payroll-giving programme whereby employees offer deductions from their salary to donate for specified charities or social causes of their choice and the Bank contributes an equivalent amount. HUMAN RESOURCES The Banks staffing-needs continued to increase during the year particularly in the retail banking and SME businesses in line with the business growth. Total number of employees increased from 21,477 as of March 31,2007 to 37,836 as of March 31, 2008. The Bank continues to focus on training its employees on a continuing basis, both on the job and through training programs conducted by internal and external faculty. The Bank has consistently believed that broader employee ownership of its shares has a positive impact on its performance and employee motivation. The Banks employee stock option scheme so far covers around 6,535 employees. STATUTORY DISCLOSURES The information required under Section 217(2A) of the Companies Act, 1956 and the rules made there under, are given in the annexure appended hereto and forms part of this report. In terms of section 219(1 )(iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid annexure. Any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the Registered Office of the Bank. The Bank had 37,836

employees as on March 31, 2008. Three hundred twenty six employees employed throughout the year were in receipt of remuneration of more than Rs. 24.0 lacs per annum and fifty employees employed for part of the year were in receipt of remuneration of more than Rs. 2.0 lacs per month. The provisions of Section 217(1)(e) of the Act relating to conservation of energy and technology absorption do not apply to your Bank. The Bank has, however, used information technology extensively in its operations. The report on the Corporate Governance is annexed herewith and forms part of this report. RESPONSIBILITY STATEMENT The Board of Directors hereby state that i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; ii) we have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as on March 31, 2008 and of the profit of the Bank for the year ended on that date; iii) we have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Bank and for preventing and detecting frauds and other irregularities; iv) we have prepared the annual accounts on a going concern basis. DIRECTORS Mr. Keki Mistry, Mrs. Renu Karnad and Mr. Vineet Jain will retire by rotation at the ensuing Annual General Meeting and are eligible for re-appointment. The Board at its meeting held on October 12, 2007, appointed Mr. Harish Engineer and Mr. Paresh Sukthankar as Additional Directors as well as Executive Directors of the Bank subject to the approval of the shareholders and the Reserve Bank of India. The Bank sought the approval of shareholders by way of postal ballot for the appointment of Mr. Engineer and Mr. Sukthankar as Executive Directors of the Bank. As per the scrutinizers report, both the ordinary resolutions were approved by the shareholders with the requisite majority effective December 10, 2007. The brief resume/details relating to Directors who are to be appointed/re-appointed are furnished in the report on Corporate Governance.

AUDITORS The Auditors M/s. Haribhakti & Co., Chartered Accountants will retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment. Members are requested to consider their re-appointment on remuneration to be decided by the Audit and Compliance Committee of the Board. ACKNOWLEDGEMENT Your Directors would like to place on record their gratitude for all the guidance and co-operation received from the Reserve Bank of India and other government and regulatory agencies. Your Directors would also like to take this opportunity to express their appreciation for the hard work and dedicated efforts put in by the Banks employees and look forward to their continued contribution in building a World Class Indian Bank. On behalf of the Board of Directors Jagdish Capoor Chairman Mumbai, April 24,2008

Sbi

Director Report
Mar2009 Mar 2010 Mar2011

V. CREDIT POLICY AND PROCEDURES DEPARTMENT (CPPD)

PERFORMANCE HIGHLIGHTS : - Loan Policy of the Bank, has been reviewed and current RBI guidelines have been incorporated. - Increase in the Term Loan exposure limit to Infrastructure sector to 15% from 10%. . - Appointment of Nominee Directors Review and Authority Structure. - Prudential Norms on Unsecured Advances. - Guidelines on Restructuring of Advances by Banks. - Review of Grievances redressal mechanism under Guidelines on Fair Practice Codes for Lending.

- Accounting procedures for sale of NPAs / Securitisatibn Companies / Asset Reconstruction Companies. - Operational guidelines on Forward Exchange Contracts and Derivatives. - Competitive Pricing - Review. - CP linked rates for discounting of Bills under LCs. - Policy for financing Corporates on Unsecured basis to attract new business. - As part of the Banks Green Banking Policy, initiatives like plantation of fruit bearing trees across the Banks premises, implementation of energy saving measures, encouraging customers on reduction of Green House gases by way of extending project loans on concessionary interest rates, assisting in CDM Registration and securitization of CER receivables etc. were undertaken. - Under the captive windmill project, the Bank has gone in for 10 windmills (1.5 MW each) which have been set up in three States viz. Maharashtra, Gujarat and Tamilnadu. Power generated from the windmills shall be set-off against the power consumption of identified offices / branches of those States. State Bank of India is the first Bank in India to have conceived the idea of Green Power generation for captive use in the Banking Industry. NEW PRODUCT : - Financing to Shipbreaking Units. Responsibility Statement The Board of Directors hereby states : i, that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; ii>. that they have selected such accounting policies and applied them consistently and made judgements and estimates as are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank as on the 31st March 2010, and of the profit and loss of the Bank for the year ended on that date; iii. that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Banking Regulation Act, 1949 and State Bank of India Act, 1955 for safeguarding the assets of the Bank and preventing and detecting frauds and other irregularities; and iv. that they have prepared the annual accounts on a going concern basis.

Acknowledgement During the year, Shri Ashok Chawla, Finance Secretary, Govt, of India was nominated to the Board under Section 19 (e) with effect from 13th May 2009, in place of Shri Arun Ramanathan, who retired on 30th April 2009. The Directors express their gratitude for the guidance and cooperation received from the Government of India, RBI, SEBI, IRDA and other government and regulatory agencies. The Directors also thank all the valued clients, shareholders, banks and financial institutions, stock exchanges, rating agencies and other stakeholders for their patronage and support, and take this opportunity to express their appreciation of the dedicated and committed team of employees of the Bank. For and on behalf of the Central Board of Directors O.P. Bhatt Date : 14th May, 2010 Chairman

Director Report
Mar2008 Mar 2009 Mar2010

Economic Backdrop and Banking Environment

The Indian economy, which is one of the fastest growing economies in the world, is poised to maintain its leading position, despite the global financial crisis and economic slowdown. India has managed to beat the global financial turmoil due to sound regulation, prudent financial supervision and proactive policies. Indias growth is driven predominantly by domestic consumption and investment and the Indian banking system has no direct exposure to the US sub-prime mortgage assets or to the failed institutions. Thus, as also projected by the IMF, India will remain among the fastest growing economies in the world. In the first half of the year, high inflation and spiralling crude oil prices were the major concerns, but the focus in the second half shifted to sustaining growth and maintaining stability. Real GDP growth is expected to moderate from 9.0% in 2007-08 to 6.5% 6.7% in 2008-09. Agriculture and allied sectors are likely to grow by around 2.6% in 2008-09, which is only marginally lower than the average growth of 2.9% during 2000-01 to 2007-08, mainly due to stagnant

foodgrains production. Industrial production was marked by a slowdown in the manufacturing sector. During 2008-09 the Index of Industrial Production decelerated to 2.4% against 8.5% in 2007-08. The deceleration in capital goods reflects the slowdown in industry. The rebound in consumer durables during 2008- 09 at 4.4% against decline of 1.0% in 2007-08, however, reflects a measured pick up in consumption and investment. The slowdown in industry and agriculture was partially offset by a reasonable 9.7% growth in services sector in 2008-09 (April-Dec) with community, social and personal services showing a higher growth of 11.2% in 2008-09 (April-Dec) than the 5.7% growth posted in 2007-08 (April- Dec). To mitigate the impact of the current slowdown, Government launched three fiscal stimulus packages in the form of cut in indirect taxes, higher Government spending and support for exports, along with easing of monetary policy by RBI. Inflation based on WPI rose from 7.7% at end- March 2008 to a high of 12.9% on 2nd August 2008, reflecting high international crude oil and commodity prices coupled with increase in price of manufactured products and primary articles. After remaining in the range of 10-12% between June and October 2008, inflation began to ease from November 2008 onwards to touch 0.26% by 28th March 2009, mainly reflecting the decline in prices of crude oil, metals, minerals and manufactured goods. The deceleration in economic growth globally was reflected in weakness in external demand for goods and services, besides decline in forex reserves and depreciation of the rupee against major currencies. The fall in exports began in October 2008 and every month since then, export growth has been negative with the biggest decline of 33.3% in March 2009. Consequently, growth in exports during 2008-09 was lower at 3.4% than 28.9% in 2007-08. Imports also registered a lower growth of 14.3% in 2008- 09 as against 35.4% in 2007-08, mainly due to fall in international crude oil prices. The risk aversion in the global financial markets resulted in a sharp reversal in capital inflows into India, with net outflow by foreign institutional investors (FIIs) of around US$15.0bn in 2008-09 compared with an inflow of US$20.3bn in 2007-08. As a result of decline in exports and capital outflows from the domestic stock market, forex reserves fell by US$57.70 bn YoY to US$252.00 bn as at endMarch 2009. The Rupee depreciated to Rs.50.95 per dollar at end-March 2009 from Rs.39.99 per dollar at end-March 2008. The focus of RBIs monetary and credit policy during the year was to control inflation, support growth, maintain financial market stability, ensure comfortable liquidity in the system to meet the required credit demand and limit the contagion from the ongoing global turmoil. During 2008-09, while the Bank Rate was kept unchanged at 6%, Reverse Repo and more particularly the Repo rate and CRR were changed on a number of occasions. When inflation started rising due to increase in international commodity and oil prices, the Repo rate was hiked from 7.75% in April 2008 to a high of 9% in July 2008 and CRR was hiked from

7.50% in March 2008 to 9% in August 2008. Subsequently, when growth stalled and inflation started coming down due to drop in crude oil and commodity prices, the Repo rate was cut five times to 5%, the Reverse Repo rate was reduced three times to 3.50% and CRR was cut four times to 5.0%, between October 2008 and March 2009. Deposit and lending rates of banks also moved more or less in tandem with key policy rates as interest rates initially firmed up during 2008-09 up to October 2008, and subsequently started declining after November 2008. The capital outflows and slowdown in economic activity, particularly in the second half of the year, impacted money supply growth in the system (M3) and saw moderation in the business of all scheduled commercial banks (ASCB). While growth in money supply (M3) moderated to 18.6% in 2008-09 from 21.1% a year ago, deposit and credit growth of ASCB moderated to 19.8% and 17.3% respectively in 2008-09 from 22.4% and 22.3% in 2007-08. The coming year will continue to be marked with uncertainty as the impact of the global crisis has been deeper and wider than earlier anticipated. However, a stable banking and financial sector, falling inflation and prompt co-ordinated policy action have helped India weather the crisis. On the upside, domestic demand especially from rural areas, and Government investment activity in the economy will help keep up the growth momentum, making India the second fastest growing economy in the world. Financial Performance Profit The Operating Profit of the Bank for 2008-09 stood at Rs. 17,915.23 crores as compared to Rs. 13,107.55 crores in 2007-08 registering a growth of 36.68%. The Bank has posted a Net Profit of Rs. 9,121.23 crores for 2008-09 as compared to Rs. 6,729.12 crores in 2007-08 registering a growth of 35.55%. While Net Interest Income recorded a growth of 22.63% and Other Income increased by 45.96%, Operating Expenses increased by 24.11% attributable to higher staff cost and other overhead expenses. Dividend The Bank has increased dividend to Rs. 29.00 per share (290%) from Rs. 21.50 per share (215%) in the last year. Net Interest Income The Net Interest Income of the Bank registered a growth of 22.63% from Rs. 17,021.23 crores in 2007-08 to Rs. 20,873.14 crores in 2008-09. This was due to growth in interest income on advances. The gross interest income from global operations rose from Rs. 48,950.31 crores to Rs. 63,788.43 crores during the year. This was mainly due to higher interest income on advances.

Interest income on advances in India registered an increase from Rs. 32,162.68 crores in 2007-08 to Rs. 42,989.36 crores in 2008-09 due to higher volumes. Also average yield on advances in India increased from 9.90% in 2007-08 to 10.15% in 2008-09. Interest income on advances at foreign offices also increased due to higher volumes. Income from resources deployed in Treasury operations in India increased by 28.60% mainly due to higher average resources deployed. The average yield, which was 6.92 % in 2007-08, has increased to 7.10% in 2008-09. Total interest expenses of global operations increased from Rs. 31,929.08 crores in 2007-08 to Rs. 42,915.29 crores in 2008-09. Interest expenses on deposits during 2008-09 recorded an increase of 40.74% compared to the previous year, whereas the average level of deposits grew by 24.85%. This resulted in an increase in the average cost of deposits from 5.59% in 2007-08 to 6.30% in 2008-09. However, as substantial high cost deposits are maturing and present level of deposit rate being lower, it is expected that there will be a fall in the average cost of deposits. Non-Interest Income Non-interest income stood at Rs. 12,690.79 crores in 2008-09 as against Rs. 8,694.93 crores in 2007-08. During the year, the Bank received an income of Rs. 409.60 crores (Rs. 197.41 crores in the previous year) by way of dividends from Associate Banks/subsidiaries and joint ventures in India and abroad. Operating Expenses There was an increase of 25.19% in the Staff Cost from Rs. 7,785.87 crores in 2007-08 to Rs. 9,747.31 crores in 2008-09 attributable to higher pension provisioning and increased staff strength. Staff Cost included an amount of Rs.1,414 crores towards wage revision provision as compared to Rs. 575 crores in the previous year. Other Overhead Expenses have also registered an increase of 22.36% mainly due to increase in expenses on rent, taxes and lighting as a result of opening of new branches, advertising & publicity, printing & stationary, postage and telephones and miscellaneous expenditure. Operating Expenses, comprising both staff cost and other overhead expenses, have registered an increase of 24.11% over the previous year. Provisions and Contingencies Major amounts of provisions made in 2008-09 were as under: - Rs. 707.16 crores towards provision for depreciation on investments, excluding amortization of premium on Held to Maturity category (as against write back Rs. 88.68 crores in 2007-08).

- Rs. 5,971.52 crores towards Provision for Tax (as against Rs. 3,823.50 crores in 2007-08). Table: 1 Key Performance Indicators Indicators SBI 2007-08 2008-09 Return on Average Assets (%) Return on Equity (%) Expenses to Income (%)(Operating Expenses to Total Net Income) Basic Earnings Per Share (Rs.) Diluted Earnings Per Share (Rs.) 49.03 126.62 126.50 46.62 143.77 143.77 12.97 8.53 4.44 14.25 9.38 4.87 1.76 1.01 17.82 1.04 15.73

Capital Adequacy Ratio (%) (Basel-I) 13.54 Tier I Tier II Capital Adequacy Ratio (%) (Basel-II) Tier I Tier II Net NPAs to Net Advances SBI Group 2007-08 0.99 17.93 56.64 168.61 168.45 13.49 9.14 4.40 1.78

2008-09 0.94 16.30 52.65 172.68 172.68 12.90

8.95 4.54 1.43

8.21 4.69 14.17 9.03 5.14 1.49 105.00

- Rs. 142.00 crores towards Fringe Benefit Tax (as against Rs. crores in 2007-08).

- Rs. 2,474.96 crores (net of write-back) for non- performing assets (as against Rs. 2,000.94 crores in 2007-08). Reserves and Surplus - An amount of Rs. 5,291.79 crores (as against Rs. 4,839.07 crores in 2007-08) was transferred to Statutory Reserves. - An amount of Rs. 826.56 crores (as against Rs. 4.44 crores in 2007-08) was transferred to Capital Reserve Fund. - An amount of Rs. 306.89 crores (as against Rs. 362.09 crores in 2007-08) was transferred to Other Reserve Funds. Assets The total assets of the Bank increased by 33.66% from Rs. 7,21,526.31 crores at the end of March 2008 to Rs. 9,64,432.08 crores as at end March 2009. During the period, the loan portfolio increased by 30.17% from Rs. 4,16,768.20 crores to Rs. 5,42,503.20 crores. Investments increased by 45.62% from Rs. 1,89,501.27 crores to Rs. 2,75,953.96 crores as at the end of March 2009. A major portion of the investment was in the domestic market in government and other approved securities. The Banks market share in domestic advances was 16.03% as of March 2009. Liabilities The Banks aggregate liabilities (excluding capital and reserves) rose by 34.79% from Rs. 6,72,493.65 crores on 31st March 2008 to Rs. 9,06,484.38 crores on 31st March 2009. The increase in liabilities was mainly contributed by increase in deposits and Other Liabilities & Provisions. The Global deposits stood at Rs. 7,42,073.13 crores as on 31st March 2009, representing an increase of 38.08 % over the level on 31st March 2008. The Banks market share in domestic deposits was 17.72% as of March 2009. Performance Highlights

Consequent upon acquisition of State Bank of Saurashtra by State Bank of India in 2008-09, as also migration of branches to and from within the various business groups, the base business figures of previous year (2007-08) in respect of the various business groups have been amended with regrouping, wherever necessary and determinable, to make them comparable with the current years figures and arrive at growth figures during the year 2008-09. Core Operations A Global Markets Department B Corporate Banking Group C Mid Corporate Group D National Banking Group E Rural Business Group F Marketing & Cross Selling Department G Corporate Strategy & New Business H International Banking Group I Associates & Subsidiaries J Asset Quality K Information Technology A. GLOBAL MARKETS DEPARTMENT

Global Markets Department at the Corporate Centre handles the Banks Treasury Operations across all time zones and covers activities in various markets i.e., Forex, Interest Rates, Bullion, Equity and Alternative Assets. - The year witnessed heightened volatility in the bond market. Adverse market conditions, mainly on account of higher inflation and commodity prices, resulted in higher yields which led to mark-to- market provisions on our portfolio in the first two quarters. During the second half of the financial year, interest rates stabilized and headed downwards on account of reduction in CRR, SLR and buy back of securities by RBI prompted by the sudden slow down in our economy. The benchmark 10 year yields saw a sharp fall to 4.85% in January 09, the lowest on record, from a high of 9.53% in July 08 and finally closed at 7.01% on 31st March 2009. Increased requirement of CRR and SLR, a consequence of the unprecedented deposit growth, resulted in an increase in the overall domestic investment portfolio by Rs.64,724 crores over 31st March 2008. Liquidity position eased in the second

half of the financial year and remained comfortable thereafter. The series of proactive measures taken by RBI and the resulting fall in bond yields provided us with an opportunity to book profit on sale of investments from our bond portfolio. - Performance of Global Markets department during the year is summarised in the table below. (Amount in Rs. Crores) 2007-08 Interest Income on Investments Other Income Profit on Sale of Investments and Forex Income Trading Volume Forex Operations Average Yield on Domestic Treasury Operations B.CORPORATE BANKING GROUP 11,887 2008-09 15,750 % Growth 32.50

1,987

3,125

57.27

11,74,029

18,11,194

54.27

7.49

8.02

0.53

B.1 The Banks Corporate Banking Group consists of three Strategic Business Units viz., Corporate Accounts Group, Project Finance & Leasing SBU and Stressed Assets Management Group. B.2 Corporate Accounts Group (CAG) Corporate Accounts Group, with addition of CAG, Ahmedabad Branch during the year, has five branches which cater to 489 Corporate clients. During the year, 42 new corporate clients were brought into the CAG fold. - CAGs advances portfolio of Rs. 68,866 crores is 29 % of the C&I (Non-Food) credit of the Bank and constitutes 15 % of the total domestic credit portfolio of the Bank. Table : 2 CAG - Highlights (Amount in Rs. crores) Particulars As on As on Growth 31.03.2008 31.03.2009 % 9,843 19,702 100

Deposits

Advances

46,708

68,866

47

- CAG continues to be on the high growth trajectory in forex business registering a YoY growth of 68%. CAGs forex business constituted 53 % of the total domestic forex turnover of the Bank. - Yield on advances has improved from 8.57% in 2007-08 to 9.98% in 2008-09. - Account Planning initiative was launched during the year to align better, the Groups marketing to the Business Plans of the corporate clients and to provide customised solutions. - Focus on fee-based services saw the fee income of CAG registering an impressive 66% growth during the year. - By leveraging Banks balance sheet strength, substantial underwriting business was booked from large corporates. Transaction Banking Unit The Transaction Banking Unit has been created in CBG with the Cash Management Product and Trade Finance wings under its fold to boost fee based income through Group Synergy. CASH MANAGEMENT PRODUCT Cash Management Product with its brand name SBIFAST has migrated to a centralized solution covering 379 branches and handles paper and e-collections as well as paper and e-payments for Corporate clients. CMP also has a liquidity management module, which aims to enhance profitability to Corporates by facilitating better liquidity management and reducing interest costs. B.3 Project Finance & Leasing SBU The Project finance-SBU focusses on funding projects in infrastructure sectors like power, telecom, roads, ports, airports, logistics and others. It also handles non-infrastructure projects with certain ceilings on minimum project cost. During the year, the focus was on syndication and underwriting of project loans. During 2008-09, Project Finance-SBU participated in funding of numerous projects and took up syndication of debt with other banks / institutions as given in the chart: (Amount in Rs. crores) Particulars FY 2008 FY 2009 Growth (%)

Aggregate Project Cost of projects

sanctioned Aggregate Debt requirement Of the above, Debt sanctioned by SBI Debt syndication

1,45,045

1,93,595

N. A.

92,558 20,195 54,951

1,33,894 25,854 64,069

N. A. 28.02 16.59

Besides other major projects, SBI is also the Lead Bank for the two Ultra Mega Power Projects in the country which have achieved financial closure and are presently under implementation. Analysts tracking project finance deals have been consistently ranking the Bank in leading positions in the Asia Pacific Region/globally. B.4 Stressed Assets Management Group (SAMG) The performance of SAMG during the year 2008-09 is given in the table below. Table : 3 SAMG - Highlights (Amount in Rs. crores) 1 Cash Recovery in NPA 2 Upgradation to Standard Assets 3 Write Offs 4 Gross reduction in NPAs (1+2+3) 5 Recovery in written off accounts 354 245 588 1187 418

- Stressed Assets Management Group (SAMG), originally set up to take over all NPAs with outstandings of Rs.5 crores and above, has expanded its role to resolve all NPAs of Rs.1 crore and above across the country with a view to provide focussed efforts in resolution of NPAs. - 106 Stressed Assets Resolution Centres (SARCs) have been opened across the country for focussed resolution of NPAs with outstandings upto Rs.1 crore in SME and Personal segments. Out of these, 45 independent SARCs were brought under SAMG in a phased manner to give further fillip to the Banks recovery efforts. The performance of SARCs is encouraging and substantial progress in the Management of NPAs has been achieved. Proactive steps have also been taken for prevention of NPAs by making demands on customers BEFORE DEFAULT and on FIRST DEFAULT. C. MID-CORPORATE GROUP (MCG)

Table : 4 MCG - Highlights

Particulars

As on 31.03.2008 15,428

(Amount in Rs. crores) As on growth 31.03.2009 % 19,169 24.25

Deposits Advances (Excluding off-site) Advances (Including off-site)

85,887

1,06,466

23.96

1,02,052

1,25,951

23.41

- The Group handles about 42% of the total C&I non-food advances of the Bank. It operates through 8 Regional Offices and 53 branches. - 540 new mid-corporate clients were added by the MCG during the current year. - To ensure focussed service to MCG customers in upcoming towns and "Tier II" cities, 23 new off-site branches and 4 erstwhile SBS branches have been added to MCG. - The average yield on advances went up from 9.73% in March 2008 to 11.62% in March, 2009. Initiatives taken - e-Trade sbi has been launched with marketing under the ownership of MCG. The product enables customers to handle their transactions from their office or any other place 24x7 and keep track of the transactions through web based software. - 5 Mid-Corporate Loan Administration Units, which provide centralized processing, servicing & documentation facilities to MCG customers, mainly at Off-site Centres, were brought under MCGs control during the year. New Products - Import factoring, a new product, was launched in association with SBI Factors & Commercial Services Ltd. C.1 Gold Banking - The Bank has taken several initiatives to undertake bullion business in a big way. - The number of branches for retail sale of gold coins has increased from 250 in 2008 to 518 in 2009. The Scheme will be extended to cover all important centres of the country in 2009-10 by increasing the

number of branches selling gold coins to about 1100. The Bank also undertakes supply of customised gold coins to corporates. - The Bank has re-launched Gold Deposit Scheme at 50 branches to mobilise gold from domestic market for deployment as metal loans to jewellers. - The Bank is in the process of setting up a dedicated Bullion branch at Mumbai to undertake bullion business in a focussed manner. D. NATIONAL BANKING GROUP (NBG) - National Banking Group consists of three Business Groups viz., Personal Banking, Small & Medium Enterprise (SME), and Government Banking and handles 34.41% of the total domestic credit and 59.21% of the total domestic deposit business (excluding inter bank deposits) of the Bank as on 31.03.2009. - During the year, the Bank achieved another milestone by opening its 11,111th Branch at Sonapur (Kamrup District) in Assam, which was inaugurated in Jan 09 by the Hon. Home Minister Shri P. Chidambaram. - During the year, apart from an addition of 461 branches on account of SBS merger, 807 new domestic branches were also opened (under NBG and RBG), and the Bank had a vast network of 11,448 domestic branches at the end of March 2009. Table : 5 NBG - Highlights (Amount in Rs. crores) As on growth 31.03.2009 %

Particulars

As on 31.03.2008

Deposits (excluding inter bank) Advances (excluding food and inter bank)

2,99,644

4,12,329

37.61

1,32,545

1,53,814

16.05

D.1 Personal Banking Business Unit (PBBU) PBBU handles about 23.66 % of the total domestic segmental advances and 51.44% of the total domestic deposits of the Bank as on 31.03.09 through 11,448 branches spread throughout India. Performance of PBBU during 2008-09 is given in the following table : (Amount in Rs. crores) Particulars As on 31.03.2008 As on 31.03.2009 growth %

Deposits Advances

2,43,814 90,473

3,39,326 1,06,954

39.17 18.22

- SBI once again emerged as a leader among Scheduled Commercial Banks (SCBs) and Housing Finance Companies (HFCs) this year in terms of Individual Home Loans disbursements as on 31.03.2009. - During the year, SBI introduced three new products viz., SBI Special Home Loan, SBI Happy Home Loan and SBI Lifestyle in response to the stimulus package announced by the Government of India. These initiatives have resulted in stimulating supply in low cost and affordable housing segment, which in turn has rejuvenated customers interest in new housing. SBI Green Home has been introduced to encourage developers to come out with environment friendly residential projects. - SBI is the market leader in Education Loans and maintaining its market share of 24% amongst PSU banks. The growth in Education Loans during the year is Rs. 2,203.33 crores. SBI Scholar Loan limit is extended to students joining 59 elite institutions like IIMs / IITs/ AIIMS / Management Institutions etc. at concessional interest rates and terms. The limit for the loans has been increased to Rs.15 lacs. - SBI became the largest financier of Maruti and Hyundai cars with penetration of more than 13% since October 2008. - The Bank was voted, for the third year in a row, as the Most Preferred Housing Loan and Most Preferred Bank in the CNBC AWAAZ Consumer Awards in a survey conducted by CNBC TV18 in association with AG Nielsen & Company. - The Bank was also awarded the Best Home Loan Provider as well as The Best Bank by Outlook Money Awards, 2008. - During the year, the Bank also entered into an exclusive arrangement with TATA Motors for handling the booking process of TATA Nano cars. - SBI has launched on its web-site an on-line application form for registering Auto Loan enquiries and expeditiously monitoring and converting these leads into Auto Loans. - A special deposit product namely SBI-1000 was introduced to mop up deposits for 1000 days which was a huge success and resulted in mopping up around Rs.40,000 crores. - During the year, the Bank also launched e-invest for the ASBA (applications supported by blocked accounts) to aid investors for their equity subscriptions, IPO and Rights applications. - The Bank opened over 174 lacs of new Savings Bank accounts during the year as against 78 lacs in the previous year.

D.2 SME Business Unit (SMEBU) The Bank continues to retain its premier position as a lender to the SME sector. The Bank has been implementing multiple strategies to attract business from the SME segment offering them a slew of products and services. Advances to SMEs constitute 20.66% of Banks total domestic advances. The business performance of the Bank under SME is as under: (Amount in Rs. crores) As on Growth 31.03.2009 % 2,20,468 95,893 33.48 20.29

Particulars

As on 31.03.2008 1,67,426 79,717

Deposits Advances

Achievements/Initiatives during the year - With the downturn in the economy, a slew of reliefs and concessions have been offered to SMEs banking with SBI. Two new schemes viz. SME CARE and SME Help were launched to meet the urgent fund requirements of SME units. Under these schemes, finance is being sanctioned on liberalised terms and at a concessional rate of interest of 8% p.a. - A Centralised Unit for Supply Chain Finance was operationalised during the year to finance vendors of industry majors and their dealers. - Web based registration of loan applications through SBI website was launched for Traders Easy Loan, SME Smart Score and SME Credit Card Schemes. - A Special Capital Market Branch was opened at Mumbai which has started clearing and settlement operations for various exchanges like Power Exchanges, Currency Exchanges. - Bank has adopted the Code of Banks commitment to Micro and Small Enterprise customers under the Banking Codes & Standards Board of India (BCSBI). - Bank has established Regional MSME Care Centres at all Local Head Offices across the country to facilitate MSME customers for quick redressal of their grievances at the network level of a circle. - The Bank was conferred the following National awards by the Government of India (GOI), Ministry of Micro Small and Medium Enterprises for the FY 2007-08: (i) First under "National Awards for excellence in lending to Micro Enterprises". (ii) Second under "National Awards for Excellence in MSE Lending".

(iii)The Bank was also presented an award for outstanding performance in the area of finance to SMEs by Dun & Bradstreet. - To empower the emerging SME entrepreneurs by discussing specific industry problems, best practices etc., the Bank has sponsored 13 episodes in Zee Business channel. D.3 Government Business Unit (GBU) - In order to provide timely and accurate credit of Pension as well as its arrears to Pensioners, 14 Centralised Pension Processing Centres (CPPCs) have been established and 27.38 lakh Pension Accounts have been migrated from 9116 branches to the 14 CPPCs. - Facility for e-payment of Railway Freight has been provided to 143 Corporates and more and more Corporates are adopting this new convenient 24x7 automated payment system. - Internet Banking facility has been popularized for payment of taxes as a result of which 59.96% of CBDT receipts and 60.44% of CBEC receipts of the Bank are now through e- mode. - Refund Banker Scheme for electronic refund of Income Tax is now operational at 6 centres viz. Delhi, Mumbai, Kolkata, Chennai, Bangalore and Patna and will be extended to other centres in a phased manner. - Cyber Treasury for online collection of State Govt. receipts has been implemented in 14 States and remaining States are in the process of being covered. - Bank is partnering State Government of Delhi for their e-governance project for collection of taxes and utility payments from citizens through Citizen Service Centres (CSCs). E. RURAL BUSINESS GROUP

Rural Business Group, which deals with the business of the Bank at all rural and semi urban centres, now handles a deposit portfolio of Rs. 2,15,931 crores and a credit portfolio of Rs. 1,20,617 crores, which is 32% and 26% of the Banks total domestic deposit and credit portfolio respectively as on 31.03.2009. (Amount in Rs. crores) As on Growth 31.03.2009 % 2,15,931 1,20,617 30.19 18.46

Particulars

As on 31.03.2008 1,65,852 1,01,850

Deposits Advances

Highlights/Initiatives during the year

- The rate of growth, both in deposits and advances, has been better than the growth rate of ASCB rural and semi urban branches. As a result, the Banks market share in rural and semi urban areas improved by 1.35% in deposits and 1.27% in advances between March and December 2008. - High proportion (54% of total deposits) of Current Account & Savings Account (CASA) deposits in the group contributes to its lower cost of deposits at 5.23%, which is significantly lower than the Whole Bank average of 6.03%. - The business strategy envisaged setting up of multi pronged sourcing agents coupled with improved back end processing capacity. - Front end sourcing force comprises, besides branches, alternate channels like Officers Marketing and Recovery (OMR) and Business Facilitators (BFs) and Business Correspondents (BCs). - OMRs numbering around 4800 now source not only high value Agriculture segment loans but all types of deposits, loans and cross-selling products across all the segments. - The Bank has appointed about 18,000 Customer Service Point (CSP)/outlets of Business Correspondents/Business Facilitators (BC/BFs). Some of the national level BC/BFs are India Post and ITC. During the year, the alliance with India Post has been scaled up nation wide and now covers more than 5,200 Post Offices across all States. - To increase its outreach, the Bank has opened about 481 new branches in rural and semi urban areas during FY-09. - To improve the processing capacity, 158 Rural Central Processing Centres (RCPCs) have been opened during FY-09. E.1 Agri Business: Table : 6 Agriculture - Highlights (Amount in Rs. crores) As on Growth 31.03.2009 % 12,407 54,678 41% 19%

Particulars

As on 31.03.2008 8,777 45,797

Deposits Advances

Achievements during the year - The Bank has consecutively for the second time crossed the 18% Benchmark in Agri Priority Sector Advances with achievement of 18.46% in FY 09.

- The Bank has surpassed the GOI target for credit flow to Agriculture by achieving Agri. disbursements of Rs. 28,442 crores in 2008-09 against the target of Rs. 28,000 crores and financed 10.68 lac new farmers against the target of 7.40 lac during the year. - The Bank achieved more than 50% absolute reduction in Agri NPAs (NPAs reduced to Rs. 1,454 crores from Rs 3,079 crores) in FY 09. - To improve quality of lendings and diversification of portfolio, Area Development Schemes have been prepared under National Business Plan, covering thrust areas viz. Horticulture, Dairy, Fisheries, Food Processing, Biotechnology, etc. - Thrust continues to be laid on Contract Farming and Value Chain Financing. - Bonding with Farmers: To enhance customer awareness and ensure continued relationship with the farming community, various initiatives have been taken under Bonding with Farmers. Achievements during FY 09 are given in the table. Initiative Villages adopted (SBI ka Apna Gaon) Farmers Clubs formed Farmers Meets conducted Kisan Manch established Achievement

209 1968 29653 28

- The Bank has successfully implemented Agricultural Debt Waiver & Debt Relief Scheme, 2008 of GOI in more than 6,550 Agri lending branches, covering 42 lac farmers. The Bank has submitted Agri. Debt Waiver claim of Rs. 5,287 crores to RBI and received first instalment of Rs. 2,168 crores (41% of the claim). Micro Finance and Financial Inclusion: - The Bank is the market leader in SHG-Bank credit linkage programme having credit linked so far 13.73 lakh SHGs and disbursed loans to the extent of Rs. 8,050 crores. Bank has rolled out several unique products like SHG Credit card and SHG Gold Card. - A new scheme for financing NGOs/MFIs for on- lending to SHGs has been introduced. - A Micro Insurance product - Grameen Shakti has been rolled out. - SBI has been rated as the Best Public Sector Bank for Rural Reach by Dun & Bradstreet.

- The Bank has won awards for topping SHG-Bank Credit linkage in Orissa, Jharkhand, Maharashtra, Uttarakhand, Tamil Nadu and Uttar Pradesh. - Coverage of unbanked village increased from 12,515 in March 2008 to about 53,000 upto March 2009. - The Bank is the major player in Electronic Benefit Transfer (EBT) projects of Government benefit payments, with participation in 5 States. Multiple IT enabled channels for Financial Inclusion: - The Bank has gone beyond the usual domains of technology in terms of platform, solution, operational details and service contents in a very aggressive manner to serve the excluded common citizen with minimal costs. Some of these channels are: a) SBI Tiny - Smart Card based accounts: This is a secure account working on biometric validation of the customer and RFID technology. Around 19.11 lakh customers have been enrolled with one technology partner. To broad base the outreach, cards of a different technology have been introduced and about 4.5 lakh customers enrolled. b) Internet based kiosk channel: This PC based solution launched in August 2008 leverages existing kiosk infrastructure in villages. Transactions are equally secure as this channel also works on biometric validation of the customer. c) Mobile based accounts: These accounts work with mobile phone based low cost technical solution. A pilot project is currently being implemented in Uttam Nagar, New Delhi. d) Low cost biometric ATMs: Low cost biometric ATMs have been deployed starting with Cuddalore district of Tamil Nadu. This platform will be expanded significantly. E.2 Regional Rural Banks (RRBs) - Post amalgamation, the Bank has got 17 RRBs with a network of 2557 branches spread over 122 districts and 17 states in the country. The aggregate deposits and advances of the sponsored RRBs stood at Rs.17,273 crores and Rs.10,242 crores respectively as on 31st March 2009. The profits increased from Rs.115.68 crores as on March 2008 to Rs.203.31 crores as on March 2009. - Recommendations of the Committee to formulate a comprehensive Human Resources Policy for RRBs (Dr. Thorat Committee) regarding categorisation of RRBs and their branches, organisational structuring etc. and accepted by the Government have been implemented in all our sponsored RRBs. E.3 Credit Assistance provided to Scheduled Castes and Scheduled Tribes

The credit assistance provided by the Bank to Scheduled Castes and Scheduled Tribes stands at Rs.12,939 crores and forms 7.9 % of total Priority Sector advances of the Bank as on the 31st March 2009. Table : 7 Recovery position of SC/ST borrowers (scheme-wise) SCHEME Prime Ministers Rozgar Yojana (PMRY) Swarnajayanti Gram Swarozgar Yojana (SGSY) Swarna Jayanti Shahari Rozgar Yojana (SJSRY) Scheme for Liberation & Rehabilitation of Scavengers (SLRS) Differential Rate of Interest (DRI) Recovery %

34.62

43.14

36.73

28.08

42.39

E.4 Prime Ministers New 15 Point Programme for the welfare of Minorities And Implementation of Sachar Committee recommendations. - Our Bank has implemented Prime Ministers New 15 Point Programme for the welfare of Minorities, whose important objective is to ensure that an appropriate percentage of the Priority Sector Lendings is targeted for the minority communities and that the benefits of various Government sponsored schemes reach the under-privileged, particularly the disadvantaged section of minority communities (Christians, Muslims, Buddhists, Sikhs and Zoroastrians). The year wise position in respect of our financial assistance to minority communities in the identified Minority Concentration Districts (MCDs) is given below: Table : 8 Credit Assistance to Minorities Period as on No. of districts identified by GOI (MCDs) 44 121 121 No. of A/cs Amount (Rs. in crores) 2106 3516 5091

March 2007 March 2008 March 2009

7.94 lacs 9.88 lacs 9.91 lacs

- Minority cells for co-ordination have already been created at Local

Head Office level and Nodal Officers have been designated to monitor the progress in lendings to minority communities as well as to redress the grievances of minority communities. - As per Sachar Committee recommendations, our bank has opened 177 new branches in under- banked / unbanked areas in MCDs during the financial year 2008-09. - All the lead district managers have been advised to monitor applications received from minority committees and their disposal. Also, quarterly information regarding Minority Lendings is loaded on the Banks Website. F. MARKETING & CROSS SELLING DEPARTMENT

- Consistent efforts by the Bank have resulted in emergence of Cross Selling as an important source of income. Initiatives taken by the Marketing- Cross Selling Dept. has earned the Bank an income of Rs.166.45 crores during the financial year ending March 2009 despite the adverse economic scenario. Highlights of Initiatives Taken Life Insurance: a) Cross Selling of Life Insurance products was actively carried out by branches in Rural Banking Group and Corporate Banking Group and International Banking Group also, resulting in YoY growth of : i) ii) Income Rated premium : 34.17% : 27% : 82% : 48% (12.52 lacs New Business)

iii) Renewal Business iv) Number of lives covered

b) A Micro Insurance Product "Grameen Shakti scheme for SHGs" was introduced in Andhra Pradesh, Maharashtra, Orissa, Tamil Nadu and West Bengal. Total lives covered: 8.25 lacs. c) The Bank introduced an omnibus credit protection product "Dhanraksha Plus" covering all personal loans including Home Loans and Auto Loans. d) Health insurance product covering nine critical illnesses named Criti 9 was introduced in Bangalore Circle on a pilot basis. Mutual Funds: An amount of Rs.23,628.31 crores was mobilised through our branches for investment in mutual funds, recording a YoY growth of 66%.

Mutual Funds - Miscellaneous MF-Training Initiatives: There has been a significant increase in the number of AMFI certified employees and Certified Insurance Facilitators as a result of training and skill upgradation initiatives undertaken by the Bank. G. CORPORATE STRATEGIES & NEW BUSINESS

The New Businesses Department was created to formulate strategies for new businesses, incubate new business initiatives, pilot the same and on stabilization, handover to the concerned Business Group. Various new businesses like Pension Fund Management, General Insurance, Private Equity, Financial Planning & Advisory Services (FP&AS), Custodial Services, Payment Solutions, Depository Participant Services and Online trading have been initiated by the department. The status of initiatives is as follows: Financial Planning & Advisory Services (FP&AS) - Financial Planning and Advisory Services initiative is focussed on strengthening the relationship of the Bank with Vishesh and High Net-worth Individual (HNI) customers (existing as well as new) by providing a range of services for managing and growing their wealth. - 1135 Relationship Managers (RMs/CREs-PB) have been provided basic training in Financial Planning and second level of training has been imparted for 181 RMs PB. - The Financial Planning and Wealth Management software has gone live on 02/03/2009 and the FP&AS have been rolled out in 502 branches as on 31/03/2009. The RMs PB and the Customer Relation Executives (CREs-PB) in these branches will not only help the Vishesh and HNI Customers in managing their assets through a mix of products and strategies but will also advise them for optimally meeting their needs of protection, investment in various classes of assets through investment planning, tax planning, retirement and real estate plans. This initiative will add enormous value to our offerings and increase customer stickiness, especially in the retail segment. - Demat Services and eZ-trade@sbi (Online Trading) services are now available at more than 1500 branches across India. In FY 2008-09, the Bank has introduced several customer friendly features in our demat accounts like digitally signed email statements and SMS alerts on select demat account transactions. Features such as Online instructions for securities transfer and pledge/unpledge, search ISINs, view Transaction Status, view Settlement Calendar and order delivery instruction booklet online are available through www.onlinesbi.com. Our objective for the next financial year is to extend our reach to as many centres as possible while continuously honing our products by adding more value added features.

Custodial Services - Indias attractiveness as a destination for investments is continuously on the increase and handling securities and providing full range of custodial services to the Foreign Institutional Investors as well as to the domestic investors offers great potential. - The Bank has entered into a Joint Venture (JV) Agreement with Societe Generale Securities Services (SGSS) on June 05, 2008 for starting the Custodial Services business. SBI Custodial Services Pvt. Ltd. has been incorporated initially as a 100% subsidiary of the Bank and RBI approval for inducting SGSS as a JV partner has been obtained. After receipt of approval from SEBI, the company would be converted into a JV Company with SBI holding 65% of the equity and the balance held by SGSS. - The Clients of our JV would mainly comprise FIIs, Domestic FIs, Mutual Funds, Pension Funds etc. The Business plan envisages a 8-10 % market share in domestic and global custody in 3 years. The Company is expected to commence its operations early in the financial year 2009-10. General Insurance - While SBI Life is meeting a part of the requirements under Protection Services, the insurance offering bouquet will be complete with the inclusion of General Insurance products, greatly enhancing the customer value proposition at our vast branch network and enhancing the brand value of the Bank. - With this end in view, the Bank has decided to enter into the General Insurance business through the joint venture route. The main reason for the Banks foray into General Insurance business is to leverage the Bancassurance channel. We aim to capture and leverage the value of in-house business, and establish State Bank Group as a leading player in the arena of General Insurance. - The J.V. Agreement has been signed with Insurance Australia Group (IAG) on the 24th November 2008. We have incorporated a subsidiary under the name SBI General Insurance Co. Ltd. after receiving approval from the RBI. The Company is currently in the process of obtaining necessary regulatory approvals for commencement of Insurance business. We anticipate the start of the business for the new subsidiary in the third quarter of 2009-10. Private Equity - In view of the growing importance of private equity as an alternate asset class and the attractive returns it offers, the Bank has decided to enter this area and made substantial progress in this regard. - An infrastructure fund has been set up in collaboration with Macquarie of Australia and IFC Washington, primarily aimed at investing

in the Indian Infrastructure space. All necessary regulatory approvals have been received for operationalisation of the fund. Over US $ 1 billion has been mobilized from large and well known International Investors including the sponsors. - The Bank is at an advanced stage in setting up a general purpose Private Equity Fund jointly with sovereign entities in Oman. Government of India has designated the Bank as the operationalising agency for a similar sovereign fund with Qatar. Several other Funds are at various stages of formation. - As some of the funds initiated by the Bank are on the verge of operationalisation, the Bank is poised to play a leading role in this promising sector in the coming years. Payment Solutions Business Group Mobile Banking Services Mobile Banking Services (MBS) offers scope for convenient, user friendly, secured and cost effective alternate channel of banking. MBS has been launched after RBI approval. Application based service using SMS and GPRS facilities has been made available to the customers. The service is also available over WAP for all mobiles having GPRS connectivity. MBS has been rolled out to all our non-rural branches. The product is comparable to the best available in the market. Real Time Gross Settlement (RTGS) & National Electronic Fund Transfer (NEFT) The Bank has been promoting Inter-Bank payments through RTGS and NEFT channels. Due to our sustained efforts, the Bank has witnessed substantial growth in both inward and outward RTGS/NEFT remittances. Both RTGS/NEFT remittance facilities are available through internet banking and NEFT is also available over Mobile Banking. We are making efforts for migration of more corporates / Govt. Departments to NEFT for effecting their payments to employees/vendors. Debit Cards The Bank has been encouraging the usage of debit cards at Point of Sale (POS) terminals. The daily average number of transactions at POS has increased manifold. Various offerings such as tie ups, loyalty programmes etc. are being developed to improve the Banks footprint in this area. Consolidation of Payment Solution Business The Bank has embarked on an ambitious plan to restructure the organizational and, if necessary, IT set up for its various payment related businesses. This is being done to achieve efficiency in operations, avoid duplication, optimal utilization of resources, cost effectiveness and bringing about reduction in development efforts. The Bank has appointed an outside Consultant for undertaking the above study and to advise the Bank in

the matter. The exercise, when completed, is expected to yield substantial benefits. H. INTERNATIONAL BANKING GROUP

H.1 Operation of Foreign Offices The Bank at the year end had a network of 92 overseas offices spread over 32 countries covering all time zones. The 92 offices comprised 37 Branches, 5 Sub Offices, 8 Representative Offices, 35 Branches of Subsidiaries, 3 Managed Exchange Companies and 4 Joint Ventures. The asset level of Foreign offices and subsidiaries was US$ 23.73 billion registering a growth of 20% over last year. Foreign Offices earned a net profit of US $ 151 million during the year. Overseas Expansion Consequent upon receipt of Qualifying Full Bank licence, the Bank started retail operations in Singapore during the year. Three new Branches and seven ATMs were set up to boost retail operations. One branch and a sub office were added to the network in Male and a Representative Office in Tianjin in China was operationalised. SBI California, the Banks wholly owned subsidiary in USA, opened its seventh Branch at Bakersfield. PT Bank Indomonex, a partly owned subsidiary in Indonesia, opened 2 branches during the year. Nepal SBI Bank Ltd., a Joint Venture, opened 16 new branches. The Banks two partly owned subsidiaries in Mauritius viz. Indian Ocean International Bank Ltd. and SBI International (Mauritius) Ltd. were merged during the year to create a new entity titled SBI (Mauritius) Ltd. Significant addition to the overseas network is planned for the current year. Resource Management Despite turmoil in global financial market conditions, the Banks foreign offices maintained comfortable liquidity position. During the year 2008-09, US$ 686 million (approximately Rs. 3,480 crores) was raised by the foreign offices under Banks MTN Programme and bilateral loans of different maturities. NRI Business The Banks NRI deposits grew by Rs. 8,948 crores during the year to reach a level of Rs. 48,950 crores by the year end. Similarly, advances to NRIs increased by Rs. 197 crores and now stand at Rs. 1,218 crores. Six new tie-ups with Exchange Companies were concluded taking the total such tie-ups to 20. Rapid Remittance, a faster version of remittance product, was introduced for the USA customers. A number of campaigns across various media were undertaken during the year to publicize the Banks products and services. H.2 DOMESTIC OPERATIONS Export Credit

The Banks outstanding export credit stood at Rs. 26,732 crores as on 31.03.2009. State Bank of Indias active participation in financing project export activities resulted in the Bank supporting 22 project export proposals with contract value aggregating Rs. 12,460 crores. The Banks own exposure as at the year end to these projects was Rs. 1,492 crores. Merchant Banking Despite the slowdown in the economy and tight liquidity conditions, the Bank retained its leadership as Mandated Lead Arranger and Book Runner for syndicated loans in Asia Pacific (excluding Japan but including Australia) for the year 2008. 15 syndication deals aggregating US$ 8,297 million and 13 bilateral facilities aggregating US$ 285 million were concluded in 2008-09. 22 Mergers and Acquisitions (M&A) deals aggregating US$ 7,300 million with Banks participation level of US$ 2, 269 million fructified during the year. Global Link Services (GLS) GLS, the Banks specialized outfit, caters to speedier settlement of remittances. In the year 2008-09, GLS, on behalf of domestic branches, handled 139,788 export bills and 193,286 foreign currency cheques aggregating US$ 17.45 billion. In addition, it handled 2,196,447 inward remittance transactions amounting to US$ 2.39 billion from various centres in the Middle East, UK and USA. Correspondent Relations The Bank has entered into correspondent banking arrangement with 527 reputed international banks to extend seamless services to varied clients. These correspondent Banks are located in 124 countries. The Bank also has 1626 Bilateral Key Exchange (BKE) arrangements for SWIFT facilitating speedier flow of financial messages. Country Risk & Bank Exposures The Bank has a Country Risk Management Policy in tune with RBI guidelines. The policy outlines robust risk management models with prescriptions for Country, Bank, Product and Counterparty exposure limits. Considering the global economic turmoil, both Country wise and Bank wise exposure limits are monitored and reviewed on a regular basis. The exposure ceilings and classifications are moderated in line with the dynamics of their risk profiles. Periodical corrective steps are initiated to safeguard the Banks interests. I. ASSOCIATES AND SUBSIDIARIES with a network of 16055 branches including Associate Banks dominates the banking industry banking, the Group, through its various whole range of financial services, which

1.1 The State Bank Group 4607 branches of its six in India. In addition to subsidiaries, provides a

include Life Insurance, Merchant Banking, Mutual Funds, Credit Card, Factoring, Security trading, Pension Fund Management and Primary Dealership in the Money Market. 1.2 Associate Banks SBIs six Associate Banks had a market share of 6.74% in deposits and 6.95% in advances as on last Friday of March 2009. Table : 9 Performance Highlights of Associate Banks (ABs) (Amounts in Rs. crores) As on Change 31.03.2009 313099 264779 198583 5495 2774 18.95% 21.35% 19.59% 32.11% 24.71%

As on 31.03.2008 Agg. Assets Agg. Deposits Agg. Advances Operating Profit Net Profit Credit Deposit Ratio Capital Adequacy Ratio Gross NPA Net NPA Return on Equity 263221 218199 166050 4160 2225

76.10

75.00

-1.10

12.52 2465.41 972.36 18.50%

13.01 2763.56 1191.26 19.83%

+0.49 12.09% 22.51% 1.33

1.3 SBI Commercial & International Bank Ltd. (SBICI) As at the end of March 2009, the aggregate deposits and total advances of SBICI stood at Rs.538.33 crores and Rs.315.34 crores respectively. The Bank recorded an operating and net profit of Rs.11.52 crores and Rs.11.07 crores respectively. The net NPAs as at the end of March 2009 was Rs.0.23 crores. Performance Highlights of Non-Banking Subsidiaries/ Joint Ventures 1.4 SBI Capital Markets Limited (SBICAP) SBICAP is a full service investment banking outfit offering Project Advisory Services, arrangement of Structured Finance, Capital Market Services like Equity Issuances, Mergers & Acquisitions and arrangement

of Private Equity, etc. The company, during the year, has further consolidated its dominant position as arrangers of debt for the corporate sector both in the infrastructure as well as non-infrastructure sectors. The following achievements are some of the many recognitions won by the Company during the year: - Ranked 3rd globally as Mandated Lead Arranger by Thompson Reuters PFI for 2008 as against 9th globally in 2007. Ranked No.2 globally and No.1 in Asia Pacific by Dealogic. - Ranked 1st as India Syndicated Loan Mandated Arranger and as India Syndicated Loans Book runner by Bloomberg. - The Company has been awarded "Bank of the year" award in 2008 by Thompson Reuters. - The project relating to Coastal Gujarat Power Ltd. (Tata Ultra Mega Power Plant) has been recognised by Project Finance International as Power Deal of the Year and as Best Power Project Deal of the Year by Euromoney. - Awarded Silver Shield under the category Finance sector of ICAI Awards for Excellence in Financial Reporting for the year ended March 2008. - The company has posted a PAT of Rs.150.07 crores registering YoY growth of 5.55% upto March 2009. - Declared a dividend of 120% as against 100% for the FY2007-08. 1.5 SBICAP Securities Limited (SSL) SSL, which commenced its operations in June 2006, is a broking company offering equity broking services to retail and institutional clients both in the Cash as well as in the Futures and Options segments. It is also engaged in sales & distribution of other financial products like Mutual Funds, etc. The Company has launched e-broking services to the clients of SBI and Associate Banks. SSL has 48 branches and 18 franchisees and offers Demat, e-broking, e-IPO and e-MF services to both retail and institutional clients. 1.6 SBICAPS Ventures Limited (SVL) SBICAPS Ventures Limited (SVL), a USD 100 million Venture Capital Fund, jointly with SBI Holdings Inc. (Softbank), Japan has invested USD 8 mio in two companies and a number of investment proposals are being examined. The scope of the fund covers all sectors except real estate and financial services. 1.7 SBICAP (UK) Ltd.

SBICAP (UK) Ltd., which is only in its second full years operation, has booked a revenue of Rs. 2.14 crores upto March 2009 as against Rs. 1.51 crores as on March 2008. The company has posted a net profit of Rs.0.44 crores in March 2009, as against a loss of Rs.0.36 crores last year due to diversification of income streams. 1.8 SBICAP TRUSTEE Co Ltd. (STCL) SBICAP TRUSTEE Co Ltd. (STCL) has commenced security trustee business with effect from1st August 2008. The companys gross income upto 31.03.2009 is Rs. 0.44 crores and net profit is Rs.0.14 crores. 1.9 SBI DFHI LTD. - SBI group holds 67.01% share in the Company, which is a primary dealer. - For the period ended 31st March 2009, the Companys PBT was Rs.101.76 crores as against Rs.95.89 crores during 2007-08. - The market turnover for G-Sec and Treasury bills during 2008-09 was Rs.57,922 crores as against Rs.54,919 crores recorded during 2007-08. - Declared a dividend of 12.50% as against 10.00% for the FY2007-08. 1.10 SBI Cards & Payments Services Pvt. Ltd. (SBICSPL)

- SBI Cards, the only stand-alone credit card issuing company in India, is a joint venture by State Bank of India and GE Capital Services, wherein SBI holds 60% stake. - The Cards in Force (CIF) of the Company stands at 27.24 lacs and the receivables are at Rs.1,804 crores at the end of March 2009. - The Company has posted a loss before tax of Rs. 185.12 crores during the year as against a loss before tax of Rs. 230.02 crores as on 31.03.08. 1.11 SBI Life Insurance Company Limited (SBILife) - SBI Life has a unique multi-distribution model comprising Bancassurance, Retail Agency & Institutional Alliances and Group Corporate Channels for distribution of insurance products. - SBI Life has bagged the coveted personal finance award-Outlook Money and NDTV profit Best Life Insurer 2008. - Ranked among global top three in terms of number of Million Dollar Round Table (MDRT) members. Table : 10 Performance Highlights of the Associate Banks as at March 2009

(Rs. in crores) Name of the Bank SBIs share in the capital (%) Deposits

State Bank of Bikaner & Jaipur Hyderabad Indore Mysore Patiala Travancore All 6 Banks Advances Operating Profit 892.84 1302.96 624.01 653.52 965.45 1056.27 5495.05 75 100 98.05 92.33 100 75 Net Profit 38762 64686 27693 32388 59580 41670 264779

30088 43952 21739 25878 43954 32972 198583

403.45 615.81 278.92 336.91 531.54 607.84 2774.47

- ICRA has assigned iAAA rating to the company indicating highest claim paying ability. - The company continued to be ranked 2nd among private insurers, for new business growth. - Gross Premium of the Company was Rs.7,212 crores with YoY growth of 28%. - The market share of SBI Life in the total industry improved to 6.0% as against 5.15% in March 2008 and to 16% amongst private insurers from 14% as at March 08.

- Recorded a loss of Rs.26 crores as on 31.03.2009 as against a profit of Rs.34 crores as on 31.03.2008 due to dimunition in the value of equity investments. - The Assets Under Management of SBI Life recorded a growth of 43% YoY to reach Rs.14964 crores. - Portfolio lives has increased to 131.2 lacs from 70 lacs as on March 2008. - Opened 246 new sales offices during the current year taking the total number of offices to 489 as on 31.03.2009. I.12 SBI Funds Management (P) Ltd. (SBIFMPL) - SBIFMPL, the Mutual Fund arm of SBI, is the 6th largest Fund House in terms of Assets Under Management and a leading player in the market with 5.5 million investors. - The schemes of the Fund House have performed consistently over the years and have emerged as the preferred investment for investors. - The company has posted a PAT of Rs.68.95 crores as on 31.03.2009 registering a decline of 2.0% Y-o-Y - As against net outflows experienced by many of the Mutual Funds across the industry, SBIFMPL registered a net inflow of Rs.2,315 crores during the year upto March 2009. The average Assets Under Management (AUM) of the company as at March 2009 stood at Rs.27,846 crores. - Declared a dividend of 40% as against 33.60% for 2007-08. - The companys average AUM market share at the end of March 2009 stood at 5.52%. - SBI Magnum Balance Fund and SBI Magnum Sector Umbrella-Contra Fund were adjudged the best funds in their respective categories in Lipper India Fund award in 2008. - SBI Magnum Taxgain Scheme-93 was rated a Five Star Fund in 3 year performance category in ICRA Mutual Fund Awards 2009. 1.13 SBI Factors and Commercial Services Pvt. Ltd. (SBIFACTORS)

- SBI Factors provides domestic factoring services to Small and Medium Enterprises (SMEs). - The turnover recorded by SBI Factors at the end of March 2009 stood at Rs.5,979 crores as against Rs.6,479 crores at the end of March 2008. - While total income of the company increased by 13% YoY and stood at Rs.164.25 crores as at March 2009, the company earned PAT of Rs.42.79 crores as at March 2009 registering a YoY growth of 50.78%.

- Declared a dividend of 30% as against 16% for 2007-08. 1.14 Global Trade Finance Ltd. (GTFL) - GTFL is one of the leading factoring companies in India which has the highest market share (85%) in export & import factoring. - During the year ended 31st March 2009, the turnover of the company increased by 10.60% YoY, reaching Rs.12,303 crores. The total income of the company as at March 2009 was Rs.505.48 crores as against Rs.353.76 crores in March 2008. The company earned a PAT of Rs.74.10 crores as on March 2009 as against Rs.73.57 crores last year. - Declared a dividend of 20% as against 12% for 2007-08. 1.15 SBI Pension Funds Pvt. Ltd. (SBIPF) - SBIPF is one of the three Fund Managers appointed by the Pension Fund Regulatory & Development Authority (PFRDA) for management of Pension Funds under the New Pension System for Central Government (except Armed Forces) and State Government Employees. SBIPF, wholly owned subsidiary of the State Bank Group, commenced its operations from April 2008. SBIPF has got the mandate to manage 55% of the total corpus of pension funds received under the New Pension System during 2008-09. The total Assets Under Management of the company as on 31st March 2009 was Rs.1,173.23 crores on which a management fee of Rs. 26.32 lacs was received. The Company recorded a net profit of Rs. 0.04 crores. Important Developments during the year in Associates & Subsidiaries: - State Bank of Saurashtra, a wholly-owned Associate Bank having presence in the state of Gujarat, was acquired by SBI during the with the approval of RBI and Govt. of India. The Associate Bank 461 branches with an asset base of more than Rs.21,000 crores at time of acquisition. major year had the

- The Bank has also decided to merge SBICI Bank Ltd., a wholly owned domestic banking subsidiary, with itself to bring about further synergy and efficiency. Necessary approval is awaited from the Government of India. - SBI Cap Securities Ltd. (SSL)., which is a wholly owned subsidiary of SBI Capital Markets Ltd., is proposed to be taken over by SBI as a direct subsidiary in order to impart greater synergy by undertaking besides broking activities, marketing of other wealth management products through State Bank Group channels. The proposal is awaiting necessary regulatory approvals. - With a view to improving the market share in domestic and international factoring business as also to have synergy in operations and optimising efficiency, the Bank has proposed to merge SBI Factors

and GTFL, two of its own subsidiaries. The proposal is awaiting necessary regulatory approvals. J. ASSET QUALITY

NPA Management The position of NPA reduction as on 31.03.2009 is given hereunder. Table : 11 Asset Quality 1 Gross NPAs Gross NPA Percentage 2 Net NPAs Net NPA Percentage 3 Cash Recovery in NPA (Rs. in crores) 15589 2.84% 9552 1.76 % 2966 3402

4 Upgradation to Standard Assets 5 Write offs

1896 8264

6 Gross reduction in NPAs (3+4+5) 7 Fresh slippages of Standard Assets to NPA category 8 Recovery in written off accounts

11015

888

- Restructuring of impaired Standard Assets as well as viable non-performing assets, both under CDR mechanism as well as under Banks own scheme, have been given top priority for arresting new additions and reducing the existing level of NPAs. - The machinery for identification and monitoring of Special Mention Accounts by making prompt review and taking quick corrective action has also been geared up for the purpose. - The Bank referred 9 cases with aggregate exposure of Rs. 883 crores to CDR mechanism this year out of a total of 20 cases with aggregate exposure of Rs. 1,235 crores referred to CDR by the whole Banking system. Our share in the debt in the cases referred was 72% by value. In all cases, timely intervention enabled the accounts to retain their Standard Asset status. - Five financial assets involving principal outstandings of Rs. 289 crores have been sold to other banks/ARCIL during the year. K. INFORMATION TECHNOLOGY

The Bank has been proactive in responding to the opportunities thrown open by evolving technology and increasing technology penetration. Technology has been used innovatively for achieving financial inclusion and technology driven banking solutions have been implemented to achieve enhanced customer satisfaction. Networking: More than 2000 branches were added to our wide area network during the year. Presently all the branches and ATMs of the Bank are networked. The network plays a major role in supporting the Banks business applications and is capable of carrying data voice and video in a secure manner. Core Banking: The Bank achieved full Core Banking status on 23.07.2008 when all the branches of the Bank were made functional on CBS. This is one of the most important achievements of the Bank as our network along with Associate Banks is one of the largest banking network in the world to have gone on centralised data base (Core Banking) system. Core Banking has not only enhanced our transaction processing capabilities but has also empowered our customers to transact their banking business from any of the 11448 branches of the Bank. Our 506 branches have been enabled for Core Integrated Trade Finance also. Internet Banking: With enabling of over 2100 branches for internet banking, all the branches of the Bank are now internet banking enabled. Apart from enabling Anywhere Anytime banking, our Internet Banking offers a host of value added services like funds transfer through RTGS/NEFT, Payment of Taxes, SMS Alerts, Bills Payments, Fee Payments, Mutual Fund Investments, Subscription to IPOs, Temple/Trust Donations etc. For Corporate customers, additional facilities like CBEC Payment, Customs Payment, Fee collections for DGFT, Freight collection for Railways etc. have been provided. A number of e-Governance initiatives have also been enabled through Internet Banking. ATMs: The Bank, along with its Associate banks have a common ATM network which is the largest in the country. It crossed the milestone of 10,000 ATMs in December 2008 and with an addition of 2911 ATMs during the year, the Bank has now a network of more than 11300 ATMs. The Bank also has 33 Multi Currency Module enabled ATMs at 19 foreign centres in 6 countries. Functionalities available at our ATMs include Card to Card Transfer, Fee Payments, Utility Bill Payments, Donations to Temples/Trusts etc. The Bank is also in the process of installing Biometric and low cost rural ATMs. Payment Systems Group: All the branches of the Bank have been enabled for RTGS and NEFT transactions. Further, the Bank has also enabled State Bank Group Payment Scheme (for instant funds transfer among State Bank Group Banks), Rupee Remittance Scheme from our foreign offices for direct credit to accounts in our Bank as well as with other banks through NEFT. Mobile Banking: The Bank has launched its mobile banking facility which offers various features like Funds Transfer using NEFT, Enquiry Services (balance enquiry / mini statement), Request Services (cheque book request), m-commerce (Mobile Top Up, merchant payments, SBI Life

Insurance premium) and bill payment (utility bills, credit cards). Data Warehouse Project: Implementation of Enterprise Data Warehouse is under progress. Its implementation will provide critical tools necessary to help the Bank strengthen itself as an intelligent organisation, to improve processes, delivery of information for Decision Support System (DSS) consisting of analytics on product performance, channel management, customer relationship management, concurrent audit, Inspection and Audit, budgeting and monitoring and self service for internal users. Information Security: The Bank has a robust IT policy and Information System (IS) Security policy which has been benchmarked against global best practices. To ensure business continuity and to guard against any disaster, the Bank has put in place a disaster recovery and business continuity plan. The Banks Information Systems Security is regularly reviewed to ensure that the Banks information systems remain safe and banking operations are conducted in a secure way. Miscellaneous Operations L Risk Management & Internal controls M Business Intelligence Department N Customer Service & Community Services Banking L. RISK MANAGEMENT & INTERNAL CONTROLS RISK MANAGEMENT IN SBI

L.1 Risk Management Structure - An independent Risk Governance structure is in place for Integrated Risk Management covering Credit, Market, Operational and Group Risks. This framework visualises empowerment of Business Units at the operating level, with technology being the key driver, enabling identification and management of risk at the place of origination. - Being alive to this imperative, efforts are on hand to enhance the degree of awareness at the operating level in alignment with better risk management practices, Basel II requirements and the overarching aim of the conservation and optimum use of capital. - Keeping in view the changes which the Banks portfolios may undergo in stressed situations, the Bank has in place a policy which provides a framework for conducting Stress Tests at periodic intervals and initiating remedial measures wherever warranted. The scope of the tests is constantly reviewed to include more stringent scenarios. - Risk Management is perceived as an enabler for business growth and in strategic business planning, by aligning business strategy to the underlying risks. This is achieved by constantly reassessing the interdependencies / interfaces amongst each silo of Risk and business functions.

L.2 Basel II Implementation - The Bank, as per RBI Guidelines, has migrated to Basel II as on 31st March 2008. Simultaneously, processes have been set in train for fine-tuning systems & procedures, IT capabilities and Risk Governance structure to meet the requirements of the Advanced Approaches. - Various initiatives such as migration to new Credit Risk Assessment Models, independent validation of internal ratings and improvement in Loan Data Quality would not only enable conservation of capital but also facilitate smooth migration to Advanced Approaches. L.3 Credit Risk Management - Credit Risk Management process encompasses identification, assessment, measurement, monitoring and control of credit exposures. Well defined basic risk measures such as CRA Models, Industry Exposure Norms, Counterparty Exposure Limits, Substantial Exposure Limits, etc. have been put in place. L.4 Market Risk Management - Market Risk Management is governed by the Board approved Policies for Investment and Trading in Bonds, Equities and Foreign Exchange. - Exposure, Stop Loss, Duration Limits and Derivative Limits have been prescribed. These limits along with other Management Action Triggers, are tracked daily and necessary action initiated as required to control and manage Market Risk. L.5 Operational Risk Management - The Bank manages Operational risks by ensuring maintenance of a comprehensive system of Internal Controls and Policies . - The objective of the Banks Operational Risk Management is to continuously review systems and control mechanisms, create awareness of Operational Risk throughout the Bank, assign risk ownership, alignment of risk management activities with business strategy and ensuring compliance with regulatory requirements. - The Policy applies to all business and functional areas within the Bank, and is supplemented by operational systems, procedures and guidelines which are periodically updated. L.6 Group Risk Management - The State Bank Group is recognised as a major Financial Conglomerate and as a systemically important financial intermediary with significant presence in various financial markets.

- Accordingly, it has become imperative, both from the regulatory point of view as well as from the Groups own internal control and risk management point of view, to oversee the functioning of individual entities in the Group and periodically assess the overall level of risk in the Group so as to facilitate optimal utilisation of capital resources and adoption of a uniform set of risk practices across the Group Entities. - The Group Risk Management Policy applies to all Associate banks, Banking and Non-banking Subsidiaries and Joint Ventures of the State Bank Group under the jurisdiction of specified regulators and complying with the relevant Accounting Standards. - With a view to enabling the Group Entities to assess their material risks and adequacy of the risk management processes and capital, all Group members, including Non-banking Subsidiaries are encouraged to align their policies & operations with the Group, vide Basel prescriptions and international best practices. - Further, a Group Risk Management Committee has also been constituted to oversee the matters relating to Group Risk by creating risk awareness across all Group entities, ensuring periodic review of the policy and its compliance etc. L.7 Asset Liability Management - The Asset Liability Management Committee (ALCO) of the Bank is entrusted with the evolvement of appropriate systems and procedures in order to identify and analyse balance sheet risks and setting of bench mark parameters for efficient management of these risks. - ALM Department, being the support group to ALCO, monitors the Banks market risk such as the liquidity risk, interest rate risk etc. by analyzing various ALM reports/ returns. The ALM department reviews the Banks ALM policy and complies with the Banks/ RBIs policy guidelines on an ongoing basis. - The Bank has successfully implemented Market Related Funds Transfer Pricing (MRFTP) in all its business units for effective performance management and Interest Rate Risk Management through execution of state-of-the-art ALM Tools. L.8 Internal Controls L.8.1 The Bank has in-built internal control systems with well-defined responsibilities at each level. Inspection & Management Audit (I&MA) Department of the Bank carries out four streams of audits- Risk Focussed Internal Audit (RFIA), Credit Audit, Information Systems Audit and Management Audit covering different facets of the Banks activities. I&MA Department also prescribes the processes, guidelines, manual of operations and formats for the conduct of Concurrent Audit which is administered by the Circles and carried out at branches with large deposits, advances and other risk exposures and credit oriented BPR entities. The department, headed by the Dy. Managing Director (I&MA), is functionally independent and reports to the Audit Committee

of the Banks Board (ACB). L.8.2 Risk Focussed Internal Audit The Inspection system plays an important and critical role in introducing international best practices in the internal audit function which is regarded as a critical component of Corporate Governance. Risk Focussed Internal Audit, an adjunct to risk based supervision as per RBI directives, has been introduced in the Banks audit system from April 2003. The audit of branches and BPR entities is conducted as per the periodicity approved by ACB and RBI guidelines. During the year, audit of 6136 branches and 171 BPR entities was conducted. L.8.3 Credit Audit Credit Audit aims at achieving continuous improvement in the quality of the credit portfolio of the Bank by critically examining individual large advances with exposures of Rs.10 crores and above. The audit examines the probability of default, identifies risks and suggests risk mitigation measures. The overall risk perception is also arrived at to initiate early remedial action to improve the quality of credit portfolio. During the year, on-site Credit Audit was conducted in 289 branches, covering 4624 accounts with aggregate exposures of Rs.2,64,854 crores. L.8.4 Management Audit The Management Audit focusses on the effectiveness of risk management in the processes and the procedures followed in the Bank and uses RBI Risk Profile Templates as the basis. The Management Audit universe comprises Corporate Centres Establishments; Circles/Zonal Offices/On Locale Regional Offices/Regional Business Offices; Associate Banks; Subsidiaries (Domestic/Foreign); Joint Ventures (Domestic/ Foreign), Regional Rural Banks (RRBs) sponsored by the Bank; Representative Offices abroad and Exchange companies managed by Bank. During the year, Management Audit was conducted at 25 offices /establishments. L.8.5 Foreign Offices Audit I&MA Department supervises internal audit of all foreign offices of the Bank, namely: (a) Home Office Audit carried out by officials identified by I&MA Department. (b) Internal Audit conducted either by an official of the Bank or by an outsourced firm of that country, where foreign office is located. (c) Management Audit of Representative Offices, Joint Ventures and Subsidiaries. During the year, 23 Foreign Offices/Representative Offices / Subsidiaries were subjected to audit.

L.9 Vigilance The Vigilance Department in the Bank is headed by the Chief Vigilance Officer appointed with the concurrence of the Ministry of Finance and Central Vigilance Commission. At each Local Head Office, the Vigilance Department is headed by a senior official of the rank of Deputy General Manager. The Department is manned by officers having knowledge/background of investigation, disciplinary action matters and extensive experience in banking operations. The Department oversees three primary aspects of vigilance viz. prevention, detection and punishment. The Bank has a zero tolerance policy for fraud, corruption and financial irregularities and encourages Whistle blowing as a matter of corporate culture. M. BUSINESS INTELLIGENCE DEPARTMENT - The Business Intelligence Department in the Bank constantly assesses, upgrades and fine tunes the growing information requirements of various user departments and business units. The information takes care of both decision support as well as statutory requirements. The Data Warehousing Project, designed to be a single source for all data requirements, is also progressing satisfactorily. N. CUSTOMER SERVICE & COMMUNITY SERVICES BANKING

N.1 CUSTOMER SERVICE - On July 01 2008, the Bank unveiled its new Vision statement which contains the distilled essence of the views of over 1,40,000 staff who participated in a unique exercise conceptualized and conducted by Human Resource Management Department to re- define the Banks Mission, Vision and Values. The staff, who displayed understanding of the challenges of achieving excellent customer service which alone will enable the Bank to continue to maintain its leadership position in future, were overwhelmingly of the opinion that the Banks vision should focus primarily on customer service. The Vision statement- My SBI, My Customer first. My SBI: First in customer satisfaction. appropriately reflects this view of our staff and shall be the guiding principle for the Banks plans, activities and strategies. - The Bank has a well established grievances redressal mechanism. Toll-free helpline numbers are available at all LHO centres. For product enquiries and technology related issues, a dedicated 24x7 helpline is available to customers. As a part of BPR initiatives, a Contact Centre has been established with toll free number for providing information on products and account enquiries to customers on 24x7 basis. A comprehensive analysis of customer grievances is done every quarter to identify common systemic issues that need rectification.

- The Customer Service Committee of the Board reviewed the Banks Grievances Redressal Policy in March 2009 and approved revised policy incorporating the Banks new organizational structure and instructions on grievances redressal. N.2 COMMUNITY SERVICES BANKING - Apart from the normal banking operations, the Bank, as a responsible and responsive corporate citizen, seeks to reinvest part of its profit in various community welfare projects to improve the quality of the life of the poor, neglected, weaker and downtrodden sections of society. - In the financial year 2008-09, the Bank sanctioned donations amounting to Rs.8.76 crores to various NGOs/Trusts/Societies for their projects with social orientation and also to Relief Funds including the Bihar Flood tragedy. - Under a novel scheme of Adoption of Girl Children designed by the SBI Ladies Club, over 15,300 poor and destitute girl children were adopted by various branches throughout the country to meet their education expenses. The Club members also personally mentor the children adopted. - It was a matter of pride that during the current year, the Bank was awarded Readers Digest Pegasus Corporate Social Responsibility Award 2007 in recognition of its contribution towards Rural Community Development. - From the Research & Development Fund, the Bank extended 100000 Pound Sterling towards the functioning of an India Observatory and I.G.Patel Chair at the Asia Research Centre of London School of Economics, in participation with RBI. - The Bank also approved setting up of a special cell named SBI Cell for Public Leadership in the prestigious Indian School of Business, Hyderabad which is currently ranked 15th among Global B Schools. The Cell proposes to undertake research in the area of Leadership in Public Sector with special reference to PSUs functioning in India. The proposed project will not only add to the prestige of the Bank but also set the standards for holistic leadership and effective change for public sector organizations. Miscellaneous O Corporate Communication & Change P Organisational Planning Q Right to Information Act (RTI Act 2005) R Human Resources S Business Process Re-engineering

T Official Language Department U Banking Operations Department O. CORPORATE COMMUNICATION & CHANGE

- During the current year, the Mass Internal Communication Programme named Parivartan - which was rolled out to over 130,000 officers and clerks last year - was modified, specially re-designed, and rolled out across the Bank as Parivartan II to cover 44,000 subordinate staff including drivers, guards, liftmen, messengers, etc. spreading the message of change, inclusiveness and empowerment. Over 1000 workshops were held in a record 50 days. - Meanwhile, Parivartan-I was simultaneously rolled out in all Associate Banks after modifying the design to make it Associate Bank specific. In all, over 53000 employees from clerks to senior management were covered in all Associate Banks in about 1400 two day workshops. Special two day workshops were held for the Top Management as well as the Top Union and Association leaders of all Associate Banks creating an awareness of their respective banks vis-a-vis the market and also sensitizing them on the need for change. - A series of non business HR initiatives were introduced and monitored in the Bank to bring about an open, inclusive work culture such as introduction of rolling shields, recognition dinners, Best Employee of the Month, Best RM, monetary incentives, inclusive Town Hall meetings with Union and Association leaders, Open House hours for all staff with Circle Management Committee (CMC), etc. - As a part of the Transformation process, special five day intense brain storming Conclaves were held for the newly promoted Deputy General Managers of the Bank. - Internal communication in the Bank was enhanced by sharing Corporate Video Clips with all Circles and sharing of best practices among all Circles. With a view to change work culture, placard campaigns and video campaigns through strategically placed plasma TVs were run. - An ambitious new Parivartan programme titled Citizen SBI, envisaging deep rooted, multilevel attitudinal change and transformation in the Organization, consisting of waves of HR interventions to be rolled out over the next two years was also initiated during the year. P. ORGANISATIONAL PLANNING

Organisational Changes: The under noted important organisational changes were made during the year:- Upgradation of the post of DMD & GE (A&S) to MD & GE (Associates and Subsidiaries).

- During the year, with a view to bringing about greater speed and efficiency and improving customer service, the organisational structure has been delayered by dismantling of Modules. A few posts in keeping with new structure have been created. Q. RIGHT TO INFORMATION ACT 2005 (RTI ACT 2005) Suitable structure has been put in place at Branches/Administrative Offices/Regional Business Offices/Local Head Offices for handling requests and appeals under RTI Act 2005. Further, an exclusive RTI Department has been created in Corporate Centre to handle and co-ordinate various issues under the Act. For convenience of the public, the Bank has also created an RTI link in its website. R. HUMAN RESOURCES

Learning & Development - Several key initiatives have been taken by the Bank to enthuse and motivate the employees to perform better so as to achieve the Banks growth plans. - A Leadership pipeline initiative has been taken on hand with the objective of grooming the officials from the level of Scale-IV upto GM for future leadership positions. Services of reputed institutions like ISB/Duke University/IIMs have been engaged for the purpose. - As the accreditation process is mandatory for the recovery agents, the Bank has gone in for accreditation of one of the training institutions for training of debt recovery agents to facilitate the future appointments of recovery agents. Personnel Management - The Performance Linked Incentive Scheme of the Bank has been broad-based with an aim to foster team spirit amongst the employees and to motivate them to excel in customer service. This also helped the Bank in exploiting the new emerging business opportunities to achieve the Banks growth plans. - The Bank has gone for contract employment, on cost to company basis, of specialists like Chartered Accountants, Law Officers, Statisticians, Economists, Customer Relation Executives, Credit Analysts etc. to take care of Banks growing needs to face competition. - The Bank revised the Family Pension Scheme for the family pensioners of the Bank retrospectively from the 1st May 2005. - The pension fund has been separated from the Banks liability after obtaining necessary approval from the Board of Trustees. The fund will be managed by the Treasury Dept. of SBI for better returns. HRMS Project

- For leveraging Technology in employee management area, the Bank has implemented automation of its HR process through SAP-ERP- HRMS software. A centralized database of all employees across SBI is now available. - Salary processing for 2.05 lakh employees across SBI and pension processing of approximately 1 lakh SBI/IBI pensioners have been centralized. - Besides the above, HRMS will make available a variety of services like online request submission and viewing of data etc. to all the employees of the Bank on an online real time basis. This will increase efficiency in HR operations and help the management in making employee related decisions faster. Recruitment - Massive recruitment exercises were undertaken during the year by recruiting 30231 clerical staff and 3472 Officers, out of which 25735 clerical staff and 3286 Officers had already joined. - This recruitment drive, which is the largest recruitment exercise undertaken in the banking sector, was made to augment the staff strength in tandem with the Banks branch expansion drive. This will not only help in reducing the age profile of staff but will also provide an opportunity for greater mobility and marketing thrust across the Bank to achieve its growth plans. Industrial Relations - Excellence in relationship with the members of both the Staff and Officers Federations was achieved by sorting out various industrial relations issues through their consistent support and healthy dialogue/discussions during the year. - Enhancement in limits under various staff loan schemes and other initiatives have been taken up during the year, which, besides providing better facilities / incentives to the employees, helped in creating better industrial relations environment in the Bank. Staff Strength The Bank had a total strength of 205896 as on the 31st March 2009. Of this, 31.42% were officers; 47.10% were clerks and the remaining 21.48% were sub-ordinate staff. Implementation of Persons With Disabilities (PWD) Act, 1995 Our Bank provides reservation to Persons with Disabilities (PWDs) as per the guidelines of the Government of India and Section 33 of the PWD Act, 1995. The total number of Persons with Disabilities, employed as on 31.03.2009, were 1767 (details given as under). Table : 12

Category

Total

No. of Persons with Disabilities 351 1168 248 1767

Officers Clerical Sub-staff TOTAL

64685 96974 44237 205896

Representation of Scheduled Castes and Scheduled Tribes - As on 31st March 2009, 19.20% of the Banks total staff strength belonged to Scheduled Castes and 6.52% belonged to Scheduled Tribes. - In order to discuss issues relating to Reservation Policy and effectively redress the grievances of SC/ST employees, Liaison Officers have been designated at all the Local Head Offices of the Bank as also at the Corporate Centre in Mumbai. - Senior officials of the Bank hold regular meetings at periodic intervals with the representatives of the National Federation of State Bank of India SC/ ST Employees at Corporate Centre level as also with the representatives of Circle SC/ST Welfare Associations at the Local Head Office and Administrative Office levels where issues pertaining to implementation of Reservation Policy and other points are discussed. This has ensured redressal of grievances of these communities to a large extent. - The Bank has been conducting workshops for SCs/STs/OBCs to impart up-to-date knowledge/latest operatives about the Reservation Policy and related areas to the Liaison officers for SCs/STs, in-charge of SC/ST cells at LHOs, and the representatives of SC/ST Welfare Associations. - Pre-recruitment and pre-promotion training programmes are being conducted to enable SC/ST candidates to achieve the prescribed standards to effectively compete with other candidates. S. BUSINESS PROCESS RE-ENGINEERING (BPR)

Bank has redesigned the business processes to leverage the Core Banking platform to improve performance in key business areas and quality of customer service. The BPR Project undertaken by the Bank is working to transform it into a world class institution by proactively reaching out to acquire new customers, building deep and lasting relationships with existing customers and providing all customers with the best quality of service across multiple channels. Various BPR initiatives undertaken are detailed below: - Centralised Processing Centres for Retail loans, Small & Medium enterprise loans, and Trade Finance were set up, wherein the end to end processes have been taken over from branches.

- Relationship Managers have been positioned at strategic centres to extend personalized service to mass affluent and HNI clients, and also for Medium Enterprises clients. - Dedicated Sales Teams like Home Loans Sales Team and Multi Product Sales Team have been set-up to target niche markets and to up-sell and cross-sell various products. - Assured Standard Turn Around Times for various sanction processes have been fixed for Asset CPCs. - Quality of Assets and Documentation has improved. - All branches in trade finance intensive centres have been made capable to handle non-fund based business like LCs/BGs and Bills with speed and ease. - Capability has been provided to branches for speedy opening of new accounts and issue of personalised cheque books. - Clearing CPCs have been established to centralise clearing related activities and free up branches to focus on customer service. - Pensions are being paid to pensioners through Centralised Pension Processing Centres accurately and in time. - Document Archival Centres have been designed to free up valuable space in branches. - Inward Remittance Cell has been opened to handle all retail remittances received through SWIFT at a single point. - For increasing speed and efficiency and to improve customer service, the organizational structure has been delayered. - A 24x7 contact centre has been established with toll-free number for providing information on products and services as well as account and balance queries to the customers. This service is being extended to NRIs in 17 countries shortly. During the year, top 113 business centres of the country have been fully covered by the above BPR initiatives which have stabilised very well and have enabled branches to serve customers better, with speed and accuracy. All these initiatives have helped the Bank in creating a new operating architecture capable of meeting global competition. T. OFFICIAL LANGUAGE DEPARTMENT

The Bank complied with the statutory requirements relating to the Official Language policy and made several efforts to deliver its products and services to the masses in Hindi and other Indian

languages. These include installation of bilingual software in its 11448 Core Banking branches during the year which enabled customers to get their pass books, statements of account and other reports in Hindi. In addition to this, the number of hits on ATMs in Hindi reached 46 lakhs and in other Indian languages, 39 lakhs per month as a result of efforts made by the Bank to provide its services in Hindi and other Indian languages to its customers. U. BANKING OPERATIONS DEPARTMENT

- The Bank has put in place, a Board approved revised policy on Know Your Customer (KYC)/ Anti Money Laundering (AML)/Combating the Financing of Terrorism (CFT) measures in line with the guidelines issued by Reserve Bank of India on the subject. - Monitoring of Transactions is done with a view to submit the required reports to Financial Intelligence Unit-India mandated by rules of Prevention of Money Laundering Act, 2002. - With a view to implementing and supporting monitoring of transactions, the Bank has acquired appropriate software which is processing all transactions handled by all domestic branches of the Bank, on a day to day basis and monthly Cash Transaction Reports (CTRs) are being generated along with Suspicious Transaction Report (STR) alerts daily in offline mode, for analysis by the dedicated KYC/AML Cell. - Training on KYC/AML is being imparted on an ongoing basis in the Bank. In addition to exclusive KYC/AML programmes, all training programmes/ seminars/workshops have a KYC/AML session included in the programme. Responsibility Statement The Board of Directors hereby states : i. that in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; ii. that they have selected such accounting policies and applied them consistently and made judgements and estimates as are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank as on the 31st March 2009, and of the profit and loss of the Bank for the year ended on that date; iii. that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Banking Regulation Act, 1949 and State Bank of India Act, 1955 for safeguarding the assets of the Bank and preventing and detecting frauds and other irregularities; and iv. that they have prepared the annual accounts on a going concern basis.

Acknowledgement During the year, Shri R. Sridharan was appointed as Managing Director with effect from the 5th December 2008, in place of Shri T.S. Bhattacharya, who retired on the 31st January 2008. Shri Suman Kumar Bery and Shri Ashok Jhunjhunwala, Directors, resigned from the Board and were re-elected under Section 19(c) of the SBI Act., by the Shareholders along with Shri Dileep C. Choksi and Shri S. Venkatachalam for a period of 3 years with effect from the 24th June 2008. Dr. Rajiv Kumar was nominated to the Central Board with effect from 8th September 2008 by the Government of India. Shri D. Sundaram was elected by the Shareholders under Section 19(c) with effect from the 13th January 2009, in place of Shri Suman Kumar Bery, who resigned from the Central Board on the 18th September 2008, for the residual period upto the 23rd June 2011. Consequent to his superannuation on 30th April 2009, Shri Arun Ramanathan, GOI Nominee Director [under Section 19(e)], ceased to be a Director on the Banks Board. The Directors place on record their appreciation of the contribution made by Shri Arun Ramanathan and Shri Suman Kumar Bery to the deliberations of the Board. For and on behalf of the Central Board of Directors O.P. Bhatt Chairman

Date : 9th May, 2009

Director Report
Mar2007 Mar 2008 Mar2009

Economic Backdrop and Banking Environment

After growing at 5.0% in 2006 and 4.9% in 2007, IMF estimates global GDP growth to decelerate to 3.7% in 2008 in the wake of the current financial crisis. The financial market turbulence in developed economies following the US sub-prime mortgage crisis has reduced financial leverage, lowered credit availability and negative wealth effects have emerged as risks to consumption and growth in advanced economies, especially in the US. Continuing inflationary pressures from food and commodity prices as well as high and volatile crude oil prices are other risks being faced by the global economy. India continued to be one of the fastest growing economies of the world. During 2007-08, the Indian economy grew at a robust pace for the

fifth consecutive year. Real GDP growth, estimated at 8.7% in 2007-08, is in tune with the average annual GDP growth of 8.7% in the five year period 2003-04 to 2007-08. Agriculture and allied activities are estimated to grow by 2.6% in 2007-08, which is in line with the average growth of 2.6% per annum during 2000- 01 to 2007-08. Foodgrains production touched a record high in FY08, with total foodgrains production placed at 227.3 million tonnes, surpassing the target of 221.5 million tonnes and recording an increase of 4.6% over the previous year. Industrial growth at 8.6% during 2007-08 has moderated somewhat against 10.6% in the previous year. The services sector maintained its double-digit growth at 10.6% during 2007-08, higher than the long term average of 8.9% (2000-01 to 2007-08). Within services, transport and communications and financial services recorded double-digit growth for the last two years and are expected to maintain the growth momentum. Trade and hotels showed higher growth of 12.1% in 2007-08 against 11.8% growth in 2006-07. Another positive feature underpinning growth is the sharp rise in the rate of savings and investment in recent years, which rose to 34.8% and 35.9% respectively in 2006-07. Towards the close of the fiscal year, higher inflation rate was noticed due to rise in global prices of food, metals and crude oil. Inflation based on WPI declined from 6.4% at the beginning of the fiscal year to a low of 3.1% by mid-October 2007, partly reflecting moderation in the prices of some primary food articles and manufactured products. After hovering around 3% during November 2007, inflation began to edge up from early December 2007 to touch 7.4% by 29 March 2008, mainly reflecting hardening in prices of primary articles such as fruits and vegetables, oilseeds, raw cotton and iron ore, as well as fuel and manufactured products such as edible oil/oil cakes and basic metals, partly due to international commodity price pressures. However, fiscal and monetary measures are being taken to contain inflation and maintain high growth. Despite Rupee appreciation, exports continued to show a healthy growth, rising by 23% in dollar terms during 2007-08 against 22.6% in the previous year. Overall exports growth was driven by petroleum and crude products, gems and jewellery, iron ore, non-basmati rice, cotton, transport equipment, etc. While Indias exports to USA, its single largest trading partner, showed deceleration, exports to UAE and China remained robust. In the same period, imports increased by 27.0% against 24.5%, mainly due to higher oil imports; non-oil imports were led by capital goods, chemicals and related products, edible oils, gold, silver and pearls, precious and semi- precious stones. Due to higher growth in imports than exports, the trade deficit widened by 35.5% to USS 80.4 bn during 2007-08 from US$ 59.3 bn in the previous year. The overall stance of RBIs monetary and credit policy during the year was to ensure price stability and financial system stability along with continuation of the growth momentum, emphasis on credit quality and credit delivery including financial inclusion. During 2007-08, the Bank Rate, Repo and Reverse Repo rates were kept unchanged. To manage the liquidity in the economy, RBI raised the Cash Reserve Ratio four times: in April, August and November 2007 from 6% to 7.50%. In line with

liquidity tightening, PLRs and deposit rates of rnajor banks were hiked during the year. While lending rates rose to 12.25-12.75% from 12.2512.50%, deposit rates (for more than one year maturity) rose to 8.25-9.0% from 7.5-9.0% in the previous financial year. However, in the month of February 2008, to keep up the growth momentum in the economy, some banks announced cuts in their PLR and interest rate on housing loans below Rs.20 lakh. The tight monetary policy followed by RBI to control inflation and money supply had a moderating impact on credit growth, which increased by 21.6% in 2007-08 against 28.1% in 2006-07. Deposit growth also moderated to 22.2% in 2007-08 from 23.8% in 2006-07. For the current year, despite slowdown in the major economies of the world, the Indian economy will continue to grow at 8-8.5% driven by investment. Due to a number of fiscal and monetary measures taken by the Government and RBI to put a check on prices, inflation is expected to come down to 5-5.5% by March 2009. Profit The Operating Profit of the Bank for 2007-08 stood at Rs. 13,107.55 crore as compared to Rs.9,999.94 crore in 2006-07, registering a growth of 31.08%. The Bank has posted a Net Profit of Rs 6729.12 crore for 2007-08 as compared to Rs.4,541.31 crore in 2006-07, registering a growth of 48.18%. While Net Interest Income recorded a growth of 13.04% and Other Income increased by 28.52%. Operating Expenses increased by 6.64%. Dividend The Bank has increased dividend to 215%. Net Interest Income The Net Interest Income of the Bank registered a growth of 13.04% from Rs.15,058.20 crore in 2006-07 to Rs. 17,021.23 crore in 2007-08. This was due to growth in interest income on advances. The Net Interest Margin was at a healthy 3.07% in 2007-08. The gross interest income from global operations rose from Rs. 37,242.33 crore to Rs. 48,950.31 crore during the year. This was mainly due to higher interest income on advances. Interest income on advances in India registered an increase from Rs.22,872.66 crore in 2006-07 to Rs 32,162.68 crore in 2007-08 due to higher volumes. Also average yield on domestic advances increased from 8.67% in 2006-07 to 9.90% in 2007-08. Interest income on advances at foreign offices also increased due to higher volumes. Income from resources deployed in Treasury operations in India increased by 11.03% despite decline in average yield mainly due to higher average resources deployed. The average yield, which was 6.99%

in 2006-07, declined to 6.92% in 2007-08. Total interest expenses of global operations increased from Rs.22,184.14 crore in 2006-07 to Rs. 31,929.08 crore in 2007-08. Interest expenses on deposits in India during 2007-08 recorded an increase of 45.56% compared to the previous year, whereas the average level of deposits in India grew by 22.09%. This resulted in increase in the average cost of deposits from 4.69% in 2006-07 to 5.59% in 2007-08. Non-Interest Income Non-interest income stood at Rs.8,694.93 crore as against Rs.6,725.26 crore in 2006-07. During the year, the Bank received an income of Rs. 197.41 crore (Rs.598.12 crore in the previous year) by way of dividends from Associate Banks/ subsidiaries and joint ventures in India and abroad. Operating Expenses There was marginal decline of 1.84% in the Staff Cost from Rs.7,932.58 crore in 2006-07 to Rs 7,785.87 crore in 2007-08. Staff Cost included an amount of Rs.575.00 crore towards Wage arrears. Other Operating Expenses have also registered an increase of 23.94% mainly due to increase in expenses on rent, taxes and lighting, insurance, postage, telegrams and telephones, repair and maintenance, audit fees and miscellaneous expenditure. Operating Expenses, comprising both staff cost and other operating expenses, have registered an increase of 6.64%. Provisions and Contingencies Major amounts of provisions made in 2007-08 were as under: - Rs. 88.68 crore (writeback) towards provision for depreciation on investments, excluding amortization of premium on Held to Maturity category (as against Rs.379.23 crore in 2006-07). - Rs.3,823.50 crore towards Provision for Tax, excluding deferred tax credit of Rs. 219.43 crore (as against Rs. 3,014.61 crore in 2006-07 excluding deferred tax credit of Rs. 19.83 crore). - Rs. 105.00 crore towards Fringe Benefit Tax (as against 88.50 crore in 2006-07). - Rs. 2,000.94 crore (net of write-back) for non- performing assets (as against Rs. 1,429.50 crore in 2006-07). - Rs. 566.97 crore towards Standard Assets (as against Rs. 589.19 crore in 2006-07). Including the current years provision, the total provision held on Standard Assets amounts to Rs. 2,069.38 crore.

Reserves and Surplus - An amount of Rs.4,839.07 crore (as against Rs. 3,358.11 crore in 2006-07) was transferred to Statutory Reserves. - An amount of Rs. 304.35 crore (as against Rs.321.15 crore in 2006-07) was transferred to Other Reserves. - An amount of Rs. 62.18 crore was transferred to Investment Reserves. (Nil in 2006-07) - An amount of Rs. 4,075.64 crore was withdrawn from Other Reserves towards transitional liability for complying with Accounting Standard 15 (Revised) - "Employee Benefits" Assets The total assets of the Bank increased by 27.35% from Rs.5,66,565.24 crore at the end of March 2007 to Rs. 7,21,526.31 crore as at end March 2008. During the period, the loan portfolio increased by 23.55% from Rs.3,37,336.49 crore to Rs. 416,768.19 crore. Investments increased by 27.06% from Rs.1,49,148.88 crore to Rs 1,89,501.27 crore. A major portion of the investment was in the domestic market in government and other approved securities. The Banks market shares in domestic advances was 15.28% as of March 2008. Liabilities The Banks aggregate liabilities (excluding capital and reserves) rose by 25.64% from Rs. 5,35,266.68 Table : 1 Key Performance Indicators Indicators 2007-08 Return on Average Assets (%) Return on Equity (%) 1.01 17.82 SBI 2006-07 0.84 14.24 SBI Group 2007-08 2006-07 0.99 17.93 0.87 15.08

Expenses to Income (%) Operating Expenses to Total Net Income) 49.16 Basic Earnings Per Share (Rs.) 126.62 Diluted Earnings Per Share (Rs.) 126.50 Capital Adequacy Ratio (%) (Basel I) Tier I Tier II Net NPAs to Net Advances

54.18 86.10 86.10

56.64 168.61 168.45

58.15 120.66 120.66

13.47 9.14 4.33 1.78

12.34 8.01 4.33 1.56

13.49 8.95 4.54 1.43

12.36 8.05 4.31 1.31

crore on 31st March 2007 to Rs. 6,72,493.65 crore st on 31 March 2008. The increase in liabilities was mainly contributed by increase in deposits and borrowings. The Global deposits stood at Rs.5,37,403.94 crore as on 31st March 2008, representing an increase of 23.39 % over the level on 31st March 2007. The Banks market share in deposits was 15.44% as of March 2008. Performance Highlights Core Operations A B C D E F G H I J A. Global Markets Wholesale Banking Group Mid Corporate Group National Banking Group Rural Business Group Corporate Strategy & New Business International Banking Group Associates & Subsidiaries Asset Quality Information Technology GLOBAL MARKETS

A.1 In keeping with its integrated approach to all treasury activities in various markets in different time zones i.e., Forex, Interest Rates, Bullion, Equity and Alternative Assets, the Bank redesignated its Treasury Operations into "Global Markets" A new state-of-the-art Dealing Room with online connectivity to all active forex intensive Branches across the country was inaugurated at Corporate Centre in Mumbai with facilities matching the best in the industry. This facility ensures continuous availability of market determined forex rates to our customers. The year witnessed volatility in 10-year base yields which moved upwards to 8.38% during the year and finally closed at 7.94% as on 31st March 2008. Marginal slow down in credit growth led to increase in overall Domestic investment portfolio by Rs.36311.76 crore over 31st March 2007. Liquidity position remained comfortable during most part of the year which helped the Bank to bring down high cost bulk deposits. In the backdrop of higher interest rate regime, Bond Market conditions were less conducive to trading opportunities. The Bank diversified its trading activity to Equity and Mutual Fund portfolio to encash the opportunities available through the buoyant capital markets during the year. A.2 While trading profits from Fixed Income portfolio came under pressure because of higher interest rate regime, Global Markets profits were contributed primarily by trading in equity and mutual funds. Trading profits from equity and mutual funds portfolio has increased by 321%. Interest income from investment portfolio increased in absolute terms due to the increase in the overall Fixed Income portfolio from Rs. 1,36,927.48 crore to Rs.1,73,239.24 crore. RBFs decision to increase CRR rate from 6.00% to 7.50% in four stages during the year and withdrawal of interest payable on CRR balances impacted overall income from Treasury operations. Average yield on treasury

operations net of income on CRR balances increased from 6.45% to 7.35%. A. 3 The Bank contained the interest rate risk of the Fixed Income Portfolio through a combination of measures including reduction in the duration of the portfolio and shifting of securities with a book value of Rs.9,662 crore from Available for Sale portfolio to Held to Maturity portfolio. A.4 Trading volumes in forex operations increased substantially from Rs.7,67,889 crore to Rs.ll,74,029 crore thereby increasing the exchange income from these operations by 59 % Y-O-Y to Rs.321.64 crore from Rs.202.20 crore. B.1 The Banks Wholesale Banking Group consists of three Strategic Business Units viz., Corporate Accounts Group, Project Finance & Leasing SBU and Stressed Assets Management Group. The Bank has recently launched the "Wholesale Banking Initiative" to harness the SBI Group synergy for the benefit of the corporate customers by providing them with a One Stop Shop facility for all their banking needs. The initiatives aim at providing comprehensive, customised and specialized banking solutions to the corporates thereby enhancing Banks share of business with them. Table : 2 WBG - Highlights Amount in Rs. crore) As on As on Growth 31.03.2007 31.03.2008 6669 37989 9823 46042

Particulars

% 47 21

Deposits Advances B.2 Corporate Accounts Group (CAG)

The loan portfolio of CAG constituted about 23% of the Banks Commercial and Institutional non-food credit and 12% of the total domestic credit portfolio as on 31.03.2008. Initiatives taken:- With focused initiatives on fee-based services, fee-based income registered an impressive 62% growth during the year. - CAG continued on the growth trajectory in forex business registering a YOY growth of 79% and contributed 49% of the total domestic forex turnover of the Bank. - SBI FAST, the Cash Management Product (CMP), in addition to offering collections and payments services, also facilitates the corporates liquidity management by offering various value added products. These include auto sweep facility, customized MIS and reconciliation support, automated bulk NEFT, ECS and RTGS payments with reconciliation support etc. It has started processing of centralized payments in bulk (Income

Tax Refund Orders) and has put in place a call centre for this purpose. CMP is well poised to enter new areas like customized e-payments and e-collections with Straight Through Processing. B.3. Project Finance & Leasing SBU The Project finance SBU focuses on funding core projects like power, telecom, roads, ports, airports, SEZ and others. It also handles non-infrastructure projects with certain ceilings on minimum project costs. During the year, the focus was on syndication and underwriting of project loans. Project Finance- SBU took up projects involving total debt of Rs. 92,558 crore and achieved sanctions of Rs. 20,195 crore, while it syndicated Rs. 54,951 crore with other banks during the year 07-08. In view of the unfavourable climate and availability of alternative funding options at cheaper cost, the Bank decided not to write leases during the current year also. As at the end of March 2008, the disbursements and capitalization were "NIL" and profit amounted to Rs.8.81 crore. B.4. Stressed Assets Management Group (SAMG) The performance of SAMG during the year 2007-08 is given in Table No. 3 below. Table : 3 SAMG - Highlights (Amount in Rs. crore) 1 2 3 4 5 Cash Recovery in NPA Upgradation to Standard Assets Write Off Gross reduction in NPAs (1+2+3) Recovery in written off accounts 337 53 368 758 336

Stressed Assets Management Group (SAMG) was initially set up to take over all NPAs with outstanding of Rs. 5 crore and above for focused efforts in resolution of NPAs. The coverage has now been extended to Rs.1.00 crore and above across the country. 92 Stressed Assets Resolution Centres (SARCs) have been opened across the country for more focused resolution of NPAs with outstandings upto Rs. 1 crore in SME and Personal segments. Out of these, 44 independent SARCs are being brought under SAMG in a phased manner to give further fillip to the Banks recovery efforts. In this direction, 9 SARCs have already been brought under the control of SAMG during the year. The performance of SARCs is encouraging and we expect to make substantial progress in the Management of NPAs. C.1.The Mid-Corporate Group (MCG) has been immensely successful in attracting the business of Mid-Corporate units through relationship management and quicker credit processing. To give added focus to this segment during the year, a Dy. Managing Director & Group Executive

(Mid- Corporates) was posted to independently head the operations of the Mid-Corporate Group. Table : 4 MCG - Highlights (Amount in Rs. crore) As on growth 31.03.2008 %

Particulars

As on 31.03.2007

Advances (incl. food) Advances (excl. food) Offsite advances Total advances (excl. food) Deposits

68,446 60,138 27,445 87,583 10,011

76,338 73,874 35,128 1,09,002 11,648

11.5 23 28 24 16

- The Group handles about 30% of the total non- food advances of the Bank and operates through 8 Regional Offices situated across the country. It is estimated that 38% of the Mid-Corporate universe in the country is covered by the Bank. The coverage is expected to be extended to more centres during the current year. - 695 new mid corporate clients were added to the MCG during the year. - The total credit portfolio (fund based) of the Group stood at Rs 1,09,002 crore as on 31st March, 2008. This is more than the aggregate business handled by many of the top banks in the country. - The average yield on advances went up from 8.76% in March 2007 to 9.73% in March 2008. Initiatives Taken - Syndication Desks have been created at two Regional Offices, Mumbai and Chennai, to tap the opportunities available for syndicating working capital facilities. - Project Finance Cells have been set up in Chennai and New Delhi Regions. - Substantial business in the form of IPOs/ Private Equity/Debt Syndication/Foreign Currency Loans/Overseas Acquisitions/External Commercial Borrowings has been arranged for MCG clients through SBICAPS/Foreign Offices. New Products - A new product, Construction Equipment Loan, to cater to Construction Companies has been launched.

C.2 Gold Banking A separate Department, Precious Metals Department, has been created at the Banks Corporate Centre for the purpose of boosting the Gold Banking business. The Bank launched retail sale of gold coins which is now available at 250 branches across the country. The scheme would be extended to cover 1000 branches in a phased manner during the current year. While 52 branches are authorized for metal loans and bulk sale of gold to jewellery manufacturers the number is being increased to 70. Gold Deposit Scheme has been revived for institutions like temples, trusts, etc. The Banks National Banking Group (NBG) consists of three Business Groups viz., Personal Banking, Small & Medium Enterprise (SME), and Government Banking. During the year Bank achieved a milestone by opening its 10,000th Branch at Puduvayal, Sivaganga District in Tamil Nadu, which was inaugurated by Hon. Finance Minister Shri P. Chidambaram. During the year, as many as 965 branches were opened, and at the end of March 2008 the Bank has a vast network of 10,186 branches to reach out to customers, even in the remotest parts of the country. Table : 5 NBG - Highlights (Amount in Rs. crore) Particulars As on 31.03.2007 As on 31.03.2008 % growth

Deposits (excluding inter bank) Advances (including food but excluding inter bank) Advances (excluding food)

3,67,524

4,54,883

23.77

1,98,701 1,95,531

2,44,617 2,43,068

23.11 24.31

D.1 Personal Banking Business Unit During the year, Personal Banking domestic deposits have grown from Rs.1,90,870 crore to Rs.2,36,645 crore, showing a growth of Rs.45775 crore (23.98 %) as against Rs.27,684 crore during the previous year. During the year, Personal Banking Advances have grown from Rs. 73,590 crore to Rs. 88,549 crore, showing a growth of Rs.14,959 crore (20.33%) as against Rs.12,530 crore during the previous year.

SBI emerged as a leader this year in terms of Individual Home Loan disbursements among SCBs & HFCs as on 31.12.2007. Bank was voted, for the second year in a row, as The Most Preferred Housing Loan Provider in CNBC AWAAZ Consumer Awards for 2007 along with the Most Preferred Bank Award in a survey conducted by CNBC TV 18 in association with AG Nielsen & Company covering more than 10,000 respondents across 21 cities and 13 small towns. New Products introduced during the year were SBI Reverse Mortgage Loan and SBI Home Plus in the area of Home Loans. Repayment period for Home Loans has now been increased upto 25 years to facilitate lower repayment obligations and applications are now accepted online through Banks website. The Bank had opened 78.65 lac new Savings Bank Accounts during the year as against 62.40 lac previous year. The Auto Loan portfolio has shown a healthy growth of Rs.1,645 crore in absolute terms, which is 29.89 % higher than last years growth. SBI is market leader in Education Loans and has a market share of 24% amongst PSU Banks. The growth in Education Loans during the year is Rs.1,112 crore which is 33.67% higher over March 2007. SBI Scholar Loan is extended to the students joining 52 elite institutions like IIMs/ IITs/AIIMS/ Management Institutes etc. at concessional interest rates and terms. Web based registration of applications for Education Loans was launched by Honble Finance Minister on 14th November 2007. In principle sanctions are given online for SBI Scholar Loans. D.2 SME Business Unit (SMEBU) SME Business Unit is implementing multiple strategies to maintain Banks premier position in SME financing. Advances to SME sector increased to Rs. 76,329 crore as on 31.03.2008 from Rs.58,674 crore of the previous year registering a Y-O-Y growth of 30%. Deposits under SME sector increased to Rs.1,65,168 crore as at the end of March 2008 from Rs.1,23,054 crore of previous year, recording a growth of 34% during the year. Initiatives taken - Customer Relationship Executives have been recruited from the Market and placed in potential SME branches for serving effectively Medium Enterprises. - Traders Bonanza campaign has been conducted and loans sanctioned to more than 60,000 traders.

D.3

Government Business Unit (GBU)

The following initiatives were taken in Government Business. a) Electronic Accounting System in Excise and Service Tax (EASIEST) for indirect taxes was extended to the entire country. b) E-Payment of Central Excise, Service Tax, Customs Duty, Rail Freight introduced. c) Centralised Pension Processing Centres (CPPC) were established at all LHOs covering 5814 branches (18.80 lac accounts). Remaining branches will be covered in a phased manner. d) Cyber Treasury for online collection of State Government taxes has been extended to the State of Madhya Pradesh, Chhatisgarh, Rajastan and Gujarat for collection of VAT/CST and the solution is being offered to other State Governments shortly.

During the year 2007-08, Rural Business Group of the Bank comprising rural and semi urban branches, accounting for about 70% of the branch network of the Bank grew by Rs.29,807 crore in deposit representing a growth of 22.8% and Rs.18,734 crore in advances representing a growth of 23.4%. This was against a growth of Rs.16,367 crore in deposit and Rs.17,684 crore in the advances in the previous year. Market share of Rural and Semi Urban branches during the year upto December 2007 has improved by 0.92% in deposit and 0.98% in advances. Banks share in current year growth upto December 2007 was 32.04% in deposits and 31.97% in advances. Table : 6 Agriculture - Highlights (Amount in Rs.crore) As on Growth 31.03.08 % 8058 42806 25 26

Particulars

As on 31.03.07 6,460 33,857

Deposits Advances

As against the benchmark of 18% set by RBI, the Bank for the first time crossed the benchmark and recorded its Agricultural Advances at 18.37% of Adjusted Net Bank Credit (ANBC) as at March 2008. The following important themes have been adopted by the Bank to foster its Agricultural business: "Growth with Quality" Thrust is laid on contract farming and value chain financing. Special scoring model has been introduced for financing tractors which aims to improve the quality of the advance.

The Bank, in order to diversify its Agricultural business portfolio, prepared three year National Business Plan covering Horticulture, Dairy, Fisheries, Food processing and Biotechnology. "Bonding with farmers" As a sustainable business strategy, the Bank is focussing on Bonding with Farmers. Under the scheme of SBI Ka Apna Gaon, one of the broad business themes is adoption of villages for overall development and economic upliftment and so far 237 villages have been adopted. 2400 Farmers Clubs were promoted and as many as 30,000 Farmers meets (Credit and Recovery Camps) were organized by the Bank during the year. Micro Finance and Financial Inclusion A major initiative taken in the area of financial inclusion has been the introduction of SBI Tiny Smart Cards to the financially excluded. This, in simple terms can be defined as a Bank in a box. The Card is highly secured as it works on the bio-metric validation of the customer. More than two lacs SBI Tiny Smart Cards have been issued as at the end of March 2008. The Smart Card project together with the Business Correspondent model has been successfully piloted and rolled out nation-wide. The Bank has been able to cover more than 10 thousand unbanked villages, including far flung areas of North-Eastern, Eastern and Central parts of the country. SBI Tiny Cards are used for opening No Frills Accounts and providing basic banking services. These cards are also used to route government payments direct to beneficiaries in 6 Districts of Andhra Pradesh for example, payment of wages under National Rural Employment Guarantee Programme (NREGP) and Social Security Pension scheme (SSP). The scheme is being extended to other States as various other State Governments have approached the Bank for the purpose. Self Help Groups (SHGs) The Bank is the market leader in SHG-Bank Credit Linkage Programme since its inception. In the year 2003, Bank had set a challenging target of credit linking 1 million SHGs by March 2008 which has been achieved. Cumulatively, the Bank has credit linked 10,18,481 SHGs and disbursed loan to the extent of Rs.5077.72 crore so far. Bank has brought out unique products for SHGs, viz., SHG Credit Card / SHG Gold Card, Sahayog Niwas - a housing product for SHGs. Bank has also introduced a Scheme for financing NGOs / MFIs for on-lending to SHGs. We are the first bank to recruit officers from market exclusively for promoting micro finance. SBI has won awards for topping in SHG- Bank Credit Linkage in Orissa, Jharkhand, Maharashtra, Uttarakhand, Tamil Nadu and Uttar Pradesh. SBI has sponsored and financially supported NGO SAMANWITA in collaboration with Government of Orissa. The Rural Business Strategy The Rural Business strategy drawn up by the Bank envisaged setting up a multi-pronged sourcing force, coupled with back-end processing capacity by way of Rural Central Processing Centres. The front end marketing

force comprised, besides the branches, alternate channels like Officers Marketing & Recovery (OMR) and the Business Facilitators/ Business Correspondents. MRT Channel: The OMRs not only source high value Agriculture segment loans, but also all types of deposits, loans and cross-selling products across all the segments. The Bank has more than 3000 OMRs and is planning to recruit additional 3000 OMRs during 2008-09. Business Facilitators (BF)/ Business Correspondents (BC) Channel: Utilizing the liberalization permitted by RBI, the Bank has entered into various national level alliances with entities such as India Post, ITC Limited, Drishtee Foundation and Zero Microfinance And Savings Support Foundation. INDIA POST has been engaged as a Business Correspondent (BC). The BC alliance with India Post is currently functioning in 110 post offices in six states. The India Post alliance is being extended to other states also. Besides, BCs and BFs are also being engaged at the regional levels. The BC model has enabled the Bank to reach hitherto unbanked and under banked areas. Rural CPC To meet the requirement of processing of the increased business flowing from the alternate channels, 10 Rural Central Processing Centres (RCPCs) have been set up across the country, which is proposed to be scaled upto 100 RCPCs in the year 2008-09. E.2. Regional Rural Banks (RRBs) Post amalgamation Bank has got 16 RRBs with a network of 2,351 branches spread over 115 districts and 16 states in the Country. The aggregate deposits and advances of the sponsored RRBs stood at Rs.13,573 crore and Rs.7,856 crore respectively as on 31st March 2008. The profit have jumped from Rs.32.77 crore as on March 2007 to Rs.115.68 as on March 2008. During the year, a remittance product - Gramin Pay Order (GOP) was introduced for facilitating remittances from remote areas to increase fee income in RRBs. Post amalgamation, RRBs have broad based their product profile by introducing Debt Swap Scheme, Ware House Receipt Financing. E.3. CreditAssistance provided to Scheduled Castes and Scheduled Tribes The credit assistance provided by the Bank to SCs and STs stands at Rs.6,883 crore out of total priority sector advance of Rs.1,32,300 crore. Table No : 7 Recovery position of SC/ST borrowers (Scheme-wise) : Scheme Recovery %

Prime Ministers Rozgar Yojana (PMRY) Swarnajayanti Gram Swarozgar Yojana (SGSY) Swarnajayanti Shahari Rozgar Yojana (SJSRY) Scheme for Liberation & Rehabilitation of Scavengers (SLRS) Differential Rate of Interest (DRI) Prime Ministers New 15 Point Programme for the Welfare of Minorities.

31.85

35.57

36.25

29.53

65.82

All commercial banks have been advised to ensure smooth flow of bank credit to minority communities (Sikhs, Muslims, Christians, Zoroastrians and Buddhists).The Government of India directed the banks to prepare a road map laying down specific State-wise annual targets over the next 3 years to ensure that Priority Sector lending to Minority Communities is raised to 15% by the end of 2009- 10. The number of Minority concentration districts (MCDs) which were 44 in March 2007, has been enhanced to 121 in the financial year 2007-08. (our present lendings to Minority Communities in identified districts constitute 13.50% of the priority sector advances of these identified districts). During the financial year 2007-08, our Ban); has opened 256 new branches in the MCDs. Further, 140 centres have been identified for opening of new branches. Nodal officers have been designated far co-ordinating Minority cell related work at all our Local Head Offices. Our Lead District Managers have been advised to monitor the credit flow to Minorities at monthly intervals and take corrective steps wherever the performance is low. Our financial assistance to Minority Communities in the identified Minority concentration districts is furnished hereunder: Table No : 8 Credit Assistance to Minorities (Amount in Rs. crore) No.of Amount A/cs

Period

No of districts identified by GOI 2006 2007 2008 44 44 121

Mar. Mar. Mar.

5.93 7.94 9.88

lacs lacs lacs

1016 2106 3516

Our Local Head Offices have been advised to have special publicity campaigns for creating awareness of our schemes to Minorities. Village

level meetings are being conducted to create awareness of financial assistance to Minorities in all the service area villages of the bank apart from Visual and Print media. 28 Training Camps and Melas were arranged by our branches in MCDs wherein 1,87,153 members of minority communities participated. Information on assistance to Minorities has been put up on our Banks Website. We are now targeting two schemes- SBI Talent Awards Scheme and Adoption of a Girl Child Scheme, at our branches in MCDs. F. CORPORATK STRATEGY & NEW BUSINESSES In order to maintain our premier position in the financial services arena the Bank has institutionalized innovation and change. Against this backdrop, and in order to quickly identify and respond to emerging opportunities the Bank created the position of Dy Managing Director (Corporate Strategy & New Businesses) in the year 2006. During the last one and a half year, various new business initiatives have been undertaken by the Bank, as under: E.1. Pension Fund Business: State Bank of India has been appointed as a sponsor of Pension Fund Manager (PFM) by PFRDA to manage the pension funds of Central and State Govt. employees under New Pension System (NPS) of Govt. of India. SBI Pension Funds Pvt. Ltd. has been incorporated as a wholly owned subsidiary of State Bank of India to manage the pension funds under NPS. The Company has been allocated the largest share (55%) in the pension fund corpus. F.2. Financial Planning and Advisory Services (FP&AS): Financial Planning and Advisory Services initiative is focused on deepening the existing relationship of the Bank with mass affluent and high-end customers and help them in managing their assets through a mix of products/strategies. Our relationship managers will advise the customers to meet their needs of protection, invest in various classes of assets through investment planning, tax planning, retirement and real estate plans. Going forward, we plan to commence wealth management services by March 2009 and further introduce private banking by March 2012. F.3. Mobile Banking: The proliferation of mobiles has led to the emergence of a new channel for the delivery of basic banking services and small value e-commerce services. Considering the immense potential and the cost effectiveness of delivery, the Bank has decided to introduce mobile telephone based banking services which we plan to commence before the end of the first quarter of 2008-09. F.4. Private Equity: The Bank has identified private equity in different areas as a key new

business. The rapid expansion of Indian economy, especially in growth sectors like Technology, Pharma, Health Care, Realty and Infrastructure, has opened up large opportunities of equity funding which have continuously shown superior returns. The Bank is at an advanced stage of preparedness for setting up various equity funds. Regulatory approval processes and JV formation are under implementation and a few funds are expected to be floated by the end of first half of the financial year. F.5. Custodial Services: With increasing securities transactions originating from domestic and foreign investors, there is an excellent demand for providing full range of custodial services. Accordingly, the bank has decided to expand its present capabilities in the domestic custody and offer these services as a new business in collaboration with a leading global custodian. The process of forming the Joint Venture is at an advanced stage. In addition to Custody (local and foreign institutional) & Depository services the JV would provide other value added services like Fund administration and securities lending and borrowing services on a full- fledged Straight Through Processes (STP) and web enabled environment. F.6. Non- Life Insurance: While SBI Life is meeting a part of the requirements under Protection Services, the insurance offering bouquet will be complete with the inclusion of General Insurance products, greatly enhancing the customer value proposition at our vast branch network and enhancing the brand value of the Bank. With this end in view the Bank has decided to enter General Insurance Business through the joint venture route. The Bank aspires to be amongst the top 3 players in the General Insurance space within a period of 10 years. It is expected that the JV partner will be identified shortly and MOU/ Definitive Agreement(s) will be signed during the quarter ending June 08. After this process, Insurance Regulators (IRDA) and RBI will be approached for seeking regulatory clearances. We anticipate the start of the business by the year end. F.7. Merchant Acquisition Business: The increase in usage of cards of various kinds provides huge opportunities. We are in the process of entering merchant acquisition services through a Joint Venture subsidiary in order to bring in the best practices and services at par with international benchmarks. We expect this business to grow substantially over the next few years and achieve market leadership position. Operations of Foreign Offices As on 31.03.2008, the Bank had a network of 84 overseas offices spread over 32 countries covering all,, time zones. Net Profit from Banks overseas operations (including subsidiaries and joint ventures with more than 50% shareholding) registered a growth of 84% during the fiscal year mainly driven by significant growth of 48%

in Net Customer Credit. Resource Management The bank was able to manage growth despite tight liquidity position in the global markets due to issues arising out of the US sub-prime mortgage crisis. This was because the core focus area remained on primary deposit mobilisation which stood in good stead in this period of extreme volatility. Despite volatile and challenging global market conditions, the Bank successfully entered the Malaysian Ringgit denominated bond market. This represented first ever MYR bond issue by an Indian borrower in the Malaysian market. NRI Business NRI remittances business routed through Banks foreign offices during the year registered a growth of more than 160%. The online USD and GBP remittance products more than doubled in the year. SBI -Nepal Express Remit has been launched from select Indian branches for enabling speed remittances to Nepal. Instant Transfer remittance facility, launched in Mar 07, was extended to 51 foreign offices in 18 countries. Internet enabled Instant Transfer was launched from Nepal and Bahrain offices; this product will be extended to other countries shortly. Tie ups with two exchange companies in Oman and UAE in addition to the existing ten were operationalised to expand the Banks outreach in the Middle East and boost remittance business. A tie up with Arab National Bank for remittances from Saudi Arabia was entered into in 2007-08. Overseas Expansion SBI became the first Indian bank to receive approval from Monetary Authority of Singapore for Qualifying Full Bank licence, which enables a foreign bank to open up to 25 offices/ branches in Singapore. During the year 2007- 08, SBI received approval from local regulators to open one more branch each in New York, USA and Male. Besides, process of opening of a branch at Jeddah, Saudi Arabia was initiated in 2007-08. Domestic Operations Export Credit The Banks outstanding export credit stood at Rs.26,531 crore, thereby registering a growth of more than 21% over previous year. Project Export Finance State Bank of India is an active participant in financing project export activities involving bidding and execution of turnkey / civil construction contracts and export of engineering goods on deferred

payment basis, as also service exports. During the period April 2007 to March 2008, the Bank supported 31 project export proposals with contract value aggregating Rs.13,489 crore, in 13 countries. Banks aggregate exposure as at the end of March 2008 was Rs.993 crore. Merchant Banking The Bank further intensified its thrust in the area of syndicated foreign currency loans and participated in corporate syndicated loan deals amounting to USD 27,575 million during April 2007 to March 2008, besides extending several bilateral facilities aggregating US$ 933 million. Bank has participated to the extent of US $ 3,038 million in 31 Merger and Acquisition deals aggregating US $ 22,561 million in 2007-08 as against participation to the extent of US $ 1,073 million in 13 deals aggregating US $ 5,375 million during the previous year.

The Bank was ranked No. 1 in the Asia Pacific (excluding Japan and Australia) in the mandated arranger/book runner league table for syndicated loans by IFR Asia. Global Link Services Activities (GLS) GLS of the Bank facilitates export payments, other overseas collections and inward remittances, thereby improving the profitability of the Banks foreign exchange operations. During the fiscal year 2007-08, GLS, on behalf of domestic branches of the Bank, handled 153715 export bills and 232468 foreign currency checks aggregating USD 19.55 billion during the year against USD 13.30 billion in the previous year. In addition, GLS handled 764,341 transactions amounting to USD 914.84 million under inward remittance facility. Correspondent Relations To cater to the needs of a large customer base of the Bank and also to supplement the efforts of our foreign offices in the area of international banking, the Bank has developed a network of correspondent banks numbering 523, consisting of reputed international banks spread over 124 countries. The Bank also has about 1100 Bilateral Key Exchange (BKE) arrangements for SWIFT, which facilitates a seamless flow of financial messages covering trade, remittances, etc. Country Risk & Bank Exposures Country risk management policy was formulated in line with the RBI guidelines. Detailed country- wise and bank-wise risk analysis is undertaken to arrive at respective exposure limits. Both country and bank exposure limits (product wise] are being monitored on a regular basis. H.1 The State Bank Group with a network of 15118 branches including

4932 branches of its seven Associate Banks dominates the banking industry in India. In addition to banking, the Group, through its various subsidiaries, provides a whole range of financial services, which include Life Insurance, Merchant Banking, Mutual Funds, Credit Card, Factoring, Security trading and primary dealership in the Money Market. H.2 Associate Banks SBIs seven Associate Banks had a market share of 7.29% in deposits and 7.44% in advances in March 2008. Table : 9 Performance Highlights of Associate Banks (ABs) As on 31.03.2008 Agg. Assets Agg. Deposit Agg. Advances Operating profit Net profit 289642 234167 178375 4336 2277 Growth % As on 31.03.2007 Credit Deposit Ratio Capital Adequcy Ratio Gross NPA Net NPA Return on Equity 74.57 12.22 1.83 0.76 17.71 Growth (%) 21.07 19.07 21.64 1.03 12.11 Growth % As on 31.03.2008 76.17 12.50 1.48 0.61 18.50

H.3 SBI Commercial & International Bank Ltd. (SBICI) As at the end of March 2008, the aggregate deposits and total advances of SBICI stood at Rs. 446.07 crore and Rs. 363.75 crore respectively. The Bank recorded an operating and net profit of Rs.12.37 crore and Rs.12.85 crore respectively. The net NPA as at the end of March 2008 was Nil. H.4 SBI Capital Markets Limited (SBICAP) SBICAP has successfully positioned itself as a full service investment banking outfit offering Project Advisory Services, arrangement of Structured Finance, Capital Market Services like Equity issuances, Mergers and Acquisitions Advisory Services, arrangement of Private Equity, etc. The company consolidated further its dominant position as arrangers of debt for the corporate sector both in the infrastructure as well as non-infrastructure sectors. The following achievements are some of the many recognitions won by the Company during the year:

- Ranked No.l Mandated Lead Arranger for the third consecutive year in the Asia Pacific Region by Thomson Financials Project Finance International (Global Ranking No.9). - Ranked No.l Loans Mandated Arranger in Asia Pacific Region by Bloomberg and IFR Asia. - Syndication of credit facilities to Guru Gobind Singh Refineries Ltd., lead arranged by the Group, adjudged best Petrochemical deal in Asia Pacific by Thomson Financials Project Finance International. - Companys league table ranking for IPOs improved from 9th position last year to 3rd position in 2007-08. The company has posted a PAT of Rs.142.19 crore in March 2008 as against Rs.71.18 crore last year. H.5 SBICAP Securities Limited (SSL) SSL, which commenced its operations in June 2006, is a broking company offering equity broking services to retail and institutional clients both in the cash as well as in the Futures and Options segments. It is also engaged in Sales & Distribution of other financial products like Mutual Funds, etc. It launched E-broking services to the clients of SBI and 5 of the Associate Banks during the year. The Companys net profit for the year increased three folds to Rs.12.21 crore from Rs.4.04 crore last year. H.6 SBICAPS Ventures Limited (SVL) SVL has set up a USD 100 million Knowledge Sector Fund, jointly with SBI Holding Inc. Softbank, Japan. H.7 SBICAP (UK) Ltd. SBICAP (UK) Ltd. has been aggressively marketing for potential clients and arranging for them Foreign Currency Convertible Bonds (FCCBs), Private Equities (PEs) and Cross-border Mergers and Acquisitions (M&As) transactions. H.8 SBI DFHI LTD SBI group holds 67.01% of the Companys Paid Up Capital, while other Nationalized Banks hold 22.46%. All India Financial Institutions and Private Sector Banks hold 5.84% and the Asian Development Bank holds 4.69% as on March 31, 2008. For the period upto March 2008, the Company had earned a PAT of Rs.85.68 crore. The Company prudently diversified into profitable Non-SLR avenues resulting in better profits this year. Total Secondary market turnover of the company was Rs.49491.26 crore.

The market share under Proprietary trading was 3.10%. H.9 SBI Cards & Payments Services Pvt. Ltd. (SBICSPL)

During the year 5.3 lac additional cards were issued increasing the Cards in Force (GIF) to 32 lacs as at the end of March 2008. The total receivables stood at Rs.2666 crore as at the end of March 2008 and were 5.25% higher than receivables of Rs.2533 crore as at the end of March 2007. Table : 10 The Performance Highlights of the Associate Banks as at March 2008 are as under: (Amount in Rs. crore) Name of the Bank SBIs share in the capital (%) Deposits

State Bank of Bikaner &. Jaipur Hyderabad Indore Mysore Patiala Saurashtra Travancore All 7 Banks Advances Operating Profit 661.18 991.19 451.20 567.52 779.33 176.85 709.09 4,336.36 75 100 98.05 92.33 100 100 75 Net Profit 32701 51796 24076 26781 48186 15968 34658 234167

25319 35915 18352 21315 36706 12325 28442 178375

315.00 556.99 234.01 318.86 413.73 51.99 386.11 2,276.69

H.10. SBI LIFE INSURANCE COMPANY LIMITED (SBILIFE) SBI Life has a unique multi-distribution model comprising Bancassurance, Retail Agency & Institutional Alliances and Group Corporate Channels for distribution of Insurance products. Gross premium income was over Rs.5,622 crore for the period ended March 2008. The Company has added 19 lac new lives during the year. SBI Life has been rated as "The Most Trusted Private Sector Life Insurance Company" according to a survey conducted by Brand Equity in association with AC Nielsen ORG-MARG and the Economic Times. It has also received the highest financial rating AAA from CRISIL. SBI Life has achieved the prestigious CMMI Level 3 certification for Information Systems Group (ISG) and has recently been awarded ISO 9001:2000 certification for

Claims department. It has been ranked 5* across the world in terms of number of Million Dollar Round Table members for 2007. H.11. SBI Funds Management (P) Ltd. (SBIFMPL) SBIFMPL was conferred with CNBC AWAAZ Consumer Award 2007 for the most preferred Brand of Mutual fund and also received the Outlook Money and NDTV Profit Awards for the Best Equity Fund House and the Overall Best Fund House for 2007. The Lipper Global Ranking study rated two schemes managed by SBIFMPL, namely SBI Magnum Tax Gain and SBI Magnum COMMA Fund among the best performing 100 schemes across the world for the period ended 31st December, 2007. Magnum Balanced Fund, Magnum Taxgain Scheme and Magnum Sector Funds Umbrella-Contra Fund were ranked Seven Star Funds by ICRA and won ICRA Mutual Fund "Gold Awards: for best performance in their respective categories for the period ended 31st December, 2007 ICRA Mutual Fund "Silver Awards" was also won by five of the schemes managed by SBIFMPL for performance among the top 10% for the period ended 31st December, 2007 in various categories. Ranking in terms of Assets Under Management improved by one notch from 7th to 6th position as on 31.03.2008 The total net assets under management stood at Rs. 26490 crore as on 31.03.2008 as against Rsl7,016 crore as on 31.03.2007. The value of portfolio assets managed was Rs.5,003 crore as on 31.03.2008 as against Rs.1,372 crore as on 31.03.2007. SBIFMPL reported a net profit of Rs.70.37 crore after tax as on 31.03.2008 as against Rs.29.78 crore for the previous year. H.12 SBI Factors and Commercial Services Pvt. Ltd. (SBIFACTORS)

Asset level of the Company increased by 56% (from Rs.1,220 crore to Rs.1,908 crore). It recorded a growth of 53% (year-on-year) in total income and ended the year with a PBT of Rs. 43.17 crore as against Rs.20.36 crore last year and PAT of Rs.28.38 crore, as against Rs. 13.17 crore last year. H.13 Global Trade Finance Ltd (GTFL) State Bank of India acquired 91% stake in GTFL, by acquiring shareholdings held by EXIM Bank (40%), International Finance Corporation, Washington (12.50%), and FIM Bank (38.50%) in GTFL. Due to further infusion of capital, present shareholding of SBI in GTFL is 92.03%. GTFL is one of the leading Factoring Companies in India and has the highest market share (85%) in Export & Import Factoring. The NBFC, which is into trade financing in the business-to-business (B2B) segment, has reported a 155% jump in its net profit to Rs.73.60 crores for the financial year ended March 31, 2008, as against Rs.28.90 crores in the corresponding period last year. NPA MANAGEMENT The position of NPA reduction as on 31.03.2008 is given in the table

below: Table No : 11 Asset Quality (Amount in Rs. crore) Particulars 1 2 3 4 5 6 7 8 9 Gross NPA Gross NPA Percentage Net NPA Net NPA Percentage Cash Recovery in NPA Upgradation to Standard Assets Write Off Gross Reduction (3+4+5) Recovery in written off account Amount 12,837.34 3.04% 7,424.34 1.78% 1,732.15 1,516.84 1,242.52 4,491.51 838.64

1.1.2. Restructuring of impaired Standard Assets as well as viable non performing assets, both under CDR mechanism as well as under Banks own scheme, has been given top priority for arresting new additions and reducing the existing level of NPAs. The machinery for identification and monitoring of Special Mention Accounts as per the guidelines of RBI by making prompt review and taking quick corrective action has also been geared up for the purpose. CDR system has done well as a resolution option for stressed assets which are seen to have the potential for revival. Out of 165 companies brought under CDR from the entire Banking System, SBI has an exposure in 61% cases (i.e. in 101 companies with exposure of Rs. 7,649 crore). Outof these, 21% of CDR cases i.e. 22 companies carrying 29% exposure (Rs. 2196 crore) have been revived and have since exited CDR due to improved performance - a few of these being now high growth companies. 23 other cases have been withdrawn from CDR system. Live cases under CDR as on 31.03.2008 number 56, amounting to Rs. 4,409 crore, of which, 34 cases with Rs.3,408 crore (77%) exposure are classified as "Standard". 1.1.3. Two Financial Assets involving principal outstanding of Rs.25.22 crore have been sold to other banks / ARCIL during the year. 1.1.4. One asset with an exposure of Rs.9.00 crore has been purchased with which a beginning has been made in purchase of NPAs by the Bank. Our IT initiatives have played a major role in transforming the Bank into a highly responsive organization to meet the challenges of a globalised economy. The Bank is pursuing an aggressive IT policy as a strategic initiative to meet the growing competition for business, achieve efficiency in internal operations and meet customer expectations. With this end in view, the reach of our IT initiatives was expanded to cover more banking touch points and overall business. J.1. Core Banking: Core Banking Solution (CBS) presently covers 9390

domestic branches transacting more than 98% of the Banks domestic business. CBS offers anytime anywhere banking through Multicity Cheques and other products. Our 407 branches have been enabled for Core integrated Trade Finance solution. We have provided to our customers a full featured internet frontend eTradeSBT for their trade related transactions. J.2. Internet Banking: Internet Banking has been implemented at 9112 domestic branches, and is used by retail banking as well as Corporate customers for enquiry, downloading account statements, e-mail, eticketing for Indian Airlines, e-tax, fee payment, e- pay (online utility bill payment), Bulk payments by corporates, funds transfer to customers of our Bank as well as of other banks through Visa Money Transfer, RTGS and NEFT. Our Corporate Internet Banking (CINB) enables our corporate customers to transact almost all of their banking transactions through internet. Through our fully featured CINB account Vistaar (Freedom), corporates can make transactions upto an amount of Rs 500 crore per transaction from their own offices. CINB customers can also submit online requests for issue of drafts. They can also make payments to EPFO, DGFT and OLTAS besides making payments to their suppliers and vendors. J.3. Foreign Offices Project: Finacle software for Treasury and Core Banking Solution has been implemented at 82 foreign offices in 32 countries. Our 70 foreign offices have been enabled in 17 countries to offer Internet Banking. INR remittance facility through Internet Banking has been provided to branches in 11 countries. This facility will be extended to all the foreign branches soon. ATM facilities have also been provided in 7 of our foreign offices. J.4. ATMs: We have the largest ATM network in the country with 8460 ATMs of State Bank Group installed throughout the length and breadth of the country. Our ATMs are enabled for various value added services like payment of utility bills, mobile top up, SBI card bill payment, SBI Life premium payment, donation to Trusts / Temples and funds transfer. Further, bilateral sharing of ATMs with thirteen banks has brought additional 10500 ATMs within the reach of our customers. We have plans to scale up our ATM network to 15000 by March 2009 and to 25000 by March 2010. J.5. Payment Systems Group: Through our Payment Systems Group (PSG), we have enabled 8817 branches for RTGS and 9425 branches for NEFT. We also introduced Instant Inward Rupee remittances from Foreign Offices (FOs) for direct credit to CBS accounts in any of the State Bank Group branches. This facility has also been integrated with RTGS and NEFT enabling Foreign Offices to send Rupee remittances to any Bank in the country. On-line Rupee remittance facility to beneficiaries in Nepal from authorised CBS branches of SBI is another product introduced during the year. Other banks in the country can also effect Rupee remittances to Nepal through this facility by originating the transactions at their end and forwarding them through NEFT to the Payment Hub at PSG. J.6. Information Security: IT Policy and IS Security Policy have been implemented after being benchmarked against best global practices. The Banks Information Systems are regularly reviewed to ensure that these

are adequately secure. J.7. Networking: State Bank Connect, the Wide Area Networking (WAN) project of the Bank, is capable of carrying data, voice and video in a secure way. All Applications requiring connectivity now ride on the State Bank Connect backbone. A total of 14625 branches / offices have so far been brought under State Bank Connect. Miscellaneous Operations K Risk Management & Internal controls L Business Intelligence M Customer Service & Community Services Banking

RISK MANAGEMENT IN SBI K.1. Risk Management Structure - An independent Risk Governance structure in line with the international best practices has been put in place in the Bank. In view of the growing volume and complexity in business, risk management has assumed critical importance. Accordingly, the Bank has elevated the risk function to Board level by appointing the Managing Director as Chief Risk Officer to ensure this crucial function gets the importance it deserves. - The Bank has Board approved policies and procedures in place to measure, manage, mitigate various risks such as Credit, Market, Operational, Liquidity, and Interest Rate Risks across all its portfolios. - The Risk Management Committee of the Board oversees the policy and strategy for risk management. In addition, various Risk Committees, namely the Credit Risk Management, Asset Liability, Market Risk Management and Operational Risk Management Committees are in place to monitor risks in their respective areas on an ongoing basis. K.2. Migration to Basel II - The Bank, as per RBI Guidelines, has migrated to Basel II as on 31st March 2008 with the Standardized Approach for Credit Risk and Basic Indicator Approach for Operational Risk, having already implemented Standardized Duration Method for Market Risk with effect from 31.03.2006. Simultaneously, processes have been set in train for fine-tuning Systems & Procedures, Information Technology capabilities and Risk Governance Structure to meet the requirements of the Advanced Approaches. K.3. Credit Risk Management

- Credit Risk Management processes encompass identification, assessment, measurement, monitoring and control of the credit exposures. - The Bank has multiple Credit Risk Assessment models in place covering Manufacturing, Trade, Non-Banking Financial Corporations, Banks and Primary Dealers. The Credit Risk Models developed for Manufacturing and Trading sectors have been refined to conform to the requirements under Advanced Internal Based Approach of Basel II. The other models are also being reviewed. - The Bank conducts Industry studies to assess the Risk prevalent in each industry and also gives guidelines to operating functionaries in lending to these industries. Industry wise exposure limits are fixed and monitored regularly. - The Bank manages its portfolio of loan assets with a view to limiting concentrations in terms of risk quality, geography, industry, maturity and large exposure. K.4. Market Risk Management - Market risk is the risk that the value of the "on" & "off" balance sheet positions of the Bank will be adversely affected by movements in market variables viz: interest rates, exchange rates, equity and commodity prices. - Market Risk Management is governed by Board approved Policies for Investment and Trading in Bonds, Equities and Foreign Exchange. The identification, measurement, monitoring and reporting of Market Risk is done by the Market Risk Management Department which is a part of the independent Risk Governance Structure of the Bank. - Exposure, Stop loss and Duration limits have been prescribed. These limits along with other management action triggers, are tracked daily and necessary action initiated as required to control and manage Market Risk. - In addition, Value at Risk (VaR) is generated on a daily basis for the purpose of close monitoring. Back testing of VaR numbers is also carried out to validate these measurements. The portfolio is also subjected to Stress testing under various scenarios so that a proper understanding of the potential losses under extreme price movements is always kept in view. K.5. Operational Risk Management - Operational risk is the risk of losses resulting from inadequate or failed internal processes, people and systems or from external events. Operational risk includes legal and regulatory risk but excludes strategic and reputational risks. - The Bank manages Operational risks by putting in place and maintaining a comprehensive system of internal controls and policies.

The Operational Risk Management Policy of the Bank establishes a consistent framework for systematic and proactive identification, assessment, measurement, monitoring, and mitigation of operational risk. The policy applies to all business and functional areas within the Bank, and is supplemented by operational systems, procedures and guidelines which are periodically updated. - All key processes, risks and controls are documented and periodic assessments of risks and controls are carried out. The Bank has initiated steps for creation of a loss database with a view to graduate to Advanced Measurement Approaches under the Basel II Guidelines. - The objective of the Banks Operational Risk Management is to continuously review systems and control mechanisms, create awareness of operational risk throughout the Bank, assign risk ownership, alignment of risk management activities with business strategy, and ensuring compliance with regulatory requirements. K.6. Asset Liability Management The Asset Liability Management (ALCO) of the Bank is engaged in evolving appropriate systems and procedures for ongoing identification and analysis of Market Risk which comprises mainly the Liquidity Risk Management and Interest Rate Risk Management. It also conducts a detailed Behavioural Analysis of the components of Assets & Liabilities besides Balance Sheet simulation, on an on-going basis. The Market Related Funds Transfer Pricing (MRFTP), a scientific internal funds transfer pricing, evolved a a supplement to Assets Liability Management (ALM) has been rolled out to all branches under National Banking Group (NBG) from 1st April 2007, thus covering all branches of the Bank under the revised transfer pricing from 1st April 2007. The revised transfer pricing helps in ascertaining the true profitability of branches by comparing the product prices with the market rates. K.7. Country Risk & Bank Exposure Prudent exposure risk management is being ensured by setting up appropriate bank exposure limits - product-wise, on a large number of Foreign Banks. Substantial counterparty bank limits for handling letters of credit, bank guarantees, forex and money market activities are in place. Limits are also set up for Investment/ Lines of Credit related exposures on acceptable banks, in order to clear bankable propositions. The Country Risk Management Policy, in line with RBI guidelines for setting up country exposure limits, is in place, and the overall country risk for the Bank as a whole is monitored on a regular basis. K.8. Internal Controls K.8.1 The Bank has an in-built internal control system with well-defined responsibilities at each level. The Inspection &

Management Audit Department of the Bank carries out 3 streams of audit, viz. Inspection and Audit, Credit Audit and Management Audit, covering different facets of the Banks activities. K.8.1.1 Inspection and Audit Risk Focused Internal Audit (RFIA), an adjunct to risk based supervision, as per RBI directives, was introduced in the Banks audit system on 01.04.2003. All domestic Branches have been segregated into 3 groups on the basis of business profile and risk exposures, and are being subjected to RFIA. K.8.1.2 Credit Audit Credit Audit aims at achieving continuous improvement in the quality of the Commercial Credit portfolio with exposures of Rs.5 crore and above. Duly aligned with Risk Focused Internal Audit, it examines the probability of default, identifies risks and suggests risk mitigation measures. K.8.1.3 Management Audit Management audit has been reoriented to focus on the effectiveness of risk management in processes and procedures. Management Audit of six Circles was taken up and completed during the current year. K.9. Vigilance Vigilance Department of the Bank oversees 3 primary aspects of vigilance: Preventive, Detective and Punitive. This is achieved through various means, i.e through linkages with the training system, customer education, Inspection & Audit Department, as well as suitable incentive schemes. L. BUSINESS INTELLIGENCE

MIS in the Bank is being constantly assessed, upgraded and fine tuned to cater to the growing information requirements of various user departments and operational units. A Data Warehousing Project conceived as a single source for all data required for support in decision making, analysis, forecast and reporting is under progress. M.1 Customer Service: The Bank strongly believes that customer service will be the most important factor in maintaining and improving its leadership in Indias Banking Industry. The Bank took several initiatives during the year to enhance awareness among staff on the importance of good customer service in enhancing market share and business growth. The training programmes for staff were revamped to focus on marketing, attitudinal changes, business strategies and goals. All the staff of the Bank were exposed to a training programme called "Parivartan" (Transformation). The Parivartan programme has been successful in bringing about attitudinal changes in employees at most of the branches.

Open customer meets were conducted regularly at all important centres. The Banks customers, staff and senior Officials freely interacted at these meets on issues relating to customer grievances and service. The Banks toll free Helpline number (1800 112 211) offers comprehensive product information to retail customers apart from being available 24x7 for enqiries and grievances relating to alternate channels. Besides, the Bank has dedicated helpline numbers available at all its 14 Local Head Offices for grievance redressal. A comprehensive analysis Of customer grievances is done every quarter to identify common systemic issues that need rectification. M.2 Community Services Banking Apart from the normal banking operations, the Bank, as a responsible and responsive corporate citizen, seeks to reinvest part of its profit in various community welfare projects to improve the quality of life of the poor, neglected, weaker and downtrodden sections of society. In the financial year 2007-08, the Bank made donations aggregating Rs. 8.11 crore to various Relief Funds and also to NGOs / Trusts / Societies for their projects with social orientation. In recognition of its contribution to Rural Community Development, the Bank was awarded the prestigious Readers Digest Pegasus Corporate Social Responsibilities Award 2007. Infact, it was the only Bank to have received this recognition. Under a new scheme named Adoption of the Girl Child over 8,300 poor girl children have been adopted by various branches throughout the country to meet their personal and educational expenses. This is not merely a financial assistance scheme but offers emotional and psychological support to the adopted girls due to the active involvement and care of the SBI Ladies Clubs. From the Research and Development Fund, the Bank has so far extended Rs.6.61 crore as research grants to 71 chairs / research projects at various Universities and Academic institutions. For the current year SBI has extended 100000 Sterling Pounds to London School of Economics for establishing an India Observatory and I.G.Patel Chair at their Asia Research Centre in participation with RBI. Miscellaneous N Corporate Communication & Change O Organisational Planning P Right to Information Act (RTI Act 2005) Q Human Resources Management R Business Process re-engineering S Official Language

N. CORPORATE .COMMUNICATION & CHANGE During the year, the first Mass Internal Communication Programme named "Parivartan" was rolled out across the Bank. Over 3300 inclusive Two Day workshops were conducted by over 360 specially trained Trainers in a span of 100 days covering 1,30,000 employees. Never in the history of the bank had so many been trained in so short a time. The workshops caught the imagination of all employees and unleashed a new positive energy. A professional Study conducted by Xavier Institute of Management, Bhubaneswar, found that Parivartan had brought about a perceptible positive change in each of the 25 identified Customer Service parameters. As a part of the Transformation process, special brain storming Conclaves were held for the Top Management of the Bank where various Transformational Initiatives were identified and discussed with fixed time lines, for each Business and Group Head in the Bank. Many of these initiatives were completed during the year and many are being closely followed up for implementation at gras6 root level. O ORGANISATIONAL PLANNING - CHANGES IN SENIOR POSITIONS IN THE HANK New Senior positions were created during the year as part of new initiatives for complying with RBI guidelines relating to Risk Management, implementation of Basel-II accord, catering to the needs of large corporate customers, to drive business growth in non-farm sector in Rural & Semi Urban Centres and for targeting Private Equity, Realty and Venture Capital Fund Business. The following new positions were created during the year: 1. 2. 3. 4. 5. 6. 7. Managing Director & Chief Credit and Risk Officer, Deputy Managing Director & GE (Wholesale Banking Group), Deputy Managing Director & GE (Mid Corporate Group), Deputy Managing Director & GE (Subsidiaries Business Group), Deputy Managing Director & GE (Global Markets), Chief General Manager (Chief Information Officer - Global IT), .Chief General Manager (New Business Private Equity, Realty & Venture Funds), Chief General Manager (Rural Business - Non-farm),

8.

9 Chief General Manager (CPPD), 10. General Manager (New Business - Pension Funds & General

Insurance), 11. General Manager (New business -Wealth Management & Private Banking), 12. 13. Deputy General Manager (Alternate Channels), Deputy General Manager (Group Risk Management Department)

P. RIGHT TO INFORMATION ACT 2005 (RTI ACT 2005) Structure has been put in place for handling all matters relating to RTI Act 2005. All Branch Heads (except CAG), Assistant General Manager (COO) at CAG branches, all Heads of OAD at OLROs/RBOs/ ZOs/LHOs and Assistant General Manager (RTI) at Corporate Centre have been designated as Assistant Public Information Officers (ACPIOs). General Managers of Networks at Local Head Offices, Deputy General Managers & Branch Heads of Corporate Account Group, General Manager of Mid Corporate- Region, General Manager of Stressed Assets Management Group (SAMG) and General Manager (OL & CS) at Corporate Centres have been designated as Central Public Information Officers (CPIOs). The Chief General Managers of LHOs, Corporate Account Group, Mid Corporate Group, Stressed Assets Management Group have been designated as Appellate Authority under the Act in their respective area of control and Chief General Manager (Banking Operations) for Corporate Centres and its establishments. An exclusive RTI Department, has been created at Corporate Centre to handle and co- ordinate various issues under the Act. For the convenience of the public, the Bank has created an RTI link in its website http://sbi.co.in and assigned an e-mail address riacell@sbi.co.in. Q.1 Learning & Development Bank has taken up several key initiatives to motivate and retain its manpower. In order to channelize the energy created by the Parivartan campaign, the Bank has launched a landmark exercise for creation of the new Vision Mission & Values statement which will be in place shortly. Young officers are being encouraged to takeup management education by way of sponsorship tie- up with the S. P. Jain Institute of Management. 50 officers have been enrolled in the programme on a trial basis. Bank is strong in the areas of training & development through 4 apex level training colleges and 45 learning centres across the country, e-learning project has been launched to enable any where, anytime learning. Q.2. HRMS For leveraging technology in employee management area, the Bank has started automation of its HR processes through SAP-ERP-HRMS software. Once fully implemented, it will not only create a central repository of

all employees data but also will make available a variety of services, like online request submission and viewing of individual data etc. to all the employees across the State Bank group on an online real time basis. HRMS will bring efficiency in HR operations and help the Management in making employee related decisions faster. Pensioners of SBI, IBI and Associate Banks will also form a part of this initiative and their pension will be processed through HRMS. Q.3. Personnel Management The Bank has launched Performance Linked Incentive Scheme for the Branch Managers/AGMs(Region)/ DGMs(Module) and Team Incentive Scheme for the staff members of the Branch. The incentive scheme was launched with the aim of enthusing and motivating the staff members of the Branch so that the bank is placed in a position to face the competition unleashed due to liberalization of economy and maintain its lead over others. The scheme has been successful in enthusing the staff and garnering business for the Bank. Q.4. Employees Share Purchase Scheme (SBI ESPS-2008) The Bank also launched Employees Share Purchase Scheme alongwith the Rights issue with the objective of providing incentive to Eligible Employees, to stimulate their efforts towards the continued success of the Bank and to provide a means to attract, reward and retain talent in the Bank, to reward eligible employees as also to encourage equity ownership by them. The price was fixed at Rs.1590/- (the face value of 1 share is Rs.10/-) per equity share. The Scheme opened on 28.03.2008 and closed on 30.04.2008. Q.5. Industrial Relations 1. A number of HR initiatives such a payment of performance linked incentives to staff, rationalisation of promotion policies and improvement in various staff loan schemes were taken up during the year. Such initiatives have helped in increasing the motivation level of staff significantly. 2. To meet requirement of staff for an ongoing branch expansion programme, separate recruitment exercises were undertaken to recruit clerical staff for metro/urban centres, rural/semi- urban centres and also for marketing. This also helped in reducing the age profile of staff and posting of younger staff at the front line. 3. The process of consultation and discussion with both the staff and officers federations continued during the year. 4. The industrial relations climate of the Bank remained cordial during the year. Q.6. Staff Strength

The Bank had a total strength of 1,79,205 on the 31st March, 2008. Of this, 32.23% are officers, 42.87% clerical staff and the remaining 24.90% were sub-staff. Q.7. Implementation of Persons with disabilities (PWD) Act 1995 Our Bank provides reservation to persons with disabilities (PWDs) as per the guidelines of the Government of India and section 33 of the PWD Act 1995. The total number of persons with disabilities who were employed as on 31.03.2008 was as follows: Table : 12 Number of Persons with disabilities Category Total strength 57765 76818 44622 179205 No.of persons with Disabilities 279 584 204 1067

Officers Clerical Sub-staff Total

Q.8. Representation of Scheduled Castes and Scheduled Tribes As on the 31st March, 2008, 34802 (19.42%) of the Banks total staff strength, belonged to Scheduled Caste and 11460 (6.30%) belonged to Scheduled Tribes. In order to effectively redress the grievances of the SC/ST employees, Liaison Officers have been designated at all administrative offices of the Bank. Senior officials of the Bank hold regular meetings at periodic intervals with the representatives of SC/ ST Welfare Federation and SC/ST Welfare Association at Corporate Centre, LHOs and Zonal Offices. The Bank conducts workshops on reservation policy for SCs/STs/OBCs. So also, pre- recruitment and pre-promotion training programmes are conducted by the Bank to enable SC/ST candidates to achieve the prescribed standards to effectively compete with other candidates. The BPR Project aspires to transform the Bank into a world class financial institution by proactively reaching out to new customers, building strong and lasting relationships with existing customers and providing best quality service to all customers across multiple channels. Accordingly, a number of new initiatives have been designed, piloted and rolled out across the Bank, which resulted in the following benefits: - "Centralised Processing Centres for Retail loans, Small & Medium enterprise loans, and Trade - Finance were set up and later most of them were converted into end state models, wherein the end to end processes have been taken over. Positioning Relationship Managers at strategic centres to extend personalized service to mass affluent and HNI (high networth

individuals). - Cross-selling of various products - Dedicated Sales Teams like Home Loans Sales Team and Multi Product Sales Team to target niche markets. - Assured Standard Turn Around Time for various sanction processes - Improvement in quality of Assets and Documentation. - Establishment of Clearing CPCs to Centralise clearing related activities and free up branches to focus on customer services Accurate and timely payment of pensions to pensioners through Centralised Pension Processing Centres - Creation of Document Archival Centre to free up valuable space in branches - Contact Centre with toll-free number for providing information on products to the customers on 24X7 basis - Delayering the organizational structure for increasing speed and efficiency and to improve customer sevice During the year the coverage of the above BPR initiatives has been considerably enlarged by opening - 113 Retail Assets Central Processing Centres and 113 Small & Medium Enterprises City Credit Centres both covering around 2400 branches each. - 100 Stressed Assets Resolution Centres covering 2240 branches. - 18 Trade Finance Central Processing Centres covering 966 branches. - 14 Centralised Pension Processing Centres (CPPC) covering 5814 branches. - 3 7 Centralised Clearing Processing Centres (CCPC) covering 938 branches. - 4 Liability Central Processing Centres (LCPC) covering 3120 branches. - 97 Currency Administration Cells (CAC) covering 1877 branches and 1221 off-site-ATMs. - 2112 Branches have also been redesigned across the country to provide more convenience to customers. - Mid Corporate Loan Administration Units have been set up in 8 centres

covering 68 branches to take care of post sanction activities. All these initiatives have helped the Bank in creating a new operating architecture capable of meeting global competition. S. OFFICIAL LANGUAGES During the year statutory requirements relating to the official language policy were complied with by the Bank. Several initiatives were taken to increase use of Hindi. Some of them are : SBI Gold International Debit Card (VISA) which was launched during the year is now being issued bilingual. This is first International debit card issued bilingual. Publicity/ Educational material are now being made in Hindi and regional languages. Responsibility Statement The Board of Directors hereby states : i. that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; ii. that they have selected such accounting policies and applied them consistently and made judgements and estimates as are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank as on the 31st March 2008, and of the profit and loss of the Bank for the year ended on that date; iii. that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Banking Regulation Act, 1949 and State Bank of India Act, 1955 for safeguarding the assets of the Bank and preventing and detecting frauds and other irregularities; and iv. that they have prepared the annual accounts on a going concern basis. During the year, Shri T.S. Bhattacharya, Managing Director, on his attaining the age of superannuation, laid down office on 31.01.2008. Further, Shri S.K. Bhatttacharyya was appointed as Managing Director with effect from 08.10.2007, in place of Shri. Yogesh Agarwal who resigned from the Board on 30.06.2007 on his appointment as Chairman and Managing Director of IDBI Bank Ltd. Prof. M.S. Swaminathan resigned from the Board on 11.04.2007, on his nomination to the Rajya Sabha. Shri Ajay G Piramal retired from the Board on 31.08.2007 on completion of his term. Shri Amar Pal, non-workmen Director on the Board, retired on attaining superannuation, as at the close of business on 31.03.2008. Further, Dr. Deva Nand Balodhi and Prof. Md. Salahuddin Ansari (both with effect from 09.07.2007) and Dr. (Mrs.) Vasantha Bharucha (with effect from 25.02.2008) were nominated to the Central Board under

section 19(d) by the Government of India. Shri Arun Singh, Shri Rajiv Pandey and Shri Piyush Goyal ceased to be members of the Board on completion of their term. Shri Arun Ramanathan, Secretary (Financial Services), was nominated to the Board with effect froml8.01.2008, in place of Shri Vinod Rai, who resigned on 06.01.2008, on his appointment as Comptroller and Auditor General of India. The Directors place on record their appreciation of the contributions made by Shri Vinod Rai, Shri. T.S. Bhattacharya, Shri Yogesh Agarwal, Prof. M.S. Swaminathan, Shri Ajay G Piramal, Shri Amar Pal, Shri Arun Singh, Shri Rajiv Pandey and Shri Piyush Goyal to the deliberations of the Board. The Directors express their gratitude for the guidance and co-operation received from the Government of India, RBI, SEBI, IRDA, and other government and regulatory agencies. The Directors also thank all the valued clients, shareholders, banks and financial institutions, stock exchanges, rating agencies and other stakeholders for their patronage and support, and take this opportunity to express their appreciation of the dedicated and committed team of employees of the Bank. For and on behalf of the Central Board of Directors O.P. Bhatt Chairman

Date : 2nd May, 2008

Director Report
Mar 2007 Mar2008

Economic Backdrop and Banking Environment:

The global economy grew at a higher pace of 5.4% in 2006, as compared to 4.9% in 2005, as growth picked up in Asia and other emerging market economies. According to the IMF, global growth is likely to moderate to 4.9% in 2007, due to expected slowdown in the US economy, though growth in the Euro zone is expected to pick up, led by strong domestic demand. The Indian economy witnessed robust growth for the fourth successive year. In 2006-07, the economy is estimated to have grown by 9.2%, building on 9.0% growth in the previous year. There are many positive features to this growth, which reinforce its solid foundations: the broad based nature of the growth relying on domestic demand (both investment and consumer) and exports, as well as the sectoral contribution, with manufacturing contributing to the strong growth momentum, not just services. The only exception is the challenge of agriculture. During 2006-07, the manufacturing sector grew by 12.3%

against growth of 9.1% a year ago. The services sector, which has been growing at 9% since mid-1990s, is expected to continue to power the Indian economy, as it now accounts for around three- fifth of GDP. Within services, trade, hotels, transport and communications and financial services recorded double-digit growth for the last two years. Another positive feature underpinning the current growth phase is the sharp rise in the rate of savings and investment in recent years, with the rate of gross domestic investment having risen sharply to 33.8% and the savings rate to 32.4% in 2005-06. Investment in general being a forward looking variable, reflects a high degree of business optimism and reinforces the outlook for growth. Inflation remained a major concern during the year, with WPI inflation hovering around 6.0% though it declined to 5.74% by 31st March 2007. CPI inflation however, remained higher. With its roots in supply-side factors particularly primary articles and manufactured goods, inflation was fuelled by buoyant growth in broad money supply and bank credit. Exports continued to show a healthy growth, rising by 20.9% during 2006-07, building on 23.4% in 2005-06. Buoyancy of exports was driven by resurgence in the manufacturing sector and sustained demand from major trading partners, pushing India's share in world merchandise exports to 1%. In the same period, imports grew faster at 26.4% (33.8% in 2005-06), due to increase in oil prices. There was a drop in silver and pearl imports while import of capital goods was robust, due to strong investment activity in the country. Reflecting growing interest in India's growth prospects, capital flows remained sizeable and India's foreign exchange reserves rose by US $47.6 bn to US $199.2 bn as on 30th March 2007. The overall stance of RBI's monetary policy was to check inflation while ensuring adequate credit to support growing investment demand, curb credit growth to sensitive sectors and maintain stability in financial markets overall. During 2006-07, while the Bank Rate was kept unchanged, Cash Reserve Ratio was raised by 100 bps. The Reverse Repo rate was raised by 25 bps to 6% while the Repo Rate was raised on five occasions by 25 bps each to 7.75% from 6.50%. With rising inflation, interest rates across the board rose during the fiscal year. The Prime Lending Rate (PLR) of major banks rose from 10.25-10.75% on 31st March 2006 to 12.25-12.50% on 30th March 2007. In the same period, deposit rate of major banks rose from 6.0-7.0% to 7.50-9.0% The rising lending rates had a moderating impact on credit growth, which increased by 27.6% in 2006-07 against 30.8% in 2005-06. At the same time, the increase in deposit rates had a favourable impact on deposit growth, which rose by 23.0% in 2006-07 against 18.1% in 2005-06. Consequently, the incremental CD ratio fell to 86% from 110%. The outlook for the current financial year is encouraging. Overall, the growth momentum is expected to be sustained, with continuing credit and investment demand from industry and services as well as agriculture, infrastructure and retail sectors. Financial Performance

Profit The Operating Profit of the Bank for 2006-07 stood at Rs.9,999.94 crore (which is arrived at after reckoning amortization loss of Rs. 1,677.51 crore as compared to Rs.11,299.23 crore) in 2005-06. It would appear that the Operating Profit has declined sharply. However, if the Previous Year's figures are regrouped on the lines of the Current Year, the Operating Profit for FY 2005-06 would stand revised to Rs. 8,248.99 crore (after regrouping the figures on the lines of the recent RBI Circular on treatment of amortization of Rs.3,050.24 crore) which would mean a growth of 21.23% in Operating Profit. The Bank has posted a Net Profit of Rs. 4,541.31 crore for 2006-07 as compared to Rs. 4,406.67 crore in 2005-06, registering a growth of 3.06%. While Net Interest Income recorded a growth of 2.98% and Other Income increased (on regrouped figures) by 31.57%, the gains made on the Income side were largely offset by an increase of 14.94% in Interest Expended. However, Operating Expenses remained controlled, with a marginal increase of 0.84%. Dividend The Bank has retained dividend at the rate of 140% for the current year also. Net Interest Income The Net Interest Income of the Bank registered a growth of 2.98% from Rs.15,589.13 crore in 2005-06 to Rs. 16,054.21 crore in 2006-07. This was due to growth in interest income on advances. The Net Interest Margin was at a healthy 3.31% in 2006-07. The gross interest income from global operations rose from Rs.35,979.57 crore to Rs. 39,491.03 crore during the year. This was mainly due to higher interest income on advances. Interest income on advances in India registered an increase from Rs.16,405.70 crore in 2005-06 to Rs.22,872.66 crore in 2006-07 due to higher volumes. Also average yield on advances in India increased from 7.78% in 2005-06 to 8.67% in 2006-07. Interest income on advances at foreign offices also increased due to higher volumes. Income from resources deployed in treasury operations in India declined by 21.18% due to a decline both in the average yield and the average resources deployed. The average yield, which was 7.10% in 2005-06, declined to 6.88% in 2006-07, due to the declining trend in the interest rates. Total interest expenses of global operations increased from Rs.20,390.44 crore in 2005-06 to Rs. 23,436.82 crore in 2006-07. Interest expenses on deposits in India during 2006-07 recorded an increase of 4.58% compared to the previous year, whereas the average level of deposits in India grew by 9.70 %. This resulted in an increase in the average cost of deposits from 4.57% in 2005-06 to 4.79% in

2006-07. Non-Interest Income Non-interest income stood at Rs.5,769.25 crore as against Rs.7,435.20 crore in 2005-06. However, in view of the RBI Circular on treatment of amortization, the Non-Interest income in previous year stands revised to Rs.4,384.96 crore, resulting in a growth of 31.57%. Loss on revaluation of Investment declined from Rs. 3,050.24 crore in 2005-06 to Rs.1,677.51 crore in 2006-07. During the year, the Bank received an income of Rs. 596.97 crore (Rs.317.18 crore in the previous year), by way of dividends from Associate Banks/subsidiaries and joint ventures in India and abroad. Operating Expenses There was a marginal decline of 2.34% in the Staff Cost from Rs.8,123.04 crore in 2005-06 to Rs.7,932.58 crore in 2006-07. Staff Cost included an amount of Rs.478.30 crore (previous year Rs.72.24 crore) paid towards Ex-gratia payment under Exit Option Scheme. Other Operating Expenses have also registered an increase of 8.01% mainly due to increase in expenses on rent, taxes and lighting, insurance, postage, telegrams and telephones, repair and maintenance and miscellaneous expenditure. Operating Expenses, comprising both staff cost and other operating expenses, have registered an increase of 0.84%. Provisions and Contingencies Major amounts of provisions made in 2006-07 were as under: * Rs. 379.23 crore towards provision for depreciation on investments, excluding amortization of premium on `Held to Maturity' category (as against Rs.3,898.50 crore including amortization of premium on "Held to Maturity" category in 2005-06). * Rs. 3014.61 crore towards Provision for Income Tax, including deferred tax credit of Rs.19.83 crore (as against Rs.2,040.60 crore in 2005 -06 adjusted for deferred tax debit of Rs. 357.89 crore). * Rs. 88.50 crore towards Fringe Benefit Tax (as against 458.00 crore in 2005-06). * Rs. 1,429.50 crore (net of write-back) for non-performing assets (as against Rs. 147.81 crore in 2005-06). * Rs. 589.19 crore towards Standard Assets (as against Rs. 405.17 crore in 2005-06). Including the current year's provision, the total provision held on Standard Assets amounts to Rs. 1,502.32 crore.

Reserves and Surplus * An amount of Rs. 3,358.11 crore (as against Rs. 2,933.77 crore in 2005-06) was transferred to Statutory Reserves. * An amount of Rs. 321.15 crore (as against Rs. 632.74 crore in 2005-06) was transferred to Other Reserves Assets The total assets of the Bank increased by 14.68% from Rs.4,94,028.95 crore at the end of March 2006 to Rs. 5,66,565.24 crore as at the end of March 2007. During the period, the loan portfolio increased by 28.85% from Rs.2,61,801.00 crore to Rs. 3,37,336.49 crore. Investments declined by 8.23% from Rs.1,62,534.24 crore to Rs.1,49,148.88 crore. A major portion of the investments was in the domestic market in government and other approved securities. The Bank's market shares in domestic advances was 15.55% as of March 2007. Table - 1 Key Performance Indicators SBI 2005-06 0.89 15.47 58.70 83.73 11.88 9.36 2.52 1.88 SBI Group 2006-07 2005-06 0.87 15.08 58.15 120.93 12.36 8.05 4.31 1.31 0.85 14.86 53.40 105.07 12.55 9.55 3.00 1.62

Indicators Return on Average Assets (%) Return on Equity (%) Expenses to Income (%) (Operating Expenses to Total Net Income) Earnings Per Share (Rs.) Capital Adequacy Ratio (%) Tier I Tier II Net NPAs to Net Advances (%) Liabilities

2006-07 0.84 14.24 54.18 86.29 12.34 8.01 4.33 1.56

The Bank's aggregate liabilities (excluding capital and reserves) rose by 14.76 % from Rs. 4,66,384.87 crore on 31st March 2006 to Rs. 5,35,266.68 crore on 31st March 2007. The increase in liabilities was mainly contributed by increase in deposits and borrowings. The Global deposits stood at Rs.4,35,521.09 crore as on 31st March 2007, representing an increase of 14.60 % over the level on 31st March 2006. The Bank's market share in deposits was 14.91% as of March 2007. Performance Highlights Core Operations A B C D E Treasury Operations Corporate Banking Group National Banking Group Rural & Agri Business Group International Banking Group

F G H

Associates & Subsidiaries Asset Quality Information Technology

A. TREASURY OPERATIONS A.1 The year witnessed continuous hardening of interest rates and healthy credit growth which had an impact on the domestic investment portfolio. Liquidity position remained comfortable during the year. In the backdrop of tight Bond Market conditions, the Bank increased its activity in Equity portfolio with a view to diversify the portfolio and maintain higher profit levels. The overall domestic investments declined during the year from Rs.1,59,289 crore to Rs.1,36,927 crore. The 10 year G-Sec benchmark yield increased from 7.52% as on 31-03-2006 to 7.97% as on 31-03-2007. A.2 Trading profits registered a healthy growth during the year. While trading profits from Fixed Income Portfolio continued to be under pressure in view of upward moving Yield Curve, profits from Equity Portfolio increased by 68.55% (from Rs.193 crore to Rs.325 crore). Interest income from the Investment Portfolio declined in absolute terms because of shrinkage of the overall Fixed Income Portfolio. Reduction of Interest payable CRR balances with RBI during the year impacted overall income from Treasury operations. Average yield on treasury operations net of income on CRR Balances held increased from 7.64% to 7.67%. A.3. During the year the Bank contained the interest rate risk of the Fixed Income Portfolio through a combination of measures which included shifting of securities amounting to Rs.10,976 crore (book value) from AFS to HTM. A.4 Trading volumes in forex operations increased substantially thereby increasing the income from such operations to Rs.202.20 crore from Rs.81.54 crore (growth of 147.98% y-o-y basis). A.5 The Bank continued to be active in INR Interest Rate Derivatives Market as well as Forex Derivatives Market. The Bank focused on delivery of Structured Products to High Value customers. B. CORPORATE BANKING GROUP B.I The Bank's Corporate Banking Group consists of five Strategic Business Units (SBU), viz., Corporate Accounts Group, Leasing SBU, Project Finance SBU, Mid Corporate Group and Stressed Assets Management Group (SAMG). Table - 2 CBG - highlights (Amount in Rs. Crore) Particulars As on 31.03.2006 As on 30.03.2007 Growth %

Deposits Advances (including food) Advances (excluding food)

15,406

16,882

9.58

84,823

1,06,581

25.65

78,721

98,273

24.84

B.2 Corporate Accounts Group (GAG) CAG's loan portfolio constituted about 24% of the Bank's Commercial and Institutional non-food credit and 11.75% of the total domestic credit portfolio as on 31.03.2007. Initiatives taken :* During the year 2006-07, Corporate Accounts Group (GAG) has focused on increasing its fee-based income, which registered an impressive growth of approx. 44% Y-O-Y. To this end, it has put in place different technology based products offering wholesale banking services to our corporate customers to enable them to fully outsource their Accounts Payable and Accounts Receivable function. * A new Group - Institutional Accounts Group has been formed for focussing on Banks and Financial Institutions, providing them with various Banking Products/Services, and for forming strategic alliances in the areas of mutual interest. * SBI FAST, the CMP Product offered by CAG, had a turnover of Rs.5,06,752 crore as on 31.03.2007. CMP is now a comprehensive cash management solution, offering payments in addition to collections. CMP also empowers the corporates in their liquidity management by offering auto sweep facility, customized MIS and reconciliation support. Introduction of Direct Debit facility, handling Bulk RTGS transactions, Bulk Drafts printing, Dispersed Direct Credits are some of the new initiatives. CAG is now well poised to recapature the interest and dividend warrants business of the large corporates. * All the CAG branches have migrated to Core Banking Platform. * Vendor financing package, which provides easy finance against the receivables of various vendors of our corporates across the country has been successfully implemented in 6 branches in 3 Circles, and is now ready for a full scale rollout. * Six Sigma has enabled CAG to continue on forex business registering Y-O-Y growth of turnover reached Rs. 2,04,273 crore, as on contributor to the forex kitty with around domestic forex turnover of SBI. the growth trajectory in the nearly 44%. The forex 31.03.2007. CAG is a major 40% share in the total

* With the active co-operation of Treasury Marketing Units, CAG has

marketed for derivative business to the tune of Rs. 8,651 crore. B.3 Leasing SBU In view of unfavourable climate and availability of alternative funding options at cheaper cost, the Bank decided not to write leases during the current year also. As at the end of March 2007, the disbursements and capitalization were "NIL" and profit amounted to Rs.16.42 crore. B.4. Project Finance SBU (PFSBU) The Project finance-SBU focuses on funding core projects like power, telecom, roads, ports, airports, SEZ and others. It also handles non-infrastructure projects with certain ceilings on minimum project costs. During the year, the focus was on syndication and underwriting of project loans. As a whole, Project Finance-SBU took up projects involving total debt of Rs. 42,687 crore for sanction and achieved fund-based sanctions of Rs. 10,272 crore, while it syndicated the balance Rs. 32,415 crore with other banks during the year ending March 2007. B.5. Mid-Corporate Group

The Mid-Corporate Group was created on 1st July 2004 with 7 MCG Regional Offices controlling 28 branches with high concentration of Mid-Corporate (MC) business. The MC business at all other branches at certain identified centres was also brought under the control of MCG under the off-site model. The focus of the MCG was to increase market share of the Bank in the emerging Mid-Corporate segment through relationship management and quicker credit processing. The initiative has been successful inasmuchas it has resulted in increasing the credit portfolio under Mid- Corporate segment substantially with attendant increase in earnings. In 2006-2007, the following were the major achievements of the Group: * All 28 Mid-Corporate owned branches have migrated to Core Banking Solution Network. * 689 new customers were sanctioned credit facilities. * Total advances controlled by the Group, both at MC branches and under off-site model, stood at Rs.95,994 crore as on 31st March 2007. * Advances have grown by Rs.24,358 crore (34%) * Interest income has grown by 49% over the corresponding period of the last year. * Average Yield on Advances went up by more than 17% registering an increase of 128 bps to 8.76%.

* Regional Treasury Marketing Units have been set up at 7 centres where MCG Regional Offices are located to push treasury related products aggressively. B.6. Stressed Assets Management Group (SAMG) Stressed Assets Management Group (SAMG) was initially set up to take over all NPAs with outstanding of Rs. 5 crore and above, for ensuring focussed efforts in resolution of NPAs. Now the policy has been modified to bring all NPAs of Rs. 1 crore and above under the purview of SAMG. During the year ended March 2007, the gross reduction in NPAs of the Group was to the tune of Rs. 959 crore. C. NATIONAL BANKING GROUP The Bank's National Banking Group consists of three business groups viz., Personal Banking, SME, and Government Banking. As at the end of March 2007, the NBG had 14 administrative circles encompassing a vast network of 9517 branches to reach out to customers, even in the remotest corners of the country. Table-3 NBG - highlights (Amount in Rs. Crore) Particulars As on 31.03.2006 3,15,540 As on 31.03.2007 3,67,511 % Growth 16.47

Deposits (excluding inter-bank) Out of which, contributed by * Retail Sector Advances (including food but excluding interbank) Advances (excluding food) - out of which advances to * Retail Sector

1,98,362

2,40,816

21.40

155,401 153,040

198,705 195,534

27.87 27.77

85,320

103,047

20.78

* Retail Sector includes, small industries business and personal segment. C.1 Personal Banking Business Unit C.1.1 During the year ended March 2007, Personal Banking Deposits have grown from Rs. 1,63,001 crore to Rs. 1,90,388 crore, showing a growth of Rs.27,387 crore (17%). During the year ended March 2007, Personal Banking Advances increased

from Rs. 60,935 crore to Rs. 73,468 crore, showing a growth of Rs.12,533 crore at the rate of 20.57%. C.1.2 Our Bank was voted as THE MOST PREFERRED HOUSING LOAN PROVIDER in AWAAZ consumer Awards for 2006 along with the MOST PREFERRED Bank award in a survey conducted by TV 18 in association with AC Nielsen-ORG Marg covering more than 1000 respondents across 21 cities. New products introduced during the year were, SBI Optima, SBI Homeline and SBI Upfront (Advance Disbursement Facility) in the area of Home Loans, Car Loan Overdraft, and NRI Car Loan. New products under deposits were Super Saver Term deposit scheme, SBI Tax Savings scheme 2006, and SBI Platinum account, which has an innovative feature of 'put option'. Bank launched SBI Vishwa Yatra Foreign Travel Card (FTC) and SBI Pay Roll & Gift Cards this year. For inward remittances into India, a tie-up with Western Union Financial Services INC (WU) was finalized this year. Multi City cheque facility was introduced. For extending Demat Services, the Bank launched 'eZ-trade@sbi', an on-line trading facility scheme at select branches. C.1.3 The auto loan portfolio has shown a growth of Rs.1,082 crore in absolute terms, which is 24% higher than last year's growth, mainly due to implementation of well planned strategies. C.2 SME Business Unit (SMEBU) SME Business Unit is implementing various strategies to maintain the Bank's leadership in SME financing. The Bank is continuously engaged in bringing out new products to meet SME customer expectations, developing sector specific value propositions, and doing intensive cluster financing. Advances to SME sector increased to Rs.58,667 crore, from Rs.45,106 crore for the previous year recording a growth of 30% during the year as against the minimum growth of 20% stipulated under the SME policy package of Govt. of India. Liability and transactions products for SMEs are revamped and repackaged. SBI Power Gain and SBI Power pack, two bundled current accounts that provide value to the customers, in the form of graded concessions in charges for services, have been introduced. A no frills current account `SBI SME Sahaj', has been introduced for SMEs that are not in a position to maintain the stipulated minimum balance. Deposits of SME BU increased to Rs.1,23,05 7 crore as at the end of March 2007 from Rs. 1,04,3 3 8 crore of previous year, recording a growth of 17.94% during the year. C.3 Project Uptech Project Uptech is a unique format, and is designed to catalyze entrepreneurial thoughts and action for technology upgradation/modernization which is vital for the survival of SMEs. Focused on the Small and Medium Enterprises (SME] sector, projects

under Uptech are taken up in location specific and activity specific industry clusters. So far the Bank has undertaken 30 projects for modernization under Project Uptech. C.4 Government Business Unit (GBU) Govt. business turnover recorded a growth of 19.63% this year, compared to 10.82% in the previous year. Growth in Govt. commission has been 8.17% this year, (compared to a decline of 11.97% in the previous year) due to introduction of various e-payment initiatives, and Centralised Pension Processing Centres at-all Circles. D 1. RURAL & AGRI BUSINESS-GROUP During the year under review, a new business group, viz., Rural and Agri Business Group, has been created as a strategic initiative for maximum exploitation of the emerging rural banking opportunity. The percentage of agricultural advances to Net Bank Credit has improved to 14.80% as at the end of March 2007 as compared to 13.64% as at the end of March 2006. Disbursements upto March 2007 was Rs. 21,625 crore. The Bank's target of doubling the credit flow to agriculture (as per GOI directives) within 3 years, w.e.f. June 2004, was achieved during 2005-06, i.e., within 18 months, as a result of sustained loan disbursement campaigns, introduction of new products for farmers, entering into Corporate tie-ups for contract farming, in addition to utilization of ATMs for ensuring easier credit availability. Table - 4 Agriculture - highlights (Amount in Rs. Crore) Particulars As on 31.03.06 5,177 26,305 As on 31.03.07 6,460 34,993 Growth % 25 33

Deposits Advances Major initiatives taken

`Spotlight Kharif' and `Spotlight Rabi' campaigns were launched in all Circles that resulted in higher disbursements. New products were introduced for financing sugarcane, cotton, and other crops and a scheme developed for financing organic manure manufacturers. With a view to up scaling the number of credit-linked SHGs, the Bank entered into a tie-up with reputed NGO - `CARE India'. The Bank introduced ATM linked KCCs in all Circles during the year. Rural publicity campaign intensified.

National Plan for financing emerging areas in agri. Business, such as, bio-technology, food technology, etc., in the coming 3 year plan (2007-2010) was initiated. Kisan Credit Card scheme (KCC): Bank has issued 14.24 lac cards for an aggregate limit of Rs.6,363.47 crore. New thrust areas: The Bank's performance under the new thrust areas viz. contract farming, farmers financed through AEZ and value chain financing was as under: Contract farming Value chain financing : : Rs. 1,900 crore Rs. 1,163 crore

Self-Help Groups (SHGs) : Cumulatively, the Bank has credit linked 7.68 lac SHGs and disbursed loans to the extent of Rs.3,468 crore, so far. Alternative Delivery Channels The Bank entered into an MOU with Infrastructure Leasing and Financial Services Limited (IL&FS), the National Level Agency identified by the Government of India for implementation of its National eGovernance Plan. Under this scheme, it is proposed to set up 1,00,000+ common service centres, designed as ICT enabled kiosks. The tie up will enable the Bank to reach out to rural masses in far flung villages not covered by our branch network for providing basic banking services, as well as to market our various schemes. Financial Inclusion A major initiative introduced during the year in the area of financial inclusion has been the introduction of SBI Tiny smart cards to the financially excluded. The smart card project together with the business correspondent model has been piloted in Aizawl, Pithoragarh and Medak for opening 'No Frill' accounts. The experiment has been successful and it is proposed to have a nationwide roll out during the current year. An MOU has also been signed with the Govt. of Andhra Pradesh for providing basic banking services in the district of Warangal by issuing smart cards to all beneficiaries under Rural Employment Guarantee Programme. The Bank has also launched a special programme in the district of Wardha in Maharashtra to promote financial inclusion, which has been well received. D.2. Regional Rural Banks (RRBs) 2006-07 was a year of consolidation of RRBs. There was Bank specific amalgamation at each State level. Resultantly, Bank has got 16 RRBs post amalgamation with a network of 2334 branches spread over 104

districts in the Country. The aggregate deposits and advances of the sponsored RRBs stood at Rs.12,990 crore and Rs.7,902 crore respectively as on 31st March 2007. During the financial year, the Bank's sponsored RRBs made a profit of Rs.27.58 crore. D.3. Credit Assistance provided to Scheduled Castes and Scheduled Tribes The credit assistance provided by the Bank to SCs and STs stands at Rs.6,381 crore out of total priority sector advance of Rs.1,10,373 crore as on 31.03.2007. Recovery position of SC/ST borrowers (scheme-wise) : Scheme Prime Minister's Rozgar Yojana (PMRY) Swarnajayanti Gram Swarozgar Yojana (SGSY) Swarnajayanti Shahari Rozgar Yojana (SJSRY) Scheme for Liberation & Rehabilitation of Scavengers (SLRS) Differential Rate of Interest (DRI) E. INTERNATIONAL BANKING GROUP (IBG) E.1.1 Operations of Foreign Offices As on 31.03.2007, the Bank had a network of 83 overseas offices spread over 32 countries covering all time zones. The Bank also has correspondent arrangements with 525 Banks in 126 countries. Net Profit from Bank's foreign branches increased to USD 90.22 mio during the year from USD 69.55 mio for the previous year. Assets of the foreign branches increased from USD 11.960 bio as on 31.03.06 to USD 17.188 bio as on 31.03.07. E.1.2 NRI Business The online technology based remittance products registered a growth of more than 200%. A new car loan scheme for close relatives of NRIs in India was introduced. In addition, an 'In Principle' sanction scheme for NRI Home Loans was also launched at select foreign countries. E.1.3 Treasury Management As part of the centralisation of treasury activities at foreign offices, London Central Treasury Hub became operational during the year. Foreign offices of the Bank diversified their investment portfolio through first time investment in Collateralised Debt Obligations. Credit Default swaps were also undertaken for the first time at select foreign branches. E.1.4 Overseas Expansion Recovery 27% 51% 29% 24% 27%

With opening up 5 new offices and takeover of a Bank in Indonesia during the year, the Bank now has 83 offices in 32 countries. Table 5 (a): Assets/Liabilities of Foreign Offices as at 31.03.007 (excluding Subsidiaries and Joint Ventures) Items Resources Deposits Borrowings Other Liabilities Total Deployment Investments and Placements Advances (Net) Other Assets Total Rs. in Crore USD Million

15,584.32 33,883.56 25,246.81 74,714.69 15,328.99 38,114.07 21,271.63 74,714.69

3,585.08 7,794.70 5,807.87 17,187.65 3,526.35 8,767.90 4,893.40 17,187.65

Table 5 (b): Aggregate Working Results of Foreign Subsidiaries/Joint Ventures Associates Abroad As on 31.03.2007. Deposits Subsidiaries* Joint Ventures/ Associates ** 3,604.22 2,209.35 (Rs. in Crore) Loans 3,375.48 996.66

* SBI (California), SBI(Canada), SBI International (Mauritius) Ltd., Indian Ocean International Bank Ltd., Mauritius and PT Bank Indo Monex, Indonesia. ** Commercial Bank of India Ltd. as on 31.03.2007, Bank of Bhutan Ltd. as on 31.12.2006, and Nepal SBI Bank Ltd. as on 16.07.2006. Conversion rate USDl = INK 43.4700 E.2 Domestic Operations E.2.1 Export Credit The Bank's outstanding export credit stood at Rs. 21,868 crore, having increased by 20.36% during April 2006 to March 2007 as compared to the corresponding period of the previous year. E.2.2 Project Export Finance State Bank of India is an active participant in financing project export activities involving bidding and execution of turnkey/civil

construction contracts and export of engineering goods on deferred payment basis, as also service exports. During the period April 2006 to March 2007, the Bank supported 38 project export proposals aggregating Rs.6,635 crore, in 13 countries. E.3 Merchant Banking The Bank further intensified its thrust in the area of syndicated foreign currency loans and participated in corporate syndicated loan deals amounting to USD 9,121 mio during April 2006 to March 2007, besides extending several bilateral facilities aggregating US$ 376 mio. Bank has participated in 13 Merger and Acquisition deals aggregating US $ 5,375 mio to the extent of US$ 1,073.07 mio as against participation in four deals aggregating US $ 554.50 mio to the extent of US $ 204.50 mio during the previous year. E.4 Forex Turnover During April 2006 to March 2007, the Bank recorded a total turnover of Rs. 5,11,712 crore in its forex business (Rs. 2,81,209 crore in Sales and Rs. 2,30,503 crore in Purchases) reflecting an increase of 18.18% over the previous year. E.5 Global Link Services (Export Payments & Clean Collections) Global Link Services (GLS) of the Bank facilitates export payments and other overseas collections, thereby improving the profitability of the Bank's foreign exchange operations. During the fiscal year 2006-07, GLS collected on behalf of domestic branches of the Bank proceeds of 148,000 export bills in US dollars and Euros, and the proceeds of 277,463 cheques in Sterling. Euro and US Dollars aggregating USD 13000 mio and USD 321.16 mio respectively, in value terms. Remittance by NRIs: GLS has also introduced Inward Remitttance products on Electronic Platform. During the year, 215,176 Inward Remittances, in US dollars/GBP/INR were handled from USA, UK and Middle East through various exchange companies, our foreign branches and online direct customers in the USA. E.6 Correspondent Relations To cater to the needs of a large customer base of the Bank, and to also supplement the efforts of our foreign offices in the area of International Banking, the Bank has developed a network of Correspondent Banks numbering 525 consisting of reputed International Banks spread over 126 countries. The Bank also has about 1100 Bilateral Key Exchange (BKE) arrangements for SWIFT, which facilitates a seamless flow of financial messages covering trade, remittances etc. F. ASSOCIATES AND SUBSIDIARIES F.1 The State Bank Group with a network of 14,337 branches including 4820 branches of its seven Associate Banks dominates the banking

industry in India. In addition to banking, the Group, through its various subsidiaries, provides a whole range of financial services which includes Life Insurance, Merchant Banking, Mutual Funds, Credit Card, Factoring, Security trading and primary dealership in the Money Market. F.2 Associate Banks SBI's seven Associate Banks had a market share of 7.52% in deposits and 7.56% in advances as on the last day of March 2007. Performance Highlights of Associate Banks (ABs) Gross NPA ratio improved from 2.62% in March 2006 to 1.83% as on March 2007. Net NPA ratio was at 0.76%. The combined operating profit of Associate Banks registered a growth of 10% and stood at Rs.4,433.61 crore and net profit at 31.03% and Rs.2,030.74 crore. F.3 SBI Commercial & International Bank Ltd. (SBICI) As at the end of March '07, the aggregate deposits and total advances of SBICI stood at Rs. 446.86 crore and Rs.340.06 crore respectively. The Bank recorded an operating and net profit of Rs.6.18 crore and Rs.7.55 crore respectively. During the year, net NPA ratio is just 0.19% as on March 2007. Performance Highlights of Non-Banking Subsidiaries/Joint Ventures F.4 SBI Capital Markets Limited (SBICAP) To fully exploit the opportunities arising out of the increasing funding requirements of corporate India, SBICAP substantially enhanced its scale of operations in the Project Advisory & Structured Finance (PA&SF) and Mergers & Acquisitions (M&A) areas. SBCAP is ranked as no.l lead Arranger in the Asia Pacific Region (including Japan) for the second consecutive year, by both Project Finance International (PFI) and Bloomberg. It was also ranked 9th and 3rd globally by PFI in the `Project Finance Arranger' and `Project Finance Advisory' categories respectively, in 2006. SBI Cap is ranked as the number one "Project Finance Advisor" in the PFI league table and moved to the numero uno position from seventeenth position the previous year, in the "Syndicated Loans Bookrunner" category by Bloomberg. Table - 6 The performance highlights of the Associate Banks as at March 2007 are as under: (Rupees in Crore) Name of the Bank SBI's share in the capital (%) Deposits Advances Operating Profit Net Profit

State Bank of Bikaner & Jaipur Hyderabad Indore Mysore Patiala Saurashtra Travancore All 7 Banks

75 100 98.05 92.33 100 100 75 -

28480 42881 19976 22022 39184 15871 30984 199398

20766 28346 15482 16762 29049 11162 25074 146641

679.20 1003.80 388.96 471.58 789.13 248.81 852.13 4433.61

305.80 505.50 189.96 249.23 366.53 87.44 326.28 2030.74

SBICAP has converted its broking arm SBICAP Securities Ltd., into a subsidiary and SSL has 134 branches. SBICAP Ventures Ltd., Softbank, Japan (SBI Holdings Ltd.,) have signed an MOU for setting up a USD 100 million Knowledge Sector Fund. In 2006, SBICAP (UK) Ltd., got the authorization to undertake Corporate Finance and Investment Advisory activities in the UK, and part of the European Economic Area (EEA). It arranges for its clients Foreign Currency Convertible Bonds (FCCBs), Global Depository Receipts (GDRs), Private Equities (PEs) and Cross-border Mergers and Acquisitions (M&As). F.5 SBI DFHI LTD SBI group holds 67.01% of the Company's paid up capital, while other Nationalized Banks hold 22.46%. All India Financial Institutions and Private Sector Banks hold 5.84% and the Asian Development Bank holds 4.69% as on March 31,2007. For the period upto March 2007, the Company had earned a PAT of Rs.53.25 crore. Company prudently diversified into profitable Non-SLR avenues resulting in better profits this year. Total Secondary market turnover of the company was Rs.22,791.84 crore. The market share (Proprietary) was 2.47%. F.6 SBI Cards & Payments Services Pvt. Ltd. (SBICSPL)

During the year 14.81 lac additional cards were issued increasing the Cards in Force (CIF) to 33.57 lacs up from 24.27 lacs in 2005-06. Revenue generated was Rs.896.50 crore. The Company maintained profitability of its operations, and achieved a pretax profit of Rs.91.22 crore this year. SBI Cards is in 2nd position in the country under market share. New products launched during the year were, `Truly Gold' SBI Gold Master Card, GO Air SBI Credit card. New promotional initiatives of the year were, `Low interest offer', The Smart Traveller offer', etc., to increase SBI Card usage and particularly for using the card for cash drawals, such as `Payment Holiday offer', Targeted Cash Offer', etc., F.7 SBI Life Insurance Company Limited (SBILife)

SBI Life, which has been making rapid strides in the liberalized life insurance industry in India has covered 6.49 million lives upto March 07 by selling its products through over 7000 branches of the State Bank Group, thereby earning the distinction of being the company with the highest number of lives covered, among private players. Gross premium income was over Rs. 2,929 crore for the period ended March 2007. SBI Life enjoys the unique distinction of being the private sector life insurance company in India to make profits for two consecutive years. SBI Life has made a net profit of Rs.3.83 crore during the financial year 2006-07 and total Assets Under Management of the Company stood at Rs.4,741 crore as on March 31, 2007. F.8 SBI Funds Management (P) Ltd. (SBIFMPL) SBIFMPL was judged "Mutual fund of the year" by CNBC/TV-18/CRISIL. SBI FMPL Equity Schemes won 11 awards during the year. The ranking of the AMC in terms of Assets Under Management remained at 7th position as on 31st March 2007. SBIFMPL reported a total cashflow of Rs. 52,512 crore in the various schemes during the year. The total net assets of domestic funds under management are Rs. 16,873 crore. The company reported a net profit of Rs.29.78 crore after tax for the period ending March 2007 as against Rs. 18.64 crore for the previous year. F.9 SBI Factors and Commercial Services Pvt. Ltd. (SBIFACTORS)

Asset level of the Company increased by 33% (from Rs.919.36 crore to Rs. 1,225.18 crore) and the number of clients increased by 48% (from 750 to 1106) during the year. It recorded a growth of 56% (year-on-year) in total income and ended the year with a PBT of Rs. 20.36 crore as against Rs.15.80 crore last year and PAT of Rs. 13.10 crore, as against Rs. 10.67 crore last year. G. ASSET QUALITY NPA MANAGEMENT G.1. The gross NPAs and net NPAs of the Bank have been brought down to 2.92 % and 1.56% as at end of March, 2007, from the previous year-end level of 3.61% and 1.88% respectively. G.2. Cash assets to The Gross Rs. 4,594 recoveries of Rs. 1,940 crore and upgradation to standard the tune of Rs. 1,257 crore were achieved during the year. reduction till the end of March 2007 was to the tune of crore.

G.3. Apart from the reduction in NPAs, a cash recovery of Rs. 972 crore has been effected in written off accounts during the year. G.4. Slippages of standard assets to NPA category to the tune of Rs. 4,964 crore resulted in marginal increase of Rs. 370 crore in the Gross NPA level. However, slippages were arrested by identification and

monitoring of Special Mention Accounts as per the guidelines of RBI by prompt reviews and taking quick corrective action. Restructuring of impaired standard assets as well as viable non performing assets, both under CDR mechanism as well as under Bank's own scheme, were given top priority for arresting new additions and reducing the existing level of NPAs. G.5. 116 cases were referred to CDR for restructuring till 31.03.2007 in which the Bank had an aggregate exposure of Rs. 7,678 crore. Out of these cases, 94 cases with an exposure of Rs. 6,726 crore were approved and two, with an exposure of Rs. 43 crore, were under process. G.6. 110 Financial Assets including NPAs and AUCAs, involving principal outstanding of Rs. 123.45 crore had been sold to other banks/ARGIL during the year. H. INFORMATION TECHNOLOGY: H.1. The Bank is pursuing an aggressive IT policy as a strategic initiative to meet the growing competition for business and market share, achieve efficiency in internal operations, and meet customer expectations. With this end in view, several initiatives were undertaken, viz. ATM Project, where ATMs are now also enabled to pay utility bills, and college fees, book air-line tickets, accept donations etc. Further, bilateral sharing of ATMs was extended to thirteen banks, covering 15,700 ATMs, and an MOU has been signed with the Indian Railways for installing ATMs at 682 Railway Stations. H.2. Core Banking Solution (CBS) presently covers 72 million accounts, and more than 85% of the bank's business. Finacle Project for Treasury and Core Banking Solution has been implemented at 73 foreign offices in 22 countries, alongwith Internet Banking at all foreign offices. Further, Internet Banking has been implemented at 4841 domestic branches, and used by retail banking customers for utility bill payment and booking of Rail and Air tickets. H.3. Payment Systems Group is responsible for implementation of RTGS, (4748 branches) NEFT (4690 branches), setting up MICR Cheque Processing Centres (5 new) and adding ECS facility at Clearing Houses managed by SBI (22). H.4. IT Policy and IS Security Policy have been implemented after being benchmarked against best global practices. The Bank's Central Data Centre and Disaster Recovery Centres were certified as ISO/IEC 27001:2005 Compliant, which is the new International Standard for Information Security Management Systems. H.5. SBI Connect, the Wide Area Networking (WAN) project of the Bank, is capable of carrying data, voice and video. All Applications requiring connectivity now ride on the SBI CONNECT backbone, in addition to 5794 branches/offices of SBI and 4995 branches/offices of Associate Banks being networked under the SBI Connect Project. Miscellaneous Operations

1 2 3

Risk Management & Internal controls Management Information System Allied Activities

I. RISK MANAGEMENT & INTERNAL CONTROLS Risk Governance Structure: An independent Risk Governance structure, in line with international best practices, has been put in place in the Bank. This is in the context of separation of duties/independence of risk measurement, monitoring and control functions of the Bank. An independent position of 'Chief Risk Officer' has been created to ensure integrated risk management for credit, market and operational risks. 1.1 Credit Risk Management The existing Credit Risk Assessment (CRA) system for the Corporate Borrowers has been enlarged to meet the requirements of the Basel II accord. New CRA Models for both Non-Trading and Trading sectors have been designed. These Models have been designed with a view to conform to the requirements of risk measurement as stipulated under the Advanced Internal Ratings Based (AIRB) approach of Basel n. 1.2.1 Market Risk Management Bank has developed sensitive tools to hedge and minimize the risks arising out of movements in interest rates, currency exchange rates and commodity prices. 1.2.2 Asset Liability Management The Asset Liability Management (ALCO) of the bank is engaged in evolving appropriate systems and procedures for ongoing identification and analysis of Balance Sheet risks and laying down parameters for efficient management of the same. Market Risk Management includes important tasks such as Liquidity Risk Management, Interest Rate Risk Management, Interest Rate Views, Economic, Market and Behavioral Analysis, Policy Formulation and Balance Sheet simulation, on an on-going basis. 1.2.3 BASEL II Implementation While the Bank is updating/fine-tuning Systems & Procedures, Technology capabilities, Risk Assessment, Risk Governance Structure etc., to meet the requirement of the Advanced Approaches, for the present, the Bank proposes to migrate to Basle II with the Basic Approaches, in line with RBI Guidelines. 1.3 Operational Risk Management The Operational Risk Management Committee in the Bank oversees the Operational Risks and ensures that the requisite control measures are

in place, in line with the operational risk management policy of the Bank. 1.4 Country Risk & Bank Exposure Prudent exposure risk management is being ensured by setting lip appropriate bank exposure limits - product-wise, on a large number of Foreign Commercial Banks. Substantial counterparty bank limits for handling letters of credit, bank guarantees, forex and money market activities are in place. Limits are also set up for Investment/Lines of Credit related exposures on acceptable banks, in order to clear bankable propositions. The Country Risk Management Policy, in line with RBI guidelines for setting up country exposure limits, is in place, and the overall country risk for the Bank as a whole is monitored on a regular basis. 1.5 Internal Controls 1.5.1 The Bank has an in-built internal control system with well-defined responsibilities at each level. The Inspection & Management Audit Department of the Bank carries out 3 streams of audit, viz. Inspection and Audit, Credit Audit and Management Audit, covering different facets of the Bank's activities. 1.5.1.1 Inspection and Audit Risk Focused Internal Audit (RFIA), an adjunct to risk based supervision, as per RBI directives, was introduced in the Bank's audit system on 01.04.2003. All domestic Branches have been segregated into 3 groups on the basis of business profile and risk exposures, and are being subjected to RFIA. 1.5.1.2 Credit Audit Credit Audit aims at achieving continuous improvement in the quality of the Commercial Credit portfolio with exposures of Rs.5 crore and above. Duly aligned with Risk Focussed Internal Audit, it examines the probability of default, identifies risks and suggests risk mitigation measures. 1.5.1.3 Management Audit Management audit has been reoriented to focus on the effectiveness of risk management in processes and procedures. Management Audit of six Circles was taken up and completed during the current year. 1.5.1.4 Vigilance Vigilance Department of the Bank oversees 3 primary aspects of vigilance: Preventive, Detective and Punitive. This is achieved through various means, i.e through linkages with the training system, customer education, Inspection & Audit Department, as well as suitable incentive schemes.

J. MANAGEMENT INFORMATION SYSTEM (MIS) MIS in the Bank is being constantly assessed, upgraded and fine tuned to cater to the growing information requirements, of which the Data Warehousing Project is a major initiative. K. ALLIED ACTIVITIES K.1 Customer Service: A number of initiatives were launched to intensify focus on customer service. These include conducting of Open House or Town Hall Customer Meets with participation by Circle Management; `Operation Samay' at branches to ensure that counters open for business before time and drawing up of ground rules for customer service for operating staff. Customers were encouraged to provide frank and honest feedback on services at Open House,Meets. The Bank became a member of the Banking Codes and Standards Board of India (BCSBI) in September 2006. The Bank has thereby adopted the BCSBFs Code of Bank's Commitments to Customers as the Fair Practice Code for implementation at all its branches. The Bank has also appointed Code Compliance Officers at all its Local Head Offices. The Bank places importance not only to redress customer grievances but also in identifying systemic/attitudinal issues, if any, that lead to a high frequency of complaints in particular areas and in rectifying them. K.2 Community Services Banking Apart from the normal Banking operations, the Bank, as a responsible and responsive corporate citizen, seeks to reinvest part of its profit in various community welfare projects to improve the quality of the life of the poor, neglected, weaker and downtrodden sections of society. Miscellaneous L M N O P Corporate Communication & Change Organisational Planning' Right to Information Act (RTI Act 2005) Human Resources Management Official Language

L. CORPORATE COMMUNICATION & CHANGE The Bank has launched a massive Transformation Exercise in order to be competitive in the fast changing environment. An inclusive Culture, focussing on People - Customer and Staff- is being ushered in, with the aim of becoming the Best in Customer Service. A new department Corporate Communication & Change, has been created at Corporate Centre to monitor and drive the various change initiatives. M. ORGANISATIONAL PLANNING - CHANGES IN SENIOR POSITIONS IN THE BANK

New senior positions were created during the year, i.e., Deputy Managing Director & Group Executive (Rural & Agri. Business), Deputy Managing Director & Group Executive (Treasury & Markets), Deputy Managing Director (Corporate Strategy & New Businesses), General Manager (Corporate Communication & Change) and General Manager (Super Circle of Excellence), as part of new initiatives for focusing on market segments, that need ongoing monitoring of the growth in business. A new Risk Management structure with new positions, has been put in place at Corporate Centre, to enable the Bank to comply with the first phase of implementation of Basel II. N. RIGHT TO INFORMATION ACT 2005 (RTI ACT 2005) Structure has been put in place for handling requests and appeals under the RTI Act 2005. All Branch Heads (excepts GAG), all Heads of OAD at ZOs/LHOs and AGM (RTI) at corporate centres have been designated as ACPIOs. General Managers of Networks at Local Head Offices; Branch Heads of GAG; General Managers of Mid Corporate-Region; General Manager (SAMG) at Corporate Centre and General Manager (OL & CS) have been designated as CPIOs. The Chief General Manager (BO) has been designated as Appellate Authority under the Act. An exclusive `RTI Cell', has been created in Corporate Centre, to handle and co-ordinate various issues under the Act. O. HUMAN RESOURCES MANAGEMENT (HRM) O.1 HRMS Project To derive the benefits of the technology up-gradation drive, the Bank has put in place its HR processes with the overall objective of gaining efficiency in its operations, and aligning the HR processes with business objectives. Thus HRM solution which is in the process of implementation would handle all aspects of HRM, including payment of wages and salaries, performance management, training management, leave administration etc. For this purpose, Bank has selected SAP-ERP-HRMS solution for implementation across the State Bank Group. O.2 Personnel Management A few of the important developments/initiatives taken were as under:a) The Exit Option scheme for the officers has been withdrawn and kept in abeyance w.e.f. 01.11.2006. b) Introduced a scheme for extending legal and financial support to the Executives of the Bank against whom motivated false complaints have been made by people/agencies outside the Bank. c) Pension for the employees retiring on or after 1.11.2002 was revised in the current year.

O.3 Business Process Re-engineering (BPR) BPR Project is redesigning business processes to leverage the Core Banking Platform to improve the Bank's performance in key business areas and also quality of service. O.4 Industrial Relations In order to avoid delays on account of handing over/taking over of cash every day in the morning and evening, In-Branch Cash Handling system has been introduced. O.5 Recruitment The Bank has recruited Marketing & Recovery Officers (Farm Sector) for special thrust on marketing of Agriculture and Allied Activities. O.6.1 Staff Strength The Bank had a total staff strength of 1,85,388 on the 31st March, 2007. Of this, 29.99% are officers, 43.73% clerical staff and the remaining 26.28% were sub-staff. O.6.2 Implementation of Persons with disabilities (PWD) Act 1995 Our Bank provides reservation to persons with disabilities (PWDs) as per the guidelines of the Government of India and section 33 of the PWD Act 1995. The total number of persons with disabilities who were employed as on 31.03.2007 was 1179. Category Total strength 55599 81080 48709 185388 No. of persons with Disabilities 290 635 254 1179

Officers Clerical Sub-staff Total

O.7 Representation of Scheduled Castes and Scheduled Tribes As on the 31st March, 2007, 34,909 (18.83%) of the Bank's total staff strength, belonged to Scheduled Caste and 11,527 (6.22%) belonged to Scheduled Tribes. In order to effectively redress the grievances of the SC/ST employees, Liaison Officers have been designated at all administrative offices of the Bank. Senior officials of the Bank hold regular meetings at periodic intervals with the representatives of SC/ST Welfare Federation and SC/ST Welfare Association at Corporate Centre, LHOs and Zonal Offices. P. OFFICIAL LANGUAGE

Bank's In-House Hindi magazine "Prayas" has once again bagged 1st Prize for the year 2005-06 among the In-House Hindi magazine competition for Public sector Banks/Financial Institutions conducted by RBI, for the third consecutive year. Facility for transacting on Bank's ATMs in respective regional languages, Hindi and English is available. Bank's ATM Card is also issued in bilingual format. News related to banking and finance and templates of letters and forms of repetitive nature in Hindi, general noting in Hindi, Hindi equivalents of new terms of banking and finance, Hindi teaching and training material are now available on Bank's intranet "SBI Time's", which is helping in increased usage of Hindi in the Bank. A software enabling printing of reports in Hindi in Bank Master branches is now available. Responsibility Statement The Board of Directors hereby states : i. that in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; ii. that they have selected such accounting policies and applied them consistently and made judgments and estimates as are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank as on the 31st March 2007, and of the profit or loss of the Bank for the year ended on that date; iii. that they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Banking Regulation Act, 1949 and State Bank of India Act, 1955 for safeguarding the assets of the Bank and preventing and detecting frauds and other irregularities; and iv. that they have prepared the annual accounts on a going concern basis. Acknowledgement During the year, Shri A.K. Purwar, Chairman, laid down office on 31st May 2006, consequent upon his attaining the age of superannuation. Further, consequent upon the elevation of Shri Ashok Jha, GOI Nominee Director on the Bank's Board, as Finance Secretary, Shri Vinod Rai, Secretary (Financial Sector) was nominated to the Board vice Shri Jha. The Directors place on record their appreciation of the contributions made by Shri Purwar and Shri Jha to the deliberations of the Board. The Directors express their gratitude for the guidance and co-operation received from the Government of India, RBI, SEBI, IRDA, and other government and regulatory agencies. ;

The Directors also thank all the valued clients, shareholders, banks, and financial institutions, stock exchanges, rating agencies and other stakeholders for their patronage and support, and take this opportunity to express their appreciation of the dedicated and committed team of employees of the Bank. For and on behalf of the Central Board of Directors O.P. Bhatt Chairman Date: 12th May, 2007

Company History - Bank of India 1969 - The Bank was brought into existence by an Ordinance issued on 19th July by the Central Government. In terms of the Ordinance, the Undertaking of `The Bank of India Ltd.' was transferred to and vested in the new bank. The Ordinance was replaced by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1969. 1970 - The Acquisition and Transfer of Undertakings Act was declared null and valid by the Supreme Court on 10th February. An ordinance was thereupon promulgated which was later replaced by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 which was made effective restrospectively from 19th July, 1969. - Under the `Lead Bank Scheme' the Bank was allotted 30 districts in 5 states - 9 in Maharashtra, 9 in Madhya Pradesh, 2 in Orissa, 4 in Bihar and 6 in U.P. 1985 - Rs 43 crores capital contributed by Government. 1986 - Rs 27 crores capital contributed by Government.

1988 - Rs 35 crores capital contributed by Government. 1989 - The Bank of India Finance Ltd. was incorporated in June as a subsidiary of Bank of India to extend a complete package of professional financial services to the corporate sector, including merchant banking, leasing and investment banking. - Rs 140 crores capital contributed by Government. 1990 - BOI Mutual Fund was estabished, to provide direct services to investors by pooling their resources and investing in capital market securities. - Rs 100 crores capital contributed by Government. 1991 - Rs 110 crores capital contributed by Government. 1993 - Rs 6357 crore capital contributed by Government. 1994 - A new subsidiary of the bank was formed to manage the investment operations of BOI Mutual Fund. It received Certificate of Commencement of Business on 21st February. - Rs 848.38 crores capital contributed by Government. 1995 - In terms of Ministry of Finance the accumulated loss of Rs 1369.91 crores adjusted against paid-up capital. 1996

- Rs 93.47 crores returned to Government as a part of capital restructuring. 1500,00,000 equity shares (prem. of Rs 35 per share) issued to public through prospectus. 1997 - The BOIFIN was associated with 12 issues as Lead Managers/Co-Manager/Arranger. - The Company became Depository Participate of National Securities Depository Ltd., for the purpose of clearing and settlement of trades in the dematerialised segment of BSE. 1998 - As on 31st March, the Bank had sponsered 16 Regional Rural Banks with capital of 5.60 crores and a total branch network of 992 in five states. - Bank of India has been awarded the Gem & Jewellery Export Promotion Council Award. - Bank of India (BOI) has set up a full fledged risk management department at its corporate office. The bank has already integrated its money market and forex operations to set up global treasury which will be better equipped to manage the types of risks arising from capital recent convertibility. - Four Banks - State Bank of India (SBI), Bank of India (BoI), Oriental Bank of Commerce (OBC) and Hongkong Bank - have introduced term deposits with a minimum maturity of 15 days. - Bank of India (BoI) has tied up with Equifax Venture Infotek Ltd (EVI) to automate its credit card operations to provide electronic solutions to its customers. EVI is a 50:50 joint venture between the US-based Equifax Inc and Venture Infotek. According to the agreement, BoI would provide point-ofsale (POS) terminals at its leading card acceptance establishments all over the country. - Mr. A.M. Ahmadi, former Chief Justice of India, on Monday presented the Bank of India Excellence Awards to five personalities in the fields of finance, literature, management, music and arts and media. - The public sector Bank of India has launched the BOI Navy Card with MasterCard International on the occasion of Navy Day. 1999 - The Mumbai Stock Exchange (BSE) and the Bank of India (BoI) have set up an internal working committee to review the working of the BoI Shareholding and also make it a `self sustaining unit'. - The public sector, Bank of India (BoI), is currently on an exercise of restructuring its subsidiaries. As

a part of the restructuring, the bank will be taking stock of the viability of the subsidiaries and try to turn them around. - BoI will enter the insurance partnership with a foreign insurance company. 2000 - Bank of India has introduced floating interest rate on deposits for select customers, besides advancing on Mumbai Inter Bank Offer Rate (MIBOR). - Bank of India (BoI) has unveiled major business initiatives like the introduction of a centralised banking system, floating deposit schemes and cash management services. - Bank of India (BoI) plans to introduce a centralised banking programme which will facilitate anytime and anywhere banking for its customers. - Bank of India and Andhra Bank have become the first public sector banks to receive an in-principle approval to dilute government shareholding in them to 33 per cent through mobilisation of fresh capital via a public issue. - The Bank has offered a special deposit scheme for investors in BoI Mutual Fund's Double Square Plus (1990) Scheme, which would be redeemed on September 1. - Bank of India has revised its FCNR, NRE and NRNR deposit rate effective from 11th September. - Bank of India has hiked the rates on foreign currency non-resident Indian (FCNR) account effective 2nd October. - Venugopalan, general manager, Bank of India (BoI) has been appointed as the new executive director of Union Bank of India (UBI). - Mr. Onkar Nath Singh has been named executive director of Bank of India for a period of five years. - The Bank has joined Central Depository Services as depository participant. - Bank of India will close down its merchant banking arm, BoI Finance. 2001 - State-Run Bank of India has suspended bullion trading in Ahmedabad after being hit by a payment crisis involving a troubled cooperative bank.

-Bank of India has passed a resolution to return Rs 300 crore capital to the government. Chairman K V Krishnamurthy said the depressed share value has been a matter of concern to the management. - Bank of India (BoI) has finalised a comprehensive human resource development (HRD) package for its employees. The scheme is believed to provide impetus to banks business growth and will cost the bank around Rs 30 lakh per annum. - Bank of India (BoI) has reported a 63 per cent rise in net profit at Rs 135.16 crore in the secondquarter ended September 30, 2001. - Bank of India proposes to convert its fully-owned subsidiary in Kenya into a full-fledged bank. The two existing BoI branches in Kenya will also be merged into the entity. According to Mr S.A. Bhat, General Manager, International, BoI. - Bank of India has informed that Shri S.R. Sengupta and Shri A.B. Telang have relinquished their office from Directorship of the Bank with effect from January 01, 2002. This is pursuant to their attaining age of superannuation. 2002 - Bank of India on March 30th returned Rs 150 crore capital to the government, bringing down its capital base from Rs 639 crore to Rs 489 crore. -Bank of India has informed that it has decided to exit from the Mutual Fund Business and therefore the remaining two current Mutual Fund Schemes have been sold to Taurus Mutual Fund. -Deveshwar Kumar nominated by GOI as non official Director of BOI. -Bank of India has informed BSE that the Government of India has nominated Mr Deepak Prabhakar Patil as a Workmen Employee Director on the Board of Directors of Bank of India for a period of three years with effect from August 29, 2002 and thereafter until his successor is appointed or till he ceases to be an Workman Employee of the Bank of India. -Bank of India has informed that the following four persons who have polled the majority votes have been elected as Directors in the EGM held on October 10, 2002.Mr Sadagopan Sowmyanarayanan,Mr Sheth Tarun,Mr Shastri Girish Ramanugrah,Mr Chandra Bhagwantrao Govindrao -Extends its Multi-Branch Banking (MBB) facility to all its branches in Mumbai -Enters film financing sector, becomes the first commercial bank to enter the sector

-High Court at Mumbai sanctions amalgamation of BOI Finance Pvt. Ltd. (100% subsidiary) with Bank of India (BOI) -Slashes interest rates on FCNR deposits by 20-35 basis points (bp) -Ties up with ICICI Bank to utilise wide branch network covering 1,000 branches for ICICI Bank's cash management services -Prunes the number of training centres from 14 to 5 -Becomes the bank with third highest Non Performing Assets (NPA) -Reduces deposit rates by 40 to 75 basis points -Decides to merge BOI Asset Management Co. Ltd. (BOIAMC), a wholly owned subsidiary, with the Bank -IBA gives its nod for second phase of BoI VRS -Reduces Prime Lending Rate (PLR), deposit rates by 50 basis points -Changes the maturity buckets for interest rates on domestic as well as non-resident external rupee (NRE) term deposits -Slashes deposit rates across all maturities -Appoints Deloitte Touche Tohmatsu India Pvt Ltd. as a special recovery agent for recovery of NPAs -Slashes interest rate on Euro-denominated FCNR deposits 2003 -Introduces mobile ATM in Mumbai -Slashes the rate of interest on FCNR US dollar and euro deposits by 10-25 basis points across maturitie effective January 4 -Approves insurance referral business at Hong Kong Centre -Enters into a tie-up with leading information technology players CMC Ltd. and Infrasoft Technologies

to extend its multi-branch banking (MBB) facility to another 450 branches in 21 cities -High Court approves Scheme of Amalgamation of BOI AMC with Bank of India -Four state-owned banks (Bank of India (BoI), Indian Bank, Syndicate Bank and United Bank of India) enter into an agreement to share their respectime ATM (automated teller machine) networks -Government clears Bank of India's (BoI) proposal to settle Rs 137 crore outstanding with Ketan Parekh -Introduces 'Starlinks' global debit card in partnership with Visa International and India Switch Company -Finance Ministry, RBI approve compromise formula for bank's due recovery from stock broker Ketan Parekh -Networks 275 out of 2541 branches at a cost of Rs 14 crore -Launches its first off-site ATM in Sathy Main Road in Coimbatore on September 11 -The bank has taken possession of a tea factory in Coonoor under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002. -Bank of India divested Silverline's 45 lakh shares at Rs 8 -Revises interest rates on domestic term deposits with effect from Dec 1 -The Company has tied up with insurers for Bankassurance products - both life insurance and general insurance. The bank launched some of the products on December 09, said it had tied up with ICICI Prudential Life Insurance Company and National Insurance Company. -Bank of India ties up with ICICI prudential 2004 -Board approves increase in Tier II Capital by issue of subordinated bonds -Bank of India & Canara Bank acquire 4% in Mercator Lines Ltd. -Bank Of India has informed that the Govt of India vide its notification dated January 09, 2004 has nominated Mr. V S Das, Chief General Manager-in-charge, Department of Government and Bank

Accounts, RBI as Director on the Board of the Bank w.e.f. January 09, 2004 in place of Mr. M P Kothari, Regional Director, RBI. -BoI signs tractor finance agreement with L&T-John Deere -Launches IPO financing, becomes the first public sector bank to do so -Revises interest rates on its FCNR deposits in dollar and euro currencies -Launches Star IPO, a demand loan for investors interested in subscribing to initial public offerings (IPO) approved by the bank -Bank of India (BoI) has raised Rs 200 crore by way of issuing Tier II subordinated bonds. -BoI inks pact with Escort Tractors -BoI inks pact with Punjab Tractors -Bank of India opens first off-site ATM in Tiruchi -Bank of India introduces new Kisan Samadhan card -BoI ties up with Greaves Cotton 2005 - Bank of India (BoI) enters collaboration with ACIL-Navasarjan Rural Development Foundation (ANARDE), a non-government organisation (NGO) to increase rural penetration and boost lending to the agriculture sector. - Launches an international gold credit card in association with Visa International on January 5, 2005 -BoI unveils new 'Star Diamond Saving Account' -Bank of India appoints Shri M Balachandran as Chairman & Managing Director (CMD) up to April 30, 2007 -BOI signs MoU with LG to finance consumer durables -Bank of India teams up with Nabard arm for agri projects

-Bank of India ties up with ICICI Prudential Life Insurance to provide cover to housing loan borrowers against risk of death during the loan tenure. -Bank of India and Banco Popolare Di Verona E Novara signed a Memorandum of Understanding (MoU) for supporting their respective customers doing business in each other's countries. 2006 -BoI inks MoU with Exim Bank -BoI join hands with Andhra Bank to set up Dai-ichi Mutual -Change of address: the Company Secretary Bank of India Share Department, 8th Floor, Star House, C - 5, G. Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. -BoI joins hand with SIDBI to train jewellers 2007 - Bank of India has appointed Shri. A D Parulkar as Executive Director of the Bank. 2008 -Bank of India has informed that the Government of India, Ministry of Finance, Department of Financial Services vide its Notification has nominated Shri. Amit Kumar Motayed as Officer Employee Director in place of Shri. V Eswaran for a period upto January 31, 2011 from the date of notification or until he ceases to be an officer of the Bank of India or until further orders, whichever is the earliest. - Bank of India has appointed Shri. B A Prabhakar as Executive Director of the Bank. He has taken over charge on October 15, 2008. -BoI launches debt waiver scheme -Bank of India on July 23 opened the first branch of its Tanzanian subsidiary, BoI Tanzania at Dar-esSalaam. 2009 - Alok K. Misra was appointed as Chairman and Managing Director succeeding T. S. Narayanasami of Bank of India by the centre. He was the CMD of Oriental Bank of Commerce till now.

- Bank of India has informed that the Government of India, Ministry of Finance, Department of Financial Services vide their Notification dated August 05, 2009 has appointed Shri. Alok Kumar Mishra as Chairman and Managing Director of the Bank. He has taken over charge on August 05, 2009. -BoI launches new home loan plan for new borrowers -Bank of India has signed a memorandum of understanding with Tata Motors to provide financing for Tata's entire range of commercial vehicles.

Director Report
Mar2010 Mar 2011

The Board of Directors have pleasure in presenting the Banks Annual Report along with the audited statement of accounts and the cash flow statement for the year ended 31st March 2011.
PERFORMANCE HIGHLIGHTS FINANCIAL PARAMETERS - Operating profit Rs. 5,384 crore. - Net Profit Rs. 2,489 crore, recording 42.94% growth over previous year. - Capital Adequacy Ratio at 12.17% as against 12.94% in previous year (under Basel-II). - Net Worth at Rs. 15,500 crore grew by 24.43% over March 2010. - Book Value per share Rs. 283.24 (Rs. 236.84 previous year). - Gross NPA ratio at 2.23% as on 31.03.2011. - Net NPA ratio at 0.91% as on 31.03.2011. - Total business (Deposits + Advances) reached at Rs. 5,15,040 crore recording a growth of Rs. 1,13,961 crore (28.41%). Domestic business grew by 26.02% to reach the level of Rs. 4,18,110 crore. - Total deposits increased by Rs. 69,124 crore reached the level of Rs. 2,98,886 crore, a growth of 30.08%. Domestic deposits increased by 28.68% to reach the level of Rs. 2,52,963 crore. Share of low cost deposits in the domestic deposits is 29.18% as on 31.03.2011. - Gross credit touched Rs. 2,16,154 crore, recording a growth of 26.17% with domestic credit recording a growth of 22.16% to reach level of Rs. 1,65,147 crore.

- Priority Sector lending constituted 46.27% of Net Adjusted Bank Credit and the share of Agricultural Credit to Net Adjusted Bank Credit was 16.76%. - Credit to SME sector grew from Rs. 29,568 crore to Rs. 35,586 crore recording a growth of 20.35%. - Retail Credit grew by 5.70% from Rs. 15,750 crore to Rs. 16,649 crore. - Export Credit registered a growth of Rs. 898 crore, i.e., 13.53% growth over previous year. NEW PRODUCTS & SERVICES - Welcome Kits introduced for NRI Customers opening NRE/ NRO accounts at foreign centers. - Calculation of interest on Savings Bank account, from 1st April 2010, has been changed from monthly product basis to daily product basis. - Launched Marathi version of the Banks website. - As per Finance Ministry guidelines and recommendations, the Banks corporate web-site (English) has been enabled for persons with Disabilities. - The Bank has introduced a new format of Savings Bank Passbook (Horizontal Format) which will print all details of the transaction on the same page as against the existing format (Vertical Format) where the details are printed on two pages. - As per Banking Codes and Standards Board of India (BCSBI) requirements, the Bank is printing helpline number on the passbook & statement of accounts. - The Bank introduced issuance of insta-pin for Debit-cum- ATM Card. This will address the customer grievance for non-receipt of Re-pin and also save the effort and expense in generating and mailing Re-pins. - Quarterly consolidated Statement of a/c is sent to the Diamond customers in PDF format via email. - As a fraud prevention measure, SMS alerts - Star Sandesh are generated and provided to all customers who have registered their mobile number with the Bank for all Debit transactions from delivery channels (Internet banking/ATM/POS); all Debit clearing transactions of Rs. 25,000/- and above; all Customer induced debit transfer & cash payments of Rs. 10,000/- and above; all Debit ECS transactions of Rs. 10,000/- and above; all Debit RTGS transactions and acknowledgment on accepting the cheque book issue request.

- Enabling internet banking customers to make online Fixed Deposit. - Hot Listing/Reset/Unblock/Change of Debit Cum ATM card PIN using Internet Banking password. - Viewing of Annual Tax Statement (Form 26AS). - Star eTrade - Online share trading - Integration with Gupta Equities. - Extended the facility of online e-Payment to the customers holding Banks Debit-cum-ATM card. This will enable the customers to use their Debit-cum-ATM cards for e-payments in addition to credit card & Internet banking account. - Mobile Banking facility is introduced as the latest alternate delivery channel which allows customers to do banking activities virtually from the convenience of the Mobile phone at any time and from anywhere. This facility is extended to all Retail internet banking customers and includes features like Balance enquiry, last five transactions, Cheque status, Funds Transfer & Mobile Payments. - Online Interbank Fund Transfer across banks, through Star Connect Internet Banking Services, using RTGS/ NEFT - BOI Star e-Pay for Auto-pay or on-line payment of various utility services/ bills. - e-Payment for Direct & Indirect, Central Excise & Service Tax. - Star e-Share Trade to trade in shares. - e-Freight Payment. - Online Payment of Directorate General of Foreign Trade (DGFT) license fees. - Online Booking of Railway & Airlines Ticket. - Online Application for Education loan. - Facility to make online bid-cum-application for Application Supported by Blocked Amount (ASBA) IPO issues by Retail Internet Banking Customers having account with any DPO BUSINESS INITIATIVES - Keeping its growth aspirations in mind, the Bank has embarked upon a new bold vision Sankalp 10,000. Sankalp 10,000 rests on the three pillars of Customer First, Building Winning Teams & High performance Driven Culture. - Under Project Sankalp, the organizational structure of the Bank has

been redesigned in September 2010 with its division in two distinctly separate groups of businesses i.e. (a) National Banking Group and (b) Wholesale and International Banking Group in order to have a more focused attention to each business segment. The two groups are headed by the two Executive Directors of the Bank. - National Banking Group (Head Office) - The National Banking Group is comprised of Rural Banking, Financial Inclusion, Retail Banking and SME Banking business units. - Wholesale and International Banking Group (Head Office) - The Wholesale and International Banking Group are comprised Large Corporate Banking, Mid- Corporate Banking, Project Finance, Transaction Banking, International Banking and Treasury. - All accounts of Mid-Corporate and Large Corporate Branches have been mapped to respective branch RSMs. - Fifteen Rural Centralised Credit Processing Centres (CPC) have been started at Belgaon, Ujjain, Barabanki, Mehasana, Ludhiana, Karad, Amalapuram, Tanjavur, Barasat, Hardoi, Nadiad, Ratnagiri, Nashik, Solapur & Barnagar. - In all, 40 focused districts have been identified in 19 zones to target large and medium farmers and large institutions with high credit quality. - Five New Retail Business Centres were launched in 5 identified Zones namely Bangalore, Chandigarh, Mumbai South, New Delhi and Pune on Pilot basis on 14.01.2011. - Five SME City Centres at Ahmedabad, Coimbatore, Kolkata, Ludhiana, and Pune were launched on 14th December, 2010. Subsequently, seven more SME City Centres at Bangalore, Chandigarh, Hyderabad, NewDelhi, Nagpur, Mumbai North and Vadodara have started functioning. - Mid-Corporate branches at Ernakulam, Andheri and Seepz opened. - 10 Mid-Corporate CPCs started functioning. - Large Corporate branches at Mumbai (Nariman Point) and Hyderabad opened. - Lead Management System (Sales Force Automation), to generate, track and monitor leads, revamped. - The Bank is treating financial inclusion as social cause and implementing it as a movement taking all banking products and services to those who are currently deprived from these services. So far, first step towards achievement of financial inclusion was opening of No-Frill Accounts and accordingly the Bank has opened 50.07 lakh No-Frill Accounts.

- The Bank is also implementing IT solutions on end to end basis using hand held devices and smart cards. The Bank has issued/ enrolled 6.01 lakh smart cards. - Project Finance And Syndications Group: It takes up assignments of technical appraisal, underwriting and syndication of loans. During FY11, financial closures were done with a project cost of Rs. 26,901 crore and syndicated debt of Rs. 9,008 crore. Bank of India achieved sixth position in syndication space as per the Bloomberg Lead tables for the calendar year 2010. - The Bank has created a new SME vertical headed by a General Manager to cater to the specific business needs of the segment. A more inclusive definition has been given for SME business to include all business activities with a turnover of up to Rs. 100 crore. The vertical will look for growth not only on credit, but CASA, retail business, fee based income and third party products in the SME segment. - Mobile Banking facility is introduced as the latest alternate delivery channel which allows customers to do banking activities virtually from the convenience of the Mobile phone at any time and from anywhere. This facility is extended to all Retail internet banking customers and includes features like Balance enquiry, last five transactions, Cheque status, Funds Transfer & Mobile Payments. - Established Global Remittance Centre for centralizing some of the activities related to NRI Customers which would hasten turnaround time and product delivery and also enable proactive marketing strategies & grievance redressal mechanism. AWARDS & ACCOLADES - The Bank Technology Initiative Technology has received the Winners Award in International Banking Award 2010 from IBA in the Best Business Enablement category in recognition of its achievement in Banking for the Year 2009.

- The Bank has been adjudged FE-EY Most Efficient Public Sector Bank 2010 by Dalal Street. - Mumbai North Zone of the Bank has received Third Prize for use of Official Language Hindi in Bank from Government of India, Ministry of Home Affairs, Official Language Department. - The Bank has received the consolation prize from Maharashtra State Level Bankers Committee for commendable work done in implementation of official language in Hindi. - The Bank has received National Award for Best Bank in West Zone for PMEGP under lending to KVIC in August 2010. - The Bank has been rated by The Economic Times/The Nielsen company survey The Most Trusted Brands (MTB) 2010 as follows

- Under PSU Banking Category - 2nd next to SBI - Under Top Service Brands-8th rank FINANCIAL REVIEW FINANCIAL PERFORMANCE The Bank recorded an Operating Profit of Rs. 5,384.23 crore, (growth of 14.44% over previous year). Net Profit stood at Rs. 2,488.71Crore, recording a growth of 42.94%. Net interest income grew by 35.70% on the backdrop of rise in volume of business mix by 28.41% (from Rs. 4,01,078.83 crore to Rs. 5,15,040.06 crore). Non-interest income increased by 0.96% and covered 52.12% of Operating Expenses as against 71.34% in the previous year. The Financial performance of the Bank for the year 2010-11 is summarised below: (Amount in Rs. Crore) Particulars Net Interest Income Non-Interest Income Operating Expenses Operating Profit Provisions / Contingencies Net Profit Earnings per share (Rs.) Book value per share (Rs.) Return on Average Networth (%) Return on Average Assets (%) 2009-10 5,755.94 2,616.64 3,667.81 4,704.77 2,963.70 1,741.07 33.15 236.84 14.76 0.70 2010-11 7,810.69 2,641.77 5,068.24 5,384.23 2,895.52 2,488.71 47.35 283.24 8.90 0.82 Growth (%) 35.70 0.96 38.18 14.44 -2.30 42.94 42.84 19.59

Some of the Financial Ratios are presented below: (Percentage) (%) Parameters Yield on Advances 2009-10 8.42 2010-11 8.62

Yield on Investment Yield on Funds Cost of Deposits Cost of Funds Net Interest Margin Non Interest Income to Operating Expenses Other Income to Average Working Fund Operating Expenses to Average Working Fund Staff Expenses to Average Working Fund Other operating Exp. to Average Working Fund Asset Utilisation Ratio Non-Interest Income to Total Income Non-Interest Income to Net Income Cost to Net Income SEGMENT- WISE PERFORMANCE

7.46 7.14 5.16 4.84 2.51 71.34

7.59 7.14 5.03 4.57 2.92 52.12

1.05 1.47

0.87 1.66

0.92 0.55

1.14 0.52

1.88 12.77 31.25 43.81

1.77 10.83 25.27 48.49

The Bank earned an Operating Profit of Rs. 5,384.23 crore during the year 2010-11. The contribution made by Treasury was Rs. 371.38 crore and other banking operation earned a profit of Rs. 5,161.12 crore. The unallocable expenditure net of unallocable income was Rs. 148.27 crore during the year 2010-11. DIVIDEND A Dividend at the rate of Rs. 7 per share (70%) for the year, has been declared. The total dividend payment amounts to Rs. 444.29 crore (including dividend distribution tax). CAPITAL Net worth of the Bank in FY 2010-11 has increased to Rs. 15,499.5 crore from Rs. 12,456 crore. During the year the bank has issued 2,13,04,870 Equity Shares of Rs. 10 each to Government of India at a price of Rs. 474.07 per share, on preferential basis, as approved by the

shareholders in an Extra ordinary General Meeting held in accordance with the regulation 76(1) of SEBI (Issue of Capital and disclosure requirements) Regulations, 2009. The amount received by the bank on this account is Rs. 1,010 crore. Consequently, the Government of India shareholding has increased from 64.47% to 65.86%. CAPITAL ADEQUACY As per Basel II framework, the Banks Capital Adequacy Ratio was at 12.17%, which was higher than the regulatory requirement of 10%. Details of Capital Adequacy (BASEL II) are shown as under: (Rs. in crore) Particulars (Under BASEL II) 31.03.2010 31.03.2011

Amount Tier I Capital Tier II Capital Total Capital Risk Weighted Assets BORROWINGS 13,725 7,218 20,943 1,61,857

CRAR (%) 8.48 4.46 12.94

Amount 17,047 7,867 24,914 2,04,762

CRAR (%) 8.33 3.84 12.17

The Bank has raised debts instrument through private placements like perpetual bonds and Upper Tier II Bonds and Medium Term Notes (MTN) through overseas borrowings. The bank has raised Rs. 300 crore through issue of IPDI and Rs. 1000 crore through Upper Tier-II instrument during the year 2010-11. The Bank has also redeemed Tier II Subordinated bonds for Rs. 450 crore. DIRECTORS RESPONSIBILITY STATEMENT The Directors confirm that in the preparation of the annual accounts for the year ended March 31, 2011, - The applicable accounting standards have been followed along with proper explanation relating to material departures, if any; - The accounting policies, framed in accordance with the guidelines of the Reserve Bank of India, were consistently applied; - Reasonable and prudent judgement and estimates were made so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit of the Bank for the year ended on March 31, 2011;

- Proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing banks in India, and - The accounts have been prepared on a going concern basis. CORPORATE GOVERNANCE A detailed report on Corporate Governance, being a part of Directors Report is appearing from page no. 59 to 76. ACKNOWLEDGEMENT The Board express its gratitude to the Government of India, Reserve Bank of India and Securities and Exchanges Board of India for the valuable guidance and support received from them. The Board places on record its deep appreciation for the services and contributions made by Shri M. Narendra (Ex Executive Director), Shri K.S. Sampath, Shri A.V. Sardesai, Shri Amit K. Motayed, Shri Indresh V. Singh, all Directors of the Bank, who have relinquished office during the year. The Board also thanks financial Institutions and correspondent banks for their co-operation and support. The Board acknowledges the unstinted support of its customers and shareholders and also wishes to place on record its appreciation of staff members for their dedicated services and contribution for the overall performance of the Bank. For and on behalf of the Board of Directors (Alok K Misra) Chairman & Managing Director Place : Mumbai Date : 02.05.2011

http://economictimes.indiatimes.com/et500list.cms

Director Report
Mar2009 Mar 2010 Mar2011

The Board of Directors have pleasure in presenting the Banks Annual Report along with the audited statement of accounts and the cash fl ow statement for the year ended 31st March 2010.
PERFORMANCE HIGHLIGHTS FINANCIAL PARAMETERS - Operating profit Rs.4,705 crore and Net Profit Rs.1,741 crore. - Capital Adequacy Ratio at 12.94% as against 10% prescribed by RBI

(under Basel-II). - Net Worth at Rs.12,456 crore, grew by 11.78% over March 2009. - Book Value per share Rs.236.84 (Rs.211.89 previous year) - Gross NPA ratio at 2.85% as on 31.03.2010. - Net NPA ratio at 1.31% as on 31.03.2010. - Total business (Deposit + Advances) reached at Rs. 401,079 crore recording a growth of Rs. 66,639 crore (19.93%). Domestic business grew by 20.72% to reach the level of Rs.331,779 crore. - Total deposits increased by Rs. 40,053 crore Rs.229,762 crore, a growth of 21.11%. Domestic 23.26% to reach the level of Rs.196,585 crore. deposits in the domestic deposits is 31.75% as reached the level of deposits increased by Share of low cost on 31.03.2010.

- Gross credit touched Rs.171,317 crore, recording a growth of 18.37% with domestic credit recording a growth of 17.20% to reach level of Rs.135,194 crore. - Priority Sector lending constituted 46.39% of Net Adjusted Bank Credit and the share of Agricultural Credit to Net Adjusted Bank Credit was 16.24%. - Credit to SME sector grew from Rs.25,441 crore to Rs.29,568 crore recording a growth of 16.22%. - Schematic Retail Credit grew by 15.73% from Rs.8,714 crore to Rs.10,088 crore. - Export Credit registered a growth of Rs. 602 crore, i.e., 9.98% growth over previous year. NEW PRODUCTS & SERVICES - All domestic branches are covered under Core Banking Solution. New domestic branches opened are directly under the CBS platform. All domestic branches are RTGS/NEFT enabled. - Call centre facility is made operational as an alternate delivery channel to a branch set-up which would act as a Contact centre and is a cost effective touch point for customers. - Bank has launched the Marathi version of its web-site. - Bank has launched Welcome Kit for all new accounts opened at the select branches of Mumbai, New Delhi, Chandigarh and Ghaziabad. The kit contains cheque book, ATM card, Pin, TPIN and internet PIN, the unique feature of which is that the same are in activated status from the day

one. - A web based Customer Complaint Management System has been made live from 1st January, 2010 to reduce the response time. - Oracle Marketing Online product has been implemented at Data Warehouse for communicating with customers via email. With this system in vogue, Bank is able to deliver emails overnight to its customers. - SMS alert facility has been introduced and provided to all customers for all debit transactions from delivery channels, all debit clearing transactions of Rs.25,000 and above, all customer induced debit transfer and cash payments of Rs. 10,000 and above, all debit RTGS transactions and acknowledgement on accepting the cheque book issue request - Bank of India is the fi rst PSU Bank in India to implement TWO-Factor Authentication (2FA) Star Token for both Retail and Corporate internet banking customers as an additional security measure. Banks customers enjoy the convenience of secured Anytime, Anywhere, Anyhow hassle free Banking from the comfort of their homes and offi ces with a click of a mouse. - Resetting or Unblocking of Internet Banking login password can be done using Debit-cum-ATM card PIN. - Transaction under taken through Credit Card can be viewed through Internet Banking channel. - Provision to make online bid-cum-application for Application Supported by Blocked Amount (ASBA) IPO issues by Retail Internet Banking Customers. - Mobile Banking Services extended to all retail internet banking customers which includes features like Balance enquiry, last fi ve transactions, Cheque status, Funds Transfer and Mobile Payments. - Bank has joined National Financial Switch (NFS) which enables customers to access more than 50,000 ATMs across the through owned as well as shared ATMs network. - Technology has been leveraged in some important projects like Financial inclusion project for Banking the unbanked sector, Solar Power Project which is Eco-friendly for Technology Power for Rural Areas, V-sat Connectivity Project Networking / connecting the Rural / Remote locations. - Bank launched Star Abhilasha Biometric Smart Cards in Nagpur, Maharashtra in February, 2010. Installation of Biometric ATMs and ATMs with easy accessibility for the physically handicapped is being established. BUSINESS INITIATIVES

- To strengthen our internal control system, Project STAR BOOST has been initiated by the bank to leverage technology for more effective and focussed audit. With the launch of this programme bank has established a Back Offi ce for Offsite Audit and related work and is effectively making use of CAAT (Computer Aided Audit Tools). The Audit Exception Reports (AER) are generated in advance and sent to branches for compliance before commencement of audit. This process is expected to improve the audit rating of the branches. - Bank has opened Global Remittance Centre (GRC) at Mumbai. The inward remittances, SB NRE / NRO Account opening of NRI customers have been centralized at GRC. Bank has initiated the process for establishing a hub for the purpose of handling the documentation part of Trade Finance portfolio. - With a view to enhance the corporate image and identity, Bank has initiated media campaigns on the existing theme Relationships beyond Banking. Three TVCs were produced in line with our Relationship theme viz. Old Couple, Friends and Bus which were aired on both National as well as Regional Channels. - For building the brand image and increasing the visibility and better marketing of various products through publicity, Bank has also been advertising our products in newspapers, magazines, television, Hoardings, banners, bus panels, trains, glow signs at railway stations, events and sponsorships, leafl ets and brochures, etc. - Introduction of Credit Application Processing Systems through software termed as CAPS which covers all major credit segments - Retail, Corporate, MSME and Agriculture. This has been launched from 15.02.2010 on pilot basis to cover Retail loans at all 24 Retail Hubs and select 263 branches across the Zones. It will be a fully Automated system to improve credit delivery. - Two new products, Star Suraksha SB account and Star Benefi t CD account having unparallel features were launched on the Banks Foundation Day on 7th September, 2009 for improving the CASA business. - To give a boost to SME business, Bank has SME branches and also SME hubs and Nodal Offi cers at all Zonal Centres. - Bank has devised a Composite Loan Scheme for MSE sector borrowers in Rural / Semi Urban and Urban areas for maximum exposure of up to Rs. 5 lacs per borrower. The scheme has unique features like simplifi ed application cum proposal format, hassle free minimum documentations, relaxed margin and interest rates, etc. - MOUs have been signed with Tata Motors, M/s. Piaggio Vehicles Pvt. Ltd., M/s. Asia Motor Works, M/s. JCB India Ltd., M/s. Mahindra Navistar, M/s. Ashok Leyland Ltd., Sonalika Group of companies etc. for fi nancing vehicles / earth moving equipments. - Credit business is receiving focus through specialised branches - 29

SME branches, 28 Mid Corporate Branches 2 Large Corporate and 13 Corporate Banking branches, 36 Commercial & Personal banking branches and Retail Hubs at 27 centres across the country working on the concept of single window for Housing & Personal fi nance banking. - To achieve objective of Financial Inclusion, information technology initiatives implemented and the concept of business correspondents and facilitators has been introduced throughout the country. AWARDS & ACCOLADES - Best Performance in Western Zone under the Rural Employment Generation Program (REGP) of KVIC. - Bank has been rated by the Economic Times / The Nielsen Company survey as The Most Trusted Brands (MTB) 2009 as follows : ? ? Under PSU Banking Category - 2nd next to SBI. Under Top Service Brands - 8th.

- The Debutant - 1st time in top 100. - NDTV Profi t Business Leadership Awards 2009- Best PSU Bank. - Outlook money NDTV Profi t Awards 2009 - Best Education Loan Provider - Runner up. - CIO Green Information Technology Award. - Dun & Bradstreet Rolta Corporate Awards 2009, Best Bank under Banking Category. - FE-EY Most Effi cient Public Sector Bank Awards 2010 by Dalal Street. - Second Rank for excellent performance in lending to Micro & Small Enterprises Sector by the Ministry of Micro, Small & Medium Enterprises. Also, Best Performing bank for covering maximum number of Micro & Small accounts under collateral free lending scheme of CGTMSE FINANCIAL REVIEW FINANCIAL PERFORMANCE The Bank recorded an Operating Profi t of Rs. 4,704.77 crore, (previous year Rs. 5,456.80 crore). Net Profi t stood at Rs.1,741.07 crore (previous year Rs. 3,007.35 crore). Net interest income grew by 4.67% due to rise in volume of business mix by 19.93% (from Rs.334,440 crore to Rs.401,079 crore). Non-interest income declined by 14.26% and covered 71.34% of Operating Expenses as against 98.64% in the previous year.

The Financial performance of the Bank for the year 2009-10 is summarised below: (Amount in Rs. Crore) Particulars Net Interest Income Non-Interest Income Operating Expenses Operating Profit 2008-09 5498.90 3051.86 3093.96 5456.80 2009-10 5755.94 2616.64 3667.81 4704.77 2963.70 1741.07 33.15 236.84 Growth (%) 4.67 -14.26 18.55 -13.78 20.99 -42.11 -42.11 11.77

Provisions / Contingencies 2449.45 Net Profit Earnings per share (Rs.) Book value per share (Rs.) Return on Average Networth (%) Return on Average Assets (%) 3007.35 57.26 211.89

30.42

14.76

--

1.49

0.70

--

Some of the Financial Ratios are presented below : (Percentage) (%) Parameters Yield on Advances Yield on Investment Yield on Funds Cost of Deposits Cost of Funds Net Interest Margin Non Interest Income to Operating Expenses 2008-09 9.78 7.14 8.09 5.76 5.37 2.97 98.64 2009-10 8.42 7.46 7.14 5.16 4.84 2.51 71.34

Other Income to Average Working Fund Operating Expenses to Average Working Fund Staff Expenses to Average Working Fund Other operating Exp. to Average Working Fund Asset Utilisation Ratio Non-Interest Income to Total Income Non-Interest Income to Net Income Cost to Net Income SEGMENT- WISE PERFORMANCE

1.51 1.53

1.05 1.47

0.96

0.92

0.57

0.55

2.70 15.73 35.69 36.18

1.88 12.77 31.25 43.81

The Bank earned an Operating Profi t of Rs.4,704.77 crore during the year 2009-10. The contribution made by Treasury was Rs.603.42 crore and other banking operation earned a profi t of Rs.4,751.72 crore. The unallocable expenditure net of unallocable income was Rs. 673.98 crore during the year 2009-10. DIVIDEND A Dividend at the rate of Rs. 7/- per share (70%) for the year, has been declared. The total dividend payment amounts to Rs.428.65 crore (including dividend distribution tax). CAPITAL Net worth of the Bank in FY 2009-10 has increased to Rs.12,456 crore from Rs.11,144 crore. During the year, the Bank has not increased its equity capital either by way of Public or Right or Preferential Issue of Equity Shares. CAPITAL ADEQUACY As per Basel II framework, the Banks Capital Adequacy Ratio of 12.94% which was higher than the regulatory requirement of 10%. Details of Capital Adequacy (BASEL II) are shown as under : (Rs. In crore)

31.03.2009 Particulars (Under BASEL - II) Tier I Capital Tier II Capital Total Capital Risk Weighted Assets BORROWINGS

31.03.2010

Amount 12466 5745 18211 139931

CRAR (%) 8.91 4.10 13.01 -

Amount 13725 7218 20943 161857

CRAR (%) 8.48 4.46 12.94 -

The Bank has raised Subordinated debts through private placements and Medium Term Note (MTN) for perpetual bonds and Upper Tier II Bonds through overseas borrowings. The bank has raised Rs.325 crore through issue of IPDI and Rs.2,000 crore through Upper Tier-II instrument during the year 2009-10.

ACKNOWLEDGEMENT The Board express its gratitude to the Government of India, Reserve Bank of India and Securities and Exchanges Board of India for the valuable guidance and support received from them. The Board places on record its deep appreciation for the services and contributions made by Shri T.S. Narayanasami (Ex-Chairman & Managing Director), Shri Kamal Kishore Gupta, Shri Rameshwar Prasad, all Directors of the Bank, who have relinquished offi ce during the year. The Board also thanks fi nancial Institutions and correspondent banks for their co- operation and support. The Board acknowledges the unstinted support of its customers and shareholders and also wishes to place on record its appreciation of staff members for their dedicated services and contribution for the overall performance of the Bank. For and on behalf of the Board of Directors (Alok K. Misra) Chairman & Managing Director Place: Mumbai Date: 07.05.2010

Director Report
Mar2007 Mar 2009 Mar2010

The Board of Directors have pleasure in presenting the Banks Annual Report along with the audited statement of accounts and the cash flow statement for the year ended 31st March 2009.
PERFORMANCE HIGHLIGHTS FINANCIAL PARAMETERS - Operating profit Rs. 5,457 crore. - All time high Net Profit of Rs. 3,007 crore, recording 49.68% growth

over previous year. - Capital Adequacy Ratio at 13.01 % as against 12.04% in previous year (under Basel-II). - Net Worth is Rs.11,144 crore, growth of 29.16% over March 2008. - Book Value per share Rs.211.89 (Rs.164.05 previous year) - Gross NPA ratio at 1.71 %. . - Net NPA ratio declined to 0.44 % from 0.52% as on 31.03.08. - Total business reached at Rs. 334,440 crore recording a growth of Rs. 69,636 crore (26.30%). Domestic business grew by 26.77% to reach the level of Rs. 274,841 crore. - Total deposits increased by Rs. 39,696 crore to reach the level of Rs.189,708 crore, a growth of 26.46%. Domestic deposits increased by 27.17% to reach Rs.159,487 crore. Share of low cost deposits in the domestic deposits is 31% as on 31.03.09. Gross credit touched Rs.144,732 crore, increasing by 26.08% with domestic credit recording a growth of 26.22% to reach the level of Rs.115,354 crore. - Priority Sector lending constituted 46.97% of Net Adjusted Bank Credit and the share of Agricultural Credit to Net Adjusted Bank Credit stood at 18.40%. - Credit to SME sector grew from Rs.20,400 crore to Rs.25,443 crore (24.72 % growth in the year). - Home Loan, Education Loan and Auto finance under Retail Credit grew by 22.6% from Rs.7,107 crore to Rs.8714 crore. - Export Credit on outstanding basis was Rs.6176 crore, as against Rs.6666 crore in the previous year. PRODUCT IMPROVEMENT & SERVICE ENHANCEMENT INITIATIVES - Banks bouquet of products was made more attractive by providing value added services like free air accidental insurance to SB Diamond customers, single premium insurance cover for educational loans, BOI Swastha Bima (Medi-Claim) and comprehensive domestic travel insurance in tie up with NICL specially for banks account holders. - Financing against warehouse receipt and produce marketing alongwith tie-up for collateral management, financing against gold coins (apart from gold jewellery) and Rural Sanitation Scheme were launched. - The project on integrated development of villages covered 128 villages spread over 17 states and 78 districts.

- Core Banking Solution implemented in 2593 branches covering 95.6% of domestic business mix. - Banks revamped web-site using latest Next Generation Web 2.0 technology was launched. - Around 35000 ATMs made available to our card holders through owned as well as shared ATMs network. - SMS alerts for cheque book request and any debits in accounts through any of the delivery channel like ATM, Internet Banking provided to all customers. - Solar Power System implemented at 143 locations to overcome acute power shortages and erratic power supply as well as Banks commitment towards Go Green. BUSINESS INITIATIVES - Administrative set up on the line of Strategic Business Units (SBUs) and segmentation of branches according to their business focus, i.e., Resource Centre, Profit Centre, Priority Sector Centre and General Banking Centre continued to serve as business development model. - Credit business is receiving focus through specialised branches - 30 SME branches, 2 Large Corporate and 12 Corporate Banking branches, 36 Commercial & Personal banking branches and Retail Hubs at 23 centres. - To achieve objective of Financial Inclusion, information technology initiatives implemented and the concept of business correspondents and facilitators were introduced throughout the country. - Corporate Agency Tie-up entered with Star Union Dai Ichi Life Insurance Co. Ltd for sale of their life insurance products. Tie-up arrangement was also made to boost schematic retail loans - with Tata Motors and Hyundai Motors Ltd for Auto loans, ICICI Prudential Life Insurance Co Ltd for 1 year PGPMI course for Educational loans and DLF for Housing loans. - Prestigious assignment as trustee effective from 01.04.2008 for a period of 5 years from Pension Fund Regulators & Development Authority. - Project Star Gaurav extended to 36 major centres across the country to increase productivity of marketing staff through various structured sales initiatives. - At 43 major centres across India, back office operations were centralized to achieve process efficiency and customer service. - Quality Cells have been formed at Head Office, Zonal Offices and branches to raise the standard and quality of customer services.

- For management of Pre-sale and Post-sale activities, software solution namely Sales Force Automation and Customer Complaint Management System have been installed. AWARDS & ACCOLADES - The NDTV Business Leadership Awards 2008 - Indias Best PSU Bank Award. - Business World - PWC Survey - No. 1 Public Sector Bank. - Business Today - KPMG Survey - Ranked No. 1 - The Best Banks 2008. - Dun & Bradstreet Study 2008 - Best Public Sector Bank and Overall Best Bank in the country. - Dun & Bradstreet - Rolta Corporate Awards 2008 - Top Indian Company under Banks. - Prestigious CIO 100 Award 2008 for the Banks Green IT initiative wherein solar energy is put to use to power technology in rural branches. - Best Performance in Western Zone under the Rural Employment Generation Program (REGP) of KVIC. FINANCIAL REVIEW FINANCIAL PERFORMANCE The Bank recorded an Operating Profit of Rs.5,456.80 crore (growth of 47.43% over previous year) and Net Profit increased to Rs.3,007.35 crore, recording growth of 49.66%. Net interest income grew by 30.02% on the backdrop of rise in volume of business mix by 26.30% (from Rs.264,804 crore to Rs. 334,440 crore). Non-interest income made quantum leap by 44.16% as against previous years growth of 35.44%. Non-interest income covered 98.6% of Operating Expenses as against 80.0% in the previous year. The Financial performance of the Bank for the year 2008-09 is summarised below: (Amount in Rs. crore) 2008-09 Growth(%) 5498.90 3051.86 3093.96 5456.80 2449.45 30.02 44.16 16.97 47.43 44.78

Particulars Net Interest Income Non-Interest Income Operating Expenses Operating Profit Provisions / Contingencies

2007-08 4229.27 2116.93 2644.99 3701.21 1691.81

Net Profit Earnings per share (Rs.) Book value per share (Rs.)

2009.40 40.83 164.05

3007.35 57.26 211.89 30.42 1.49

49.66 40.24 29.16

Return on Average Networth (%) 28.44 Return on Average Assets (%) 1.25

Some of the Financial Ratios are presented below: (Percentage) 2008-09 9.78 7.14 8.09 5.76 5.37 2.97

Parameters Yield on Advances Yield on Investment Yield on Funds Cost of Deposits Cost of Funds Net Interest Margin Non Interest Income to Operating Expenses Other Income to Average Working Fund Operating Expenses to Average Working Fund Staff Expenses to Average Working Fund Other Operating Exp. to Average Working Fund Asset Utilisation Ratio Non-Interest Income to Total Income Non-Interest Income to Net Income Cost to Net Income

2007-08 9.34 6.83 7.71 5.23 5.07 2.95

80.04

98.64

1.32

1.51

1.65

1.53

1.03

0.96

0.62 2.31

0.57 2.70

14.63 33.36 41.68

15.73 35.69 36.18

SEGMENT-WISE PERFORMANCE The Bank earned a profit before tax of Rs.4,164.43 crore during the year 2008-09. The contribution made by different segments of operations were - Treasury Rs. 551.10 crore, Wholesale Banking Rs. 3120.36 crore and Retail Banking Rs. 1045.42 crore. The unallocable expenditure net of unallocable income was Rs. 552.45 crore during the year 2008-09. DIVIDEND A Dividend at the rate of 80% has been declared for the year, comprising 30% interim dividend already distributed and 50% final dividend as against a total of 40% of previous year. The total dividend payment amounts to Rs. 420.14 crore (excluding dividend distribution tax). CAPITAL Net worth of the Bank in FY 2008-09 has increased to Rs. 11,143.58 crore from Rs.8,627.77 crore. During the year, the Bank has not increased its equity capital by way of Public or Right or Preferential Issue of Equity Shares. However, the Bank raised Rs.400 crore by way of Innovative Perpetual Debt Instruments (IPDI) as Tier I capital and Rs.500 crore by way of Upper Tier II Bonds during the year. CAPITAL ADEQUACY As per Basel II framework, the Banks Capital Adequacy Ratio of 13.01 % during the year as against 12.04 % during the previous year and was higher than the regulatory requirement of 9%. Details of Capital Adequacy are shown as under : (Rs. in crore) 31.03.2009 Amount 12496 6416 18912 143136 CRAR (%) 8.73 4.48 13.21 -

Particulars

BASEL -1 31.03.2008 Amount CRAR (%) 8.19 4.76 12.95 -

Tier I Capital Tier II Capital Total Capital Risk Weighted Assets

9439 5487 14926 115280 BASEL - II

31.03.2008 Amount 9409 CRAR (%) 7.70

31.03.2009 CRAR (%) 8.91

Amount 12466

5303 14712 122221 ACKNOWLEDGEMENT

4.34 12.04 -

5745 18211 139931

4.10 13.01 -

The Board express its gratitude to the Government of India, Reserve Bank of India and Securities and Exchanges Board of India for the valuable guidance and support received from them. The Board places on record its deep appreciation for the services and contributions made by Shri K.R.Kamath (Ex-Executive Director), Shri V.Eswaran ,Dr.Prabha Taviad,Shri V.B.Kaujalgi, all Directors of the Bank, who have relinquished office during the year. The Board also thanks financial Institutions and correspondent banks for their co-operation and support. The Board acknowledges the unstinted support of its customers and shareholders and also wishes to place on record its appreciation of staff members for their dedicated services and contribution for the overall performance of the Bank. For and on behalf of the Board of Directors Place: Mumbai Date : 30.04.2009

(T.S. Narayanasami) Chairman & Managing Director

Axix bank

Director Report
Mar2011 Mar 2012

The Board of Directors is pleased to present the Eighteenth Annual Report of the Bank together with the Audited Statement of Accounts, Auditors'' Report and the report on business and operations of the Bank for the financial year ended 31st March 2012.
FINANCIAL PERFORMANCE The financial highlights for the year under review are presented below: (Rs in crores) PARTICULARS Deposits 2011-12 220,104.30 2010-11 189,237.80 GROWTH 16.31%

Out of which - Savings Bank Deposits - Current Account Deposits Advances Out of which - Retail Advances - Non-retail Advances Total Assets/Liabilities Net Interest Income Other Income Out of which - Trading Profit (1) - Fee and other income Operating Expenses (excluding depreciation) Profit before depreciation, provisions and tax Depreciation Provision for Tax Other Provisions and Write offs Net Profit Appropriations: Transfer to Statutory Reserve Transfer to/(from) Investment Reserve Transfer to Capital Reserve Transfer to/(from) General Reserve Proposed Dividend 1,060.55 847.12 25.19% 51,667.96 39,754.07 169,759.54 40,850.31 36,917.09 142,407.83 26.48% 7.68% 19.21%

37,570.33 132,189.21 285,627.79 8,017.75 5,420.22

27,759.23 114,648.60 242,713.37 6,562.99 4,632.13

35.34% 15.30% 17.68% 22.17% 17.01%

361.56 5,058.66

496.97 4,135.16

(27.25%) 22.33%

5,664.86

4,489.84

26.17%

7,773.11 342.24 2,045.63

6,705.28 289.59 1,747.17

15.93% 18.18% 17.08%

1,143.03 4,242.21

1,280.03 3,388.49

(10.70%) 25.19%

51.90

(14.94) 4.76

770.08

338.85 670.36

14.88%

Surplus carried over to Balance Sheet (1) Excluding Merchant Exchange Profit KEY PERFORMANCE INDICATORS Interest Income as a percentage of working funds* Non-Interest Income as a percentage of working funds* Net Interest Margin Return on Average Net Worth Operating Profit as a percentage of working funds* Return on Average Assets Profit per employee** Business (Deposits less inter-bank deposits Advances) per employee** Net non-performing assets as a percentage of net customer assets***

2,359.68

1,542.34

52.99%

2011-12

2010-11

8.71%

7.49%

2.15% 3.59% 21.22%

2.29% 3.65% 20.13%

2.94% 1.68% Rs 14.34 lacs

3.17% 1.68% Rs 14.35 lacs

Rs 12.76 crores Rs 13.66 crores

0.25%

0.26%

- Working funds represent average total assets. ** Productivity ratios are based on average number of employees for the year. *** Customer assets include advances and credit substitutes. Previous year figures have been regrouped wherever necessary. The Bank continued to show a steady growth both in business and earnings with a net profit of Rs4,242.21 crores for the year ended 31st March 2012, registering a growth of 25.19% over the net profit of Rs3,388.49 crores last year. The strong growth in earnings was a result of robust business growth across all banking segments indicative of a clear strategic focus. During the year, the Basic Earnings Per Share (EPS) was at Rs102.94 and a Return on Equity (ROE) at 21.22%. During the year, the total income of the Bank increased by 38.55% to reach Rs27,414.87 crores as compared to Rs19,786.94 crores last year.

Operating revenue increased by 20.03% to Rs13,437.97 crores while operating profit increased by 15.82% to Rs7,430.87 crores. The growth in earnings was mainly due to a rise in core income streams such as net interest income (NII) and fee income. NII increased by 22.17% to Rs8,017.75 crores as compared to Rs6,562.99 crores last year. Fee, trading and other income increased by 17.01 % to Rs5,420.22 crores from Rs4,632.13 crores last year. The strong growth in income was partly offset by an increase in operating expenses including depreciation by 25.69% to Rs6,007.10 crores. During the year, the growth in NII may be attributed to an expansion in the balance sheet size and healthy low-cost Current Account and Savings Bank (CASA) deposits. The total earning assets on a daily average basis increased by 24.30% to Rs223,206 crores, as compared to Rs179,573 crores last year. This was partly offset by a rise in funding costs due to hardening of general interest rates, particularly on term deposits during the year. The steady growth of low-cost CASA deposits, which on a daily average basis increased by 18.96% to Rs70,845 crores from Rs59,551 crores last year, helped in containing the cost of funds. Overall, the daily average cost of funds in the year increased to 6.28% from 4.96% last year. During the year, the cost of deposits increased to 6.47% from 4.96% last year primarily due to an increase in cost of term deposits by 211 basis points (from 6.81 % to 8.92%) as well as the cost of savings bank deposits. During the year, the yield on earning assets increased by 125 basis points to 9.66% from 8.41% last year. Other income comprising fees, trading profit and miscellaneous income increased by 17.01% to Rs5,420.22 crores in 2011-12 from Rs4,632.13 crores last year and constituted 40.34% of operating revenue of the Bank. Fee income is a significant part of the earnings and is generated from a diverse set of businesses in the Bank. The main sources of fee income are client- based merchant foreign exchange trade, service charges from account maintenance, transaction banking (including cash management services), syndication and placement fees, processing fees from loans and commission on non- funded products (such as letters of credit and bank guarantees), inter-change fees on ATM-sharing arrangements and fee income from the distribution of third-party personal investment products. During the year, proprietary trading profits fell by 27.25% to Rs361.56 crores from Rs496.97 crores last year, owing to adverse market conditions in the debt and equity markets. Miscellaneous income dropped by 3.79%, mainly due to lower recoveries of loans written-off in earlier years. During the year, such recoveries accounted to Rs291.84 crores. During the year, the operating revenue of the Bank increased by 20.03% to Rs13,437.97 crores, as compared to Rs11,195.12 crores last year. The core income streams (NII, fee and miscellaneous income) constituted 97.31% of the operating revenue, reflecting the stability and sustainability of the Bank''s earnings. Operating expenses increased by 25.69% to Rs6,007.10 crores from Rs4,779.43 crores last year, as a result of the growth of the Bank''s network and other infrastructure required for supporting the existing and new businesses. The Cost to Income ratio of the Bank was 44.70% compared to 42.69% last year. During the year, the operating profit of the Bank increased by 15.82% to Rs7,430.87 crores from Rs6,415.69 crores last year. During this

period, the Bank created total provisions (excluding provisions for tax) of Rs1,143.03 crores compared to Rs1,280.03 crores last year. Of this, the Bank provided Rs860.43 crores towards loan/investment losses compared to Rs955.12 crores last year, while the provision for standard assets was Rs150.30 crores. The Bank also provided Rs88.86 crores compared to Rs15.06 crores last year against restructured assets. During the year, the Bank restructured loans of Rs1,300.29 crores. The Bank continued to maintain a healthy asset-quality with a ratio of Gross NPAs to gross customer assets of 0.94%, as compared to 1.01 % last year, and a Net NPA ratio (Net NPAs as percentage of net customer assets) of 0.25% compared to 0.26% last year. With higher levels of provisions built over and above regulatory norms during the year, the Bank has maintained its provision coverage to 80.91% (after considering prudential write-offs). The Bank has also shown an all-round improvement in various financial parameters and ratios during the year. Basic Earnings Per Share (EPS) was Rs102.94 as compared to Rs82.95 last year, while the Diluted Earnings Per Share was Rs102.20 compared to Rs81.61 last year. Return on Equity (RoE) improved to 21.22% from 20.13% last year and Book Value Per Share increased from Rs462.77 to Rs551.99. Return on Assets (RoA) is maintained at 1.68% as last year. The hardening of interest rates led to a contraction in the net interest margin (NIM) by 6 basis points for the year to 3.59% from 3.65% last year. On quarter-on- quarter basis, the NIM was 3.28% in Q1, 3.78% in Q2, 3.75% in Q3 and 3.55% in Q4. The Bank has shown robust growth in several key balance sheet parameters for the year ended 31st March 2012. The total assets increased by 17.68% to Rs285,628 crores on 31st March 2012 from Rs242,713 crores on 31st March 2011. Total deposits increased by 16.31% and stood at Rs220,104 crores. Savings Bank deposits increased by 26.48% to Rs51,668 crores, while Current Account deposits increased by 7.68% to Rs39,754 crores. Low-cost demand deposits: Current Accounts and Savings Bank (CASA) deposits were Rs91,422 crores as on 31st March 2012, as compared to Rs77,767 crores last year. As on 31st March 2012, CASA deposits constituted 41.54% of total deposits as compared to 41.10% last year. On a daily average basis, Savings Bank deposits increased by 20.43% to Rs43,442 crores, while Current Account deposits increased by 16.71 % to Rs27,403 crores. The percentage share of CASA in total deposits, on a daily average basis, was 37.65% compared to 39.40% last year. The total advances of the Bank increased by 19.21% to Rs169,760 crores. Out of this, corporate advances (comprising large, infrastructure and mid-corporate accounts) increased by 19.93% to Rs91,053 crores and SME loans increased by 11.16% to Rs23,795 crores. Agricultural lending (including micro finance) stood at Rs17,340 crores, increasing 0.11% over the last year. Retail loans increased by 35.34% to Rs37,570 crores. The percentage share of retail loans to total advances has increased to 22.13% from 19.49% last year. The total investments of the Bank increased by 29.45% to Rs93,192 crores and investments in government and approved securities, held mainly for SLR requirement, increased by 32.43% to Rs58,533 crores. Other investments, including corporate debt securities, increased by 24.70% to Rs34,659 crores. As on 31st March 2012, the total assets of the Bank''s overseas branches stood at Rs32,302 crores, constituting 11.31% of the Bank''s total assets.

During the year, the Bank continued to expand its distribution network to enlarge its reach in geographical centres with potential for growth, especially in the areas with potential for low-cost CASA deposits, lending to retail, agriculture and SME segments and the distribution of third-party products. This year, the Bank has added 231 new branches and 1 extension counter, taking the total number of branches and extension counters (ECs) to 1,622, of which 674 branches/ECs are in semi-urban and rural areas and 948 branches are in metropolitan and urban areas. The Bank is present in all the States and Union Territories (except Lakshadweep), covering a total of 1,050 centres. The Bank has also increased its ATM network to 9,924, as compared to 6,270 ATMs last year. In addition to domestic branches, during the year the Bank opened an international branch office in Colombo, Sri Lanka to finance cross-border trade and manufacturing activities. This is in addition to the existing branches at Singapore, Hong Kong and DIFC (Dubai International Finance Centre) and representative offices at Shanghai, Dubai and Abu Dhabi. CAPITAL & RESERVES During the year, the Bank has raised capital of Rs3,425 crores by way of sub-ordinated bonds (unsecured redeemable non-convertible debentures) qualifying as Tier II capital. The raising of this non- equity capital has helped the Bank continue its growth strategy and has strengthened its capital adequacy ratio. The Bank is well capitalised with an overall capital adequacy ratio (CAR) of 13.66% at the end of the year, well above the benchmark requirement of 9% stipulated by Reserve Bank of India (RBI). Of this, Tier I CAR was 9.45%, as against 9.41 % last year, while the Tier II CAR was at 4.21%, as against 3.24% last year. During the year, a total of 2,658,109 equity shares were allotted to employees of the Bank pursuant to the exercise of options under its Employee Stock Option Scheme. The paid-up capital of the Bank rose to Rs413.20 crores, as compared to Rs410.55 crores last year. The shareholding pattern of the Bank as of 31st March 2012 was as under: Sr. No. Name of Shareholders % of Paid-up Capital

i.

Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI) Life Insurance Corporation of India (LIC) General Insurance Corporation and four PSU insurance companies Overseas investors (including FIIs/OCBs/NRIs) Foreign Direct Investment (GDR issue) Other Indian financial institutions/mutual funds/banks

23.53 9.69(1)

ii. iii.

4.16 33.19 8.54

iv. v. vi.

6.45

vii.

Others Total

14.44 100.00

(1) Save and except 4,00,40,156 shares equivalent to 9.69% of the total paid up capital of the Bank held by LIC, all other holdings are not considered for arriving at the Promoter''s shareholding. The Bank''s shares are listed on the NSE and the BSE. The GDRs issued by the Bank are listed on the London Stock Exchange (LSE). The Bonds issued by the Bank under the MTN programme are listed on the Singapore Stock Exchange. The listing fees relating to all stock exchanges for the current year have been paid. DIVIDEND The Diluted Earnings Per Share (EPS) for 2011-12 has risen to Rs102.20 from Rs81.61 last year. In view of the overall performance of the Bank and the objective of rewarding shareholders with cash dividends while retaining capital to maintain a healthy capital adequacy ratio to support future growth, the Board of Directors has recommended a higher dividend of Rs16.00 per equity share, compared to Rs14.00 per equity share declared last year. This dividend shall be subject to tax on dividend to be paid by the Bank. This increase reflects our confidence in the Bank''s ability to consistently grow earnings over time. BOARD OF DIRECTORS During the year, some changes in the composition of the Board of Directors have taken place. Shri J. R. Varma ceased to be a Director of the Bank at the conclusion of the last Annual General Meeting with effect from 17th June 2011. Shri S. K. Roongta, resigned as a Director of the Bank with effect from 20th June 2011. Shri R. B. L. Vaish tendered his resignation as a Director on completion of his tenure as LIC Nominee with effect from 5th September 2011. Shri S. K. Chakrabarti, Deputy Managing Director, retired from the services of the Bank on 30th September 2011 and accordingly ceased to be a Director of the Bank with effect from 1st October 2011. Shri M. V. Subbiah resigned as a director with effect from 26th April, 2012. Prof. Samir K. Barua, Director, Indian Institute of Management, Ahmedabad was appointed as an Additional Independent Director of the Bank with effect from 22nd July 2011. Shri A. K. Dasgupta was nominated by LIC as its Nominee Director in place of Shri R. B. L. Vaish and was accordingly appointed as an Additional Director of the Bank with effect from 5th September 2011. Shri Som Mittal, President of NASSCOM was appointed as an Additional Independent Director of the Bank with effect from 22nd October 2011. We report with sadness the demise of Dr. R. H. Patil who passed away on 12th April 2012. The Board of Directors places on record its deep appreciation and gratitude to Dr. R. H. Patil, Shri M. V. Subbiah, Shri J. R. Varma, Shri S. K. Roongta, Shri R. B. L. Vaish and Shri S. K. Chakrabarti for the valuable services rendered by them during their tenure as Directors of the Bank. In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Bank, Smt. Rama Bijapurkar and Shri V.

R. Kaundinya retire by rotation at the Eighteenth Annual General Meeting and, being eligible, offer themselves for re-appointment as Directors of the Bank. The Board of Directors of the Bank at its meeting held on 13th February 2012, has re-appointed Smt. Shikha Sharma as Managing Director & CEO for a further period of three years i.e. from 1st June 2012 till 31st May 2015. The re-appointment is subject to approval of Reserve Bank of India and the shareholders. Further, the Board of Directors of the Bank at its meeting held on 27th April, 2012, has decided to appoint Shri V. Srinivasan and Shri Somnath Sengupta, Executive Directors of the Bank as the Whole-time Directors of the Bank with effect from the date as may be approved by RBI. SUBSIDIARIES The Bank has set up six wholly-owned subsidiaries: Axis Securities and Sales Ltd., Axis Private Equity Ltd., Axis Trustee Services Ltd., Axis Asset Management Company Ltd., Axis Mutual Fund Trustee Ltd., and Axis U.K. Ltd. Axis Securities and Sales Ltd. is primarily in the business of marketing of credit cards and retail asset products and also provides retail broking services. The primary objective of Axis Securities and Sales Ltd. is to build a specialised force of sales personnel and optimise operational efficiency by providing greater control over the sales functions, as compared to a Direct Sales Agent (DSA) model as well as undertake retail broking business. Axis Private Equity Ltd. primarily carries on the activities of managing equity investments and provides venture capital support to businesses. Axis Trustee Services Ltd. is engaged in trusteeship activities (e.g. acting as debenture trustee and as trustee to various securitisation trusts). Axis Asset Management Company Ltd. undertakes the activities of managing the mutual fund business. Axis Mutual Fund Trustee Ltd. was formed to act as the trustee for the mutual fund business. Axis U.K. Ltd. is a private limited company registered in the UK. It was formed with the main purpose of filing an application with Financial Services Authority (FSA), UK for a banking license in the UK and for the creation of necessary infrastructure for the subsidiary to commence banking business in the UK. As of 31st March 2012, Axis U.K. Ltd. has not commenced operations. In terms of the General Circular No. 2/2011 dated 8th February 2011 issued by the Ministry of Corporate Affairs, Government of India, the copies of Directors'' Reports, Auditors'' Reports and the financial statements of the six subsidiaries have not been attached to the accounts of the Bank for the financial year ended 31st March 2012. Any shareholder who may be interested in obtaining a copy of the aforesaid documents may write to the Company Secretary at the Registered Office of the Bank. These documents will also be available for examination by shareholders of the Bank at its Registered Office. The documents related to individual subsidiaries will similarly be available for examination at the respective registered offices of the companies. In line with the Accounting Standard 21 (AS-21) issued by the Institute of Chartered Accountants of India, the consolidated financial results of the Bank along with its subsidiaries for the year ended 31st March 2012

are enclosed as an Annexure to this report. PROPOSED ACQUISITION OF ENAM SECURITIES PVT. LTD. On 17th November, 2010, the Board of Directors of the Bank had approved the acquisition of certain financial services business undertaken by Enam Securities Private Limited (ESPL) directly and through its wholly owned subsidiaries, by Axis Securities and Sales Limited (ASSL), a wholly owned subsidiary of the Bank by way of a demerger. However, pursuant to conditions prescribed by the Reserve Bank of India, certain modifications have been carried out to the demerger structure in terms of a revised Scheme of Arrangement under Sections 391-394 and other relevant provisions of the Companies Act, 1956. Accordingly, the acquisition will now comprise (a) a demerger of the financial services businesses from ESPL to the Bank, in consideration of which the Bank will issue shares to the shareholders of ESPL, and (b) immediately upon completion of the demerger under the Scheme, a simultaneous sale of the financial services businesses will be undertaken from the Bank to ASSL for a cash consideration, with both the aforesaid steps occurring simultaneously. The Reserve Bank of India has on 30th March, 2012, conveyed its no objection to the Scheme. Further, on 27th April, 2012, the Board of Directors of the Bank have approved the reassessment of the valuation of the ESPL business at Rs1,396 crores and consequently, in consideration for the demerger of the financial services business of ESPL, the Bank will issue shares in the ratio of 5 equity shares of the Bank (aggregating 12,090,000 equity shares) of the face value of Rs10 each for every 1 equity share (aggregating 2,418,000 equity shares) of Rs10 each held by the shareholders of ESPL. The sale of the financial services business will be simultaneously undertaken from the Bank to ASSL for a cash consideration of Rs274 crores only. The appointed date under the Scheme is 1st April, 2010, and the parties shall proceed with filing the Revised Scheme and other necessary documents with the relevant High Courts and other regulatory authorities for their approval. EMPLOYEE STOCK OPTION PLAN (ESOP) The Bank has instituted an Employee Stock Option Scheme to enable its employees and the employees of its subsidiaries including Whole-time Directors, to participate in the future growth and financial success of the Bank. Under the Scheme 40,517,400 options can be granted to employees. The employee stock option scheme is in accordance with the Securities and Exchange Board of India (Employee Stock Option and Employee Stock Purchase Scheme) Guidelines, 1999. The eligibility and number of options to be granted to an employee is determined on the basis of the employee''s work performance and is approved by the Board of Directors. The Bank''s shareholders approved plans for the issuance of stock options to employees in February 2001, June 2004, June 2006, June 2008 and June 2010. Under the first two plans and upto the grant made on 29th April 2004, the option conversion price was set at the average daily high-low price of the Bank''s equity shares traded during the 52 weeks preceding the date of grant at the Stock Exchange which has had the maximum trading volume of the Bank''s equity share during that period. Under the third plan and with effect from the grant made by the

Bank on 10th June 2005, the pricing formula has been changed to the closing price on the day previous to the grant date. The Remuneration and Nomination Committee granted options under these plans on eleven occasions: 1,118,925 during 2000-01, 1,779,700 during 2001-02, 2,774,450 during 2003-04, 3,809,830 during 2004-05, 5,708,240 during 2005-06, 4,695,860 during 2006-07, 6,729,340 during 2007-08, 2,677,355 during 2008-09, 4,413,990 during 2009-10, 2,915,200 during 2010-11 and 3,268,700 during 2011-12. The options granted, which are non-transferable, vest at rates of 30%, 30% and 40% on each of three successive anniversaries following the grant, subject to standard vesting conditions, and must be exercised within three years of the date of vesting. As of 31st March 2012, 24,368,087 options had been exercised and 11,428,248 options were in force. Other statutory disclosures as required by the revised SEBI guidelines on ESOPs are given in the Annexure to this report. CORPORATE GOVERNANCE The Bank is committed to achieve the highest standards of corporate governance, and it aspires to benchmark itself with international best practices in this regard. The corporate governance practices followed by the Bank are enclosed as an Annexure to this report. The Bank has adopted a major part of the recommendations contained in the Corporate Governance Voluntary Guidelines 2009 issued by the Ministry of Corporate Affairs and is examining the possibility of implementing the remaining recommendations. DIRECTORS'' RESPONSIBILITY STATEMENT The Board of Directors hereby declares and confirms that: - The applicable accounting standards have been followed in the preparation of the annual accounts and proper explanations have been furnished, relating to material departures. - Accounting policies have been selected and applied consistently and reasonably, and prudent judgements and estimates have been made so as to give a true and fair view of the state of affairs of the Bank and of the Profit and Loss of the Bank for the financial year ended 31st March 2012. - Proper and sufficient care has been taken for the maintenance of adequate accounting records, in accordance with the provisions of the Companies (Amendment) Act, 2000, for safeguarding the assets of the Bank, and for preventing and detecting fraud and other irregularities. - The annual accounts have been prepared on a going concern basis. - The Bank has in place a system to ensure compliance of all laws applicable to the Bank. STATUTORY DISCLOSURE

Considering the nature of activities of the Bank, the provisions of Section 217(1 )(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption do not apply to the Bank. The Bank is, however, constantly pursuing its goal of technological upgradation in a cost-effective manner for delivering quality customer service. The statement containing particulars of employees as required under Section 217(2A) of the Companies Act, 1956 and the rules hereunder is given in an Annexure appended hereto and forms part of this report. In terms of Section 219(1 )(iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Bank. AUDITORS M/s Deloitte Haskins & Sells, Chartered Accountants, Statutory Auditors of the Bank will retire on the conclusion of the Eighteenth Annual General Meeting and are eligible for re-appointment, subject to the approval of Reserve Bank of India and the shareholders. As recommended by the Audit Committee of the Board, the Board of Directors has proposed the appointment of M/s Deloitte Haskins & Sells, Chartered Accountants as Statutory Auditors for the financial year 2012-13. The shareholders are requested to consider their appointment on the remuneration to be decided by the Audit Committee of the Board. ACKNOWLEDGEMENTS The Board of Directors places on record its gratitude to the Reserve Bank of India, other government and regulatory authorities, financial institutions and correspondent banks for their strong support and guidance. The Board acknowledges the support of the shareholders and also places on record its sincere thanks to its valued clients and customers for their continued patronage. The Board also expresses its appreciation to all employees of the Bank for their strong work ethic, excellent performance, professionalism, teamwork, commitment and initiative, which has led to the Bank making commendable progress in today''s challenging environment. For and on behalf of the Board of Directors Place : Mumbai Date : 27th April, 2012 Adarsh Kishore Chairman

Director Report
Mar2010 Mar 2011 Mar2012

The Board of Directors is pleased to present the Seventeenth Annual Report of the Bank 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.
FINANCIAL PERFORMANCE The financial highlights for the year under review are presented below:

(Rs. in crores) PARTICULARS Deposits Out of which - Savings Bank Deposits - Current Account Deposits Advances Out of which Retail Advances Non-retail Advances Total Assets/Liabilities Net Interest Income Other Income Out of which - Trading Profit . Fee & other income Operating Expenses excl. depreciation Profit before depreciation, provisions and tax Depreciation Provision for Tax Other Provisions & Write offs Net Profit 496.97 4,135.16 822.38 3,123.40 (39.57%) 32.39% 27,759.23 20,820.73 33.32% 40,850.31 33,861.80 20.64% 2010-11 189,237.80 2009-10 141,300.22 Growth 33.93%

36,917.09 142,407.83

32,167.74 104,340.95

14.76% 36.48%

114,648.60

83,520.22

37.27%

242,713.37

180,647.85

34.36%

6,562.995,00 4,632.13

4.49 3,945.78

31.14% 17.39%

4,489.8

43,475.40

29.19%

6,705.28 289.59 1,747.17

5,474.87 234.32 1,336.83

22.47% 23.59% 30.70%

1,280.03 3,388.49

1,389.19 2,514.53

(7.86%) 34.76%

Appropriations: Transfer to Statutory Reserve Transfer to/(from) Investment Reserve Transfer to Capital Reserve Transfer to General Reserve Proposed Dividend Surplus carried over to Balance Sheet (1) Excluding Merchant Exchange Profit KEY PERFORMANCE INDICATORS Interest Income as a percentage of working funds* Non-Interest Income as a percentage of working funds* Net Interest Margin Return on Average Net Worth Operating Profit as a percentage of working funds* Return on Average Assets Profit per employee** Business (Deposits less inter-bank deposits + Advances) per employee** 2010-11 7.49% 2009-10 7.73%

847.126

28.63

34.76%

(14.94) 4.76 338.85 670.36

14.88 223.92 0.31 567.45

(97.87%) 18.14%

1,542.34

1,079.34

42.90%

2.29% 3.65% 20.13% 3.17% 1.68%

2.62% 3.75% 19.89% 3.48% 1.67%

14.35 lacs 11.63 lacs

13.66 crores 1.11 crores

Net non performing assets as a percentage of net customer assets *** - Working funds represent average total assets.

0.26%

0.36%

** Productivity ratios are based on average number of employees for the year. *** Customer Assets include advances and credit substitutes. Previous year figures have been regrouped wherever necessary. In 2010-11 both business and earnings grew strongly with the Bank

reporting a net profit of Rs.3,388.49 crores for the year ended 31 March, 2011, rising 34.76% over the net profit of Rs.2,514.53 crores in the previous year. The solid growth of business across segments has been reflected in a set of robust financial indicators. The Banks total income increased 26.97% to reach Rs.19,786.94 crores during 2010- 11, compared to Rs.15,583.80 crores last year. Operating revenue during this period increased 25.08% to Rs.11,195.12 crores while operating profit increased by 22.42% to Rs. 6,415.69 crores. The growth in revenues may be attributed to the performance of the Banks core income streams: net interest income (Nil), fee and other income. Nil increased by 31.14% to Rs.6,562.99 crores from ^5,004.49 crores last year, while fee and other income increased by 17.39% to Rs.4,632.13 crores from ^3,945.78 crores last year. Nil increased by 31.14% as a result of healthy growth of both assets and low-cost Current Account and Savings Bank (CASA) deposits, on a daily average basis. During the year, total earning assets, on a daily average basis, rose 34.70% to Rs.179,573 crores from Rs.133,309 crores last year. A 32.81 % growth of low-cost CASA deposits, on a daily average basis, from ^44,839 crores last year to Rs.59,551 crores, helped the Bank contain funding costs, which had risen in the last quarter of the year due to the hardening of interest rates on term deposits. Other income comprising fees, trading profit and miscellaneous income also rose 17.39% to ^4,632.13 crores in 2010-11 from Rs.3,945.78 crores last year. Fee income constituted 33.86% of the operating revenue of the Bank and rose 29.59% to Rs.3,790.37 crores from Rs.2,924.96 crores last year. The Bank earns fee income from a diverse set of products and businesses such as client- based merchant foreign exchange trade, service charges from account maintenance, transaction banking including cash management services, syndication and placement fees, processing fees from loans and commission on non-funded products such as letters of credit and bank guarantees, inter-change fees on ATM-sharing arrangements and fee income from the distribution of third-party personal investment products. During the year, proprietary trading profits fell 39.57% to Rs.496.97 crores from Rs.822.38 crores last year, primarily due to adverse market conditions in the debt and equity markets. Miscellaneous income was buoyant, rising 73.75% mainly due to strong recoveries of loans and derivative receivables written-off in previous years. During the year, such recoveries amounted to Rs.325.22 crores compared to Rs.174.43 crores last year. During the year, the operating revenue of the Bank increased 25.08% to Rs.11,195.12 crores from Rs.8,950.27 crores last year. The core income streams (Nil, fee and miscellaneous income) constituted 95.56% of the operating revenue, reflecting the stability and sustainability of the Banks earnings. Operating expenses increased by 28.84% to ^4,779.43 crores from Rs.3,709.72 crores last year, on the back of the continuing growth of the Banks network and infrastructure required for supporting existing and new businesses. During the year, the Cost: Income ratio was 42.69% compared to 41.45% last year. During the year, the operating profit of the Bank increased 22.42% to Rs.6,41 5.69 crores from Rs.5,240.55 crores last year. During this period, provisions (excluding provisions for tax) charged to the Profit & Loss account were Rs.1,280.03 crores compared to Rs.1,389.19 crores last year.

Of this, provisions for loan losses were ^955.12 crores compared to Rs.1,357.04 crores last year, while the provision for standard assets was Rs.166.16 crores. The Bank accelerated its provisioning requirements in some portfolios as a measure of prudence, increasing the overall provision coverage. The Bank also provided Rs.15.06 crores compared to Rs.56.47 crores last year against restructured assets. During 2010-11, the Bank restructured loans of Rs.404 crores, significantly lower than Rs.1,633 crores last year. The Bank continued to maintain a generally healthy asset-quality with a ratio of Gross NPAs to gross customer assets of 1.01% compared to 1.13% last year and a Net NPA ratio (percentage of Net NPAs as percentage of net customer assets) of 0.26% compared to 0.36% last year. With higher levels of provisions, built over and above regulatory norms during the year, the Bank has further improved its provision-coverage to 80.90% (after considering prudential write-offs) from 72.38% last year. Due to a consistent trajectory of core earnings, there has been an all-round improvement in various financial metrics. The Return on Equity (RoE) improved to 20.13% from 19.89% last year. Basic Earnings Per Share (EPS) rose to Rs.82.95 from Rs.65.78 last year, while the Diluted Earnings Per Share was Rs.81.61 compared to Rs.64.31 last year. The Book Value Per Share increased from Rs.395.99 on 31 March, 2010 to Rs.462.77 on 31 March, 2011, while Return on Assets (RoA) improved to 1.68% from 1.67% last year. Employee productivity has also improved with Profit per Employee increasing to Rs.14.35 lacs from ^11.63 lacs last year and Business per Employee increasing to Rs.13.66 crores from Rs.11.11 crores last year. Hardening of interest rates on Term Deposits in the final quarter of the year pushed up the cost of funds, compressing the Net interest Margin by 10 basis points of the year to 3.65% from 3.75% last year. The quarterly NIMs during the year were as follows: 3.71% in Q1, 3.68% in Q2, 3.81% in Q3 and 3.44% in Q4. The total assets of the Bank were Rs.242,713 crores, rising 34.36% from <="" pre=""> As a conscious strategy of building a network of branches and ATMs with effective penetration, the Bank continued to enlarge its geographical coverage of centres with potential for growth, especially in the areas with potential for low- cost CASA deposits, lending to retail, agriculture and SME segments and the distribution of third party products. During the year, 407 new branches were added to the Banks network taking the total number of branches and extension counters (ECs) to 1,390. Of these, 564 branches/ECs are in semi-urban and rural areas and 826 branches/ECs are in metropolitan and urban areas. The Bank is present in all states and Union Territories (except Lakshadweep) covering 921 centres. The ATM network of the Bank increased from 4,293 last year to 6,270 as on 31 March, 2011. During the year, the Bank also opened a Representative Office in Abu Dhabi. This was in addition to the existing branches at Singapore, Hong Kong and DIFC (Dubai International Financial Centre) and representative offices at Shanghai and Dubai. CAPITAL & RESERVES The Bank is well capitalised at present with an overall Capital Adequacy Ratio (CAR) of 12.65% at the end of the year, well above the

benchmark requirement of 9% stipulated by Reserve Bank of India. Of this, Tier I CAR was 9.41 % against 11.18% a year earlier, while the Tier II CAR was at 3.24% against 4.62% a year earlier. During the year under review, 5,371,724 equity shares were allotted to employees of the Bank pursuant to the exercise of options under its Employee Stock Option Scheme. The paid-up capital of the Bank as on 31 March, 2011 rose toRs.410.55 crores from ^405.17 crores as on 31 March, 2010. The shareholding pattern of the Bank as of 31 March, 2011 is stated below. Sr.No. i. Name of Shareholders Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI) Life Insurance Corporation of India General Insurance Corporation and four PSU Insurance Companies Overseas Investors including Flls/OCBs/NRIs Foreign Direct Investment (GDR issue) Other Indian Financial Institutions/ Mutual Funds/Banks Others % of Paid Up Capital

23.68 9.56 3.97 37.89 9.19 5.12 10.59 100.00

ii. iii. iv. v. vi. vi Total

The Banks shares are listed on the NSE and the BSE. The GDRs issued by the Bank are listed on the London Stock Exchange (LSE). The Bonds issued by the Bank under the MTN programme are listed on the Singapore Stock Exchange. The listing fees relating to all stock exchanges for the current year have been paid. With effect from 26 March, 2001, the shares of the Bank have been included and traded in the BSEs Group A stocks. With effect from 27 March, 2009, the Banks shares have been included and traded as part of the main NIFTY Index of the NSE. Earlier, the shares of the Bank were part of the NIFTY Junior Index of the NSE. DIVIDEND In view of the overall performance of the Bank and the objective of rewarding shareholders with cash dividends while retaining capital to maintain a healthy capital adequacy ratio to support future growth, the Board of Directors has recommended a higher dividend of Rs.14.00 per equity share, compared to Rs.12.00 per equity share declared for 2009-10. This dividend shall be subject to tax on dividend to be paid by the Bank. This increase reflects our confidence in the Banks ability to consistently grow earnings over time. BOARD OF DIRECTORS

During the year, some changes have taken place in the composition of the Board of Directors. Shri M. S. Sundara Rajan, former Chairman and Managing Director of Indian Bank, was appointed as an Additional Independent Director with effect from 8 June, 2010. He resigned with effect from 22 February, 2011. Shri S. K. Roongta, former Chairman of SAIL, was appointed as an Additional Independent Director with effect from 15 July, 2010. Shri S. K. Chakrabarti, former Executive Director (Retail Banking, SME and Agri.) of the Bank was appointed as the Deputy Managing Director of the Bank with effect from 27 September, 2010. Shri Prasad R. Menon, former Managing Director, Tata Power Limited, was appointed as an Additional Independent Director with effect from 9 October, 2010. Shri R. N. Bhattacharyya, former IPS officer and nominee of the Specified Undertaking of the Unit Trust of India (SUUTI) was appointed as an Additional Director with effect from 17January, 2011. In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Bank, Shri R. B. L. Vaish and Shri K. N. Prithviraj retire by rotation at the Seventeenth Annual General Meeting and, being eligible, offer themselves for re-appointment as Directors of the Bank. Shri J. R. Varma also retires by rotation but he has expressed his desire not to be re-appointed as his term of continuous period of eight years as Director under the provisions of Section 10-A(2-A)(i) of the Banking Regulation Act, 1949, comes to an end with effect from 25 June, 2011. SUBSIDIARIES The Bank has set up six wholly-owned subsidiaries: Axis Securities and Sales Ltd., Axis Private Equity Ltd., Axis Trustee Services Ltd., Axis Asset Management Company Ltd., Axis Mutual Fund Trustee Ltd. and Axis U.K. Ltd. Axis Securities and Sales Ltd. is primarily in the business of marketing of credit cards and retail asset products as well as retail broking. The objective of this subsidiary is to build a specialised force of sales personnel and optimise operational efficiency by providing greater control over the sales functions, as compared to a Direct Sales Agent (DSA) model, as well as undertake retail broking business. Axis Private Equity Ltd., primarily carries on the activities of managing equity investments and provides venture capital support to businesses. Axis Trustee Services Ltd. is engaged in trusteeship activities (e.g. acting as debenture trustee and as trustee to various securitisation trusts). Axis Asset Management Company Ltd. primarily undertakes the activities of managing a mutual fund business and the Axis Mutual Fund Trustee Ltd. was set up to act as the trustee for the mutual fund business. On 7 March, 2011, the Bank has incorporated a new subsidiary namely Axis U.K. Ltd. as a private limited company registered in the United Kingdom (UK) with the main purpose of filing an application with Financial Services Authority (FSA), UK for a banking license in the UK and for the creation of necessary infrastructure for the subsidiary to commence banking business in the UK. As on 31 March, 2011, Axis U.K. Ltd. had not commenced operations. In terms of an exemption received from the Ministry of Corporate Affairs, Government of India through its letter no. 47/19/2011-CL-lll

dated 21 January, 2011, under Section 212(8) of the Companies Act, 1956, copies of Directors Reports, Auditors Reports and the financial statements of the five subsidiaries (Axis Securities and Sales Ltd., Axis Private Equity Ltd., Axis Trustee Services Ltd., Axis Asset Management Company Ltd. and Axis Mutual Fund Trustee Ltd.) have not been attached to the accounts of the Bank for the financial year ended 31 March, 2011. Any shareholder who may be interested in obtaining a copy of the aforesaid documents may write to the Company Secretary at the Registered Office of the Bank. These documents will also be available for examination by shareholders of the Bank at its Registered Office. Documents related to individual subsidiaries will similarly be available for examination at the respective registered offices of the five companies. In line with the Accounting Standard 21 (AS 21) issued by the Institute of Chartered Accountants of India, the consolidated financial results of the Bank along with its subsidiaries for the year ended 31 March, 2011 are enclosed as an Annexure to this report. PROPOSED ACQUISITION OF ENAM SECURITIES PVT. LTD. BY AXIS SECURITIES AND SALES LTD. At their meetings held on 17 November, 2010, the Board of Directors of the Bank, Enam Securities Private Limited (ESPL) and Axis Securities and Sales Limited (ASSL), a wholly-owned subsidiary of the Bank, approved the acquisition of certain businesses undertaken by ESPL directly and through its wholly owned subsidiaries, by ASSL by way of a demerger. It is envisaged that these businesses will be transferred to ASSL, pursuant to a Scheme of Arrangement, as may be approved by the relevant High Courts under Sections 391 to 394 and other relevant provisions of the Companies Act, 1956 and subject to receipt of necessary requisite approvals. The appointed date for the purpose of the Demerger under the Scheme shall be 1 April, 2010. The valuation of ESPL business was assessed at ^2,067 cores in consideration for the demerger, the Bank will issue shares in the ratio of 5.7 equity shares of the Bank (aggregating 13,782,600 equity shares) of the face value of Rs.10 for every 1 equity share (aggregating 2,418,000 equity shares) of Rs.10 each held by shareholders of ESPL. EMPLOYEE STOCK OPTION PLAN (ESOP) The Bank has instituted an Employee Stock Option Scheme to enable its employees and the employees of its subsidiaries including whole-time Directors, to participate in the future growth and financial success of the Bank. Under the Scheme 40,517,400 options can be granted to employees. The employee stock option scheme is in accordance with the Securities and Exchange Board of India (Employee Stock Option and Employee Stock Purchase Scheme) Guidelines, 1999. The eligibility and number of options to be granted to an employee is determined on the basis of the employees work performance and is approved by the Board of Directors. The Banks shareholders approved plans for the issuance of stock options to employees in February 2001, June 2004, June 2006, June 2008 and June 2010. Under the first two plans and upto the grant made on 29 April, 2004, the option conversion price was set at the average daily high-low price of the Banks equity shares traded during the 52 weeks preceding the date of grant at the Stock Exchange which has had the maximum trading volume of the Banks equity share during that period.

Under the third plan and with effect from the grant made by the Bank on 10 June, 2005, the pricing formula has been changed to the closing price on the day previous to the grant date. The Remuneration and Nomination Committee granted options under these plans on ten occasions: 1,118,925 during 2000-01, 1,779,700 during 2001 -02, 2,774,450 during 2003-04, 3,809,830 during 2004-05, 5,708,240 during 2005-06, 4,695,860 during 2006-07, 6,729,340 during 2007-08, 2,677,355 during 2008-09, 4,413,990 during 2009-10 and 2,915,200 during 2010-11. The options granted, which are non-transferable, vest at rates of 30%, 30% and 40% on each of three successive anniversaries following the grant, subject to standard vesting conditions, and must be exercised within three years of the date of vesting. As of 31 March, 2011, 21,709,978 options had been exercised and 11,122,518 options were in force. Other statutory disclosures as required by the revised SEBI guidelines on ESOPs are given in the Annexure to this report. CORPORATE GOVERNANCE The Bank is committed to achieving the highest standards of corporate governance and it aspires to benchmark itself with international best practices in this regard. The corporate governance practices followed by the Bank are enclosed as an Annexure to this report. The Bank has adopted a major part of the recommendations contained in the Corporate Governance Voluntary Guidelines 2009 issued by the Ministry of Corporate Affairs and is examining the possibility of implementing the remaining recommendations. DIRECTORS RESPONSIBILITY STATEMENT The Board of Directors hereby declares and confirms that: i. The applicable accounting standards have been followed in the preparation of the annual accounts and proper explanations have been furnished, relating to material departures. ii. Accounting policies have been selected, and applied consistently and reasonably, and prudent judgements and estimates have been made so as to give a true and fair view of the state of affairs of the Bank and of the Profit & Loss of the Bank for the financial year ended 31 March, 2011. iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records, in accordance with the provisions of the Companies (Amendment) Act, 2000, for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities. iv. The annual accounts have been prepared on a going concern basis.

v. The Bank has in place a system to ensure compliance of all laws applicable to the Bank. STATUTORY DISCLOSURE

Considering the nature of activities of the Bank, the provisions of Section 217(1 )(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption do not apply to the Bank. The Bank is, however, constantly pursuing its goal of technological upgradation in a cost-effective manner for delivering quality customer service. The statement containing particulars of employees as required under Section 217(2A) of the Companies Act, 1956 and the rules thereunder, is given in an Annexure appended hereto and forms part of this report. In terms of Section 219(1) (iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Bank. AUDITORS M/s Deloitte Haskins & Sells, Chartered Accountants, Statutory Auditors of the Bank will retire on the conclusion of the Seventeenth Annual General Meeting and are eligible for re-appointment, subject to the approval of Reserve Bank of India and of the shareholders. As recommended by the Audit Committee of the Board, the Board of Directors has proposed the appointment of M/s Deloitte Haskins & Sells, Chartered Accountants as Statutory Auditors for the financial year 2011-12. The shareholders are requested to consider their appointment on the remuneration to be decided by the Audit Committee of the Board. ACKNOWLEDGEMENTS The Board of Directors places on record its gratitude to the Reserve Bank of India, other government and regulatory authorities, financial institutions and correspondent banks for their strong support and guidance. The Board acknowledges the support of the shareholders and also places on record its sincere thanks to its valued clients and customers for their continued patronage. The Board also expresses its deep sense of appreciation to all employees of the Bank for their strong work ethic, excellent performance, professionalism, team work, commitment, and initiative which has led to the Bank making commendable progress in todays challenging environment. For and on behalf of the Board of Directors Place : Mumbai Date : 22nd April, 2011 Adarsh Kishore Chairman

Director Report
Mar2009 Mar 2010 Mar2011

The Board of Directors is pleased to present the Sixteenth Annual Report of your Bank together with the Audited Statement of Accounts, Auditors Report and the report on business and operations of the Bank for the financial year ended 31st March 2010.
FINANCIAL PERFORMANCE

The financial highlights for the year under review are presented below: (Rs. in crores) PARTICULARS Deposits Out of which - Savings Bank Deposits Current Account Deposits Advances Out of which - Retail Advances - Non-retail Advances Total Assets/Liabilities Net Interest Income Other Income Out of which - Trading Profit (1) - Fee & other income Operating Expensesexcl. depreciation Profit before depreciation, provisions and tax Depreciation Provision for Tax Other Provisions & Writeoffs Net Profit Appropriations: Transfer to Statutory Reserve Transferto Investment Reserve 628.63 14.88 453.84 0.06 38.51% 822.38 3,123.40 373.86 2,523.02 119.97% 23.80% 2009-10 141,300.22 2008-09 117,374.11 Growth 20.38%

33,861.80 32,167.74 104,343.12

25,822.12 24,821.61 81,556.77

31.13% 29.60% 27.94%

20,822.90 83,520.22 180,647.85 5,004.49 3,945.78

16,051.78 65,504.99 147,722.05 3,686.21 2,896.88

29.72% 27.50% 22.29% 35.76% 36.21%

3,475.40

2,669.55

30.19%

5,474.87 234.32 1.336.83

3,913.54 188.66 969.84

39.90% 24.20% 37.84%

1,389.19 2,514.53

939.68 1,815.36

47.84% 38.51%

Transferto Capital Reserve Transferto General Reserve Proposed Dividend Surplus carried overto Balance Sheet (1) Excluding Merchant Exchange Profit KEY PERFORMANCE INDICATORS Interest Income as a percentage of working funds*

223.92 0.31 567.45

146.72 420.52

52.62% 34.94%

1,079.34

794.22

35.90%

2009-10

2008-09

7.73%

8.59%

Non-Interest Income as a percentage of working funds Net Interest Margin Return on Average Net Worth Operating Profit as a percentage of working funds Return on Average Assets Profit per employee**

2.62% 3.75% 19.89%

2.30% 3.33% 19.93%

3.48% 1.67% Rs. 11.63 lacs

2.95% 1.44% Rs. 10.02 lacs

Business (Deposits less inter bank deposits + Advances) per employee** Rs. 11.11 crores Rs. 10.60 crores NetNon performing assets as a percentage of net customer assets***

0.36%

0.35%

- Working funds represent average total assets. ** Productivity ratios are based on average number of employees for the year. *** Customer Assets include advances and credit substitutes. Previous year figures have been regrouped wherever necessary. In a difficult year for the financial sector, the Bank has delivered a very strong performance with a net profit of Rs. 2,514.53 crores (38.51 % higher than the net profit of Rs. 1,81 S.36 crores last year), Basic

Earnings per Share (EPS) of Rs. 65.78 (29.97% higher than the EPS of Rs. 50.61 in 2008-09) and a Return on Equity (ROE) of 19.89% compared to 19.93% last year. In 2009-10, the total income was Rs. 15,583.80 crores, increasing by Rs. 1,851.44 crores or 13.48% over last year. During the period the operating revenue rose 35.96% to Rs. 8,950.27 crores, while operating profit increased by 40.69% to Rs. 5,240.55 crores, due to a robust growth of core income streams. The Net Interest Income (Nil) grew by Rs. 1,318.28 crores to Rs. 5,004.49 crores, rising 35.76%, due in large measure, to lower cost of deposits supported by the solid and sustained growth of the low-cost current account and savings bank (CASA) deposits as well as a sharp fall in the cost of term deposits. Nil also grew on the back of strong asset growth across business segments and on a daily average basis, the total earning assets of the Bank increased by 20.46% to Rs. 133,308.75 crores from Rs. 110,663.96 crores last year. During the year the yield on earning assets declined by 101 basis points from 9.73% last year to 8.72% in line with the general decline in lending rates facilitated by an accommodating monetary policy. The decline in the cost of funds, on the other hand, was steeper, falling 130 basis points from 6.50% last year to 5.20%, mainly on account of the reasons stated above. The share of CASA deposits in the total deposits of the Bank on a daily average basis rose sharply by 429 basis points from 36.10% last year to 40.39% while the cost of term deposits fell 189 basis points from 9.41% last year to 7.52%. As a result, the Net Interest Margin (NIM) climbed 42 basis points over the year. In the last four quarters, the NIM has consistently improved: from 3.34% in Q1, to 3.52% in Q2,4.00% in Q3 and 4.09% in Q4. Other income comprising fees, trading profit and miscellaneous income was Rs. 3,945.78 crores, at the end of the year, rising 36.21% or by Rs. 1,048.90 crores over the year. Fee income comprised 32.68% of the operating revenue of the Bank, generated by products and services of diverse businesses such as client-based merchant foreign exchange trade, service charges from account maintenance, transaction banking including cash management services, syndication and placement fees, processing fees from loans and commission on non-funded products such as letters of credit and bank guarantees, inter-change fees on ATM-sharing arrangements and fee income from the distribution of third-party personal investment products. There was also a healthy increase in treasury income by way of proprietary trading profit which grew 119.97% over the year to Rs. 822.38 crores, from Rs. 373.86 crores last year. Miscellaneous income rose 162.24% mainly on account of higher recoveries of loans written-off in earlier years. During the year, such recoveries amounted to Rs. 174.43 crores against Rs. 62.95 crores last year. The Bank continued to add to its network of branches, ATMs and other channels, contributing in part to the growth of operating expenses of the Bank which rose 29.79% to Rs. 3,709.72 crores over last year. However, the Cost: Income ratio which reflects operational efficiency, improved to 41.45% in 2009-10 from 43.42% last year. During the year, the Bank created total provisions (excluding provisions for tax) of Rs. 1,389.19 crores against Rs. 939.68 crores

last year. Of this, provisions for loan losses were Rs. 1,357.04 crores (against Rs. 732.21 crores last year) as some loan segments came under stress in the wake of the economic slowdown. The Bank accelerated its provisioning requirements in several portfolios as a measure of prudence, increasing the overall provision coverage. The Bank also provided Rs. 56.47 crores against restructured assets. Global recessionary conditions and the consequential impact upon the Indian economy led to a sharp rise of restructured assets in the banking sector during the year. Although the Bank restructured assets of Rs. 1,632.97 crores during the year, it has been able to maintain the quality of its loans, ending the year with a ratio of Gross NPAs to gross customer assets of 1.13% (against 96 basis points last year) and a net NPA ratio (net NPAs as percentage of net customer assets) of 0.36% (against 35 basis points last year). With higher levels of provisions, built over and above the regulatory norms during the year, the Bank achieved a provision-coverage of 72.38% after considering prudential write-offs. Given the strong revenue growth, key financial parameters and ratios for the year have improved. The ROE declined marginally from 19.93% in 2008-09 to 19.89%. Basic EPS rose to Rs. 65.78 from Rs. 50.61 last year, while diluted EPS was Rs. 64.31 compared to Rs. 50.27 last year. The Book Value per share rose from Rs. 284.50 on 31st March 2009 to Rs. 395.99 on 31" March 2010 while Return on Assets (ROA) improved to 1.67% from 1.44% last year. Employee productivity also improved, profit per employee increasing to Rs. 11.63 lacs from Rs. 10.02 lacs last year and business per employee increasing to Rs. 11.11 crores from Rs. 10.60 crores last year. Despite relatively subdued growth during the first three quarters of the year, the Bank finished the year with a healthy growth of the balance sheet at Rs. 180,647.85 crores, increasing by Rs. 32,925.80 crores, or 22.29% over last year. Total deposits were Rs. 141,300.22 crores, increasing by Rs. 23,926.11 crores, or 20.38% over last year. Low-cost demand deposits (savings bank and current accounts) (CASA) were Rs. 66,029.54 crores, rising by Rs. 15,385.81 crores, or 30.38% over the year. As on 31st March 2010, the percentage share of low-cost demand deposits (CASA) in total deposits rose to 46.73% from 43.15% last year. Savings bank account deposits grew 31.13% to Rs. 33,861.80 crores, while current account deposits grew 29.60% to Rs. 32,167.74 crores. Total advances were Rs. 104,343.12 crores, growing 27.94% by Rs. 22,786.35 crores from last year. Of this, corporate advances (comprising large and mid-corporate accounts) were Rs. 52,503.53 crores, growing by Rs. 11,292.63 crores or 27.40% over last year. During the same period, advances to the SME segment (including micro finance) were Rs. 19,482.65 crores, increasing by Rs. 3,405.95 crores, or 21.19% over last year, while agricultural lending stood at Rs. 11,534.04 crores, increasing by Rs. 3,316.65 crores or 40.36% over the year. Retail loans wereRs. 20,822.90 crores, increasing by Rs. 4,771.12 crores or 29.72% from last year. The Banks total investments were Rs. 55,974.82 crores, increasing by Rs. 9,644.47 crores or 20.82% over last year. Investments in government and approved securities, mainly held to meet the Banks SLR requirement, were Rs. 34,195.88 crores increasing by Rs. 6,473.01 crores or 23.35% over last year. Other investments, including corporate debt securities, were Rs. 21,778.94 crores increasing by Rs. 3,171.46 crores or 17.04% over last year. The total

assets of the Banks overseas branches as on 31" March 2010 were Rs. 13,921.42 crores, increasing by Rs. 2,245.93 crores or 19.24% over last year, constituting 7.71% of the Banks total assets. As one of the key planks for business growth and customer-acquisition, the Bank continued to enlarge its distribution network. Widening geographical reach is critical for extending service delivery and for tapping growth opportunities in newer markets, especially in the areas of low-cost CASA deposits, lending to retail, agriculture and SME segments and the sale of third party products. The distribution network now covers 643 centres in India and 4 centres in overseas as on 31 "March 2010. The Bank crossed a landmark on 29* March opening its 1000th branch at Bandra West, Mumbai. The Bank is now present in all states and Union Territories (except Lakshadweep) and is present in 401 of the 626 district headquarters in the country. During 2009-10, 200 branches (including service branches/CPC) were added to the Banks network, taking the total number of branches and Extension Counters (ECs) to 1,035 as on 31" March 2010 from 835 last year. Of these, 320 branches are in semi-urban and rural areas and 707 branches are in metropolitan and urban areas. The ATM network of the Bank grew from 3,595 last year to 4,293 at the end of FY 2010. CAPITAL & RESERVES During the year under review, the Bank raised capital in the form of equity and debt to support future growth. It raised Tier I capital in the form of equity capital through simultaneous offerings in the form of a follow-on Global Depositary Receipt (GDR) issue, a Qualified Institutional Placement (QIP) and a preferential allotment of equity shares to the promoters of the Bank. The Bank mobilised an aggregate of Rs. 3,816.14 crores through the three-way offering, of which the Bank raised US Dollars 95.56 million (equivalent to Rs. 459.43 crores) through allotment of 5,055,500 GDRs each representing one equity share of the Bank at a price of US Dollars 18.90 per GDR. The Bank also raised Rs. 2,996.15 crores by issuing 33,044,500 equity shares through a QIP offering, which was priced along with the GDR at Rs. 906.70 per share (equivalent to the price offered under the GDR offering). In order to maintain the percentage shareholding of the Banks promoters at the pre-GDR/QIP offering levels. Life Insurance Corporation of India and New India Assurance Company Ltd. participated in a preferential offer by subscribing to 3,976,632 equity shares aggregating Rs. 360.56 crores. The equity shares offered under the preferential allotment were also priced at Rs. 906.70 per share (equivalent to price at which both GDR and QIP was offered). Under its Employee Stock Option Plan, the Bank allotted 4,092,369 equity shares to employees during the year under review. The Bank also raised Rs. 2,000 crores by way of subordinated bonds (unsecured redeemable non-convertible debentures) qualifying asTier II capital. The Bank is thus well capitalized, with a capital adequacy ratio of 15.80% at the end of the year, of which the Tier I capital adequacy ratio was 11.18% against 9.26% a year earlier, while the Tier II Capital Adequacy Ratio was 4.62% against 4.43% in FY 2009. These measures have significantly strengthened the capital position of the Bank, particularly core Tier I capital, providing adequate support for its growth plans in future.

The paid up capital of the Bank as on 31st March 2010 rose to Rs. 405.17 crores from Rs. 359.01 crores as on 31" March 2009. The shareholding pattern of the Bank as of 31st March 2010 is stated below: Sr. No. i. Name of Shareholders % of Paid Up Capital

Administrator of the Specified Undertaking of the Unit Trust of India (UTI-I)

24.00 10.27

ii. Life Insurance Corporation of India iii. General Insurance Corporation and four PSU Insurance Companies iv. v. vi. Overseas Investors including Flls/OCBs/NRIs Foreign Direct Investment (GDR issue) Other Indian Financial Institutions/ Mutual Funds/ Banks

4.27 33.68 8.37

7.07 12.34 100.00

vii. Others Total

The Banks shares are listed on the NSE and the BSE. The GDRs issued by the Bank are listed on the London Stock Exchange (LSE). The Bonds issued by the Bank under the MTN programme are listed on the Singapore Stock Exchange. The listing fees relating to all stock exchanges for the current year have been paid. With effect from 26" March 2001, the shares of the Bank have been included and traded in the BSE Group A. Further, with effect from 27th March 2009, the Banks shares have been included and traded as part of the main NIFTY Index of the NSE. Earlier, the shares of the Bank were part of the NIFTY Juniorlndexof the NSE. The Banks shares were voluntarily delisted from the Ahmedabad Stock Exchange with effect from 17th August 2009 as there was no trading of the Banks shares at this Stock Exchange and the only trading which took place for the last few years was that of a few shares in February 2000. DIVIDEND The Banks diluted EPS for 2009-10 has risen to Rs. 64.31 from Rs. 50.27 during 2008-09. In view of the overall performance of the Bank, future outlook and the objective of rewarding shareholders with cash dividends while retaining capital to maintain a healthy capital adequacy ratio to support future growth, the Board of Directors has recommended a higher dividend of Rs. 12.00 per share on equity shares, compared to Rs. 10.00 per share declared for the last year. This

increase reflects our confidence in the Banks ability to consistently grow earnings over time. BOARD OF DIRECTORS During the year, some changes in the Board of Directors have taken place. Dr. P.J. Nayak, former Chairman and CEO of the Bank retired with effect from 20th April 2009. Shri A. T. Pannir Selvam, nominee Director of the Specified Undertaking of the Unit Trust of India (SUUTI) passed away on 21" April 2009. Shri Ramesh Ramanathan, Independent Director resigned with effect from 14th July 2009. Five new Directors have been inducted in the Board during the year. Smt. Shikha Sharma was appointed as Managing Director and CEO of the Bank with effect from 1" June 2009. RBI gave its approval for the appointment of Shri M. M. Agrawal, former Executive Director (Corporate Banking) of the Bank as Deputy Managing Director with effect from 10th February 2010. Shri V. R. Kaundinya, Managing Director, Advanta India Ltd. was appointed as an Additional Independent Director with effect from 12th October 2009. Dr. Adarsh Kishore, former Finance Secretary, Government of India and former Executive Director, International Monetary Fund and nominee of the Specified Undertaking of the Unit Trust of India (SUUTI) was appointed as an Additional Director with effect from 15th January 2010. RBI gave its approval for the appointment of Dr. Adarsh Kishore as a non-executive Chairman of the Bank with effect from 8th March 2010. Shri S. B. Mathur, former Chairman of LIC and the National Stock Exchange of India was appointed as an Additional Independent Director with effect from 15th January 2010. The Board of Directors places on record its appreciation and gratitude to Dr. P.J. Nayak for the pivotal role played by him in shaping the strategies of and building the Bank to its present pre-eminent position in the banking sector. The Board of Directors also places on record its appreciation and gratitude to Shri A. T. Pannir Selvam and Shri Ramesh Ramanathan for the valuable services rendered by them during their tenure as Directors of the Bank. In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Bank, Dr. R. H. Patil and Smt. Rama Bijapurkar retire by rotation at the Sixteenth Annual General Meeting and, being eligible, offer themselves for re-appointment as Directors of the Bank. SUBSIDIARIES The Bank has set up five wholly-owned subsidiaries: Axis Securities and Sales Ltd., Axis Private Equity Ltd., Axis Trustee Services Ltd., Axis Asset Management Company Ltd. and Axis Mutual Fund Trustee Ltd. Axis Securities and Sales Ltd. was set up in December 2005 (originally incorporated as UBL Sales Ltd., renamed as Axis Sales Ltd. in 2007 and now rechristened as Axis Securities and Sales Ltd. on 5th April 2010) to market credit cards and retail asset products. The objective of setting up the subsidiary was to build a specialised force of sales personnel and optimize operational efficiency by providing greater control over the sales effort in comparison with a Direct Sales Agent

(DSA) model. The scope of activities of the subsidiary has now been enlarged to include retail broking. In October 2006, the Bank set up Axis Private Equity Ltd., primarily to carry on the activities of managing equity investments and provide venture capital support to businesses. Axis Trustee Services Company Ltd. was established in May 2008 to engage in trusteeship activities (e.g. acting as a debenture trustee, the trustee to various securitisation trusts as well as other trusteeship businesses). Axis Asset Management Company Ltd. was set up primarily to carry on the activities of managing a mutual fund business in January 2009 and in the same year, Axis Mutual Fund Trustee Ltd. was set up, to act as the trustee for the mutual fund business. In terms of an exemption received from the Ministry of Corporate Affairs, Government of India through its letter no. 47/39/2010-CL-lll dated 25,h January 2010 under Section 212(8) of the Companies Act 1956, copies of the Directors Report, report of the auditors of the five subsidiaries [Axis Sales Ltd. (now renamed as Axis Securities and Sales Ltd.), Axis Private Equity Ltd., Axis Trustee Services Ltd., Axis Asset Management Company Ltd. and Axis Mutual Fund Trustee Ltd.] along with financial statements have not been attached to the accounts of the Bank for the financial year ended 31st March 2010. Any shareholder who is interested in obtaining a copy of these details may write to the Company Secretary at the Registered Office of the Bank. These documents will also be available for examination by shareholders of the Bank at its Registered Office and also at the registered offices of the five subsidiary companies. In line with the Accounting Standard 21 (AS 21) issued by the Institute of Chartered Accountants of India, the consolidated financial results of the Bank along with its subsidiaries for the year ended 31st March 2010 are enclosed as an Annexureto this report. EMPLOYEE STOCK OPTION PLAN (ESOP) To enable employees including whole-time Directors of the Bank to participate in the future growth and financial success of the Bank, the Bank instituted in 2001 an Employee Stock Option Scheme under which 35,770,000 options can be granted to employees. The employee stock option scheme is in accordance with the Securities and Exchange Board of India (Employee Stock Option and Employee Stock Purchase Scheme) Guidelines, 1999. The eligibility and number of options to be granted to an employee is determined on the basis of the employees work performance and is approved by the Board of Directors. The Banks shareholders approved plans in February 2001, June 2004, June 2006 and June 2008 for the issuance of stock options to employees. Under the first two plans and upto the grant made on 29th April 2004, the option conversion price was set at the average daily high-low price of the Banks equity shares traded during the 52 weeks preceding the date of grant at the Stock Exchange which has had the maximum trading volume of the Banks equity share during that period. Under the third plan and with effect from the grant made by the Bank on 10"June 2005, the pricing formula has been changed to the closing price on the day previous to the grant date. The Remuneration and Nomination Committee

granted options under these plans on nine occasions: 1,118,925 during 2000-01, 1,779,700 during 2001-02, 2,774,450 during 2003-04, 3,809,830 during 2004-05, 5,708,240 during 2005-06, 4,695,860 during 2006-07, 6,729,340 during 2007-08, 2,677,355 during 2008-09 and 4,413,990 during 2009-10. The options granted, which are non-transferable, vest at rates of 30%, 30% and 40% on each of three successive anniversaries following the grant, subject to standard vesting conditions, and must be exercised within three years of the date of vesting. As of 31st March 2010, 16,338,254 options had been exercised and 13,897,518 options were in force. Other statutory disclosures as required by the revised SEBI guidelines on ESOPs are given in the Annexure to this report. CORPORATE GOVERNANCE The Bank is committed to achieving the highest standards of corporate governance and it aspires to benchmark itself with international best practices in this regard. The corporate governance practices followed by the Bank are enclosed as an Annexure to this report. The Bank has adopted a major part of the recommendations contained in the Corporate Governance Voluntary Guidelines 2009 issued by the Ministry of Corporate Affairs and is examining the possibility of implementing the remaining recommendations. DIRECTORS RESPONSIBILITY STATEMENT The Board of Directors hereby declares and confirms that: i. The applicable accounting standards have been followed in the preparation of the annual accounts and proper explanations have been furnished, relating to material departures. ii. Accounting policies have been selected, and applied consistently and reasonably, and prudent judgements and estimates have been made so as to give a true and fair view of the state of affairs of the Bank and of the Profits Loss of the Bank for the financial year ended 31s March 2010. iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records, in accordance with the provisions of the Companies (Amendment) Act, 2000, for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities. iv. The annual accounts have been prepared on a going concern basis.

v. The Bank has in place a system to ensure compliance of all laws applicable to the Bank. STATUTORY DISCLOSURE Considering the nature of activities of the Bank, the provisions of Section 217(1 )(e) of the Companies Act, 1956 relating to conservation

of energy and technology absorption do not apply to the Bank. The Bank is, however, constantly pursuing its goal of technological upgradation in a cost-effective mannerfordelivering quality customer service. The statement containing particulars of employees as required under Section 217(2A) of the Companies Act, 1956 and the rules thereunder, is given in an Annexure appended hereto and forms part of this report. In terms of Section 219(1) (iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Bank. AUDITORS M/s S. R. Batliboi & Co., Chartered Accountants, had been appointed by the shareholders at the fifteenth Annual General Meeting as Statutory Auditors of the Bank for the year 2009-10 and will be retiring at the conclusion of the forthcoming Annual General Meeting. M/s S. R. Batliboi & Co. have been the Statutory Auditors of the Bank since 2006. As per the regulations of Reserve Bank of India, the same auditors cannot be re-appointed for a period beyond 4 years. It is, accordingly, proposed to appoint M/s Deloitte Haskins & Sells, Chartered Accountants, as the Banks new Statutory Auditors subject to the approval by the shareholders. The Board of Directors place on record their appreciation of the professional services rendered by IWs S. R. Batliboi & Co., as the Statutory Auditors of the Bank. ACKNOWLEDGEMENTS The Board of Directors places on record its gratitude to the Reserve Bank of India, other government and regulatory authorities, financial institutions and correspondent banks for their strong support and guidance. The Board acknowledges the support of the shareholders and also places on record its sincere thanks to its valued clients and customers for their continued patronage. The Board also expresses its deep sense of appreciation to all employees of the Bank for their strong work ethic, excellent performance, professionalism, team work, commitment, and initiative which has led to the Bank making commendable progress in todays challenging environment. For and on behalf of the Board of Directors Place: Mumbai Date : April 20,2010 Adarsh Kishore Chairman

Director Report
Mar2008 Mar 2009 Mar2010

The Board of Directors has pleasure in presenting the Fifteenth Annual Report of your Bank together with the Audited Statement of Accounts, Auditors Report and the report on business and operations of the Bank for the financial year ended 31st March 2009.
FINANCIAL PERFORMANCE

The Bank has delivered a strong performance in 2008-09 in the backdrop of widespread turbulence in the global financial markets as well as a slowdown of economic growth in India. The Banks strategy of building customer franchises and tapping into the opportunities within those franchises for growing its business continues to deliver strong results. Financial highlights for the year under review are presented below: (Rs. in crores) PARTICULARS Deposits Out of which 2008-09 1,17,374.11 2007-08 87,626.22 Growth 33.95%

- Savings Bank Deposits 25,822.12 -Current Account Deposits 24,821.61 Advances 81,556.77 Out of which - Retail Assets 16,051.78 - Non-retail Advances 65,504.99 Total Assets/Liabilities 1,47,722.05 Net Interest Income 3,686.21 Other Income 2,896.88 Out of which - Trading Profit (1) 373.86 - Fee & other income 2,523.02 Operating Expenses excl. depreciation 2,669.55 Profit before depreciation, provisions and tax 3,913.54 Depreciation 188.66 Provision for Tax 969.84 Other Provisions & Write offs 939.68 Net Profit1, 815.36 Appropriations: Transfer to Statutory Reserve 453.84 Transfer to Investment Reserve 0.06 Transfer to Capital Reserve 146.72 Proposed Dividend 420.52 Surplus carried over to Balance Sheet 794.22 (1) Excluding Merchant Exchange Profit KEY PERFORMANCE INDICATORS Interest Income as a percentage of working funds Non-Interest Income as a percentage of working funds Net Interest Margin Return on Average Net Worth Operating Profit as a percentage of working funds Return on Average Assets

19,982.41 20,044.58 59,661.14 13,591.68 46,069.46 1,09,577.85 2,585.35 1,795.49 253.59 1,541.90 1,996.81 2,384.03 158.11 575.25 579.64 1,071.03 267.76 26.84 251.64 524.79

29.22% 23.83% 36.70% 18.10% 42.19% 34.81% 42.58% 61.34% 47.43% 63.63% 33.69% 64.16% 19.32% 68.59% 62.11% 69.50% 69.50% 446.65% 67.11% 51.34%

2008-09

2007-08

8.59% 2.30% 3.33% 19.93% 2.95% 1.44%

8.08% 2.07% 3.47% 16.09% 2.57% 1.24%

Profit per employee Business (Deposits less inter bank deposits + Advances) per employee Net Non performing assets as a percentage of net customer assets

Rs.10.02 lacs Rs.10.60 crores 0.35%

Rs.8.39 lacs Rs.11.17 crores 0.36%

- Working funds represent average total assets. - Productivity ratios are based on average number of employees for the year. - Customer Assets include advances, credit substitutes and unamortized cost of assets leased out. Previous year figures have been regrouped wherever necessary. The Bank continues to record an impressive year-on-year performance, earning a net profit of Rs. 1,815.36 crores for the financial year 2008-09 against Rs. 1,071.03 crores in the previous year. The YoY growth of 69.50% in net profit was mainly due to an increase in net interest income by 42.58% and non-interest income by 61.34%, partly offset by a lower increase in operating expenses of 33.69%. The overall performance in 2008-09 was supported well by a healthy rise in core income streams such as net interest income and fee income. During the year, the total income of the Bank increased by 56.04% to Rs. 13,732.36 crores from Rs. 8,800.80 crores in the previous year, largely driven by substantial increase in both net interest income (NIl) and in fee and other income. NIl grew by 42.58% to Rs. 3,686.21 crores from Rs. 2,585.35 crores in the previous year, while fee and other income increased by 61.34% to Rs. 2,896.88 crores from Rs. 1,795.49 crores in the previous year. The growth of NIl may be attributed to an expansion in the balance sheet size, with average earning assets in the year increasing by 48.37% (Rs. 74,589 crores in 2007-08 to Rs. 1,10,664 crores in 2008-09). Although this gain in NIl was partly offset by the hardening of interest rates, particularly in the second half of the financial year, the growth of demand deposits (which on a daily average basis increased by 33.81 % to Rs. 34,141 crores from Rs. 25,515 crores in the previous year) helped the Bank contain the cost of funds. Overall, the daily average cost of funds in the year rose to 6.50% from 6.02% in the previous year, primarily due to a steep rise of interest rates on term deposits in the third quarter when liquidity concerns were at a peak. During 2008-09, the yield on earning assets increased by 37 basis points to 9.73% from 9.36% which, however, was offset by an increase in cost of funds by 48 basis points. During 2008-09, the net interest margin (NIM) declined by 14 basis points to 3.33% from 3.47% in the previous year. On a quarter-on-quarter basis, the NIM was 3.35%, 3.51%, 3.12% and 3.37% in Q1, Q2, Q3 and Q4 respectively. Other income, comprising fees, trading profits and miscellaneous income also showed impressive growth, increasing by 61.34% to Rs. 2,896.88 crores in 2008-09 from Rs. 1,795.49 crores in the previous year. Fee

income is a significant part of the earnings of the Bank and is generated through a diverse set of businesses in the Bank. The main constituents of fee income are service charges for account maintenance, inter-change fees on ATM-sharing arrangements, fees on distribution of third-party personal investment products, fee income from cash management services, syndication and placement fees and fees earned on the processing of loans and on non-fund based business. Fee and miscellaneous income (including exchange profit earned on client-based merchant foreign exchange business) rose by 63.63% to Rs. 2,523.02 crores from Rs. 1,541.90 crores in the previous year. Of this, exchange profit earned on merchant foreign exchange business has increased by 57.38% to Rs. 274.08 crores from Rs. 174.15 crores in the previous year. During the same period, proprietary trading profits increased by 47.43% to Rs. 373.86 crores from Rs. 253.59 crores in the previous year. During the year, the operating revenue of the Bank increased by 50.27% to Rs. 6,583.09 crores from Rs. 4,380.84 crores in the previous year. The core income streams (Nil, fee and miscellaneous income) constituted 94.32% of the operating revenue of the Bank, reflecting the stability as also the sustainability of the Banks earnings. The operating expenses (including depreciation) increased by 32.64% to Rs. 2,858.21 crores from Rs. 2,154.92 crores in the previous year, which reflected the growth of the Banks network and other infrastructure required for supporting existing and new businesses. During the year, there was an improvement in operational efficiency, evident from a decline in the cost: income ratio to 43.42% from 49.19% in the previous year. In 2008-09, the operating profit of the Bank increased by 67.34% to Rs. 3,724.88 crores from Rs. 2,225.92 crores in the previous year. During the period, the Bank has created total provisions (excluding provisions for tax) of Rs. 939.68 crores against Rs. 579.64 crores in the previous year. The Bank has provided Rs. 732.21 crores towards non-performing assets against Rs. 322.69 crores in the previous year, while the provision for standard assets was Rs. 105.50 crores against Rs. 153.46 crores in the previous year. The Bank has also provided Rs. 65.46 crores towards restructuring of assets. The Bank continued to maintain the generally high quality of its assets and net NPAs, as the percentage of net customer assets declined from the previous year level of 0.36% to 0.35% in 2008-09. There has been an all-round improvement on various financial parameters and ratios during the year. Basic earning per share has increased by 57.42% to Rs. 50.61 per share from Rs. 32.15 per share in the previous year, Diluted earnings per share (EPS) was Rs. 50.27 per share, up 60.56% from Rs. 31.31 per share in the previous year. Return on Equity (ROE) has improved to 19.93% from 16.09% in the previous year. Book Value per share has improved by 16.06% to Rs. 284.50 from Rs. 245.14 in the previous year. Return on Average Assets improved to 1.44% from 1.24% in the previous year. The Bank has also reported a robust growth of key balance sheet parameters for the year ended 31st March 2009. The Banks total balance sheet size increased by 34.81 % to Rs. 1,47,722.05 crores from Rs. 1,09,577.85 crores in the previous year. As on 31st March 2009, total deposits overtook the Rs. 1 lac-crore mark and stood at Rs. 1,17,374.11

crores against Rs. 87,626.22 crores, a growth of 33.95%. Demand deposits (savings bank and current accounts) increased by 26.52% to Rs. 50,643.73 crores from Rs. 40,026.99 crores in the previous year, constituting 43.15% of total deposits as on 31st March 2009. Savings bank account deposits grew by 29.22% to Rs. 25,822.12 crores, while current account deposits grew by 23.83% to Rs. 24,821.61 crores. During the year, total advances of the Bank grew by 36.70% to Rs. 81,556.77 crores from Rs. 59,661.14 crores in the previous year. Of this, corporate advances (comprising large and mid-corporates) increased by 41.98% to Rs. 41,210.90 crores. During the same period, advances to SMEs (including microfinance) increased by 39.35% to Rs. 16,076.70 crores, while agricultural lending increased by 49.23% to Rs. 8,217.39 crores. Retail loans grew 18.10% to Rs. 16,051.78 crores. The Banks total investments increased by 37.46% to Rs. 46,330.35 crores with investments in government and approved securities, held to meet the Banks SLR requirement, increasing by 37.41 % to Rs. 27,727.24 crores as a result of the increase in total deposits. Other investments, including corporate debt securities, increased by 37.53% to Rs. 18,603.11 crores. As on 31st March 2009, the total assets of the Banks overseas branches stood at Rs. 11,675 crores, constituting 7.90% of the Banks total assets. As part of its strategy of building the organic growth engine, the Bank continued to enlarge its geographical coverage of centres with potential for growth, including district headquarters and other Tier II cities and towns across the country. This has helped the Bank particularly in the acquisition of low cost retail deposits, retail assets, lending to agriculture, SME and mid-corporates as also the sale of third-party products. During the year, 176 new branches were added to the Banks network (including 12 extension counters that have been upgraded to branches), taking the total number of branches and ECs to 835 as on 31.3.2009 (against 671 branches and ECs in the previous year). Of the 827 branches, 230 branches are in semi-urban and rural areas. With the opening of these offices, the geographical reach of the Bank now extends to 30 States and 4 Union Territories covering 515 centres. During 2008- 09, the Bank opened 831 ATMs, thereby taking the ATM network of the Bank from 2,764 to 3,595. The Bank has also opened a Representative Office in Dubai during the year. This was in addition to the existing branches at Singapore, Hong Kong and DIFC (Dubai International Finance Centre). The opening of overseas offices provides opportunities to the Bank to finance cross-border trade and manufacturing activities in addition to the ability to source remittances and other businesses from the NRI community. CAPITAL & RESERVES The business expansion plans of the Bank need to be backed by adequate capital. During the year under review, the Bank has raised capital of Rs. 1,700 crores by way of subordinated bonds (unsecured redeemable non-convertible debentures) qualifying as Tier II capital. The raising of this non-equity capital has helped the Bank continue its growth strategy and has strengthened its capital adequacy ratio. The Bank is well capitalized with the capital adequacy ratio as at the end of the year at 13.69%, substantially above the benchmark requirement of 9% stipulated by Reserve Bank of India. Of this Tier I Capital amounted to 9.26%, as against 10.17% last year, while Tier II Capital was at 4.43%.

During the year under review, 12,95,449 equity shares were allotted to employees of the Bank pursuant to the exercise of options under its Employee Stock Option Plan. The paid up capital of the Bank as on 31st March 2009 thereby rose to Rs. 359.01 crores from Rs. 357.71 crores as on 31st March 2008. The shareholding pattern of the Bank as of 31st March 2009 was as under: Sr. No. i. Name of Shareholders % of Paid Up Capital

Administrator of the Specified Undertaking of the Unit Trust of India (UTI-I)

27.08 10.36

ii. Life Insurance Corporation of India iii.General Insurance Corporation and four PSU Insurance Companies iv. Overseas Investors including Flls/OCBs/NRIs v. Foreign Direct Investment (GDR issue)

4.96 25.12 7.76

vi. Other Indian Financial Institutions/ Mutual Funds/ Banks vii.Others Total

11.26 13.46 100.00

The Banks shares are listed on the NSE, the BSE and the Ahmedabad Stock Exchange. The GDRs issued by the Bank are listed on the London Stock Exchange (LSE). The Bonds issued by the Bank under the MTN programme are listed on the Singapore Stock Exchange. The listing fees relating to all stock exchanges for the current year have been paid. With effect from 26th March 2001, the shares of the Bank have been included and traded in the BSE Group A. Further, with effect from 27th March 2009, the Banks shares have been included and traded as part of the main NIFTY Index of the NSE. Earlier, the shares of the Bank were part of the NIFTY Junior Index of the NSE. DIVIDEND The diluted Earning per Share (EPS) for 2008-09 has risen to Rs. 50.27 from Rs. 31.31 last year. In view of the overall performance of the Bank and the objective of rewarding shareholders with cash dividends while retaining capital to maintain a healthy capital adequacy ratio to support future growth, the Board of Directors has recommended a higher dividend of Rs. 10.00 per share on equity shares, compared to Rs. 6.00 per share declared for 2007-08. This increase reflects our confidence in the Banks ability to consistently grow earnings overtime. BOARD OF DIRECTORS

During the year, some changes in the Board of Directors have taken place. The term of office of Shri Surendra Singh, Independent Director, who served on the Board for eight years, the maximum period allowed under the Banking Regulation Act, ended on 27th April 2008. The Board of Directors places on record its appreciation and gratitude to Shri Surendra Singh for the valuable services rendered by him during his tenure as Director of the Bank. In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Bank, Shri M. V. Subbiah and Shri Ramesh Ramanathan retire by rotation at the Fifteenth Annual General Meeting and, being eligible, offer themselves for re- appointment as Directors of the Bank. SUBSIDIARIES The Bank has set up five wholly-owned subsidiaries. Axis Sales Limited, Axis Private Equity Limited, Axis Trustee Services Limited, Axis Asset Management Company Limited and Axis Mutual Fund Trustee Limited. Axis Sales Limited has been set up for marketing credit cards and retail asset products. The objective of this subsidiary is to build a specialised force of sales personnel, optimize operational efficiency and productivity and thereby reduce costs. The sales subsidiary also seeks to provide greater control and monitoring of the sales effort vis-a-vis the Direct Sales Agent model. The second subsidiary of the Bank, Axis Private Equity Limited, has been formed primarily to carry on the activities of managing equity investments and providing venture capital support to businesses. During the year, the Bank has set-up three more subsidiaries viz. Axis Trustee Services Limited, Axis Asset Management Company Limited and Axis Mutual Fund Trustee Limited. The objective of Axis Trustee Services Limited is to carry on trusteeship activities such as debenture trustee, trustee to various securitization trusts and other trusteeship business. Another subsidiary, Axis Asset Management Company Limited has been formed primarily to carry on the activities of managing a mutual fund business. Axis Mutual Fund Trustee Limited has been formed to act as the trustee for the mutual fund business. In terms of an exemption received from the Ministry of Corporate Affairs, Government of India through its letter no. 47/126/2009-CL- III dated 27th March 2009 under Section 212(8) of the Companies Act 1956, copies of the Directors Report, report of the auditors of the three subsidiaries (Axis Sales Limited, Axis Private Equity Limited and Axis Trustee Services Limited) along with financial statements have not been attached to the accounts of the Bank for the financial year ended 31st March 2009. In the case of two subsidiaries viz. Axis Asset Management Company Limited and Axis Mutual Fund Trustee Limited, the first audited financial results will be prepared as on 31st March 2010. Any shareholder who may be interested in obtaining a copy of these details may write to the Company Secretary at the Registered Office of the Bank. These documents will also be available for examination by shareholders of the Bank at its Registered Office and also at the

registered offices of the three subsidiaries. In line with the Accounting Standard 21 (AS 21) issued by the Institute of Chartered Accountants of India, the consolidated financial results of the Bank along with its subsidiaries for the year ended 31st March 2009 are enclosed as an Annexure to this report. EMPLOYEE STOCK OPTION PLAN (ESOP) The Bank has instituted an Employee Stock Option Scheme to enable its employees, including whole-time Directors, to participate in the future growth and financial success of the Bank. Under the Scheme 3,57,70,000 options can be granted to employees. The employee stock option scheme is in accordance with the Securities and Exchange Board of India (Employee Stock Option and Employee Stock Purchase Scheme) Guidelines, 1999. The eligibility and number of options to be granted to an employee is determined on the basis of the employees work performance and is approved by the Board of Directors. The Banks shareholders approved plans in February 2001, June 2004, June 2006 and June 2008 for the issuance of stock options to employees. Under the first two plans and upto the grant made on 29th April 2004, the option conversion price was set at the average daily high-low price of the Banks equity shares traded during the 52 weeks preceding the date of grant at the Stock Exchange which has had the maximum trading volume of the Banks equity shares during that period (presently the NSE). Under the third plan and with effect from the grant made by the Company on 10th June 2005, the pricing formula has been changed to the closing price on the day previous to the grant date. The Remuneration and Nomination Committee granted options under these plans on eight occasions, 11,18,925 during 2000-01, 17,79,700 during 2001-02, 27,74,450 during 2003-04, 38,09,830 during 2004-05, 57,08,240 during 2005-06, 46,95,860 during 2006-07, 67,29,340 during 2007-08 and 26,77,355 during 2008-09. The options granted, which are non-transferable, vest at the rate of 30%, 30% and 40% on each of three successive anniversaries following the granting, subject to standard vesting conditions, and must be exercised within three years of the date of vesting. As of 31st March 2009, 1,22,45,885 options had been exercised and 1,38,52,974 options were in force. Other statutory disclosures as required by the revised SEBI guidelines on ESOPs are given in the Annexure to this report. CORPORATE GOVERNANCE The Bank is committed to achieving a high standard of corporate governance and it aspires to benchmark itself with international best practices. The corporate governance practices followed by the Bank are enclosed as an Annexure to this report. DIRECTORS RESPONSIBILITY STATEMENT The Board of Directors hereby declares and confirms that: i. The applicable accounting standards have been followed in the preparation of the annual accounts and proper explanations have been

furnished, relating to material departures. ii. Accounting policies have been selected, and applied consistently and reasonably, and prudent judgements and estimates have been made so as to give a true and fair view of the state of affairs of the Bank and of the Profits Loss of the Bank for the financial year ended 31st March 2009. iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records, in accordance with the provisions of the Companies (Amendment) Act, 2000, for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities. iv. The annual accounts have been prepared on a going concern basis.

STATUTORY DISCLOSURE Considering the nature of activities of the Bank, the provisions of Section 217(1)(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption do not apply to the Bank. The Bank has, however, used information technology extensively in its operations. The statement containing particulars of employees as required under Section 217(2A) of the Companies Act, 1956 and the rules made thereunder, is given in an Annexure appended hereto and forms part of this report. In terms of Section 219(1) (iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Bank. AUDITORS M/s S. R. Batliboi & Co., Chartered Accountants, Statutory Auditors of the Bank since 2006, retire on the conclusion of the Fifteenth Annual General Meeting and are eligible for re-appointment, subject to the approval of Reserve Bank of India, and of the shareholders. As recommended by the Audit Committee, the Board has proposed the appointment of M/s S.R. Batliboi & Co., Chartered Accountants as Statutory Auditors for the financial year 2009-10. The shareholders are requested to consider their appointment. ACKNOWLEDGEMENTS The Board of Directors places on record its gratitude to the Reserve Bank of India, other government and regulatory authorities, financial institutions and correspondent banks for their strong support and guidance. The Board acknowledges the support of the shareholders and also places on record its sincere thanks to its valued clients and customers for their continued patronage. The Board also expresses its deep sense of appreciation to all employees of the Bank for their strong work ethic, excellent performance, professionalism, team work, commitment and initiative which has led to the Bank making commendable

progress in todays challenging environment. For and on behalf of the Board of Directors Place: Mumbai Date : April 20, 2009 P. J. Nayak Chairman & Chief Executive Officer

Director Report
Mar2007 Mar 2008 Mar2009

The Board of Directors has pleasure in presenting the Fourteenth Annual Report of your Bank together with the Audited Statement of Accounts, Auditors Report and the report on business and operations of the Bank for the financial year ended 31st March 2008.
The financial year 2007-08 will be remembered as a year of transformation in the history of the Bank, when the name of the Bank changed to Axis Bank from UTI Bank. The conviction that it was worthwhile to invest in building a brand that would solely be our own, helped to create a distinct identity. The name Axis Bank connotes solidity and transcends geographical boundaries as we seek to become a multinational bank. The Bank was successful in establishing a new identity in the market in a short span of time. FINANCIAL PERFORMANCE The Bank once again met with considerable success over the past year and achieved all its key objectives. This encouraging performance not only underscored the sustainability of the Banks high tempo of growth, but also helped to move closer to its objective of being one of the more customer-focused banks in the country. This is reflected in the robust growth in both business and revenue during 2007-08 and in various financial parameters. The financial highlights for the year under review are presented below: (Rs. in crores) Growth 49.06% 64.79% 77.32% 61.79% 52.24% 64.83% 49.58% 76.07% 77.75% 130.31% 65.91%

PARTICULARS Deposits Out of which Savings Bank Deposits Current Account Deposits Advances Out of which Retail Assets Non-retail Advances Total Assets/Liabilities Net Interest Income Other Income Out of which Trading Profit Fee & other income

2007-08 87,626.22 19,982.41 20,044.58 59,661.14 13,591.68 46,069.46 1,09,577.85 2,585.35 1,795.49 427.74 1,367.75

2006-07 58,785.60 12,125.88 11,304.31 36,876.48 8,927.54 27,948.94 73,257.22 1,468.33 1,010.11 185.72 824.39

Operating Expenses excl. depreciation 1,996.81 Profit before depreciation, provisions and tax 2,384.03 Depreciation 158.11 Provision for Tax 575.25 Other Provisions & Write offs 579.64 Net Profit 1,071.03 Appropriations: Transfer to Statutory Reserve 267.76 Transfer to Capital Reserve 26.84 Proposed Dividend 251.64 Surplus carried over to Balance Sheet 524.79 KEY PERFORMANCE INDICATORS Interest Income as a percentage of working funds* Non-Interest Income as a percentage of working funds Net Interest Margin Return on Average Net Worth Operating Profit as a percentage of working funds Return on Average Assets Profit per employee** Business (Deposits less inter bank deposits + Advances) per employee** Net Non performing assets as a percentage of net customer assets***

1,102.73 1,375.71 111.86 337.21 267.61 659.03 164.76 15.64 148.79 329.84 2007-08

81.08% 73.29% 41.35% 70.59% 116.60% 62.52% 62.52% 71.61% 69.12% 59.10% 200607

8.08%

7.42%

2.07% 3.47% 16.09%

1.68% 2.74% 21.84%

2.57% 1.24% Rs. 8.39 lacs

2.10% 1.10% 7.59 lacs

Rs.11.17crores 10.24 crores

0.36%

0.61%

- Working funds represent average total assets. - Productivity ratios are based on average number of employees. - Customer Assets include advances, credit substitutes and unamortised cost of assets leased out. Previous year figures have been regrouped wherever necessary. During 2007-08, the Banks business and earnings continued to show high growth, indicative of a clear strategic focus, the communication of corporate priorities to branches across the country, and finally the execution of these goals through intensive efforts. The Bank reported a

net profit of Rs. 1,071.03 crores during the year ended 31st March 2008, up 62.52%, from Rs. 659.03 crores in the previous year. Diluted earnings per share (EPS) were Rs. 31.31 per share, up 37.38% from Rs. 22.79 per share a year earlier. Return on Equity (ROE) was 16.09% compared to 21.84% a year earlier. The decline in ROE was primarily on account of the raising of fresh equity capital during the financial year. Return on Average Assets was 1.24%, compared to 1.10% in the previous year. In 2007-08, the Bank achieved a total income of Rs. 8,800.80 crores, up 60.84% from 2006-07. During this period, operating revenue was Rs. 4,380.84 crores, up 76.76% from the previous year, while operating profit was up by 76.12% to reach Rs. 2,225.92 crores. The strong growth in income was largely driven by a strong increase in both net interest income by 76.07% to Rs. 2,585.35 crores, and fee and other income by 77.75% to Rs. 1,795.49 crores. The strong income growth reflects the solid business growth across all banking segments and the successful execution of growth initiatives. The strong growth in incomes was partly offset by an increase in operating expenses, including depreciation, by 77.42% to Rs. 2,154.92 crores. The increase in operating expenses primarily reflects the higher costs incurred as a result of increased business levels that include additional sales and service personnel and higher variable compensation. Additional expenses incurred to support the growth initiatives of the Bank (including network expansion as well as the re-branding exercise) also contributed to the increase in operating expenses. In 2007-08, net interest income increased by 76.07% to Rs. 2,585.35 crores from Rs. 1,468.33 crores in the previous year. This increase was largely due to a strong asset side growth, as also the robust growth in low-cost demand deposits (current and savings bank deposits). On a daily average basis, total earning assets in 2007-08 increased by 39.18% to Rs. 74,589 crores from Rs. 53,591 crores a year ago. This was partially offset by a rise in funding costs due to the hardening of rates on term deposits during the year. However, the steady growth in demand deposits, which on a daily average basis increased by 57% to Rs. 25,515 crores from Rs. 16,252 crores a year ago, helped contain the funding costs. Nevertheless, the average cost of funds in 2007-08 increased to 6.02% from 5.60% a year earlier. In 2007-08, the cost of deposits increased to 5.91% from 5.38% a year earlier, primarily the result of an increase in the cost of term deposits by 146 basis points. During the year, the yield on earning assets increased by 106 basis points to 9.36% from 8.30% a year earlier, reflecting the impact of changes in the product-mix in advances, together with an improvement in the yield on investments. The Bank was able to absorb the downward pressure on the yield on advances in the last quarter of the financial year, and the consequent compression of margins, through concerted efforts in shoring up low-cost demand deposits. In 2007-08, the net interest margin increased to 3.47% from 2.74% a year earlier. On a quarter-to-quarter basis, net interest margin in the year rose from 2.56% in Q1, to 3.28% in Q2, to 3.91 % in Q3 and 3.93% inQ4, highlighting the quality of earnings. Other income, comprising trading profits, fee and miscellaneous income, also increased strongly by 77.75% to Rs. 1,795.49 crores in 2007-08

from Rs. 1,010.11 crores in 2006-07. Fee and miscellaneous income rose by 65.91% to Rs. 1,367.75 crores from Rs. 824.39 crores a year earlier. Fee income has a significant share in the earnings of the Bank and its main contributors are service charges for account maintenance, inter-change fees, third-party distribution fees, transaction banking including cash management services, syndication and placement fees and fees earned on the processing of loans. Trading profit increased by 130.31 % to Rs. 427.74 crores from Rs. 185.72 crores a year earlier. A significant portion of growth in trading profit was client- driven, with particularly high growth in profit earned on merchant foreign exchange business. In 2007-08, profit on foreign exchange transactions increased by 66.18% to Rs. 207.48 crores from Rs. 124.85 crores. Another contributor to the growth of trading profit was profit from investment in equity shares - a result primarily of the buoyancy in the capital markets. In 2007-08, the operating revenue of the Bank increased by 76.76% to Rs. 4,380.84 crores from Rs. 2,478.44 crores in 2006-07. Net interest income together with fee and other income (excluding trading profit) constituted 90.24% of operating revenue, reflecting the robust core earning streams of the Bank. Operating expenses increased by 77.42% to Rs. 2,154.92 crores from Rs. 1,214.59 crores in 2006-07. Expenses grew mainly due to the increase in sales and service staff levels, higher performance related pay, an aggressive growth of the Banks retail network and the re-branding exercise undertaken by the Bank. Employees costs increased by 75.76% to Rs. 670.25 crores from Rs. 381.35 crores last year, constituting 31.10% of the operating expenses, largely prompted by the increase in the number of employees from 9,980 on 31st March 2007 to 14,739 on 31st March 2008. During the year, the cost: income ratio was 49.19% against 49.01% last year. Operating profit of the Bank in 2007-08 increased by 76.12% to Rs. 2,225.92 crores from Rs. 1,263.85 crores a year earlier. Further, the book value per share increased from Rs. 120.50 as on 31" March 2007 to Rs. 245.14 as on 31st March 2008. The business per employee improved to Rs. 11.17 crores from Rs. 10.24 crores a year ago. Profit per employee has also improved from Rs. 7.59 lacs in 2006-07 to Rs. 8.39 lacs in 2007-08. In 2007-08, the Bank has created total provisions (excluding provisions for tax) of Rs. 579.64 crores compared to Rs. 267.61 crores a year ago. The Bank has created provisions for loan assets of Rs. 344.01 crores compared to Rs. 73.73 crores a year ago, while provision for standard assets was Rs. 153.46 crores compared to Rs.122.35 crores a year ago. The Bank continued to improve its asset quality, as a result of which net NPAs, as a percentage of net customer assets, declined from 0.61 % as on 31" March 2007 to 0.36% as on 31" March 2008. The Bank has also shown substantial growth in several key balance sheet parameters for the year ended 31st March 2008. The total balance sheet size increased by 49.58% to Rs. 1,09,577.85 crores as on 31st March 2008 from Rs. 73,257.22 crores as on 31st March 2007. Total deposits have increased by 49.06% from Rs. 58,785.60 crores as on 31st March 2007 to Rs. 87,626.22 crores as on 31st March 2008. Demand deposits (savings bank and current accounts) increased by 70.84% to Rs. 40,026.99 crores on 31st March 2008. Savings bank account deposits have

increased by 64.79% to Rs. 19,982.41 crores, while current account deposits grew by 77.32% to Rs. 20,044.58 crores. Demand deposits constituted 45.68% of total deposits on 31st March 2008 compared to 39.86% last year. On a daily average basis, the total deposits in 2007-08 increased by 37.35% to Rs. 63,341 crores, in which demand deposits increased by 57.00% to Rs. 25,514 crores. As a result, the percentage share of demand deposits on a daily average basis increased to 40.28% in 2007-08. The total advances of the Bank as on 31" March 2008 increased by 61.79% to Rs. 59,661.14 crores. Of this, corporate advances (comprising large and mid- corporates) increased by 68.32% to Rs. 29,025.84 crores. During the same period, advances to SMEs increased by 73.98% to Rs. 11,536.92 crores, while agricultural lending increased by 35.17% to Rs. 5,506.70 crores. Retail loans increased by 52.24% to Rs. 13,591.68 crores. The Banks total investments increased by 25.31% to Rs. 33,705.10 crores. The investments in government and approved securities held to meet the Banks SLR requirement increased by 22.81 % to Rs. 20,178.84 crores as a result of the increase in total deposits. Other investments, including corporate debt securities, increased by 29.24% to Rs. 13,526.26 crores. The total assets of the Banks overseas branches as on 31" March 2008 increased by 110% to Rs. 6,672 crores, constituting 6.09% of the Banks total assets. As a conscious strategy of building an organic growth engine during the year, the Bank continued to expand its distribution network, in both domestic and overseas geographies, to enlarge its reach and accelerate its business momentum. The Bank has developed a branch network which is built on customer-convenience and service, helping it particularly in the acquisition of low-cost retail deposits, retail assets, lending to agriculture, SME and mid-corporates and facilitating the cross-selling of third-party products. During 2007-08,143 new branches were added to the Banks network, taking the number of branches to 651. This includes 33 extension counters that have been upgraded to branches. As on 31st March 2008, the Bank had a network of 651 branches and 20 extension counters as against 508 branches and 53 extension counters a year earlier. Out of the 651 branches, 158 branches are in semi-urban and rural areas. With the opening of these offices, the geographical reach of the Bank extends to 29 States and 3 Union Territories covering 405 centres. During the year, the Bank set up 423 ATMs, thereby taking the ATM network of the Bank from 2,341 to 2,764, enabling it to retain its status of being the third largest ATM network provider among all banks in the country. During the year, the Bank also expanded overseas with the opening of a branch at the Dubai International Finance Centre (DIFC). This was in addition to the existing branches at Singapore and Hong Kong and the representative Office in Shanghai. The Bank has also received the authorization of the Central Bank of the UAE to establish a Representative Office in Dubai. The opening of these overseas offices will provide significant opportunities to the Bank to finance cross-border trade and manufacturing activities in addition to the ability to source remittances and other businesses from the NRI community. CAPITAL & RESERVES

During the year under review, the Bank has raised capital in the form of Tier I and Tier II Capital to support future growth. The Bank has raised Tier I Capital in the form of equity capital through simultaneous offerings in the form of a follow-on Global Depositary Receipt (GDR) issue, a Qualified Institutional Placement (QIP) and a preferential allotment of equity shares to the promoters of the Bank. As a result, the Bank mobilised an aggregate of Rs. 4,534.36 crores through the three-way offering as per the details below. The Bank raised Rs. 878.83 crores (equivalent to US Dollars 218.06 million) through the allotment of 1,41,32,466 GDRs, each representing one equity share of the Bank at a price of US Dollars 15.43 per GDR. The GDR was priced at a nominal discount to the closing price of the Banks listed GDR on the London Stock Exchange (LSE) but at par with the preceding one-month average price of GDRs quoted on the LSE. Converted at the Noon-Day Buying Rate of US Dollars published by the Federal Reserve in New York, the price of the underlying share in the Indian market was Rs. 620 per share, which is a discount to the closing price of the Banks share of Rs. 644.60 on the NSE as on that date. The GDRs are listed and traded on the London Stock Exchange. The Bank also raised Rs. 1,752.43 crores by issuing 2,82,64,934 equity shares under QIP. The equity shares under the QIP were priced along with the GDR at Rs. 620 per share (equivalent to the price offered under the GDR offering). To maintain the percentage shareholding of the Banks promoters at the pre-GDR/QIP offering level, the Administrator of the Specified Undertaking of the Unit Trust of India (UTI-1), Life Insurance Corporation of India, General Insurance Corporation of India and three government-owned general insurance companies participated in a preferential offer by subscribing to 3,06,95,129 equity shares. The equity shares offered under the preferential allotment route were also priced at Rs. 620 per share (equivalent to price at which both GDR and QIP was priced). Through the process of preferential allotment of equity shares to promoter entities, the Bank raised Rs.1,903.10 crores. Asa result, the Bank raised, as stated above, an aggregate equity capital of Rs. 4,534.36 crores under GDR/QIP and the preferential offer. This will help the Bank in continuing its growth strategy and in strengthening its capital adequacy ratio. The Bank is now well capitalised, with the capital adequacy ratio at the end of the year at 13.73%, substantially above the benchmark requirement of 9% stipulated by Reserve Bank of India. Of this Tier I Capital amounted to 10.17%, up from 6.42% a year earlier, while Tier II Capital was at 3.56%. During the year under review, the Bank also allotted equity shares to employees under its Employee Stock Option Plan aggregating 29,86,353 equity shares. The paid up capital of the Bank as on 31st March 2008 thereby rose to Rs. 357.71 crores from Rs. 281.63 crores as on 31st March 2007. The shareholding pattern of the Bank as of 31st March 2008 was as under. Sr. No. i. Name of Shareholders Administrator of the Specified Undertaking of the Unit % of Paid Up Capital

Trust of India (UTI-I) ii. iii. Life Insurance Corporation of India General Insurance Corporation and four PSU Insurance Companies Overseas Investors including Flls/OCBs/NRIs Foreign Direct Investment (GDR issue) Other Indian Financial Institutions/ Mutual Funds/ Banks Others Total

27.18 10.40

4.93 35.46 3.64

iv. v. vi.

8.33 10.06 100.00

vii.

During the year, the Bank has also raised US Dollars 60 million (equivalent to Rs. 243.12 crores) as Upper Tier II Capital from Singapore under its MTN Programme. The Banks shares are listed on the NSE, the BSE, the Ahmedabad Stock Exchange and the OTCEI (under permitted securities). The GDRs issued by the Bank are listed on the London Stock Exchange (LSE). The Bonds issued by the Bank under the MTN programme are listed on the Singapore Stock Exchange. The listing fees relating to all stock exchanges for the current year have been paid. With effect from 26th March 2001, the shares of the Bank have been included and traded in the BSE GroupA. DIVIDEND The Banks diluted Earning per Share (EPS) for 2007-08 has risen to Rs. 31.31 from Rs. 22.79 during 2006-07. In view of the excellent financial performance of the Bank, the encouraging future outlook of the Bank as well as the objective of rewarding shareholders with cash dividends while retaining capital to maintain a healthy capital adequacy ratio to support future growth, the Board of Directors has recommended a higher dividend rate of 60% on equity shares, compared to the 45% dividend declared for the last year. This increase reflects our confidence in the Banks ability to consistently grow earnings over time. BOARD OF DIRECTORS During the year, some changes in the Board of Directors have taken place. Shri K. N. Prithviraj was appointed as Additional Director on 9th January 2008, joining the Board as a nominee of the Administrator of the Specified Undertaking of the Unit Trust of India (UTI - I). Further, Shri S. B. Mathur, a nominee of the Administrator of the Specified Undertaking of the Unit Trust of India (UTI - I) has resigned on 6th December 2007. The Board of Directors places on record its appreciation and gratitude to Shri S. B. Mathur for the valuable services rendered by him during

his tenure as Director of the Bank. In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Bank, Shri N. C. Singhal, Shri J. R. Varma and Shri R. B.L. Vaish retire by rotation at the Fourteenth Annual General Meeting and, being eligible, offer themselves for reappointment as Directors of the Bank. SUBSIDIARIES The Bank has set up two wholly-owned subsidiaries. Axis Sales Limited, and Axis Private Equity Limited. Axis Sales Limited has been set up for marketing credit cards and retail asset products. The objective of this subsidiary is to build a specialised force of sales personnel, optimise operational efficiency and productivity and thereby reduce costs. The sales subsidiary also seeks to provide greater control and monitoring of the sales effort vis-a-vis the DSA model. The second subsidiary of the Bank, Axis Private Equity Limited has been formed primarily to carry on the activities of managing (directly or indirectly) investments, venture capital funds and off-shore funds. In terms of an exemption received from the Ministry of Corporate Affairs, Government of India through its letter no. 47/417/2007-CL-lll dated 22nd November 2007 under Section 212(8) of the Companies Act 1956, copies of the Directors Report, report of the auditors of the two subsidiaries along with financial statements have not been attached to the accounts of the Bank for the financial year ended 31st March 2008. Any shareholder who may be interested in obtaining a copy of these details may write to the Company Secretary at the Registered Office of the Bank. These documents will also be available for examination by any shareholder of the Bank at its Registered Office and also at the registered offices of the two subsidiaries. Inline with the Accounting Standard 21 (AS 21) issued by the Institute of Chartered Accountants of India, the consolidated financial results of the Bank along with its subsidiaries for the year ended 31st March 2008 are enclosed as an Annexure to this report. EMPLOYEE STOCK OPTION PLAN (ESOP) The Bank has instituted an Employee Stock Option Scheme to enable its employees, including whole-time Directors, to participate in the future growth and financial success of the Bank. Under the Scheme 2,78,00,000 options can be granted to employees. The employee stock option scheme is in accordance with the Securities and Exchange Board of India (Employee Stock Option and Employee Stock Purchase Scheme) Guidelines, 1999. The eligibility and number of options to be granted to an employee is determined on the basis of the employees work performance and is approved by the Board of Directors. The Banks shareholders approved plans in February 2001, June 2004 and June 2006 for the issuance of stock options to employees. Under the first two plans and upto the grant made on 29th April, 2004, the option conversion price was set at the average daily high- low price of the Banks equity shares traded during the 52 weeks preceding the date of grant at the Stock Exchange which has had the maximum trading volume of the Banks equity share during that period (presently the NSE). Under the third plan and with effect from the grant made by the Company on

10th June 2005, the pricing formula has been changed to the closing price on the day previous to the grant date. The Remuneration and Nomination Committee granted options under these plans on seven occasions, 11,18,925 during 2000-01,17,79,700 during 2001-02, 27,74,450 during 2003-04, 38,09,830 during 2004-05, 57,08,240 during 2005-06, 46,95,860 during 2006-07 and 67,29,340 during 2007-08. The options granted, which are non-transferable, vest at the rate of 30%, 30% and 40% on each of three successive anniversaries following the granting, subject to standard vesting conditions, and must be exercised within three years of the date of vesting. As of 31st March 2008, 1,09,50,436 options had been exercised and 1,27,94,268 options were in force. Other statutory disclosures as required by the revised SEBI guidelines on ESOPs are given in the Annexure to this report. CORPORATE GOVERNANCE The Bank is committed to achieving a high standard of corporate governance and it aspires to benchmark itself with international best practices. The corporate governance practices followed by the Bank are enclosed as an Annexure to this report. DIRECTORS RESPONSIBILITY STATEMENT The Board of Directors hereby declares and confirms that: i. The applicable accounting standards have been followed in the preparation of the annual accounts and proper explanations have been furnished, relating to material departures. ii. Accounting policies have been selected, and applied consistently and reasonably, and prudent judgements and estimates have been made so as to give a true and fair view of the state of affairs of the Bank and of the Profit & Loss of the Bank for the financial year ended 31st March 2008. iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records, in accordance with the provisions of the Companies (Amendment) Act, 2000, for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities. iv. The annual accounts have been prepared on a going concern basis.

STATUTORY DISCLOSURE Considering the nature of activities of the Bank, the provisions of Section 217(1)(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption do not apply to the Bank. The Bank has, however, used information technology extensively in its operations. The statement containing particulars of employees as required under Section 217(2A) of the Companies Act, 1956 and the rules made thereunder, is given in an Annexure appended hereto and forms part of this report. In terms of Section 219(1) (iv) of the Act, the Report and

Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Off ice of the Bank. AUDITORS M/s S. R. Batliboi & Co., Chartered Accountants, Statutory Auditors of the Bank since 2006, retire on the conclusion of the Fourteenth Annual General Meeting and are eligible for re-appointment, subject to the approval of Reserve Bank of India, and of the shareholders. As recommended by the Audit Committee, the Board has proposed the appointment of M/s S.R. Batliboi & Co., Chartered Accountants as Statutory Auditors for the financial year 2008-09. The shareholders are requested to consider their appointment. ACKNOWLEDGEMENTS The Board of Directors places on record its gratitude to the Reserve Bank of India, other government and regulatory authorities, financial institutions and correspondent banks for their strong support and guidance. The Board acknowledges the support of the shareholders and also places on record its sincere thanks to its valued clients and customers for their continued patronage. The Board also expresses its deep sense of appreciation to all employees of the Bank for their strong work ethic, excellent performance, professionalism, team work, commitment, and initiative which has led to the Bank making commendable progress in todays challenging environment. For and on behalf of the Board of Directors Place: Mumbai Date : April 21, 2008 P. J. Nayak Chairman & Chief Executive Officer

Pnb

Director Report
Mar2010 Mar 2011 Mar2012

Punjab National Bank with a rich legacy spanning 117 years has emerged as the second largest bank in the country. Today, PNB is a well established brand with a strong technological base touching the lives of millions of customers. The Bank has worked assiduously to build its front line position, constantly reinventing itself to keep pace with the changing banking landscape and customer preferences. While successfully managing change, the Bank has remained deeply rooted in the principles of good banking. Resultantly, the fundamentals of the Bank have strengthened which augur well for a bright future.
A network of 5189 branches, 5050 ATMs and a customer base of over 60 million add considerably to the franchise value the Bank enjoys. Technology has played an important role in expanding its franchise value through customer acquisition and retention, carrying out faster and efficient financial transactions in a secure manner and in improving customer convenience.

The awards and recognitions received by the Bank bear testimony to the efforts and initiatives to remain highly customer-focused, adoption of good business practices and extending the reach to the unbanked. It is also a reflection of how the Bank has been able to successfully pursue business opportunities with acumen while continuing to fulfill its social responsibilities. Organization Structure Pursuit of strategy requires that organization structure is closely aligned with business goals. During the year, Bank took various measures aimed at improving organization structure to support effective execution of strategy. The Retail Banking Division was bifurcated into Retail Assets Division and Resource Mobilization Division. Further, the Retail Hubs were reorganized into Retail Asset Branches (RAB) to meet the requirements of the retail borrowers and ensure faster delivery of retail credit. Presently, 73 RABs are functioning successfully. Budgeting process was further strengthened by linking with systems growth in a particular area as well as available potential. To face the HR challenges in a proactive manner, routine administrative functions relating to human resource management were hived-off into a separate Personnel Administration Division. Your Directors take pleasure in placing the Banks Annual Report for 2010-11 along with its audited annual financial statements. OUR PERFORMANCE 1. FINANCIAL HIGHLIGHTS

1.1 BALANCE SHEET (Rs Crore) 2010-11 Growth %

2009-10 PARTICULARS Capital & Reserves Total Business Deposits Low cost Deposits (Savings and Current) Advances Retail Credit Priority Sector Credit -% of Adjusted Net Bank Credit (ANBC) 17723 435931 249330 101850 186601 19214 63769 40.55

21509 555005 312899 120325 242107 23621 75652 40.67

21.36 27.31 25.50 18.14 29.75 22.94 18.63 -

Agreecultural Credit -% of Adjusted Net Bank Credit (ANBC) 1.2 PROFIT

30207 19.53

35462 19.3

17.40 -

(Rs Crore) PARTICULARS Operating profit Provisions Net profit 1.3 INCOME & EXPENDITURE (Rs Crore) PARTICULARS Interest income - Interest/discount on advances/bills - Income on investments Non-interest income Commission, Exchange & Brokerage Net Interest Income Total Income Interest expended - Interest paid on deposits Total Operating expenses - Establishment expenses Total Expenses Operating profit Provisions and contingencies FY 2009-2010 21422 16677 4556 3610 1682 8478 25032 12944 11966 4762 3121 17706 7326 3421 FY 2010-2011 26986 21105 5638 3613 2045 11807 30599 15179 13795 6364 4461 21543 9056 4622 Growth% 25.97 26.55 23.75 0.08 21.58 39.27 22.24 17.27 15.28 33.64 42.93 21.67 23.61 35.11 FY 2009-2010 7326 3421 3905 FY 2010-2011 9056 4622 4433 Growth% 23.61 35.11 13.53

Net profit

3905

4433

13.53

Note: Difference in total is due to rounding off 1.4. KEY RATIOS

(Percent) 2009-10 4.76 7.88 24.59 3.57 1.44 39.39 2010-11 4.57 8.12 22.13 3.96 1.34 41.27

PARTICULARS Average cost of funds Average yield on funds Return on Equity Net Interest Margin Return on Assets Cost to Income Ratio Operating expenses to average Working Funds Operating profit to average Working Funds Earnings per share (Rs.) Book value per share (Rs.) Ratio of Net NPAs to Net advances NPA coverage ratio CRAR - Basel II 2. OPERATIONAL HIGHLIGHTS

1.70

1.91

2.62 123.86 514.77 0.53 81.17 14.16

2.72 140.60 661.20 0.85 73.21 12.42

- Bank leveraged on its 5180 plus branch network to build deep, enduring relationships with its 60 million plus customers across all the segments. - Banks network of 5050 ATMs along with alternate delivery channels account for more than 28% of transactions. - New set of products and services like PNB Uphaar, PNB Suvidha, World Travel Card, etc were introduced during the year. - In addition to international presence in 9 countries, Bank acquired equity stake in Dana Bank of Kazakhstan and is in the process of setting up presence in Australia and Canada.

- Under the performance management system, employee performance was recognized and incentivized. - Strengthened pool of management talent as part of succession planning exercise with Team 2020 initiatives. - Streamlined CSR activities to move forward and to make a positive contribution towards community. 3. DIVIDEND

The Board of Directors has recommended a dividend of 220% for the year 2010-11. 4. CORPORATE GOVERNANCE

The Bank is committed to best practices in corporate governance and recognizes that transparency, ethical behavior, integrity and protection of interests of all stakeholders form the keystones of governance. Being in the business of financial intermediation, the Bank is fully aware of the risks involved. To address this, the Bank has put in place elaborate system of risk identification, measurement and mitigation. A Risk Management Committee at the Board level monitors the risk management process in the Bank. The Board of Directors has oversight on the Bank and ensures that there is right balance between business and risk. Further through the Audit Committee, the Board ensures strong system of internal control and corporate reporting including financial reporting. As a listed entity, the Bank is complying with various regulatory requirements. Disclosures are made in the financial statements in compliance with Section 29 of Banking Regulation Act, 1949, RBI guidelines, Section 49 of the Listing Agreement and Accounting Standards and Guidelines issued by the Institute of Chartered Accountants of India. These inter-alia, include segment reporting, related party disclosures, lending to sensitive sectors, restructured loan assets, key business ratios, risk management, performance of Banks share price, etc. PNB follows practices that provide its financial stakeholders a high level of assurance on the quality of Corporate Governance. This is reflected in the ICRA Ltds CGR 2 rating which is the highest rating assigned to a financial institution in India. 5. BOARD OF DIRECTORS

As on 31.03.2011 there were 11 Directors on the Board of the Bank including Chairman and Managing Director and two Executive Directors. At the time of appointment/nomination of any Director, the guidelines defining the roles and responsibilities of Directors as circulated by Government of India/ Ministry of Finance from time to time are made available to them. A declaration of Model Code of Conduct is being obtained from all the Directors in April every year. Deeds of covenants as recommended by Ganguly Committee are being entered into with the

elected directors on the Board of the Bank in terms of instructions of Reserve Bank of India/ Government of India every year. As per recommendations of Ganguly Committee, Directors are imparted training to make them more responsive to the organization, the business environment and emerging developments/challenges in the banking sector. As part of their training, Directors are nominated to training programmes in reputed Institutions like Centre for Corporate Research and Training (CCRT), Navi Mumbai, Institute of Company Secretaries of India, Institute of Directors, etc. During the Financial Year 2010-11, four Directors were nominated for various training programmes viz. Masterclass for Directors leading to Certified Corporate Directorship, Conference on Corporate Compliance and Role of Independent Directors - Issues & Solutions. 6. CHANGES IN THE BOARD OF DIRECTORS

During the year 2010-11, the following changes took place in the composition of Board of Directors of the Bank: - Shri L.M. Fonseca, RBI Nominee Director ceased to be Director on 30.07.2010 on expiry of his term. - Shri Jasbir Singh, RBI Nominee Director was appointed on the Board of the Bank on 30.07.2010. - Shri Nagesh Pydah, Executive Director, demitted the office on 31.12.2010 on his elevation as Chairman & Managing Director of Oriental Bank of Commerce. - Shri Rakesh Sethi was appointed as Executive Director of the Bank on 01.01.2011. - Shri M.A. Antulay, part time non-official Director ceased to be Director w.e.f 27.02.2011 on completion of his tenure. - Shri G.P. Khandelwal, part time non-official Director ceased to be Director w.e.f 27.02.2011 on completion of his tenure. The Board welcomes Shri Rakesh Sethi, new Executive Director and Shri Jasbir Singh, new Director and wishes to place on record the valuable services rendered by Sh. Nagesh Pydah, Sh. L.M. Fonseca, Sh. M.A. Antulay and Sh. G.P. Khandelwal. BOARD COMMITTEES (As on 31.03.2011) No. NAME OF THE COMMITTEE

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Management Committee Audit Committee of Board Risk Management Committee Share Transfer Committee Shareholders /Investors Grievance Committee Customer Service Committee I.T. Committee PA Committee Directors Promotion Committee Appellate Authority and Reviewing Authority

11. Special Committee of Board to monitor and follow up fraud cases involving Rs.1.00 crore and above. 12. 13. 14. 15. 16. 17. Committee of Directors to Review Vigilance and Non Vigilance cases HRD Committee of Directors Remuneration Committee Nomination Committee Steering Committee for Vision 2013 Insurance Joint Venture Committee

The details of various meetings held up to 31st March, 2011 are as follows: S. No 1 Meeting Number of Meetings 15 22 4

Board Meeting

2 Management Committee 3 Committee of Directors to review vigilance & non-vigilance cases 4 Audit Committee of Board

10

5 Risk Management Committee

6 Special Committee of Board to Monitor and Follow Fraud cases of Rs. 1.00 crore and above 7 IT Committee of the Board 8 P.A. Committee 9 Customer Service Committee 10 Share Transfer Committee 11 Shareholders/ Investors Grievances Committee 12 Directors Promotion Committee 13 Steering Committee Vision 2013 14 Insurance Joint Venture Committee 7. ACKNOWLEDGMENTS 6

5 5 4

24

The Board of Directors thank the Government of India, Reserve Bank of India, Securities and Exchange Board of India, Stock Exchanges, Banks customers, public and the shareholders for valuable support, continued patronage and confidence reposed in the bank. The Board also wishes to place on record its appreciation for the valuable contribution of the members of the Banks staff at all levels and look forward to their continued enthusiasm in meeting the future goals. For and on behalf of Board of Directors CHAIRMAN AND MANAGING DIRECTOR

Director Report
Mar2009 Mar 2010 Mar2011

The brand PNB commands respect and confidence in the eyes of public and shareholders today. PNB with its sound and strong fundamentals remained unscathed by the economic slowdown and global

financial crisis of 2008-09. PNB, not only maintained its leading position among the Nationalized Banks in the above turbulent period, but is once again poised to excel in its business as the economy shows signs of improvement. The image and perception of PNB in the Government, industry and public is aptly reflected in the awards and accolades it has won for itself recently.
PNB was declared the Best Public Sector Bank by a survey conducted by The Financial Express and Ernst & Young. PNB was ranked 26th amongst Indias top 500 listed companies by ET 500. Globally, the The Banker Magazine (London) placed PNB at 239th position amongst the top 1000 Global Banks while Forbes ranking of 2000 global giants placed it at 695th position. The Bank was conferred with the Best Corporate Social Responsibility Practice award by Bombay Stock Exchange. The Bank was also declared the winner of the Gold trophy of SCOPE Meritorious Award for Excellence in Corporate Governance 2009 by Standing Conference of Public Enterprises amongst the Public Sector Enterprises, a coveted award received by the Bank from the the hands of the Honble President of India. The Bank also received the Golden Peacock Award for Excellence in Corporate governance for 2009 from the Institute of Directors. The Dainik Bhaskar in association with Daily News and Analysis presented PNB with India Pride Awards for excellence in PSU category in the year 2009, while Dun & Bradstreet Award for Priority Sector Lending including Financial Inclusion was also bagged by the Bank. BUILDING STABLE BUSINESS PNB is committed to build business through long term sustained relationships with its customers. PNB has been recognized as the Bank offering highest levels of customer satisfaction in Delhi and Chennai. Our customer base as of today stands at around 56 million which we aim to grow to 150 million by the year 2013. We are considered to be the Bank that cares about needs & ambitions of customers. We believe in partnering growth of our clients over generations which is properly reflected in our tagline Bharose ka Prateek. This approach to business is characteristic of PNBs 116 year history of banking with growth. RATIONALIZATION OF THE CIRCLE OFFICES Banks 4 tier structure was reduced to 3 tiers to improve upon efficiency in decision making and to cut on administrative costs. An opportunity was identified in rationalizing the administrative structure of the Bank, in the backdrop of economic downturn, to bring in more efficiency and team spirit in the overall work culture of the bank. The objectives for this rationalization accordingly aimed at decentralizing the decision making and reporting functions, better transient speeds and responses, higher transparency, effective monitoring, shared vision and reliance upon each other, easy accessibility and greater control. Rationalization of circles was done to remove the disparity in number of branches allocated among various circles. New circles were created in Delhi, Rajasthan, Kerala, Haryana, UP and Punjab. The number of Field General Managers (FGM) was also increased from 5 to 10 ensuring pan-India presence and control of FGMs.

This new structure has been implemented w.e.f. 1st April, 2010. PNB has the largest domestic network of 4997 offices, including 46 extension counters among Nationalized Banks. All our branches offer Core/Centralized Banking Solution (CBS) along with a variety of financial products catering to different market segments. PNB offers its customers a warm and friendly banking experience by serving them with a characteristic Indian emotional touch. This commitment showcases the intent of the bank to be closely involved in the lives of its customers. To facilitate our customers and to focus our deliverables uniquely to specific market segments, branches have been classified as Agriculture, Retail, MSME and Commercial/Corporate. Today, PNB has both the strength and the capability to expand in the international arena but will go full throttle for this expansion only after it makes an excellent business case. Bank has international presence in 9 countries. Bank constantly innovates and reorients strategies, and realigns business processes with advanced technology to serve its customers better to earn strong brand loyalty and recall value. Your Directors take pleasure in placing the Banks Annual Report for 2009-10 along with its audited annual financial statements. OUR PERFORMANCE IN THE YEAR 2009-10 1. FINANCIAL HIGHLIGHTS

1(a) BALANCE SHEET (Rs crore) PARTICULARS 2009-10 yoy growth % 20.95 19.61 18.86 25.0 20.6 20.5 25.5

Capital & Reserves Total business Deposits

17723 435931 249330

Low cost Deposits (Savings and Current)101850 Advances Retail credit Priority Sector Credit -Percent of adjusted Net bank credit (ANBC) 186601 19214 63769

40.55%

(National goal - 40%)

Agricultural credit -Percent of adjusted Net bank credit (ANBC)

30207

25.56

19.53%

(National goal - 18%)

1(b) PROFIT (Rs. crore) PARTICULARS 2009-10 yoy growth % 28.8 31.58 26.4

Operating profit Provisions Net profit 1(c) INCOME & EXPENDITURE (Rs. crore) PARTICULARS

7326 3421 3905

2009-10

yoy growth % 12.2 14.5 7.3 16.3 22.2 12.8 5.3 3.5 13.2 6.7 7.3 28.8 31.6 26.4

Interest income - Interest/discount on advances/bills - Income on investments Non-interest income CEB Net Interest Income 8523 Total Income Interest expended - Interest paid on deposits Total Operating expenses - Establishment expenses Total Expenses Operating profit Provisions and contingencies Net profit Note: Difference in total is due to rounding off 1(d) KEY RATIOS (per cent) Particulars

21467 16701 4577 3565 1682 24.8 25032 12944 11966 4762 3121 17706 7326 3421 3905

2008-09

2009-10

Average cost of funds Average yield on funds Return on Equity Net Interest Margin Return on Assets Cost to Income Ratio Staff expenses to average Working Funds Operating profit to average Working Funds Earnings per share (Rs) Book value per share (Rs) Ratio of Net NPAs to Net advances * NPA coverage ratio* CRAR - Basel II

5.51 8.43 23.52 3.52 1.39 42.50

4.75 7.89 24.54 3.57 1.44 39.39

1.29

1.15

2.52 98.03 416.74 0.17 93.51 14.03

2.70 123.86 514.77 0.53 81.17 14.16

*Excluding Rs 338 Crore impact of slippage from Debt relief, Net NPA ratio and NPA coverage ratio in 2009-10 will be 0.35% and 86.80 %, respectively. 2) NON FINANCIAL-HIGHLIGHTS - Customer centric business through Robust Technology platform. - Continued to expand, adding over 500 branches and 1400 ATMs while improving internet and mobile banking capabilities. - Expanding International forays to newer destinations like Australia and Canada in addition of international presence in 9 countries. - Strong revenue growth across all client segments, geographies and products despite the challenging conditions during the stressed economic conditions. - Created a competitive advantage through the efficient management of our capital and liquidity. - Significantly strengthened our pool of management talent as part of succession planning exercise.

- Streamlined CSR activities in the Bank to move forward in a planned way in this direction. 3) DIVIDEND The Board of Directors has recommended a dividend of 220 percent for the year 2009-10. 4) CORPORATE GOVERNANCE The Bank stresses on implementing best practices in Corporate governance as we believe in following - Full transparency in all our operations and policies which has earned us the customers trust over the years and our customers have stayed with us for generations which may seem unrealistic to many in these times of declining brand loyalty. - Zero tolerance for any malpractices which has made the institution fundamentally stronger and has withstood many testing times. - All our decisions are consensus decisions involving voice of our stakeholders. We take the opinions of our customers while deciding the roadmap and future directions of the Bank. - The Bank being a financial intermediary has to undertake risks while managing assets and liabilities, making risk mitigation the most crucial aspect of our functioning. Towards understanding, measuring and managing various risks and ensuring a sustained growth of healthy asset portfolio, the bank has put in place a robust risk management system. - The Bank is guided (to the extent possible/applicable) by the acclaimed OECD (Organization for Economic co-operation and Development) principles of corporate governance as far as responsibilities of the Board of Directors, governance infrastructure, rights of shareholders, equitable treatment of shareholders, role of shareholders in governance and disclosures and transparency are concerned. - The Bank has a strong and committed Board of Directors with specialists from various fields; a robust risk management framework; audit committee including Management audit committee, etc. The Bank is a listed entity and ensures that the Shareholders are satisfied with Banks performance and are kept well informed about the performance of the Bank. The Bank has a consistent track record of paying dividends. - The Bank ensures disclosure & transparency in financial statements as per section 29 of Banking Regulation Act, 1949; RBI guidelines; section 49 of the Listing Agreement; Accounting Standards and Guidelines issued by the Institute of Chartered Accountants of India, etc. Disclosures as per RBI guidelines & ICAI Accounting Standards (AS) include Segment reporting, Related Party Disclosures, Lending to sensitive sectors, Loan assets restructured, ALM, Key Business Ratios and Performance of banks share price vis--vis NIFTY/ Bank index. In

addition to the statutory disclosures, the Bank discloses voluntarily additional information by way of Directors Report about the banks overall performance, business strategies, products & services, Risk Management etc. The Bank gives high priority to good Corporate Governance. ICRA Ltd, the rating Agency has reaffirmed the CGR 2 rating (on a rating scale of CGR1 to CGR 6, where CGR 1 denotes the highest rating) to the Bank in February 2010, which reflects that PNB has adopted and follows such practices, conventions and codes as would provide its financial stake holders a high level of assurance on the quality of Corporate Governance. This is the highest rating assigned to a financial institution in India. The Bank has complied with the guidelines of Reserve Bank of India and SEBI on the matters relating to Corporate Governance, which has been examined by the Statutory Central Auditors. 5) CHANGES IN BOARD OF DIRECTORS During the year 2009-10, the following changes took place in the composition of Board of Directors. - Dr. K.C. Chakrabarty, CMD demitted the office on 15.06.2009 on his elevation as Dy. Governor of RBI. - Shri M.L. Bagga, Director representing Workmen Employee ceased to be Director on 25.09.2009. - Shri K.R. Kamath took over as Chairman & Managing Director of the Bank on 28.10.2009. - Shri S.R. Khurana, Director representing CA Category ceased to be Director on 2.01.2010. - Shri M.P. Singh, Director representing Workmen Employee was appointed on the Board of the Bank by Govt. of India under clause 9(3)(e) of Banking Companies Acquisition and Transfer of Undertakings Act w.e.f. 28.01.2010. - Shri Pardeep Kumar, Director representing Officer Employee was appointed on the Board of the Bank by Govt. of India under clause 9(3)(f) of Banking Companies Acquisition and Transfer of Undertakings Act w.e.f. 15.02.2010. BOARD COMMITTEES: (As on 31.03.2010) S. No. NAME OF THE COMMITTEE 1. Management Committee

2. 3. 4. 5. 6. 7. 8. 9. 10.

Audit Committee of Board Risk Management Committee Share Transfer Committee Shareholders /Investors Grievance Committee Customer Service Committee I.T. Committee PA Committee Directors Promotion Committee Appellate Authority and Reviewing Authority

11. Special Committee of Board to monitor and follow up fraud cases involving Rs.1.00 Cr. and above. 12. 13. 14. 15. 16. Committee of Directors to Review Vigilance and Non Vigilance cases HRD Committee of Directors Remuneration Committee Nomination Committee Steering Committee for Vision 2013

The details of various meetings held up to March, 2010: S. Meeting No. Number of Meetings Held Upto March, 2010 14 23 S. No. Meeting Number of Meetings Held Upto March, 2010 1 1

1 Board Meeting 2 Management Committee 3 Committee of Directors to review vigilance & nonvigilance cases 4 Audit Committee of Board 5 Risk Management

9 10

HRD Committee Remuneration Committee Customer Service Committee

11

14

12

Share Transfer Committee Shareholders/

24

13

Committee 6 Special Committee of 5 Board to Monitor and Follow Fraud cases of Rs. 1.00 crore and above 7 IT Committee of the Board P.A. Committee 4 14

Investors 6 Grievances Committee Directors Promotion Committee 1

15

Steering Committee 3 Vision 2013

The Board welcomes new CMD, Shri K R Kamath and other new Directors and places on record the valuable services rendered by former CMD, Dr. K.C. Chakrabarty and Directors, Shri M.L. Bagga and Shri S.R. Khurana. 6) ACKNOWLEDGMENTS The Board of Directors thank the Government of India, Reserve Bank of India, Securities and Exchange Board of India, Stock Exchanges, Banks customers, public and the shareholders for valuable support, continued patronage and confidence reposed in the bank. The Board also wishes to place on record its appreciation for the valuable contribution of the members of the Banks staff at all levels and look forward to their continued enthusiasm in meeting the future goals set in VISION 2013. For and on behalf of Board of Directors CHAIRMAN AND MANAGING DIRECTOR

Director Report
Mar2008 Mar 2009 Mar2010

The Directors take pleasure in placing the Bank s Annual Report for 2008-09 along with its audited annual financial statements.
Key Financial Highlights 1. Positive Earning Momentum

- Net Profit of Rs.3,091 crore (y-o-y rise of 50.9 percent). - Operating Profit amounted to Rs.5,744 crore (y-o-y rise of 43.4 percent). - 50.9 percent increase in Earning Per Share to Rs.98.03. - Cost to income ratio of 42.27 percent (y-o-y improvement of 4.54 pps, i.e percentage points). - Net Interest margin protected at 3.62 percent.

- Return on Assets increased by 0.24 pps to 1.39 percent. - CRAR under Basel II rose to 14.03 percent (as against 13.46 percent in 2007-08). - Ratio of net NPAs to net advances 0.17 percent; (y-o-y improvement of 0.47 pps). - NPA coverage ratio stood at 90.47 percent as at the end of March 2009. - Return on Equity 23.52 percent; (y-o-y improvement of 4.52 pps). 2. Balance Sheet Strength increases significantly

- Capital & Reserves increased to Rs.14,654 crore (y-o-y increase of around 19 percent). - Total business stood at Rs.3,64,463 crore (y-o-y increase of 27.5 percent). - Deposits amounted to Rs.2,09,760 crore (y-o-y increase of 26.0 percent). - Low cost deposits comprising savings and current deposits formed 38.83 percent of total deposits. - Advances grew by 29.5 percent to Rs.1,54,703 crore. - Retail credit at Rs 25,012 crore constituted 16.2 percent of the Bank s net advances. . - Priority Sector Credit at Rs.50,793 crore was 41.53 percent of the Adjusted Net Bank Credit (ANBC) and continues to be above the National Goal of 40 percent. - Agricultural credit at Rs.24,057 crore was 19.72 percent to ANBC, as against the National Goal of 18 percent. 3. Income & Expenditure Analysis

- Total income of the Bank increased by 36.8 percent to reach a level of Rs.22,246 crore. - Interest Income rose by 35.5 percent to Rs.19,326 crore. - Net Interest Income improved by 27 percent to Rs.7,031 crore. - Non-Interest income grew by 46.2 percent to Rs.2,920 crore, accounting for 13.12 percent of total income. Commission, Exchange and Brokerage (CEB) increased to Rs.1,377 crore, registering a growth of

24.4 percent. - Operating expenses stood at Rs.4,206 crore during 2008-09, showing an increase of 19.3 percent. - Interest Spread improved to 3.15 percent from 3.11 percent during 2007-08. Income Expenditure Details Particulars Interest income - Interest/discount on advances/bills - Income on investments Non-interest income Total Income Interest expended - Interest paid on deposits - Other interest expenses Total Operating expenses - Establishment expenses Total Expenses Operating profit Provisions and contingencies Net profit 4. Profit Analysis (Rs. crore) 2008-09 19326 14638 4410 2920 22246 12295 11564 731 4206 2924 16502 5744 2653 3091

2007-08 14265 10439 3611 1998 16263 8731 8265 466 3526 2462 12257 4006 1957 2049

- Operating profit of the Bank rose by 43.4 percent to Rs.5,744 crore. - Provisions made at Rs.2,653 crore were higher as compared to Rs.1,957 crore made during the last year. - Net profit grew by 50.9 percent to Rs.3,091 crore. 5. Key Ratios 2007-08 4.90 8.01 19.00 3.58 1.15 1.38 2.25 64.98 341.98

Particulars Average cost of funds Average yield on funds Return on Equity Net Interest Margin Return on Assets Staff expenses to AWF Operating profit to AWF Earning per share (Rs) Book value per share (Rs) 6. Dividend

(per cent) 2008-09 5.51 8.67 23.52 3.62 1.39 1.31 2.58 98.03 416.74

- The Board of Directors has recommended a Dividend of 200 percent for

the year 2008-09. 7. Changes in Board of Directors

During the year 2008-09, the following changes took place in the composition of Board of Directors :- Shri M.V. Tanksale took over as Executive Director on 26.3.09. - Shri Nagesh Pydah took over as Executive Director on 26.3.09 - Mrs Ravneet Kaur was appointed as Director representing Govt. of India on 10.6.08 (in place of Shri Rakesh Singh). - Shri Vinod Kumar Mishra was appointed as Director on 05.12.08 under section 9(3)(h) of the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970. - Shri D.K.Singla, Shri T.N. Chaturvedi and Shri G.R. Sundaravadivel have been elected as Directors, w.e.f. 27.12.08, representing Shareholders under clause 9(3)(i) of the Banking Companies (Acquisition and Transfer of Undertaking) Act. - Shri Prakash Agarwal and Dr. Harsh Mahajan ceased to be Directors on 12.12.08. - Shri K. Raghuraman ceased to be Executive Director on attaining the age of superannuation on 30.9.08. - Shri J.AA.Garg ceased to be Executive Director on his elevation as Chairman & Managing Director of Corporation Bank on 6.11.08. - Shri P.K.Nayar, Director representing Non Workman ceased to be Director on attaining the age of superannuation on 31.3.09. The Board welcomes all the new Directors and wishes to place on record the valuable services rendered by Shri K. Raghuraman, Shri J.M. Garg, Shri Rakesh Singh, Shri Prakash Agarwal, Dr Harsh Mahajan and Shri P.K. Nayar. 8. Corporate Governance

The Bank accords high priority to good Corporate Governance. ICRA Ltd, the rating agency has reaffirmed the CGR 2 rating of the Bank, which reflects PNBs transparent ownership structure, improved risk management practices, well defined delegation of powers, accountability and an elaborate audit function carried out by both its Inspection & Audit Division and by independent Statutory Central Auditors. The favourable factors also include the satisfactory Board processes and the oversight function played by the Board. In compliance of RBI directive regarding "fit & proper criteria" to be fulfilled by the persons being elected as Directors on the Board of the

Nationalised Bank, the Board of the Bank has constituted a "Nomination Committee". Bank has complied with the guidelines of RBI and SEBI on the matters relating to Corporate Governance which has been examined by the Statutory Central Auditors. 9. Acknowledgments

The Board of Directors thanks the Government of India, Reserve Bank of India and Securities & Exchange Board of India (SEBI) for their long and sustained efforts to strengthen our safety and soundness through a whole slew of prudential measures. The Board of Directors also thanks the Stock Exchanges, Banks customers, public in general and the shareholders for their valuable support and trust reposed in the Bank. The Board pays tribute to all our people whose talent, commitment, teamwork and professionalism have contributed to the Banks success and ongoing developments. The Board looks forward to their continued dedication and co-operation in 2009-10 and thereafter too. For and on behalf of Board of Directors CHAIRMAN AND MANAGING DIRECTOR

Director Report
Mar2007 Mar 2008 Mar2009

The Bank completed eventful 113 years and has crossed several milestones in its quest to satisfy the diverse requirements of its customers. In the process, the Bank has gained the goodwill of its around 3.7 crore customers, earned a strong brand image as one of Indias most trusted brands, received recognitions and won various awards. The Bank features at 11 66th position among Forbes Global 2000 list of worlds biggest companies. The Bank was bestowed Corporate Excellence Award by Amity International Business School, Amity University, Noida.
The year 2007-08 reflects the Banks efforts to re-furbish its overriding principle that the customer should benefit from his relationship with the Bank. The Bank sees Financial Inclusion as a distinct opportunity and a business proposition, especially in the Indo Gangetic area, where the Bank has inherent strength. For fully exploiting the business potential with cost effectiveness, the Bank has re-aligned its business processes with technology; pruned its organisational structure to 3 tier from 4 tier making it more horizontal; re-invented its human capital and formulated various schemes. The Bank has also fully complied with revised AS-15 (relating to accounting for retirement benefits) of Institute of Chartered Accountants of India. In compliance with revised AS- 15, the transitional liability has been adjusted out of Opening Reserves (net of taxes) and the current year liability charged to Profit & Loss Account. Your Directors take pleasure in placing the Banks Annual Report for 2007-08 along with its audited annual financial statements. Key Financial Highlights

Key highlights of the Banks performance in the year 2007-08 include the following : 1. Positive Earnings Momentum

Net Profit of Rs 2,048.76 crore; a rise of 33.0 per cent. Operating Profit crossed the landmark level of Rs 4000 crore to reach Rs 4,006.24 crore as compared to Rs 3617.40 crore in the previous year. Cost to income ratio of 46.8 per cent; an improvement of 109 basis points (bps). Net Interest margin stood at 3.58 percent. Return on Assets rose by 12 bps to 1.15 percent. CRAR improved to 12.96 percent as at the end of March 2008, compared to 12.29 percent last year. This CRAR was achieved even after providing for additional capital towards (i) compliance with revised AS-15 ( relating to accounting for retirement benefits) ; (ii) compliance with Basel II- the capital has also been provided for operational risk, besides credit & market risks and (iii) starting the Banks subsidiary at London, called PNBIL. The Bank has successfully migrated to Basel II accord as at March 31, 2008. The CRAR, as per Basel II works out to 13.46 percent. To shore up the capital base, the Bank raised Hybrid Perpetual Tier-I bonds (Rs 1,100 crore) and Upper Tier II bonds (Rs 1,610 crore) during the year 2007-08. Ratio of Gross NPAs to Gross advances was 2.74 per cent; showing an improvement of 71 bps over the previous year. Ratio of net NPAs to net advances stood at 0.64 per cent; an improvement of 12 bps over the previous year. NPA Coverage ratio stood at 77.3 percent as at the end of March 2008. Return on Equity of 19 percent; an improvement of 381 bps over the previous year. 2. Significant Balance Sheet Strength

Capital and Reserves increased to Rs 12,318 crore; an increase of 18.0 per cent. Total business stood at Rs 2,85,959 crore; registering an increase of 20.9 per cent.

Deposits amounted to Rs 1,66,457 crore; showing a growth of 19.0 per cent. Low cost deposits comprising savings and current deposits formed 42.99 per cent of total deposits. Advances grew by 23.7 per cent to Rs 1,19,502 crore. Retail Advances (excluding traders) rose by 18.5 percent to Rs 18,834 crore. Priority Sector Credit at Rs 43,412 crore was 44.11 percentage of Adjusted Net Bank Credit (ANBC) and continues to be above the national goal of 40 per cent. Agricultural credit at Rs 19,947 crore was 18.94 percent of ANBC and continues to be higher than the national goal of 18 percent. 3. Income & Expenditure Analysis

Total income of the Bank increased by 25.4 percent to reach a level of Rs 16,262 crore. Interest Income rose by 27.0 percent to Rs 14,265 crore. Net Interest Income increased by 6.2 per cent to Rs 5,534 crore. Non-Interest income grew by 15.4 percent to Rs 1,997 crore, accounting for 12.3 percent of total income of the Bank. Commission, Exchange and Brokerage (CEB) increased to Rs 1,106 crore, registering a growth of 14 percent. Operating expenses stood at Rs 3,525 crore during 2007- 08, showing an increase of 6 percent. Interest Spread stood at 3.11 percent during 2007-08. Income Expenditure Details (Rs crore) 2006-07 2007-08 11236 7644 3288 1730 12966 6023 5617 406 3326 2352 9349 14265 10439 3611 1997 16262 8731 8265 466 3525 2462 12256

Particulars Interest income Interest/discount on advances/bills Income on investments Non-interest income Total Income Interest expended Interest paid on deposits Other interest expenses Total Operating expenses Establishment expenses Total Expenses

Operating profit Provisions and contingencies Net profit 4. Profit Analysis

3617 2077 1540

4006 1957 2049

* Operating profit of the Bank crossed the landmark level of Rs 4000 crore to reach Rs 4,006 crore. * Provisions were made at Rs 1,957 crore, as compared to Rs 2,077 crore made during the last year. * Net profit grew by 33 percent to Rs 2,049 crore. 5. Key Ratios (per cent) 2006-07 4.01 7.48 15.19 3.85 1.03 1.57 2.41 48.84 2007-08 4.90 8.01 19.00 3.58 1.15 1.38 2.25 64.98

Particulars Average cost of funds Average yield on funds Return on net worth Net Interest Margin Return on assets Staff expenses to average Working Funds Operating profit to Working Funds Earning per share (Rs) 6. Dividend

The Board of Directors has recommended a dividend of 130 percent for 2007-08. 7. Changes in Board of Directors

During the year 2007-08, the following changes took place in the composition of Board of Directors. Dr. K.C. Chakrabarty took over as Chairman & Managing Director on 4.6.2007. Shri J.M. Garg was appointed Executive Director of the Bank on 6.6.2007, thereby increasing the strength of Executive Directors to two. Shri Mushtaq A. Antulay and Shri Gautam P. Khandelwal were nominated as Directors on the Board of the Bank on 27.2.2008 under Section 9(3)(h) of the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970. Shri S.C. Gupta ceased to be Chairman & Managing Director w.e.f. 1.6.2007 on attaining the age of superannuation. Shri Mohanjit Singh, Director representing shareholders expired on

21.2.2008. The Board welcomes all the new Directors and wishes to place on record the valuable services rendered by Shri S.C. Gupta and Shri Mohanjit Singh. 8. Corporate Governance

The Bank gives high priority to good Corporate Governance. The Bank was assigned the CGR-2 Rating by ICRA Ltd implying adoption of such practices, conventions and codes as would provide its financial stakeholders a high level of Corporate Governance. In compliance of RBI directive regarding fit & proper criteria to be fulfilled by the person being elected as Directors on the Boards of the Nationalised Bank, the Board of the Bank constituted a Nomination Committee. The Bank has complied with the guidelines of RBI and SEBI on the matters relating to Corporate Governance which has been examined by the Statutory Central Auditors. In recognition of its efforts, the Bank was bestowed Golden Peacock Award for Excellence in Corporate Governance by the Institute of Directors, on September 20, 2007. 9. Organisational Restructuring

While the Bank gained in terms of improved business processes, asset liability management and risk management, the rapid changes in the competitive environment and higher use of technology warranted the need for a more horizontal organizational structure for speedier decision making. Keeping this in view, the Bank removed one tier and adopted 3 tier structure in place of existing 4 tier one. The new 3 tier structure will allow for a leaner, efficient and cost effective system. 10. Acknowledgments

The Board of Directors thank the Government of India, Reserve Bank of India, Securities and Exchange Board of India (SEBI), Stock Exchanges, the Banks customers, public in general and the shareholders for valuable support, continued patronage and confidence reposed in the Bank. The Board also wishes to place on record its appreciation to all our people whose talent and commitment are central to the Banks success and look forward to their continued co-operation in meeting the future challenges. For and on behalf of the Board of Director Chairman and Managing Director New Delhi May 29, 2008