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Directors Report of Allahabad Bank

Mar 31, 2014

The Board of Directors has pleasure in presenting the Directors'' Report along with the audited Statement of Accounts of the Bank for the year ended 31st March 2014.

1. PERFORMANCE OF ALLAHABAD BANK

The performance of the Bank is to be analyzed concomitantly with the aforesaid macroeconomic and banking environment during FY 13-14.

1.1 OPERATING RESULTS

Bank''s performance in key business parameters is presented below :

(Amt in Rs. Crore)

Parameter Mar''12 Mar''13 Mar''14 Growth (%) (Y-O-Y)

Total Business 271843 309678 331748 7.13

Total Deposits 159593 178742 190843 6.77

Total Advances 112250 130936 140905 7.61

Gross Investments 54770 58617 64348 9.78

Net Profit 1867 1185 1172 (1.11)

Operating Profit 3770 3385 4020 18.76

Operating Profit Ex. Trading Profit 3657 2705 3733 38.00

Provisions & Contingencies 1903 2200 2848 29.45

Total Income 16822 18913 20913 10.57

Total Expenditure (Excl. Prov) 13052 15527 16892 8.79

Interest Spread 5163 4866 5311 9.14

2.2 PERFORMANCE HIGHLIGHTS

- Total Business of the Bank increased to Rs.3,31,748 Crore as against Rs.3,09,678 Crore in previous year showing a YOY growth of 7.13 %.

- Operating Profit surged to Rs.4020 Crore as against Rs.3385 Crore last year showing a YOY growth of 18.76%.

- Net Profit came down to Rs.1172 Crore during the Financial Year ending 31.03.2014 as againstRs.1185 Crore last year showing a negative YOY Growth of 1.11 %.

- Net Interest Margin (NIM) decreased to 2.75 % during the Financial Year ending March, 2014 as against 2.81% last year.

- Deposits of the Bank went up to Rs.190843 Crore from Rs.178742 Crore last year. Year-on-Year basis, Total Deposits grew by 6.77 %.

- Gross Credit surged to Rs.140905 Crore from Rs.130936 Crore last year. Year-on-Year basis, the Gross Credit increased by 7.61 %.

- Credit Deposit Ratio stood at 74.26% as at March, 2014.

- Retail Credit grew to Rs.19308 Crore from Rs.17654 Crore last year, with an Y-O-Y growth of 9.37%.

- Non-Fund Non Interest Income during the Financial Year ending March, 2014 stood atRs.1085 Crore as againstRs.918 Crore last year.

- Capital Adequacy Ratio stood at 10.26 % as on 31.03.2014 under Basel-II norms and at 9.96% under Basel-III norms.

- Gross NPA to Gross Advances and Net NPA to Net Advances Ratios stood at 5.73% and 4.15 % as on 31st March, 2014 respectively.

- Provision Coverage Ratio stood at 46.03%.

2.3 CAPITAL AND RESERVES

Due to preferential allotment of equity to Government of India, the paid-up equity capital of the Bank increased from Rs.500.03 crore as on 31.03.2013 to Rs.544.61 Crore as on 31.3.2014. The reserves & surplus went up to Rs.11256.12 Crore as on 31.03.2014 from Rs.10852.49 Crore as on 31.03.2013.

2.4 DIVIDEND

The Board of Directors of the Bank in its meeting dated 11th January, 2014 declared an interim dividend of Rs.2.50 per equity share i.e. @ 25% of the paid up equity capital of the Bank. The Dividend payment date was 30th January, 2014.

Further, the Board of Directors of the Bank has not recommended any final dividend for the financial year 2013- 14.

2.5 Financial Ratios

Parameters 31.03.12 31.03.13 31.03.14

Capital Adequacy Ratio (%)

As per BASEL-II

Capital Adequacy Ratio Tier I (%) 9.13 8.05 7.67

Capital Adequacy Ratio Tier II (%) 3.71 2.98 2.59

Total Capital Adequacy Ratio Tier II (%) 12.84 11.03 10.26

As per BASEL-III

Common Equity Tier I Capital Adequacy Ratio (%) NA NA 7.35

Total Tier I Capital Adequacy Ratio (%) NA NA 7.51

Tier II Capital Adequacy Ratio (%) NA NA 2.45

Total Capital Adequacy Ratio (CRAR) (%) NA NA 9.96

Spread to Average Working Fund (%) 3.48 2.62 3.70

Average Cost of Funds (%) 6.98 7.31 7.04

Average Yield on Funds (%) 10.48 10.08 9.71

Average Cost of Deposits (%) 7.07 7.51 7.24

Average Yield on Advances (%) 12.09 11.43 10.83

Earnings per Share (Rs.) 39.18 23.70 22.89

Book Value per Share (Rs.) 192.93 209.93 201.04

Return on Assets (%) 1.02 0.64 0.57

Return on Average Net Worth (%) 19.35 11.77 10.93

Provision Coverage Ratio (%) 74.00 50.00 46.03

Net NPAs (%) 0.98 3.19 4.15

Profit per Employee (Rs.in lacs) 8.36 5.25 4.77

Productivity per Employee (Rs.in lacs) 1217 1373 1350

2.6 OFFICES & BRANCHES

The Bank is having 2840 domestic branches and one overseas branch at Hongkong. Out of 2840 domestic branches, 1131 are at Rural, 592 at Semi-urban, 581 at Urban and 536 at Metropolitan Centre. During the financial year 13-14 Bank opend 124 new branches, out of which 26 are at Rural, 39 at Semi Urban, 30 at Urban and 29 are at Metro centers. Further, 18 branches have been opened at Unbanked centers. Bank has plans to open 450 new branches during the financial year 14-15.

3. DEPOSIT MOBILISATION

Total deposits of the Bank showed a growth of 6.77 % to Rs.190843 Crore as on 31.03.2014 as against a growth of 12 % a year ago. The reason being, a conscious decision taken by the Bank to shed part of high cost bulk deposits and CDs during the year and this has resulted into lower growth rate in Deposits and Business figures of the Bank, compared to previous years. SB deposits grew by Rs.5753 crore to Rs.50728 Crore as on 31.03.2014, constituting 26.74 % of aggregate deposits. Bank emphasized on CASA deposits mobilization and observed saving deposits & CASA deposit mobilization campaigns during the year.

4. CREDIT DEPLOYMENT

Total advances of the Bank went up by 7.61% to Rs.140905 Crore as on 31.03.2014. Credit-Deposit ratio (gross) stood at 74.26 % as against 74.00% last year. The Base Rate (BR) of the Bank was at 10.25 % on 31.03.2014. Yield on advances stood at 10.83 % during 2013-14 as against 11.43% during 2012-13 in line with the general market scenario.

4.1 CORPORATE & MID CORPORATE CREDIT

The bank has major thrust on faster delivery & adoption of best practices in credit administration. During the year, efforts were made to improve the speed of decision making without compromising on quality. As a part of its ongoing business strategy to improve the quality of assets, the bank analyses the prevailing position, problems foreseen in near future and identifies weaknesses/potential defaults at any stage. This enables the Bank to take corrective steps to prevent impairment in credit quality, which includes restructuring in deserving cases.

4.2 RETAIL CREDIT

Total Outstanding under Retail Credit as on 31.03.2014 stood at Rs.16976.00 Crore as against Rs.14773.00 Crore as on 31.03.2013. The growth so registered on Y-o-Y basis is 14.91%. In Housing Loan segment and Car Loan segment there is appreciable growth (Y-o-Y) of 26.23% and 25.57% respectively.

To enhance the confidence / comfort level of the customers, recently, Bank has introduced the facility for Pre Approved Housing Loan limit (All Bank Pre Approved Limit-APPL) based on the income criteria of the prospective Housing Loan borrowers before finalizing their House / Flat. This will enhance the comfort to the prospective Housing Loan customers about their eligibility of Housing Loan, even before finalization of the property.

Education Loan Scheme has been made more customers friendly with attractive rate of interest and lower security requirement for premier Institutions. Management quota students have also been brought under the purview of Education Loan Scheme subject to fulfillment of other terms and conditions. Interest concession of 0.50% is offered to Girl students.

A new product namely "All Bank Home Appliance Finance Scheme" have been launched for financing consumer durables like TV Set/Washing Machine/Air Conditioner etc. to all categories of customers to boost Retail Credit portfolio.

5. Priority Sector Credit

- Priority Sector Credit grew from Rs.39403 Crore as on 31.03.2013 to Rs.47741 Crore as on 31.03.2014, registering an absolute YOY growth of Rs.8338 Crore (21.16%). Bank has achieved 38.30 % of ANBC as on Mar''14.

- Agriculture Credit increased from Rs.17688 Crore as on March 2013 to Rs.21924 Crore as on March 2014, registering an absolute YOY growth of Rs.4236 Crore (23.95%). Bank has achieved 17.59 % of ANBC as on Mar''14.

- Direct Agriculture Credit increased from Rs.13712 Crore as on March 2013 to Rs.16687 Crore as on March 2014, registering an absolute YOY growth of Rs.2975 Crore (21.70%). Bank has achieved 13.39 % of ANBC as on Mar''14.

- Fresh Credit Disbursal in Agriculture Loans reached Rs.7970 Crore during the current year 2013-14 against the target of Rs.7590 Crore, achieving 105.01% of the target.

The achievements under PS and Agriculture were marginally lower than stipulated norms.

Bank''s Performance under Priority Sector and Weaker Sections as on 31.03.2014 is presented below:

(Amount Rs. in Crore)

Mar-12 Mar-13 Mar-14 Sub-Sector Growth (%) (Y-O-Y)

Direct Agriculture 12304.38 13711.99 16686.99 21.70 (% to ANBC) (13.55%) (12.69%) (13.39%) (Norm 13.5% Min.)

Indirect Agriculture 4285.43 3976.20 5236.88 31.71 (% to ANBC) (4.50%) (3.68%) (4.20%) (Norm 4.5% max.)

Total Agriculture (% to ANBC) 16589.81 17688.19 21923.87 23.95 (Norm 18%) (18.05%) (16.37%) (17.59%)

Micro & Small Enterprises 16182.28 16570.21 19519.66 17.80

Other Priority Sector Credit 4624.34 5145.04 6297.66 22.40

Total Priority Sector Credit 37396.43 39403.44 47741.19 21.16

(% to ANBC) (41.19%) (36.47%) (38.30%)

(Norm 40%)

5.1 RUPAY KISAN CARDS (RKC)

- The Bank issued 2.58 lacs fresh Kisan Credit Cards involving a credit amount of Rs.4037.21 crores during the financial year 13-14.

- Bank is digitally processing all KCC loan applications under Akshay Krishi-Kisan Credit Card Scheme.

- Bank has issued 257123 Rupay Kisan Cards till March 2014 and has planned to issue cards to all eligible KCC account holders during this Financial Year.

Through Rupay Kisan Cards the borrowers can withdraw cash from Rupay enabled ATMs and can make purchases at point of sales (POS) machines.

5.2 RE-VERIFICATION OF ACCOUNTS UNDER ADWDR SCHEME-2008

The process of re-verification of agriculture accounts under Agriculture Debt waiver & Debt Relief (ADWDRS) scheme- 2008 has been completed. No incidences of any tampering of material facts have been found.

5.3 MSE SECTOR FINANCING

Credit to Micro and Small Enterprises (MSE) grew from Rs.16570 Crore as on March 2013 to Rs.19520 Crore as on March 2014, registering an absolute YOY growth of Rs.2950 Crore (17.80%).

5.4 COLLATERAL FREE LOANS VIS-À-VIS COVERAGE UNDER CGTMSE

Bank has given much thrust on credit delivery to collateral free loans covered under CGTMSE. As on 31.03.2014, 37903 proposals have been covered under CGTMSE amounting to Rs.1611.23 Crores.

5.5 BANK''S EXPOSURE TO MICRO FINANCE INSTITUTIONS (MFIS)

As on 31.03.2014, outstanding prevails at Rs.234.22 crores in 12 number of MFI accounts.

6. CORPORATE SOCIAL RESPONSIBILITY

6.1 During the financial year 2013-14 Bank provided fianancial support aggragating to Rs.29.68 lac under Corporate Social Responsibility (CSR) to various organisations/activities as detail below.

Sl. Organisations/Activities Amount Spent No. (Rs. in lac)

1 Saroj Gupta Cancer Centre & Research Institute 2.89

2 Udyan Shalini Fellowship Prog. 0.24

3 Water Purifier & Sewing Machine 0.55 (Distributed by ZO Guwahati)

4 Bhawna Aj O Kal 1.00

5 Repairing/ Renovation of Girl''s Hostel of Sabarmati 10.00 Harijan Ashram Trust, Ahmedabad

6 Centurian University of Technology and Management, Bhubaneshwar 15.00

6.2 Bank''s endevaour is to serve the society through various means. Taking its inititave further towards Corporate Social Responsibility, the Bank made donations to various charitable institutations/fund as detailed below:

a. Uttarakhand Chief Minister''s Relief Fund (Rs.5.00 Crore)

b. Bhagwan Mahaveer Viklang Sahataya Samiti, Jaipur (Rs.0.05 Crore)

7. LEAD BANK SCHEME

- Bank is having Lead Bank responsibilities in 17 districts, 13 in Uttar Pradesh, 2 in Jharkhand and one each in Madhya Pradesh and West Bengal.

- The Bank disbursed Rs.3494.26 crore under Priority Sector Credit against a target of Rs.3256.40 crore under Lead District Credit Plan 2013-14 achieving 107.30% of the target.

- As Lead Bank, our Bank took initiatives in implementing all State and Central Government programmes.

8. REGIONAL RURAL BANK (RRB)

- There is one Regional Rural Bank sponsored by our Bank i.e., Allahabad UP Gramin Bank (AUPGB), Banda (UP). The gross profit of AUPGB has come down to Rs.27.46 Crore during FY 13-14 as against Rs.87.46 Crore during FY 12-13.

- The RRB reached a deposit level of Rs.6437.08 crore registering a negative growth of 1.85% over March 2013. The main reason for this negative growth was due to delays in receipt of cane payment by farmers as well as shedding of bulk and high cost deposit by the Bank.

- Advances of the RRB increased from Rs.4253.71 crore to Rs.5098.91 Crores (Target Rs.5470.00 crore) achieving a growth of 19.87% over March 2013.

- As per Government Guidelines, all the branches of the RRB were migrated successfully to CBS and are providing NEFT/RTGS facilities to its customers.

9. STATUS OF RURAL SELF EMPLOYMENT TRAINING INSTITUTE (RSETI)

- Bank has a total of 21 RSETIs. These are in the states of Uttar Pradesh (15), Jharkhand (3), Madhya Pradesh (1) and West Bengal (2), which are actively imparting skill development training to the rural youth and creating financial literacy awareness among the rural people.

- During a recent review by Ministry of Rural Development, Govt. of India out of 18 eligible RSETIs for grading, 9 have been graded as ''AA''/ ''A as compared to one ''A grade during the previous review as on March''2012.

- Bank has provided 442 skill developments training to 13425 unemployed youth, out of which 5160 are settled with bank finance during FY13-14 for starting their own entrepreneurship ventures.

- Our RSETI, namely Lakhimpur Kheri has been selected as top performing institute in the country based on overall performance & RSETI Hamirpur has been awarded consolation prize. Our Bank has been awarded 3rd Prize as a stakeholder.

10. FINANCIAL LITERACY AND CREDIT COUNSELING CENTRES (FLCC)

- Bank has 17 FLCs operating in all 17 Lead Districts and one in Kolkata. As such, 18 FLCs are functioning now.

- All the Rural and Semi Urban branches are also actively participating in the financial literacy initiatives of Reserve Bank of India.

- 41211 Rural youth have been benefitted of which 12020 have been converted into Bank customer.

11. FINANCIAL INCLUSION

- Bank has achieved coverage of 5110 villages on 31.03.2014 under its Board approved financial Plan by way of 121 brick & mortar branches, 4 Satellite branches and 4985 villages covered through ICT based BC Model.

- Out of 4985 villages, 412 Ultra Small Branches(USB) have been opened , where one Officer visits the village on all working days with Lap top having VPN connectivity to render all types of banking solutions.

- Three year plan for FI Implementation (2013-2016) for population below 2000 in 15196 villages allotted to our Bank has been prepared and being implemented towards universal Financial Inclusion.

12. NON-PERFORMING ASSETS (NPAs) MANAGEMENT - 2014

The Gross NPA and Net NPA stood at Rs.8068.04 Crore and Rs.5721.81 Crore as on 31.03.2014 respectively. The Gross & Net NPAs as percentage to gross advances & net advances was 5.73 % & 4.15 % respectively. Though the Bank was able to recover fairly good amount (Rs.3446.48 Crore), due to fresh addition of NPAs to the tune of Rs.6021.22 Crore, the outstanding NPA has increased. The provision coverage ratio stood at 46.03 %.

12.1 CREDIT MONITORING & RESTRUCTURED DEBTS

At Head Office level a separate vertical, headed by General Manager (Credit Monitoring), has been set up because of the challenging scenario, for monitoring and supervising the loan assets. The Credit Monitoring Department alerts, guides and follows up with the field functionaries for up-keeping of the asset quality, preventing down-gradation and slippage and advises measures against the delinquent assets.

The slippage ratio of the assets has been contained at 4.79% during FY13-14 as against 5.35% of corresponding previous FY12-13.

12.2 RESTRUCTURED DEBTS

Towards revitalising the distressed assets as per guidelines from Reserve Bank of India, the restructuring of debts has been considered by bank as under:

(Rs. in Crore)

31.03.2014 Type of Restucturing No. of cases Amount Outstanding %to Gross Credit Sacrifice

CDR cases 42 4445.85 3.16 380.14

Non-CDR 13473 6451.66 4.58 174.09

(i) Non-CDR-SME 1807 489.45 0.35 9.69

(ii) Non-CDR-Others 11666 5962.61 4.23 164.40

Total Restructuring 13515 10906.51 7.74 554.23

The quantum of restructured debts (Standard) is 7.74% of Gross Credit as on 31.03.2014 as against 9.09% as on 31.03.2013.

13. INTERNATIONAL BANKING

The Bank carries out its International business in India through its 53 authorised/ designated branches, which includes 5 International branches & through its overseas branch at Hong Kong. Export credit of the Bank as on 31.03.2014 stood at Rs.2859 crore. The Bank is taking all steps to increase the credit flow to exporters. Exporters'' meets are arranged at various centres to explain various facilities available to them. The Bank maintains correspondent relationship with prime banks abroad and has ''Standard Settlement Instructions'' in various currencies with 15 foreign banks. The Bank is also catering to the needs of Non-Resident Indians through its branches.

14. OVERSEAS PRESENCE

Bank is having one overseas branch at Hong Kong. The Business of Hong Kong branch has increased from Rs.7354 cr as on 31.03.2013 to Rs.7590 cr as on 31.03.2014. The Hong Kong branch has earned a net profit of Rs.62 cr in FY13-14.

The Bank is also having a Representative Office at Shenzhen, China. Bank has received approval from the Reserve Bank of India for opening a Branch at Dhaka, Bangladesh and has filed the application with Bangladesh Bank for their permission

15. FEE BASED INCOME

Total fee based income of the Bank during the financial year 13-14 was Rs.1084.68 as against Rs.917.88 in the financial year 12-13 registaring a Y-O-Y growth of 18.17%.

The Bank has deployed 144 Marketing Officers and 58 specified persons for sale of these financial products pan India.

16. BUSINESS PROCESS RE-ENGINEERING (BPR)

Improvement in Productivity, Efficiency & Profitability with introduction of technology enabled products for rendering convenient, caring and attractive services to customers continued to remain the prime focus of the Bank under Business Process Re-engineering.

With this vision to strive for excellence, the Bank has moved towards Customer Centric activities from Process and Product Centric activities. The existing processes are being reviewed continuously by streamlining & simplifying the systems & processes and also as preventive steps against possible frauds & forgeries.

During the financial year 13-14, Centralized Processing Hubs (CPH) have been further strengthened by linking more than 1100 branches for back office activities like issuance of Personalized Cheque Books, SB Account Opening through Welcome Kits, Term Deposit Maturity Notices etc. For rest of the Non-CPH branches, personalized Cheque Intending System has been centralized. Grid based Cheque truncation System (CTS) has been extended to Western & Northern Grid also in addition to the existing Southern Grid.

17. NEW INITIATIVES - E-DELIVERY

E-LOBBY

- Bank has introduced E- Lobbies in 25 metro/urban branches and plans to open 225 during FY14-15. E- Lobbies will include the following:

- Passbook Printing Kiosk

- Cheque Deposit Kiosk

- Internet Banking Kiosk

- Cash Deposit Kiosk (Single Note acceptor)

Besides, above, Bank installed Cash Deposit Kiosks in 9 rural branches and plans to open 91 during FY14-15.

18. INFORMATION TECHNOLOGY

Total number of ATMs of Bank has been increased to 901 as on March''14. Bank has issued more than 27.97 lacs ATM- cum Debit Cards to its customers. VISA debit card has been made live for e-commerce (VbV). Total number of Point of Sale (POS) has been increased to 316. POS has been made live for Master Card also. Online Payment gateway services are running successfully at the merchant websites through our Internet Banking channel. More than 2300 merchants added to our gateway through M/s Bill Desk and M/s Tech Process.

19. CUSTOMER SERVICE

As a commitment to provide excellent customer service and services to Micro and Small Enterprises & to create awareness to customers about the common codes provided by Banking Codes and Standards Board of India (BCSBI), Bank has introduced various steps. Notable among them are:

(i) Display on ATM screens inviting customers to visit the Bank''s website or BCSBI''s website for getting to know about their rights in terms of the Codes

(ii) Printing of such messages on the backside of the ATM transaction slip

(iii)Grievance Redressal Mechanism has been strengthened for quick disposal of complaints with the help of Internal Ombudsman posted by the Bank at Head Office.

20. KNOW YOUR CUSTOMER & ANTI MONEY LAUNDERING

The Bank has adopted the comprehensive policy guidelines on Know Your Customer / Anti Money Laundering Norms in consonance with the Reserve Bank of India''s directives. The guidelines for submission of reporting under Prevention of Money Laundering Act, PMLA, 2002 viz. Cash Transaction Reports (CTRs), Suspicious Transaction Reports (STRs), Non Profit Organizations Transaction Reports (NTRs) and Counterfeit Currency Reports (CCRs) have been issued from time to time. The reporting system has been made online as per instructions of Financial Intelligence Unit of India (FIU-IND) and all the reports are uploaded on their website within prescribed time.

21. RISK MANAGEMENT

RBI guidelines on Basel III Capital Regulations have been implemented from 1st April 2013. Policies and procedures for credit and operational risk have been formalized and documented in compliance with RBI guidelines. The Bank has developed score cards for retail loans and new models for non-retail rating. In order to implement Internal Rating Based (IRB) approaches for Credit Risk, Facility Rating Model has also been developed, implementation of which will make the rating system of the Bank two-dimensional. The Bank is in the process of development of risk based pricing mechanism, Risk Adjusted Performance measurement and calculation of Risk- Adjusted Return on Capital (RAROC) Framework.

22. RIGHT TO INFORMATION

In pursuance of the enactment of Right to Information Act, 2005, the Bank has designated 48 Central Public Information Officers at all its Zonal Offices including Head Office and an Appellate Authority at Head Office. Further, as per the directions of Central Information Commission (CIC), a Transparency Officer for the Bank, has also been designated. The Bank is providing information to the citizens of India through suo-moto disclosures on website as well as through disposal of requests for information received under the Act. During FY13-14, the Bank received 3082 requests for information and 590 First Appeals, under the Act, out of which 3010 RTI applications and 516 RTI appeals were disposed of.

23. INSPECTION & AUDIT

With the implementation of Risk Based Internal Audit & Risk Based Concurrent Audit, the Audit plan is now made as per the Risk profile of the branches and the audit resources are directed towards high risk areas.

Bank has since indentified certain areas as ''Zero Tolerance Areas''. This will foster and ensure further robustness of the system and control in the branches as well as to keep the deviations and irregularities at a bare minimum level.

24. VIGILANCE

Bank has taken many new initiatives in the area of preventive & predictive vigilance in the recent years. Certain important measures undertaken to curb incidents of frauds include mandatory reference to Cautionary list of Third Party Entities, verification of genuineness of auditing of Financial Statements submitted by Borrowers/Guarantors, mandatory reference to CIBIL Reports of the borrowers, Guarantors, Mortgagors, checking status of properties proposed for mortgage through reference to Central Registry (CERSAI) and to ascertain noting/ registration of Bank''s charge on the property.

In recognition of spectacular performance of Allahabad Bank in vigilance functions, the Bank has been awarded "Vigilance Excellence Award 2013-14" by the Institute of Public Enterprises, Hyderabad during its Golden Jubilee Celebrations.

25. GOVERNMENT BUSINESS

Under National Pension System (NPS), the Bank expanded the coverage area for NPS lite (Swabalamban) by getting authorization of 2290 additional branches during the FY13- 14. During the FY13-14, the Bank has accepted subscription under Inflation Indexed National Savings Securities-(IINSS- C) launched by the Government of India.

26. AUTOMATED DATA FLOW (ADF)

As per the RBI Approach Paper, ADF cell of the Bank at Head Office is implementing a uniform and seamless reporting system, where information from Bank''s different source systems are flowing to a Centralized Data Repository (CDR) without any manual intervention and reports are being generated.

27. OFFICIAL LANGUAGE

The Bank received several National level prizes for outstanding performance in the area of implementation of Official Language. The Bank was awarded "Consolation Prize" under prestigious "Indira Gandhi Rajbhasha Puraskar" for the year 2011-12 for commendable performance in the area of Official Language Implementation from Official Language Department, Ministry of Home affairs, Government of India. This coveted prize was received by the then Chairman & Managing Director of the Bank Smt. Shubhalakshami Panse on 14th September, 2013 from His Excellency, The President of India Shri Pranab Mukherjee, in presence of Hon''ble Union Minister of State for Home Affairs Shri R. P. N. Singh and Hon''ble Union Minister of State for Home Affairs Shri M. Ramchandran.

Our Bank was awarded "Third Prize" in Region ''C'' under "Reserve Bank Rajbhasha Shield Competition" for the year 2011-12. The then Executive Director of the Bank, Shri Arun Tiwari received the prize from the then Governor of Reserve Bank of India Dr. D. Subbarao on 28th August, 2013 in a grand ceremony held at Mumbai in Central Office of the Reserve Bank of India. One officer of the Bank secured ''First'' Position in linguistic group ''A'' in the All India Inter Bank Hindi Essay Writing Competition 2012-13 organized by the Reserve Bank of India and was awarded by the Governor, RBI in the same ceremony.

The 3rd Sub-committee of Committee of Parliament on Official Language inspected our Pithoragarh branch (Z. O. Dehradun), Karvi Branch (Z. O. Allahabad) and Head Office during the year. The Drafting & Evidence Sub-committee of Committee of Parliament on Official Language also inspected our Zonal Office, Ahmedabad and Lucknow.

28. HUMAN RESOURCES

The Bank continues to focus on overall development of its human assets through manpower planning, knowledge enrichment, capacity building, promotion & career progression, staff welfare measures etc. to make them focussed and productive.

28.1 RECRUITMENT & MANPOWER MIX

In order to meet the strategic needs of the Bank our Human Resource Department has been constantly infusing new recruits to the system to strengthen the existing manpower. During the financial year 13-14, total 3384 officers/employees have been recruited by the Bank, which includes 1508 officers (including specialist officers) and 1876 SWOs-A in clerical cadre. Further, we are in the process of recruiting 600 officers (including specialist officers) and 500 SWOs-A during the Financial year 2014-15.

28.2 THE MANPOWER MIX OF THE BANK IS AS UNDER:

Category As on 31.3.2013 As on 31.03.2014

Officer 11407 12270

Clerk 6829 8349

Sub-staff 4321 3950

Total Manpower 22557 24569

Out of which

Scheduled Castes 5827 6246

Scheduled Tribes 1440 1669

Other Backward Class 2666 3406

Women 3293 4063

Others (MC, PH & XSM) 1824 2082

SC/ST and OBC Cells have been set up in Head Office and Zonal Offices under the Chief Liaison Officer and Liaison Officers respectively. Besides dealing with the grievances of SC/ST and OBC employees of the Bank, they look after the implementation of Government guidelines issued from time to time in this regard.

29. PUBLICITY ENDEAVOURS

The Bank has gone for nation-wide campaign on Television, Radio, and Newspapers/Magazines, hoardings etc. Bank has also made publicity for popularizing and marketing various products of the Bank.

30. SUBSIDIARY & JOINT VENTURE

AllBank Finance Ltd., a wholly owned subsidiary of Allahabad Bank, engaged in Corporate Advisory Services, Project Appraisal, Issue Management, Loan Syndication, Debenture Trusteeship and Underwriting, posted a profit of Rs.3.70 Crore during FY 13-14.

The Bank holds 27.04% equity stake in Asset Management Company "ASREC (India) Ltd" along with other Banks/ Institutions

The Bank holds 30% equity stake in joint venture company "Universal Sompo General Insurance Company Limited" for general insurance business along with Indian Overseas Bank, Karnataka Bank Ltd., Dabur Investment Ltd. and Japanese insurance major Sompo.

31. FUTURE PLANS

The Bank will focus on Retail Business, Loan Syndication, etc in addition to other core banking activities. Focus areas of business for FY14-15 will be growth in Retail Business, Improving Asset quality and improving credit Monitoring, Customer acquisition and maximizing usage of e-delivery channels to reduce costs.

The Bank is planning for overseas expansion.

32. OPPORTUNITIES & CHALLENGES:

- Mortgages in the Retail banking opportunities in India is the best opportunity for Banking industry as the mortgages are to cross Rs.40 trillion by 2020.

- The next opportunity will be financial inclusion for both urban & rural population, opening of branches & ATMs, going into deep penetration with e-banking, making full utilization of technology with massive use of SMS banking, internet banking and mobile banking.

- The foremost challenges to the Banks in next few years will be Human Resources Management & asset quality maintenance and monitoring.

33. BOARD OF DIRECTORS

- The details of meetings of the Board and its Committees held during the Financial Year13-14 are as under:

Board/Committee(s) Number of meetings held

The Board of Directors 17

The Management committee of the Board (MCBOB) 21

The Audit Committee of the Board (ACB) 10

The Directors'' Promotion Committee (DPC) 04

Shareholders'' / Investors'' Grievance committee (SHIGC) 02

IT committee of the Board (IT-Comm) 03

Fraud Monitoring Committee (FMC) 09

Customer Service Committee (CSC) 04

Remuneration Committee (Remu Comm) 02

Risk Management Committee (RMC) 04

Share Issue & Allotment Committee 02

Credit Approval Committee (CAC) 32

Recovery Committee of the Board (RCB) 07

Election Committee of the Board (ECB) 03

- Shri Rakesh Sethi, Chairman & Managing Director joined the Bank on 12.03.2014. Prior to his present appointment Shri Sethi was the Executive Director of Punjab National Bank since 01.01.2011.

- Shri Jal Karan Singh Kharb joined the Bank as Executive Director on 23.01.2014. Prior to his present assignment Shri Kharb was the General Manager of Dena Bank.

- Shri Ajay Shukla and Shri Y. P. Singh joined the Board as Part-Time Non-Official Director and Workmen Employee Director, respectively, on 29.08.2013.

- Shri Sanjeev Kumar Sharma joined the Board as Part-Time Non-Official Director under Chartered Accountant category w.e.f. 18.12.2013.

- Shri Dinesh Dubey, Part Time Non-Official Director resigned from the Board of Directors on 17.02.2014.

- During the year Smt. Subhalakshmi Panse, Chairman & Managing Director retired from the Bank after completion of her tenure on 31.01.2014 & Shri Arun Tiwari, Executive Director was relieved from the Bank on 26.12.2013 for taking over his new assignment at Union Bank of India as Chairman & Managing Director.

- Shri Gour Das, Workmen Employee Director on the Board completed his tenure on 15.08.2013.

- Shri Rajesh M. Chaturvedi, Part-Time Non-Official Director under Chartered Accountant category on the Board completed his tenure on 13.07.2013

34. ACKNOWLEDGEMENTS

The Board of Directors records its appreciation for continued support and patronage of the shareholders/investors of the Bank. The Board of Directors gratefully acknowledges the valuable and timely advice, guidance and support from the Reserve Bank of India, Government of India and other regulatory agencies and look forward to their continued support and co-operation. The Board of Directors is thankful to the customers for their continued trust and confidence on the Bank. The Board records its appreciation for valuable contributions of the outgoing members and welcomes the new incumbents. The Board of Directors is pleased to place on record their appreciation for the committed services of all the employees of the Bank.

For and on behalf of the Board of Directors,

Date : 7 th May, 2014 (Rakesh Sethi)

Place : Kolkata Chairman & Managing Director


Mar 31, 2012

The Board of Directors has pleasure in presenting the Directors' Report along with the audited Statement of Accounts of the Bank for the year ended 31st March 2012.

BANKING & FINANCIAL SECTOR DEVELOPMENT

Financial markets in India have acquired greater depth and liquidity over the years. During FY 2011-12, Indian banks remained robust, notwithstanding a decline in capital to risk- weighted assets ratio and a rise in non-performing asset levels in the recent past. Capital adequacy levels remain above the regulatory requirements. The financial market infrastructure continues to function without any major disruption. With further globalization, consolidation, deregulation, and diversification of the financial system, the banking business becomes more challenging.

During FY 2011-12, growth in bank credit extended by scheduled commercial banks (SCBs) stood at 19.18% as on 30th March 2012 (21.51% the corresponding period of previous year). The growth in aggregate deposits has been 17.40% on the same date as against 15.9% of corresponding period last year. The business growth of SCBs has been in line with RBI's credit growth projection of 18% and deposits growth projection of 17%. Financial markets in India have acquired greater depth and liquidity over the years. Steady reforms since 1991 have led to growing linkages and integration of the Indian economy and its financial system with the global economy. Weak global economic prospects and continuing uncertainties in the international financial markets therefore, have had their impact on the emerging market economies. Sovereign risk concerns, particularly in the euro area, affected financial markets for the greater part of the year, with the contagion of Greece's sovereign debt problem spreading to India and other economies by way of higher-than-normal levels of volatility.

The macroeconomic fundamentals during the year exhibited challenging interest rate environment. There was hardening of interest rates in general for both the assets and liabilities. The cost of funds was escalated due to this situation and put pressure on NIM (Net Interest Margin) of the Bank during the year. The financial and banking system have been experiencing the twin problem of slackening growth and high inflation. To counter price spiral problems, RBI has increased Repo rates 5 times in FY 2011-12. The repo rate was increased to 7.25% as on 3rd May 2011 from 6.75% earlier which further increased to 8.50% on 5th October 2011.

PERFORMANCE OF ALLAHABAD BANK

The performance of the Bank is to be analyzed concomitantly with the aforesaid macroeconomic and banking environment during FY 2011-12.

OPERATING RESULTS

Bank's performance in key business parameters is presented below.

(Rs in crore)

Parameter Mar'10 Mar'11 Growth (%) Mar'12 Growth (%)

Net Profit 1206 1423 17.97 1867 31.18

Operating Profit 2549 3055 19.86 3770 23.42

Operating Profit Ex. Trading Profit 1972 2894 46.77 3657 26.34

Provisions & Contingencies 1342 1631 21.55 1903 16.65

Total Income 9885 12385 25.29 16822 35.82

Total Expenditure (Excl. Prov.) 7337 9331 27.18 13052 39.89

Interest Spread 2650 4022 51.76 5163 28.35

Total Deposits 106056 131887 24.36 159593 21.01

Total Advances 72437 94571 30.56 112250 18.69

Total Business 178493 226458 26.87 271843 20.04

Gross Investments 38680 43545 12.58 54770 25.78

Performance Highlights

- Total Business of the Bank increased to Rs 2, 71,843 Crore as against Rs 2, 26,458 Crore in previous year showing a YOY growth of 20.04 %.

- Operating Profit surged to Rs 3770 Crore as against Rs 3055 Crore last year showing a YOY growth of 23.42%.

- Net Profit rose to Rs 1867 Crore during the Financial Year ending 31.03.2012 as against Rs 1423 Crore last year showing a YOY Growth of 31.18 %

- Net Interest Margin (NIM) increased to 3.48 % during the Financial Year ending March, 2012 as against 3.38% last year.

- Deposits of the Bank went up to Rs 1,59,593 Crore from Rs 1,31,887 Crore last year. Year-on-Year basis, Total Deposits grew by 21.01 %.

- Gross Credit surged to Rs 1,12,250 Crore from Rs 94,571 Crore last year. Year-on-Year basis, the Gross Credit increased by 18.69 %.

- Credit Deposit Ratio stood at 71% as at March, 2012.

- Retail Credit grew to Rs 15,114 Crore from Rs 13,029 Crore last year, constituting an increase of 16% during the financial year.

- Non-Fund Non Interest Income during the Financial Year ending March, 2012 stood at Rs 953 Crore as against Rs 857 Crore last year.

- Capital Adequacy Ratio stood at 12.83% as on 31.03.2012.

- Gross NPA to Gross Advances and Net NPA to Net Advances Ratios stood at 1.83% and 0.98% as at March, 2012 end respectively.

- Provision Coverage Ratio stood at 74%.

CAPITAL AND RESERVES

Due to preferential allotment of equity to LIC of India the paid- up capital of the Bank increased from Rs 476.22 Crore to Rs 500.03 Crore as on 31.3.2012. The reserves & surplus went up to Rs 10006.59 Crore as at end of this year from Rs 8031.17 Crore as on 31.03.2011.

Dividend

The Board of Directors of the Bank has recommended a dividend @ 60 % i.e. Rs 6 per equity share of Rs 10 each.

OFFICES & BRANCHES

The Bank is having 2516 domestic branches and one overseas branch at Hongkong. Out of 2516 domestic branches, 1033 are at Rural, 493 at Semi- urban, 517 at Urban and 473 at Metropolitan Centre. 101 new branches have been opened during the financial year 2011-12 out of which 40 are at Rural, 39 Semi Urban,9 Urban and 13 at Metro centers. 25 branches have been opened under FI Plan against target of 21. Further, 29 branches have been opened at Unbanked centers and 34 in Under Banked Districts of Under Banked States, fulfilling statutory requirements setup by RBI. Besides the above, 2 Field Inspection Offices, one Mobile branch & 4 satellite branches have been opened during the year. Bank has plans to open 250 new branches during the fiscal 2012-13.

DEPOSIT MOBILISATION

Total deposits of the Bank showed a significant growth of 21.01 % to Rs 1,59,593 Crore as on 31.03.2012. Low cost deposits grew by 10.22 % to Rs 48,668 Crore as on 31.03.2012, constituting 30.78% of aggregate deposits. Bank emphasized on low cost deposit mobilization and observed saving deposits & CASA deposits mobilization campaign during the year.

FINANCIALS

Parameters 31.03.10 31.03.11 31.03.12

Capital Adequacy Ratio (%) 13.62 12.96 12.83

Of which Tier I (%) 8.12 8.57 9.13

Tier II (%) 5.50 4.39 3.71

Spread to Average Working Fund (%) 2.54 3.12 3.24

Average Cost of Funds (%) 5.99 5.85 6.98

Average Yield on Funds (%) 8.68 9.19 10.48

Average Cost of Deposits (%) 5.97 5.83 7.07

Average Yield on Advances (%) 10.57 10.50 12.09

Earnings per Share (Rs) 27.01 31.85 39.18

Book Value per Share (Rs) 151.17 178.64 192.93

Return on Assets (%) 1.16 1.11 1.02

Return on Average Net Worth (%) 22.21 21.04 19.35

Provision Coverage Ratio (%) 78.95 75.67 74.00

Net NPAs (%) 0.66 0.79 0.98

Profit per Employee (Rs in lacs) 5.76 6.70 8.36

Productivity per Employee (Rs in lacs) 845 1063 1217

CREDIT DEPLOYMENT

Total advances of the Bank went up by 18.69% to Rs 1,12,250 Crore as on 31.03.2012. Credit-Deposit ratio (gross) stood at 71 % as against 72.18% last year. The Bank increased its market share in the system to 2.39 % from 2.23% during the period. The Benchmark Prime Lending Rate (BPLR) of the Bank was at 14.75 % on 31.03.2012. Yield on advances stood at 12.09 % during 2011-12 as against 10.50 % during 2010- 11 in line with the general market scenario.

NON-PERFORMING ASSETS (NPAs) MANAGEMENT

The Gross and Net NPA stood at Rs 2058.98 Crore and Rs 1091.70 as on 31.03.2012. The Gross & Net NPAs as percentage to gross advances & net advances was 1.83 % & 0.98% respectively. Though the Bank was able to recover fairly good amount, due to fresh addition of NPAs to the tune of Rs 2232.06 Crore, the outstanding NPA has increased. The provision coverage ratio stood at 74%.

SOCIAL BANKING

- Priority Sector Credit grew from Rs 30,764 Crore as on 31.03.2011 to Rs 37,396 Crore as on 31.03.2012, registering an absolute YOY growth of Rs 6633 Crore (21.56 %). Bank has exceeded the National Goal (40.00%) of PSC to ANBC by achieving 41.19 % as on Mar'12.

- Agriculture Credit increased from Rs 13,387 Crore as on March 2011 to Rs 16,590 Crore as on March 2012, registering an absolute YOY growth of Rs 3203 Crore (23.93%). Bank has exceeded the National Goal (18.00%) of Agriculture to ANBC by achieving 18.05% as on Mar'12.

- Direct Agriculture Credit increased from Rs 9808 Crore as on March 2011 to Rs 12304 Crore as on March 2012, registering an absolute YOY growth of Rs 2496 Crore (25.45%). Bank has exceeded the National Goal (13.50%) of Direct Agriculture to ANBC by achieving 13.55% as on Mar'12.

Bank's performance under Priority Sectors and Weaker Sections is presented below: (Rs in Crores)

Mar-10 Mar-11 Mar-12 GROWTH(YOY) Mar'12 over Mar'11 SUB-SECTOR AMT. AMT. AMT. AMT. %

Direct Agriculture 8339.81 9807.88 12304.38 2496.50 25.45

(% to ANBC)* 14.18 13.86 13.55

Indirect Agriculture 3227.60 3578.71 4285.43 706.72 19.74

(% to ANBC)* 4.50 5.06 4.50

Total Agriculture 11567.41 13386.59 16589.81 3203.22 23.93

(% to ANBC)* 18.68 18.92 18.05

Micro & Small Enterprise(MSE) 8187.84 11990.30 16182.28 4191.98 34.96

Total PSC 24279.35 30763.73 37396.43 6632.70 21.56

(% to ANBC)* 41.29 43.48 41.19

(Norm 40%)

Total MSME (MSE ME) 9770.71 14383.89 18446.35 4062.46 28.24

Weaker Section 6150.00 7547.00 9487.00 1940.00 25.71

(% to ANBC)* 10.46 10.67 10.45

Women Beneficiaries 2961.73 3582.45 4765.1 3 1182.68 33.01

(% to ANBC) 4.19 5.06 5.25

*ANBC March'2010 : Rs70760 crore

*ANBC March2011: Rs90782 crore

- MSME Sector Financing :

Credit to Micro and Small Enterprises (MSE) grew from Rs 11,990 Crore as on March 2011 to Rs 16,182 Crore as on March 2012, registering an absolute YOY growth of Rs 4192 Crore (34.96%). Credit to Micro, Small & Medium Enterprises (MSME) increased from Rs 14,383 crores to Rs 18,446 crores as on 31.03.2012, showing a YOY growth of 28.24%.

- Collateral Free Loans vis-a-vis Coverage under CGTMSE :

Bank has given much thrust on credit delivery to collateral free loans covered under CGTMSE. As on 31.03.2012, 35501 proposals have been covered under CGTMSE amounting to Rs 1348.63 Crores.

New Structured Products launched:

The Bank has launched following structured products under Priority Sector Credit:

- Scheme for providing Savings-cum-OD account to Non- Farm Sector (NFS) poor families living in Rural/ Urban areas,

- Scheme for extending produce loan to farmers against Warehouse Receipts under Tie-Up arrangement with Warehouse companies for providing Collateral Management Services in Tie-Up with National Bulk Handling Corporation,

- Weavers Credit Card Scheme,

- Akshay Krishi-Kisan Credit Card Scheme,

- Allahabad Bank Potato Growers Credit Card Scheme

- Bank's Exposure to Micro Finance Institutions(MFIs) 19 number of MFI accounts involving Rs 258.54 crores has been sanctioned by Bank. As on 31.03.2012, outstanding prevails at Rs 93.08 crores.

- State Level Bankers' Committee (SLBC)

The Bank as SLBC convenor, continued to give thrust for economic upliftment of State of Jharkhand. The Bank has been playing a lead role in the state to plan and open Bank branches in unbanked and underbanked areas on priority basis. Bank took necessary steps for implementation of special programmes of Government of India and Government of Jharkhand such as Bringing Green Revolution in Eastern India. As on 31.03.2012, all the 1541 villages with a population of over 2000 have been provided with banking facilities. As a leader, our bank provided banking facilities in 112 villages. A mobile banking van with ATM was also operationalised to cover 12 villages in the state to provide banking facilities. The bank also started one coin vending machine at Ranchi. The Bank conducted meetings of SLBC timely and the SLBC in the state has proved to be a strong forum to discuss and review banking initiatives for the development of the state.

- Lead Bank Scheme:

Under Lead Bank responsibilities in 17 districts, 13 in Uttar Pradesh, 2 in Jharkhand and one each in Madhya Pradesh and West Bengal, the Bank disbursed Rs 2174.35 crores against a target of Rs 2128.66 crores under District Credit Plan 2011-12 achieving 102.15% of the target

- Regional Rural Banks:

Government of India adopted "One State One RRB" for each sponsor Bank. Thus the number of Regional Rural Banks sponsored by our Bank now is two, one in Uttar Pradesh (Allahabad UP Gramin Bank, Banda) and another in Madhya Pradesh (Sharda Gramin Bank, Satna). These two RRBs continued to show their performance with a net profit of Rs 53.43 Crore (Target Rs 40.00 crores) during 2011-12. The accumulated profit stood at Rs 612.05 Crores in 2011-12 as against Rs 558.67 Crores during 2010-11. As per Government Guidelines, all the branches of both the RRBs were migrated successfully to CBS. The RRBs are providing NEFT/ RTGS facilities to its customers also.

- Financial Inclusion:

In accordance with the guidelines and observations of Govt. of India/ Reserve Bank of India, Bank prepared a comprehensive Financial Inclusion Plan with an outlay of Rs 215.82 Crore to provide banking services in unbanked rural as well as urban areas through BC Model, Banking Kiosks, Bio-metric ATMs and Mobile van fitted with ATM, ultra small branches etc.

The Bank has covered the 2618 villages allotted to it with population of 2000 and above and 15549 villages with population less than 2000.In addition to existing 5 Brick & Mortar Branches, Bank has opened another 25 Brick & Mortar Branches taking the total no. of B&M branch under Financial Inclusion to 30, exceeding the target of 26 branches during the FY 2011-12.

- CORPORATE SOCIAL RESPONSIBILITY

The Bank, as a responsible Corporate Citizen, has initiated several measures towards sustainable development of the society reflecting its concern for social welfare and developments, some of which are as under:

- Training Facilities to Farmers / Unemployed Youths through RSETI

The Bank has established five more Rural Self Employment Training Institutes (RSETI) this year for imparting training to Farmers, unemployed youths, NGOs, SHGs etc. for improvement of skills and entrepreneurship ability. Thus the Bank has at present 18 RSETIs. During the FY 2011-12, 262 programmes were conducted upto Feb, 12 and extended trainings to 8317 farmers / unemployed youths, out of which 3396 trainees were linked to Bank Credit.

- Financial Literacy and Credit Counseling Centres (FLCC) :

Financial Literacy and Credit Counseling Centres (FLCC) aims at strengthening financial inclusion initiatives by providing financial education and credit counseling. Our Bank is having 13 FLCCs at RBI identified (financially excluded) centers:

Three Mobile vans were launched at Dumka branch of Jharkhand State covering 12 villages, Kasraila branch of Sitapur, U.P. covering 4 villages and Khaira Branch in New Delhi, covering 6 villages.

- INTERNATIONAL BANKING

The Bank carries out its International business in India through its 54 authorised/ designated branches, which includes 5 International branches & through its overseas branch at Hong Kong. Export credit of the Bank as on 31.03.2012 stood at Rs 2,808.61 crore. The bank is taking all steps to increase the credit flow to exporters. The Bank maintains correspondent relationship with prime banks abroad and has 'Standard Settlement Instructions' in various currencies with 15 foreign banks.

- Overseas Presence

Bank is having one overseas branch at Hong Kong.

The Business of Hong Kong branch has increased from Rs 3,284 crore as on 31.03.2011 to Rs 5,327 crore as on 31.03.2012. The Hong Kong branch has earned a net profit of Rs 48.10 crore in 2011-12 as against Rs 19.01 crore in 2010-11. The Bank is also having a Representative Office at Shenzhen, China and in terms of regulatory guidelines, Bank has applied to Reserve Bank of India for opening of a full fledged branch in China. Bank has taken up with the regulators regarding opening of overseas branches at Dhaka, Shanghai, Singapore & Kowloon (Hong Kong).

- RETAIL CREDIT

The Bank has always been keen on exploring novel avenues to excel in Retail Credit business. A mosaic of Retail Credit Products caters to the personal, consumer and business needs of various sections of the society. The Bank has centralized various processes from mobilization to disbursement of Retail loans, by opening Centralized Retail Banking Boutiques (CRBBs) at important centers across the country.

The Bank added 7 new CRBBs to the existing network of 27 CRBBs & 61 Retail Banking Boutiques (RBBs) spread across the country. Outstanding under Retail Credit as on 31.03.2012 stood at Rs 15114.00 Crore that is 13.41% of the Gross Credit Outstanding exhibits an increase of 16.00 % during the year. During the fiscal 2011-12 Bank launched two new Retail Finance Schemes, i.e. "ALLBANK AASHIANA" under Housing Loan segment & "PENSIONERS" PERSONAL LOAN" to meet the changing requirement patterns of the senior citizens.

Bank entered into tie-up with the leading Automobile manufacturer M/s Tata Motors Ltd. for financing their vehicles in addition to the various Automobile manufacturers, Scheme of 1% interest subvention on housing loans up to Rs 15 Lac announced by Finance Minister is being implemented by the Bank.

Fee Based Income:

Performance under overall fee based income of the Bank as on 31.03.12 stood at Rs 953 crore as against Rs 857 crore as on 31.03.11 registering a growth rate of 11.20%

MOU entered with the Government by the Bank

The Bank has signed MOU with Government of India under fee based income to achieve 7% of total income for FY 2011- 12(achievement 5.71%); 10% of the total income for FY 2012- 13; 15% of Total Income for FY 2013-14 and 20% of total in- come for FY 2014-15.

GOVERNMENT ACCOUNTS DEPARTMENT

Processing of Central Government Pensions viz. Central Civil, Defence, Railways & Telecom of all the Zones centralized at CPPC, Lucknow since April 2011.CPPC, Lucknow is authorized by the Central Pension Accounting Office with effect from 01.11.2011.

Collection of Commercial Taxes of Government of West Ben- gal, Orissa & Jharkhand through the e-payment mode commenced from 06.07.2011, 15.09.2011 & 19.01.2012 respectively.PPF Remittances automated with effect from 02.07.2011.

225 Branches additionally authorized as Points of Presence- Service Providers (POP-SPs) by PFRDA for NPS.

BUSINESS PROCESS RE-ENGINEERING (BPR)

Improvement in Productivity, Efficiency & Profitability with introduction of technology enabled products for rendering convenient and attractive services to customers continued to re- main the prime focus of the Bank. Centralized Processing Centre had been established for Back Office activities like Clearing Process and Pension Processing. Other activities of the branches like Account Opening, Signature Scanning; Issuance of personalized Cheque Books etc. has been shifted to Back Office Processing Centre at Lucknow.

Information Technology:

- All 2516 branches and 81 offices are covered under the ambit of CBS. All the 567 branches & 4 extension counters of Gramin Banks sponsored by us have been migrated to CBS as on 24.09.2011

- Total no of ATMs has been increased to 316

- Bank has issued more than 12.78 lacs ATM cum Debit card to its customers

- As part of green initiative high definition video conferencing system implemented at 59 identified locations across the country in order to have seamless communication

- Mobile banking facility for the customers launched on 24th April 2011.

- Bank has extended internet banking facility to corporate customers also, the facility has been made available in current, cash credit & overdraft accounts also with certain terms & conditions.

Customer Service

The Bank's "Customer Service Committee of the Board" is committed towards excellence in customer service. The suggestions of the Committee on Procedures and Performance Audit on Public Services (CPPAPS), constituted by Reserve Bank of India, are accorded top priority for implementation in the Bank. The Bank is making constant endeavor to strive for and achieve an ideal situation of complaint free environment. An online complaint redressal mechanism has been introduced.

Know Your Customer & Anti Money Launderings

The Bank has adopted the comprehensive policy guidelines on Know Your Customer/Anti Money Laundering Norms in consonance with the Reserve Bank of India directives. The guidelines for submission of mandatory returns viz., Cash Transaction Reports (CTRs), Suspicious Transaction Re- ports (STRs) and Counterfeit Currency Reports as per the provisions of the PLMA, 2002 have been issued from time-to- time and all branches/offices have been sensitized on sub- mission of these return within the prescribed time limit.

INSPECTION AND AUDIT

Bank has switched over to Risk Based Internal Audit (RBIA) from 1st April 2010. Under this system the audit plan is pre- pared with reference to the Risk Profile of the branch and audit resources are directed towards high risk areas.

An Off-Site Monitoring Cell has been established during the year which undertakes continuous Monitoring of any major deviation / error in transactions by the branches during the previous day's operation & follows up with them for immediate corrective action. A fraud Risk Management Cell has been set up during March 2012 with the objective of better administration of Concurrent Audit Report findings. Further, the Bank has also appointed Consultant for implementation of Integrated Risk Management Solution (IRMS) towards Advanced Approach.

VIGILANCE

Bank has taken many new initiatives in the area of preventive & predictive vigilance in the recent years.

- Introduction of intranet-site on vigilance issues which display important guidelines and information on various issues of vigilance department.

- Bank has taken initiative to impart training to officers of CBI/ Police on various issues relating to Bank with the objective to help them understand intricate banking transactions/procedures and also to understand bank's viewpoints, concerns & priorities in the cases referred to them. One such training programme for the officers of CBI/ Police is scheduled to be organised in May, 2012.

- Bank has published 4 issues of quarterly News Magazine on Vigilance matters covering detailed information on variety of important issues relating to vigilance, especially concerning preventive vigilance matters.

- Department has taken initiative for organising workshops/ meetings on preventive vigilance issues at various zones wherein CVO deliberated on various burning vigilance issues, especially on modus operandi of recent frauds & default / deviation in observance of systems & procedures of the Bank.'

OFFICIAL LANGUAGE

Compliance of various provisions under the Official Language Policy was ensured in order to achieve the targets stipulated in the annual programme. Accordingly, statutory requirements in regard to bilingual issuance of documents under Section 3(3) of Official Language Act, reply of Hindi letters in Hindi, bilingual publication of manuals & codes, bilingualisation of stationery items was ensured. During the year a large number of officers and employees, not having working knowledge of Hindi, were nominated for various Hindi courses conducted by the Govt. of India. During the year, 187 Hindi Workshops (3159 Officers/Employees participated) and 75 Desk Training Programmes (669 Officers/Employees participated) were organized.

The Bank received several National level prizes for outstanding performance in the area of implementation of Official Language. Bank was awarded First Prize under prestigious "Indira Gandhi Rajbhasha Puraskar" for the year 2009-10 for excellent performance in the area of Official Language Implementation from Official Language Department, Ministry of Home affairs, Government of India. The Prize was received by our Chairman and Managing Director on 14th September, 2011 from Her Excellency, Smt. Pratibha Devisingh Patil, President of India in presence of Hon'ble Union Home Minister Shri P. Chidambaram and Hon'ble Union Home Minister of State Shri M. Ramchandran and Hon'ble Union Home Minister of State Shri Jitendra Singh.

Our Bank secured "First Position" in linguistic Region 'A' and "Third Position" in linguistic Region 'B' and 'C' respectively under "Reserve Bank Rajbhasha Shield Competition" for the year 2009-10. Our Executive Director Shri M. R. Nayak received the prizes from Shri D. Subbarao, Hon'ble Governor of Reserve Bank of India on 1st June, 2011 in a grand ceremony held at Central Office of the Reserve Bank of India.

Our Bank received 'Third Prize' for Bank's Bilingual House Magazine 'Triveni Dhara' for the year 2010-2011. The award was received by the Sri M.R. Nayak, Executive Director from

Shri D. Subbarao, Hon'ble Governor, Reserve Bank of India in the R.B.I. Prize Distribution ceremony.

Two participants of our Bank secured 'First' and 'Second' Position in linguistic groups 'A' and 'C' respectively in the All India Inter Bank Hindi Essay Writing Competition 2010-11 organized by the Reserve Bank of India.

Under the Town Official Language Implementation Committee prizes, Bank's Head Office received the "Shresthata Pramanpatra".

HUMAN RESOURCES DEVELOPMENT

In line with the Bank's established conviction that the Human resources are the greatest asset, our bank has been constantly responding to the changing needs of human capital and strengthening the existing man power with the infusion of new blood in the system from time to time in accordance with the strategic needs of the Bank. During the financial year 2011-12,1541 officers ,879 Single window operator-A in clerical cadre ,324 sub-staff have been inducted in the system. Further intake of 1600 Probationary officers and 225 specialist officers in lateral line during the year is in the pipeline. Bank has been giving paramount importance to the training and capacity building. Much emphasis was laid on e-learning and other alternate advanced channels of training during the year.

PUBLICITY ENDEVOURS

The bank has gone for nation-wide campaign on Television, Radio, and Newspapers/Magazines, hoardings etc. during the year 2011-12 for enhancing visibility and Image of the Bank. Bank has also made publicity for popularizing and marketing various products of the Bank.

SUBSIDIARY & JOINT VENTURE

All Bank Finance Ltd., a wholly owned subsidiary of Allahabad Bank, engaged in Corporate Advisory Services, Project Appraisal, Issue Management, Loan Syndication, Debenture and Trusteeship Underwriting, posted a profit of Rs 2.90 Crore during 2011-12.The Bank holds 27% equity stake in Asset Management Company "ASREC (India) Ltd" along with other Banks/ Institutions

The Bank holds 30% equity stake in joint venture company "Universal Sompo General Insurance Company Limited" for general insurance business along with Indian Overseas Bank, Karnataka Bank Ltd., Dabur Investment Ltd. and Japanese insurance major Sompo.

FUTUREPLANS

The Bank will focus on Retail Business, Loan Syndication, Sale of Gold Coins, CMS and Bancassurance etc in addition to other core banking activities.

The Bank is planning for overseas expansion.

BOARD OF DIRECTORS

The Board of Directors, the Management Committee and the Audit Committee of the Board met 16, 20 and 11 times respectively during 2011-12. The Director's Promotion Committee, Shareholders'/ Investors' Grievance Committee, IT Committee, Fraud Monitoring Committee, Customer Service Committee, Remuneration Committee, Risk Management Committee, Nomination Committee, Share transfer Committee, Share Issue & Allotment Committee met 4, 2, 5, 6, 4, 2, 4, 1, 21, and 2 times respectively during 2011-12.

The Govt. Nominee Director, Dr. Shashank Saksena joined the Board as Director from 15.11.2011. Dr. Saksena is working as Director, Department of Financial Services, Ministry of Finance, Govt. of India.

The RBI Nominee Director, Shri A Udgata joined the Board as Director from 13.10.2011. Shri Udgata is working as Chief General Manager (CGM), Urban Banks Department, at Central Office RBI Mumbai.

Dr. Sudip Chaudhuri rejoined the Board as Shareholders' Director from 10.02.2012. Dr. Chaudhuri has been serving Indian Institute of Management, Calcutta as Professor (Economics Group) since 1990.

Shri A .P. V. N. Sarma joined the Board as Shareholders' Director from 10.02.2012. Shri Sarma is a retired IAS officer and is having 36 years of experience in Public Administration and Industries.

Shri Ashok Vij joined the Board as Shareholders' Director from 10.02.2012. Shri Vij is a Chartered Accountant having 32 years experience in the areas of Financial & Management consultancy, Audit, Taxation and Business Advisory Services.

During the year Smt Sukriti Likhi, Shri S Ramaswamy, Shri P. V. Guddi Reddy, Shri D K Kapila, Dr. Shakeel-Ul-Zaman Ansari, Dr. V. B. Kaujalgi & Dr. Sudip Chadhuri retired from the Board of Directors after completion of their tenure.

ACKNOWLEDGEMENTS

The Board of Directors records its appreciation for continued support and patronage of the shareholders/investors of the Bank. The Board of Directors gratefully acknowledges the valuable and timely advice, guidance and support from the Reserve Bank of India, Government of India and other regulatory agencies and look forward to their continued support and co-operation. The Board of Directors is thankful to the customers for their continued trust and confidence on the Bank. The Board records its appreciation for valuable contributions of the outgoing members and welcomes the new incumbents. The Board of Directors is pleased to place on record their appreciation for the committed services of all the employees of the Bank.

For and on behalf of the Board of Directors,

Date : 5 May, 2012 (J.P.Dua)

Place : Kolkata Chairman & Managing Director


Mar 31, 2011

The Board of Directors has pleasure in presenting the Directors Report along with the audited Statement of Accounts of the Bank for the year ended 31st March 2011.

Dividend

The Board of Directors of the Bank has recommended a dividend @ 60 % i.e. Rs. 6 per equity share of Rs.10 each subject to approval by the Govt. of India.

FINANCIALS

Important ratios of the Bank are depicted below;

Parameters 31.3.09 31.3.10 31.3.11

Capital Adequacy Ratio (%) 13.11 13.62 12.96

Of which Tier I (%) 8.01 8.12 8.57

Tier II (%) 5.10 5.50 4.39

Spread to Average Working Fund (%) 2.54 2.54 3.31

Average Cost of Funds (%) 6.67 5.99 5.85

Average Yield on Funds (%) 9.62 8.68 9.19

Average Cost of Deposits (%) 6.62 5.97 5.83

Average Yield on Advances (%) 10.88 10.57 10.50

Earnings per Share (Rs.) 17.21 27.01 31.85

Book Value per Share (Rs.) 131.00 151.17 178.64

Return on Assets (%) 0.90 1.16 1.11

Return on Average Net Worth (%) 16.49 22.21 21.04

Provision Coverage Ratio (%) 76.45 78.95 75.67

Net NPAs (%) 0.72 0.66 0.79

Profit per Employee (Rs. in lacs) 3.76 5.76 6.70

Productivity per Employee (Rs. in lacs) 706 845 1063

OFFICES & BRANCHES

The Bank opened 129 new branches during 2010-11, taking total branches to 2416 as on 31.3.2011, with 993 rural, 454 semi-urban, 508 urban, 460 metropolitan branches and 1 foreign branch.

DEPOSIT MOBILISATION

Total deposits of the Bank showed a significant growth of 24.36 % to Rs. 131887 crores as on 31.3.2011. Low cost deposits grew by 20.69% to Rs.44156 crores as on 31.3.2011, constituting 33.70 % of aggregate deposits.

Bank emphasized on low cost deposits mobilization and observed saving deposits & CASA deposits mobilization campaign during the year. During the SB mobilization campaign (from 01.09.10-31.03.11), over 1.3 million new saving accounts were opened and saving deposit mobilized to the tune of Rs.2663.37 crores.

CREDIT DEPLOYMENT

Total advances of the Bank went up by 30.56% to Rs.94570 crores as on 31.3.2011. Credit-deposit ratio (gross) stood at 72.18 % as against 68.93% last year. The Bank increased its market share in the system to 2.23 % from 2.15% during the period. The Benchmark Prime Lending Rate (BPLR) of the Bank was at 13.75 % on 31.03.2011. Yield on advances stood at 10.50 % during 2010-11 as against 10.57 % during 2009-10 in line with the general market scenario.

NON-PERFORMING ASSETS (NPAs) MANAGEMENT

The Bank attached great importance on recovery of non- performing assets. The Bank has recovered Rs 929.16 cr from non performing assets including written off debts during 2010- 11 as against Rs 681.35 cr in 2009-10. The Gross & Net Non- performing assets of the Bank stood at Rs. 1647.92 crores & Rs. 736.37 crores as on 31.03.2011 The Gross & Net NPAs as percentage to gross advances & net advance was 1.74 % & 0.79 % respectively. The provision coverage ratio of the Bank stood at 75.67%

SOCIAL BANKING

Priority Sector Credit grew from Rs.24279 Crore as on 31.03.2010 to Rs.30764 Crore as on 31.03.2011, registering an absolute YOY growth of Rs. 6485 Crore (26.71 %). the Bank has exceeded the National Goal (40.00%) of PSC to ANBC by achieving 42.96 % as on Mar11.

. Agriculture Credit outstanding increased from Rs.11567 Crore as on March 2010 to Rs.13387 Crore as on March 2011. The Agricultural advance to Adjusted Net Banking Credit was 18.20% as on March 2011, thereby achieving the National goal of 18%.

. Direct Agriculture Credit outstanding increased from Rs.8340 Crore as on March 2010 to Rs. 9808 Crore as on March 2011. Bank has exceeded the National Goal (13.50%) of Direct Agriculture to ANBC by achieving 13.70% as on Mar11.

MSME Sector:

. The Bank was awarded 1st prize for outstanding work in MSME lending from Her Excellency Honble President of India Smt Pratibha Patil.

. Credit to Micro and Small Enterprises (MSE) grew from Rs. 8188 Crore as on March 2010 to Rs.11990 Crore as on March 2011, registering an absolute YOY growth of Rs.3802Crore (46.44%). Share of Micro Enterprises to

Micro & Small Enterprises has exceeded the National Goal (50%) by achieving 50.68% as on Mar11. Credit to Micro, Small & Medium Enterprises (MSME) increased from Rs.9771crores to Rs.14384 crores as on 31.03.2011, showing a YOY growth of 47.21%.

. Further the Bank has given thrust on credit delivery to collateral free loans covered under CGTMSE. As on 31.03.2011, 26092 proposals have been covered under CGTMSE amounting to Rs.896.80 crores and the Bank has emerged amongst best performing Banks in terms of number of proposals covered under CGTMSE during 2010-11

Table 1: Priority Sector Credit :

March 2010 March 2011

Sector / Schemes Amount Amount (Rs. crores) (Rs. crores)

Priority Sector Credit 24279 30764 Of Which

a) Agriculture 11567 13387

-Direct 8340 9808

- Indirect 3227 3579

b) Micro & Small Entp.(MSE) 8188 11990 Of Which

Micro Enterprises 5091 6077

Other PSC 4524 5387

2. Weaker Section. 6150 7547

Table 2: Ratios (in percentage)

March March Important Ratios National Goal 2010 2011

PSC to Adjusted Net Bank Credit (ANBC) 40 41.29 42.96

Agriculture Credit to Adjusted Net Bank Credit 18 18.68 18.20

Micro Enterprises to Total Micro & Small Entp. 50 62.25 50.68

Weaker Section Credit to Net Bank Credit 10 10.46 10.54

. New Products / Schemes launched:

The Bank has launched several structured products under Priority Sector Credit to promote agro-based industries and support trading of farm produce viz Scheme for Financing to Rice Shelling Units, Allbank Liquid Scheme for Artiyas (Commission Agents),Scheme for financing Doctors/Medical Practitioners for Clinics/Nursing Homes, Scheme for Construction of Godown under lease agreement with FCI/ Central Govt/ State Govt. Corporation /Agencies and Scheme for Seed Processing Units.

. Banks Exposure to Micro Finance Institutions (MFIs)

18 number of MFI accounts involving Rs.218.54 crores has been sanctioned by Bank. As on 31.03.2011, there is an outstanding of Rs.127.93 crores,

. State Level Bankers Committee (SLBC)

The Bank as SLBC convener, continued thrust on co- coordinating banking efforts for Economic upliftment of state of Jharkhand in association with other banks operating in the state and drew roadmap for providing banking facilities to 1541 villages having population over 2000. A mobile banking van with ATM was also operationalised to cover 12 villages in the state to provide banking facilities. The bank also started one coin vending machine at Ranchi. The Bank conducted meetings of SLBC from time to time and converted the SLBC into a strong forum to discuss and review banking initiatives for the development of the state.

. Lead Bank Scheme

Under Lead Bank responsibilities in 17 districts (13 in Uttar Pradesh, 2 in Jharkhand and one each in Madhya Pradesh and West Bengal) the Bank disbursed Rs.1605.53 crores under District Credit Plan 2010-11 achieving 93.31% of the target.

. Regional Rural Banks (RRBs)

The Bank-sponsored two RRBs, one in UP namely Allahabad UP Gramina Bank and the other in M.P. namely Sharada Gramina Bank. The two RRBs cumulatively disbursed Rs.1637.07 crores during 2010-11 under the Annual Credit Plan against a target of 1681.50 crores achieving 97.36% of target. The two RRBs continued to improve their performance with an aggregate profit of Rs.79.20 Crores during 2010-11. The accumulated profit stood at Rs 553.42 Crores in 2010-11 as against Rs.474.21 Crores during 2009-10.

. Financial Inclusion

Bank has been given the responsibility of 2618 villages having population of 2000 and above where banking services are to be provided by opening of banking outlet by March2012 under ICT enabled Financial Inclusion by adopting various models viz. Biometric Smart Card solution through Business Correspondents, Mobile Banking Van fitted with ATM, and opening of Brick & mortar branches. During the year the Bank had covered 1054 villages against a target of 1046 villages Transaction by Smart cards through HHD has commenced.

. CORPORATE SOCIAL RESPONSIBILITY

The Bank, as a responsible Corporate Citizen, has initiated several measures towards sustainable

development of the society reflecting its concern for social welfare and developments, some of which are as under.

. Financial Literacy And Credit Counselling Centres

In order to provide financial education and credit counselling to the people having limited resources and skills to appreciate the complexities of financial dealings, the Bank has so far opened two Financial Literacy and Credit Counselling Centres christened "Samadhan"- one at Kolkata (WB) and another at Banda (UP). Setting up of another 11 more FLCCs is in progress.

. Rural Self Employment Training Institute (RSETI)

Bank has so far established 11 Rural Self Employment Training Institute (RSETI) up to 31.03.2011 to impart training to the rural youths and Farmers for setting up of small business enterprises with hand holding and escort services. Bank has planned to establish another 10 RSETIs in rest of the lead district during 2011-12.

INTERNATIONAL BANKING

The Bank carries out its International business through its 56 authorised/designated branches, which includes 5 international branches. Export credit of the Bank as on 31.03.2011 stood at Rs.2911.23 crore. The bank is taking steps to increase the credit flow to exporters. Exporters meets are arranged at various centers

Overseas presence

. The Bank is having one overseas branch at Hong Kong, The business of the Hong Kong branch has increased from Rs 1128 cr as on 31.03.2010 to Rs3284 cr as on 31.03.2011. The Hong Kong branch has earned a profit of Rs 19.01 cr in 2010-11 as against a profit of Rs 12.63 cr during 2009-10

. The Bank is also having a Representative office at Shenzhen, China and in terms of regulatory guidelines; the Bank is eligible to open a full fledged branch. The Bank is exploring the possibilities of opening more overseas branches.

RETAIL CREDIT

In order to deliver outstanding service to our customer with focused attention in a specialized manner, the Bank has dedicated delivery channel for Retail Lending through its 27 CRBBs & 75 Retail Banking Boutiques (RBBs) across the country. Total outstanding under Retail Credit as on Mar 2011 stood at Rs. 13028.96 Crore as against Rs. 10082.14 Crore as on Mar2010. This shows an increase of 29.23 % during the year. Disbursement under Retail Credit during 2010-11 was Rs. 3868.63 Crore as against Rs.3148.97 Crore during 2009-10 registering a growth of 22.85 %. Online application of Retail Loans through INTERNET at 27 centers was introduced. Bank has finalized tie-up with a number of reputed Automobile manufacturers for financing their vehicles. Bank

has launched "Premium Housing Finance scheme for High Net worth Individuals (HNIs)"and"SARAL- 2" for the employees of the Organizations/Institutions, where the salaries are disbursed through Banks branches.

FEE BASED INCOME

The income from the Third Party Product (TPP) Business (Life, Non Life, Mutual Fund) grew by 12.07 % to reach at Rs 19.69 Crores during FY 2010-11 from Rs 17.57 Crores in the last FY. Banks corporate General Insurance partner Universal Sompo General Insurance Company has designed a special health insurance policy (Universal Sompos Sampoorna Swasthya Kavach) for the customers and the employees of the Bank. The policy is for the protection against spiraling medical cost and available for individuals & families.

RISK MANAGEMENT

The Bank has implemented Basel II norms for calculation of Capital Adequacy Ratio under Standardized Approach for Credit Risk, Modified Duration Approach for Market Risk and Basic Indicator Approach for operational Risk for the year 2010-11.

CUSTOMER SERVICE

The Banks "Customer Service Committee of the Board" is committed towards excellence in customer service. The suggestions of the Committee on Procedures and Performance Audit on Public Services (CPPAPS), constituted by Reserve Bank of India, are accorded top priority for implementation in the Bank. The Bank is making constant endeavour to strive for and achieve an ideal situation of complaint free environment.

KNOW YOUR CUSTOMER & ANTI MONEY LAUNDERINGS

The Bank has adopted the comprehensive policy guidelines on Know Your Customer/ Anti Money Laundering Norms in consonance with the Reserve Bank of India directives. The guidelines for submission of mandatory returns viz. Cash Transaction Reports (CTRs), Suspicious Transaction Reports (STRs) and Counterfeit Currency Reports as per the provisions of the PMLA, 2002 have been issued from time-to-time and all branches/offices have been sensitised on submission of these return within the prescribed time limit

INFORMATION TECHNOLOGY

. As on 31.03.2011, the Bank has implemented CBS in all its branches

. Online Retail Loan processing and sanction to the customers of the lead generating branches of CRBB has been made available in the intranet site.

. The Internet Website http://www.allahabadbank.in is available in 3 languages i.e. Hindi, English and vernacular language Bengali.

. The Internet banking for both the individuals and for corporate customers with RTGS/ NEFT fund transfer facilities has been started and is live since 01.01.2011.

. Mobile banking Van with ATM through CDMA VPN

connectivity with CBS network has been introduced at Dumka, Jharkhand,at Kasraila branch under Sitapur Zone and at Khaira branch in New Delhi Zone.

. Beta version of Mobile banking application deployed successfully in test region.

. In line with the directives of CBEC/RBI/IBA, EASIEST has been rolled out in entire India. Bank has 183 authorized branches, which are participating in the project. E-Payment facility for Indirect Taxes (CBEC- EASIEST) for Tax payers and this facility is available to the customers of all branches. This facility is also available through e-payment on Internet banking.

. The Bank has implemented Cheque Truncation System under NCR (National Capital Region) of Delhi. The implementation of CTS in Chennai grid is in progress.

. SMS Alerts is operational and on an average 31000 SMS Alerts are generated.

. RTGS / NEFT have been made live in 2372 branches.

. In arrangement with M/s UAE Exchange and Financial Services Ltd., Bank has launched two products namely X-press Money and Money Gram for making hassle free inward Remittances.

INSPECTION AND AUDIT

Bank has switched to on line Risk Based Internal Audit (RBIA) from 1st April 2010. Under this system the audit plan is prepared with reference to the Risk Profile of the branch and audit resources are directed towards high risk areas.

VIGILANCE

. Preventive Vigilance Committee has been formed at every branch & office of the bank. Bi-monthly Preventive Vigilance Committee Meetings are organized at all branches/offices.

. Banks Quarterly Newsletter on vigilance issues called ALL-ALERT is Introduced

. Initiative has been taken for formation of Off-site Monitoring System to screen high value suspected transactions.

. Preventive vigilance workshops at various zones all over India were conducted during the year.

OFFICIAL LANGUAGE

. Compliance of various provisions under the Official Language Policy was ensured viz bilingual issuance of documents under Section 3 (3) of Official Language Act, reply of Hindi letters in Hindi, bilingual publication of manuals & codes, bilingualisation of stationery items was ensured.

. Bank was awarded prestigious "Indira Gandhi Rajbhasha Puraskar" for the year 2008-09 for excellent

performance in the area of Official Language Implementation from Official Language Department, Ministry of Home Affairs, Government of India. The prize was received by our Chairman and Managing Director on 14th September, 2010 from His Excellency, Mohd. Hamid Ansari in presence of Honble Union Home Minister and Honble Union Home Ministers of State.

. Our Chairman and Managing Director received First Prize for Banks Bilingual House Magazine Triveni Dhara and Third Prize for official language implementation 2008-09 from Shri D. Subbarao, Honble Governor of Reserve Bank of India in the Prize Distribution Ceremony held on 26.05.2010 at the Central Office of R.B.I., Mumbai.

. Bank has secured "First Position" in linguistic region "A" and "Third Position" in linguistic regions "B" and "C" under "Resereve Bank Rajbhasha Shield Competition"for the year 2009-10.

. Bank has secured Third Position for our House Magazine Triveni Dhara under the Reserve Bank Bilingual House Magazine Competition 2009-10 among all the public sector banks and financial institutions.

. Two participants of our Bank secured First and Second position in linguistic groups A and B respectively in the All India Inter Bank Hindi Essay Competition 2009-10 organised by Reserve Bank of India.

. Under the Town Official Language Implementation Committee prizes, Banks Head Office received the "Rajbhasha Shield", Zonal Office, Dehradun received the First Prize, Zonal Office, Lucknow, Rajmahal Road Branch, Baroda and Staff Training Centre, Hyderabad received the "Second Prize" and Zonal Office Hyderabad received the Third Prize for excellent implementation of Official Language.

HUMAN RESOURCES DEVELOPMENT

. The Bank laid prime importance on developing human capital in tune with its quest to emerge as a bank of global stature. During 2010-11, the Bank undertook processes for recruitment of 1,117 Officers (including Specialist Officers) & 990 clerical cadre employees.

. Training and capacity building was given paramount importance. Much emphasis was laid on e-learning and other alternate advanced channels of training/learning of the human capital during the year, in tune with the changing scenario.

PUBLICITY ENDEVOURS

. The bank has gone for nation-wide campaign on Television, Radio, and Newspapers/Magazines, hoardings etc. during the year 2010-11 for enhancing Banks image and brand visibility.

SUBSIDIARY & JOINT VENTURE

. All Bank Finance Ltd., a wholly owned subsidiary of Allahabad Bank, engaged in Corporate Advisory Services, Project Appraisal, Issue Management, Loan

Syndication Debenture and Trusteeship Underwriting, posted a profit of Rs. 2.80 crores during 2010-11.

. The Bank holds 27% equity stake in Asset Management Company "ASREC (India) Ltd" along with other Banks/ Institutions

. The Bank holds 30% equity stake in joint venture company "Universal Sompo General Insurance Company Limited" for general insurance business along with Indian Overseas Bank, Karnataka Bank Ltd., Dabur Investment Ltd. and Japanese insurance major Sompo.

FUTURE PLANS

. The Bank will focus on Retail Business, Loan Syndication, Sale of Gold Coins CMS and Bancassurance etc in addition to other core banking activities.

. The Bank is planning for overseas expansion.

BOARD OF DIRECTORS

. The Board of Directors, the Management Committee and the Audit Committee of the Board met 15, 22 and 9 times respectively during 2010-11. The Directors Promotion Committee, Shareholders/Investors Grievance Committee, IT Sub-Committee, Fraud Monitoring Committee, Customer Service Committee, Remuneration Committee, Risk Management Committee, Nomination Committee, Share transfer Committee, Share Allotment Committee and Flat Purchase Committee met 5, 1, 8, 7, 4, 1, 4, 1, 18, 1 and 2 times respectively during 2010-11.

. The RBI Nominee Director, Shri Ramaswamy joined the Board as Director from 30.07.2010. Shri Ramaswamy is working as Chief General Manager (CGM), Expenditure & Budgetary control, at Central Office RBI Mumbai.

. Shri Sudip Chaudhuri joined the Board as Shareholders Director from 03.06.2010. Shri Chaudhuri has been serving Indian Institute of Management, Calcutta as Professor (Economics Group) since 1990.

. Shri R.M.Chaturvedi joined the Board as Government Nominee Director under Chartered Accountant category wef 14.07.2010 for a period of 3 years. Shri Chaturvedi is a Chartered Accountant and is having 26 years of experience.

. Shri Gour Das joined the Bank as workmen Employee Director wef 16.08.2010 for a period of 3 years. Shri Gour Das is a Commerce Graduate and is having 38 years of banking experience.

. During the year Shri Mohammad Tahir, Shri K. K. Dogra & Smt. Joginder Kaur retired from the Board of Directors after completion of their tenure.

ACKNOWLEDGEMENTS

The Board of Directors records its appreciation for continued support and patronage of the shareholders/investors of the Bank. The Board of Directors gratefully acknowledges the valuable and timely advice, guidance and support from the Reserve Bank of India, Government of India and other regulatory agencies and look forward to their continued support and co-operation. The Board of Directors is thankful to the customers for their continued trust and confidence on the Bank.

The Board records its appreciation for valuable contributions of the outgoing members and welcomes the new incumbents.

The Board of Directors is pleased to place on record their appreciation of the committed services of the Banks employees.

For and on behalf of the Board of Directors,

(J. P. Dua) Chairman & Managing Director

Date : 02.05.2011 Place : Kolkata


Mar 31, 2010

PERFORMANCE OF ALLAHABAD BANK OPERATING RESULTS

Bank’s performance in key business parameters is presented below.

(Rs. in crores)

Parameter Mar’08 Mar’09 Growth (%) Mar’10 Growth (%)

Net Profit 974.74 768.60 -21.15 1206.33 56.95

Operating Profit 1479.51 1901.15 28.50 2548.55 34.05

Operating Profit Ex. Trading Profit 1008.48 1328.45 31.73 1972.00 48.44

Provisions & Contingencies 504.77 1132.55 124.37 1342.22 18.51

Total Income 7135.97 8506.65 19.21 9885.10 16.20

Total Expenditure (Excl. Prov.) 5656.46 6605.50 16.78 7336.55 11.07

Interest Spread 1672.34 2158.67 29.08 2650.48 22.78

Total Deposits 71616.38 84971.79 18.65 106055.75 24.81

Total Advances 50312.16 59443.40 18.15 72437.31 21.86

Total Business 121928.54 144415.19 18.44 178493.06 23.60

Gross Investments 23722.28 30081.35 26.81 38680.43 28.59

CAPITAL AND RESERVES

The paid-up capital of the Bank remained at Rs.446.70 crores as on 31.3.2010. The reserves & surplus went up to Rs.6306.25 crores as at end of this year from Rs.5405.25 crores as on 31.03.2009.

PROFITABILITY

Operating Profit

The Operating Profit of the Bank grew by 34.05% to Rs.2548.55 crores during 2009-10 from Rs.1901.15 crores during the preceding year. During 2008-09, the growth in operating profit was to the tune of 28.50%.

Net Profit

The net profit of the Bank grew by 56.95% to Rs.1206.33 crores during 2009-10 from Rs.768.60 crores during the preceding year. Higher profitability of the Bank may be attributed to increased volume of interest income from advances, enhanced fee-based income, reduction in cost of fund due to larger share of low cost deposits and refraining from bulk deposits and better recovery in written off accounts.

Dividend

The Board of Directors of the Bank has recommended a dividend @ 55% i.e. Rs.5.50 per equity share of Rs.10 each.

Voluntary Delisting of Equity Share from The Calcutta Stock Exchange Limited (CSE)

In terms of approval granted by shareholders in the last Annual General Meeting, the equity share of the Bank got delisted from the CSE with effect from 09.03.2010.

FINANCIALS

Important ratios of the Bank are depicted below;

Parameters 31.3.08 31.3.09 31.3.10

Capital Adequacy Ratio (%) 11.99 13.11 13.62

Of which / Tier I (%) 7.71 8.01 8.12

II (%) / Tier II (%) 4.28 5.10 5.50

Spread to Average Working Fund (%) 2.26 2.54 2.54

Average Cost of Funds (%) 6.66 6.67 5.99

Average Yield on Funds (%) 9.26 9.62 8.68

Average Cost of Deposits (%) 6.67 6.62 5.97

Average Yield on Advances (%) 10.76 10.88 10.57

Earnings per Share (Rs.) 21.82 17.21 27.01

Book Value per Share (Rs.) 116.88 131.00 151.17

Return on Assets (%) 1.32 0.90 1.16

Return on Average Net Worth (%) 24.56 16.49 22.21

Provision Coverage Ratio (%) 75.62 76.45 78.95

Net NPAs (%) 0.80 0.72 0.66

Profit per Employee (Rs. in lacs) 4.85 3.76 5.76

Productivity per Employee (Rs. in lacs) 604 706 845

OFFICES & BRANCHES

The Bank opened 27 new branches during 2009-10, taking total branches to 2287 as on 31.3.2010, with 976 rural, 411 semi-urban, 472 urban, 427 metropolitan branches and 1 foreign branch. The specialized branches, numbering 76, including 7 Industrial Finance Branches, 5 International Branches, 1 Industrial Finance-cum-International Branch, 1 NRI Branch, 2 Specialized Personal Banking Branches, 18 SME Finance Branches, 7 Recovery Branches, 1 CMS Hub, 1 Specialized Savings Bank Branch, 2 Trading Finance Branches, 1 Specialized Commercial Agricultural Finance Branch, 4 Agriculture Finance Branches, 2 Agriculture

Development Branch, 3 Regional Processing Centres, 1 Forex- cum-Treasury Management Branch and 20 Service Branches. Extension Counters numbered 66 as on 31.3.2010. The Bank constituted two more zonal offices- Berhampore & Bhagalpur for effective management. Moreover, one of the zonal offices was shifted from Jhansi to Agra.

DEPOSIT MOBILISATION

Total deposits of the Bank showed a significant growth of 24.81% to Rs.106056 crores as on 31.3.2010. Low cost deposits grew by 24.45 % to Rs.36587 crores as on 31.3.2010, constituting 34.82 % of aggregate deposits as compared to 35.08% a year ago. Cost of deposits decreased to 5.97 % from 6.62% during the period.

In line with the directions from Ministry of Finance, the Bank emphasized on low cost deposits mobilization and observed saving deposits & current deposits mobilization campaign during the year. During the SB mobilisation campaign (from 17.08.09-31.12.09), over 10 million new saving accounts were opened and saving deposit mobilized to the tune of Rs.424.86 crores. During the Current Deposit Mobilisation campaign (from 01.01.10-31.03.10), Current deposits of Rs.322.49 crores were mobilized in 20,393 accounts.

CREDIT DEPLOYMENT

Total advances of the Bank went up by 21.86% to Rs.72,437 crores as on 31.3.2010. Credit-deposit ratio (gross) stood at 68.93% as against 70.93% last year. The Bank increase its market shares in the system to 2.15% from 2.00% during the period. The Benchmark Prime Lending Rate (BPLR) of the Bank was at 12.00%. Yield on advances stood at 10.57 % during 2009-10 as against 10.88% during 2008-09 in line with the general market scenario.

NON-PERFORMING ASSETS (NPAs) MANAGEMENT

The Bank continued its emphatic thrust on recovery of non- performing assets. The thrust areas included, among others;

ü Arrest of Fresh addition of NPAs by ensuring close monitoring and other control measures,

ü Reduction in NPA through invocation of SARFAESI Act and application of other legal measures for logical conclusion,

ü Increase in income from derecognised interest through recovery in written-off debt accounts,

ü Strengthening credit risk management,

ü Thrust on upgradation of fresh NPAs A/cs and accounts under restructuring/CDR,

ü Settlement scheme for different segment of borrowers like; small & marginal farmers, Govt. sponsored loans, agricultural credit etc, ü Recovery of small & cluster loans (including written off debts through settlement camps/recovery camps and Lokadalats), Gross Non-performing assets of the Bank increased to Rs.1221.80 crores as on 31.3.2010 from Rs.1078.25 crores as on 31.3.2009 while net non-performing assets increased to Rs.470.15 crores from Rs.422.11 crores during the period. The gross NPAs as percentage to gross advances declined to 1.69% from 1.81%. The ratio of net NPAs to net advances reduced to 0.66% from 0.72%. The provision coverage ratio of the Bank stood at 78.95% as compared to 76.45% while the slippage ratio increased to 1.98% from 1.72% during the period.

Asset Recovery Management Branches:

The Bank has reconstituted the erstwhile Recovery Branches as Asset Recovery Management Branches (ARMBs) in terms of policy approved. According to the newly laid down policy, three of the existing Recovery Branch Kolkata, Mumbai & New Delhi have started functioning. The fourth one is opened recently at Lucknow. The ARMBs at Chennai, Allahabad, & Patna are to be opened recently. These ARMBs are to deal with in all NPA cases of Rs 10.00 lacs & above including non- suit filed accounts.

SOCIAL BANKING:

Bank’s performance under Priority Sectors and Weaker Sections is presented below:

• Priority Sector Credit grew from Rs.20435 Crore as on 31.03.2009 to Rs.24279 Crore as on 31.03.2010, registering an absolute YOY growth of Rs.3844 Crore (18.81 %). Bank has exceeded the National Goal (40.00%) of PSC to ANBC by achieving 41.29% as on Mar’10.

• Agriculture Credit outstanding increased from Rs.9568 Crore as on March 2009 to Rs.11567 Crore as on March 2010, registering an absolute YOY growth of Rs.1999 Crore (20.90%). Bank has exceeded the National Goal (18.00%) of Agriculture to ANBC by achieving 18.68% as on Mar’10.

• Fresh Credit Disbursal in Agriculture Loans reached Rs.3615 Crore during the current year 2009-2010.

• Kisan Credit Cards ( KCC ) :

The Bank issued 2.23 lacs Kisan Credit Cards involving a credit amount of Rs. 1335.97 crores during 2009-10. The cumulative KCC numbered 9.12.lacs with a credit line of Rs4847.62crores as on 31.03.2010.

• Kisan Shakti Yojana ( KSY) :

The Bank extended credit facility to farmers under KSY to 1143 Kisan Credit Card holders involving a credit limit of Rs. 26.29 Crores during 2009-10. Cumulative number of Kisan Credit card holders financed under KSY scheme was 147935 involving Rs. 1962.38 Crores as on 31.03.2010.

Table 1: Priority Sector Credit

Sector/Schemes March 2009 March 2010

Number of Amount Number of Amount Accounts (Rs. crores) Accounts (Rs. crores) (in lacs) (in lacs)

1. Priority Sector Credit 15.02 20435 18.16 24279 Of Which

a) Agriculture 10.43 9568 12.76 11567

Direct 10.21 7306 12.47 8340

Indirect 0.22 2262 0.29 3227

b) Micro & Small Entp.(MSE 1.80 4593 3.52 8188 Of Which

Micro Enterprises 1.65 2768 3.01 5091

Other PSC 2.85 6275 1.88 4524

2. Weaker Section. 9.25 5010 10.75 6150

Table 2: Ratios (in percentage)

Important Ratios March March National Goal 2009 2010

PSC to Adjusted Net Bank Credit (ANBC) 40 41.10 41.29

Agriculture Credit to Adjusted Net Bank Credit 18 19.20 18.68

Micro Enterprises to Total Micro & Small Entp. 60 60.26 62.25

Weaker Section Credit to Net Bank Credit 10 10.07 10.46

• MSME Sector Financing:

Credit to Micro and Small Enterprises (MSE) grew from Rs. 4593 Crore as on March 2009 to Rs.8188 Crore as on March 2010, registering an absolute YOY growth of Rs.3595 Crore (78.27%). Share of Micro Enterprises to total Micro & Small Enterprises has exceeded the Na- tional Goal (60%) by achieving 62.25% as on Mar’10. Credit to Micro, Small & Medium Enterprises (MSME) increased to Rs.9770.71crores as on 31.03.2010, show- ing a growth of 77.39% during 2009-10.

• New Products / Schemes launched:

The Bank launched two new schemes under Priority Sec- tor Credit to promote agro-based industries and support trading of farm produce.

(a) Scheme for Financing to Rice Shelling Units to meet the credit requirement of Rice Shelling Entrepreneurs.

(b) Allbank Liquid Scheme for Artiyas (Commission Agents) to meet the credit requirement of Artiyas for on lending to Farmers.

• State Level Bankers’ Committee (SLBC)

The Bank as SLBC convenor, continued to thrust in co-

ordinating banking efforts for economic upliftment of State of Jharkhand. The Bank has been playing a lead role in organiz- ing banks operating in the state to plan and open Bank branches in unbanked and underbanked areas on priority basis. Bank took necessary steps for implementation of spe- cial package for Drought Relief announced by the Govern- ment of Jharkhand. Under the directions of Government of India/Reserve Bank of India, our Bank, as SLBC convenor, in association with other banks operating in the state, drew roadmap for providing banking facilities to all villages having population over 2000. The Bank conducted meetings of SLBC timely and the SLBC in the state has proved to be a strong forum to discuss and review banking initiatives for the devel- opment of the state.

• Lead Bank Scheme:

Under Lead Bank responsibilities in 17 districts, 13 in Uttar Pradesh, 2 in Jharkhand and one each in Madhya Pradesh and West Bengal, the Bank disbursed Rs.1511.58 crores un- der District Credit Plan 2009-10 achieving 98.24% of the tar- get.

• Regional Rural Banks:

Government of India adopted “One State One RRB” for each sponsor Bank. In pursuance to the above policy our two Spon- sored RRBs in Uttar Pradesh were amalgamated into one large size and strong RRB, Allahabad UP Gramin Bank, having 480 branches spread over 11 districts in Uttar Pradesh.

Thus the number of Regional Rural Banks sponsored by our Bank now remain two, one in Uttar Pradesh and another in Madhya Pradesh. These two RRBs continued to improve their performance with an aggregate profit of Rs.77.9 Crores during 2009-10 as against Rs. 47.66 Crores during 2008-09. The accumulated profit stood at. Rs 456.04 Crores in 2009- 10 as against Rs.386.62 Crores during 2008-09.

The Bank-sponsored RRBs disbursed Rs.1308.67 crores dur- ing 2009-10 under the Annual Credit Plan as against Rs.1033.02 Crores in 2008-09 achieving 101.44%.

• Agriculture Debt Waiver & Debt Relief Scheme, 2008(ADWDR)

A scheme in the name of Agriculture Debt Waiver & Debt Re- lief Scheme 2008 was launched by the Government of India on 23.05.2008. The scheme provided waiver of agriculture loans of small and marginal farmers having land holding upto 5 acres for overdue loan amount as on 31.12.2007 and re- maining unpaid upto 29.02.2008. The scheme also provided relief for farmers having land more than 5 acres upto an ex- tent of 25% of overdue loan amount as on 31.12.2007 and remaining unpaid upto 29.02.2008 on the condition that eli- gible farmers pay 75% of the overdue amount by 30.06.2010.

The audited claim of the Bank for debt waiver is Rs.1041.80Crores, of which Rs.673.90 Crores has so far been reimbursed by the Reserve Bank of India. The claim of debt relief will be submitted after June’2010.

• Providing Short Term Production Credit to Farmers upto Rs.3lacs. at 7% p.a. interest.

Government of India is providing interest subvention of 2% to Public Sector Banks in respect of short term production credit upto Rs.3lacs provided to farmers on the condition that such short term credit is provided at 7% p.a. at ground level. In addition Govt. is providing additional interest subvention of those prompt paying farmers who pay their short term produc- tion credit within one year of disbursement of such loans. The Bank is implementing the scheme. During 2009-10 Bank has claimed and availed of interest subvention of Rs.22.36 Crores.

Corporate Social Responsibility

The Bank, as a responsible corporate citizen, has initiated the following measures towards sustainable development of the society reflecting its concern for human rights and environ- ment.

• Financial Inclusion:

Bank has achieved 100% Financial Inclusion in Nine Lead Districts of the Bank in the State of Uttar Pradesh and Jharkhand. The Bank has taken steps for achieving greater financial inclusion through implementation of ICT Enabled Fi- nancial Inclusion by adopting Biometric Smart Card solution through Business Correspondents. As per directions of Re- serve Bank of India, our Bank has submitted “Financial In- clusion Plan” for providing Banking facilities to all Villages having a population over 2000. The Bank has decided to bring 1000 unbanked villages in the fold of banking services during 2009-10.

• Financial Literacy and Credit Counselling Centres

In order to provide financial education on one hand and to offer credit counselling on the other to people having limited resources and skills to appreciate the complexities of finan- cial dealings, the Bank has opened Financial Literacy and Credit Counselling Centres christened Samadhan at Kolkata and Banda (UP).

The Centres act independently on its own under the auspices of Allahabad Bank Rural Development Trust.

The Centers are nonprofit organizations established with a view to rendering assistance in the form of advice to all those who are in need of advice on financial management even though they do not have any financial dealings with Allahabad Bank. The services offered by the counsellors are on one to one basis.

• Training Facilities to Farmers / Unemployed Youths:

The Bank has established two more Rural Self Employment Training Institutes (RSETI) this year for imparting training to Farmers, unemployed youths, NGOs, SHGs etc. for improve- ment of skills and entrepreneurship ability. Thus the Bank has at present six RSETIs in the following centres :

1. Rae Bareilly, U.P. 2. Hazaribagh, Jharkhand

3. Bolpur, W.B. 4. Debra, W.B.

5. Dumka, Jharkhand 6. Banda(U. P.)

The target groups for training interventions are: Small/Marginal/Tenant Farmers/Landless Labourers Medium & Large Farmers First Generation Entrepreneurs Established Entrepreneurs

Up to 31.03.2010, 636 programmes were conducted and ex- tended trainings to 17077 farmers / unemployed youths , out of which 7376 trainees were credit linked involving an amount of Rs.49.29 Crores.

• Welfare of Wild Animal

As a part of its CSR activities, the Bank has initiated adoption of wild animals at ‘Van Vihar’ Bhopal showing its love for wild animals. The Bank has adopted following animals for one year commencing from 1st April, 2010.

1. Tigress – ‘BASANI’

2. Leopard – ‘AGNI’

3. Sloth Bear – ‘KAMAL’

Retail Credit

The Bank has emphasized to augment the loans under vari- ous retail loan schemes to cater to the personal, consumer & business needs of all sections of the society. The Bank has 126 Retail Banking Botiques (RRBs) all over the country. Again the Bank has opened 27 Central Retail Banking Botiques (CRBBs) to further the easy processing & disbursement of the of Retail loans with strong operational guidelines & efficient manpower.

Disbursement during the year 2009-10 was Rs. 3148.97 Crore as against Rs.1795.60 Crore during the last financial year reg- istering a growth of 75.37%. Total outstanding as on Mar- 2010 stood at Rs. 10082.14 Crore as against Rs. 8400.59 Crore as on Mar’2009. This shows an increase of 20.02% during the year. The share of Retail credit having outstanding of Rs10082.14 Crore is 13.92% to Gross credit which is 72437 Crore.

Distribution of Retail Loans are as follows:

Scheme Outstanding % of Outstanding

HOUSING LOAN 3139.37 31.14%

PROPERTY 1590.14 15.77%

RENT 1228.02 12.18%

SARAL LOAN 1218.37 12.08%

EDUCATION 825.72 8.19%

ALL BK TRADE 638.07 6.33%

CAR LOAN 439.34 4.36%

Other 1003.11 9.95%

Total 10082.14 100.00%

Fee Based Income

The Bank has put a thrust towards promotion of third party products and other fee based activities. The income from TPP business grew by 39.88% to reach at Rs.17.57 crores during 2009-10 from Rs.12.56 crores last year.

Under Life Insurance and General Insurance segment of TPP business, Bank is having respective tie up with LICI and Universal Sompo General Insurance Company Ltd. (USGICL). Under Mutual Fund business, the Bank is having Tie up arrangements with country’s five leading Asset Management Companies viz. UTI, Principal PNB, Kotak Mahindra, Franklin Templeton & Reliance Mutual Fund for Providing wide range of products to its customers who intend to park their surplus fund in MFs. Under Cash Management Services (CMS), new avenues have emerged post migration to CBS and introduction of new Application Software (cash@will), the Bank has plans to fully exploit the situation with varied new CMS products. In order to augment income under CMS, Bank is focusing on Payment Products like DDF Drawing Dividend/ Interest Warrant and Direct Debit/ Direct Credit (Instrument and mandate based). Currently Bank is having six DPs and is in the process of expanding it at few more strategic locations. The Bank has launched retail selling of Gold Coins under “AllBank Gold” and sold as many as 36760 Gold Coins weighing 274.36 Kgs & booked an income of Rs.3.02 crore during 2009-10.

INVESTMENTS

Gross investments of the Bank were at Rs.38680 crores as on 31.3.2010 as against Rs.30081 crores as on 31.3.2009. The yield on investments declined to 6.83% during 2009-10 from 7.57% during 2008-09, in line with the market trend.

RISK MANAGEMENT

The Bank has implemented BASEL II norms and the calculation of Capital Adequacy Ratio (CRAR) for the year 2009-10 has been done as per the RBI prescription in this regard. In line with the RBI direction, the Bank has adopted Standardised Approach methodology for calculation of Risk weight under Credit Risk, Basic Indicator Approach for Operational risk and Standardised Approach-duration based approach for market risk. In line with the best practice in Industry, the Bank has set up a Comprehensive Risk Management Framework to effectively identify, measure and manage risk elements of Credit, Market and Operational Risks in an integrated and comprehensive manner. The Bank has evolved suitable Risk Management architecture comprising a Board Level Risk Management Committee. Further, towards preparedness for advance approach under BASEL II, the Bank is in the implementation process of a technology-based MIS system covering all the branches and offices.

Disclosures under BASEL - II norms is provided in a separate Annexure (Pg. No.54-81).

CUSTOMER SERVICE

The Bank’s “Customer Service Committee of the Board” is pivoted on the improvement in customer service. The suggestions of the Committee on Procedures and Performance Audit on Public Services (CPPAPS), constituted by Reserve

Bank of India, are accorded top priority for implementation in the Bank. Customer Service Audit, conducted at the branch level, receives immediate attention for rectification of irregularities, if any. The improvement in customer service is appraised to the Customer Service Committee of the Board of Directors’ on quarterly basis. Besides, the Standing Committee on Customer Service has been reconstituted with the induction of three personalities of public eminence as non-executive members. The meeting of the committee are held on quarterly basis.The Bank lays emphasis on improving customer service par excellence to strive and achieve an ideal situation of complaint free environment. However, whenever the complaints are received, remedial measures are immediately taken to redress them. The complaints are categorized on the basis on the nature and gravity of the complaint by way of ABC analysis and it is ensured to redress these within the timeframe prescribed for the category. Besides, steps are taken as per suggestions of the Standing Committee on Customer Service towards grievance redressal and improvement of customer service.

Know Your Customer & Anti Money Laundering Measures

Bank has adopted the comprehensive policy guidelines on Know Your Customer/ Anti Money Laundering Norms in consonance with the Reserve Bank of India directives.The guidelines for submission of mandatory returns viz. Cash Transaction Reports (CTRs), Suspicious Transaction Reports (STRs) and Counterfeit Currency Reports as per the provisions of the PMLA, 2002 have been issued time-to-time and all branches/offices have been sensitized on submission of these return within the prescribed time limit. Bank continues to submit the monthly CTRs to Financial Intelligence Unit-India, Govt. of India. Adequate precautions are taken by the Bank while opening of accounts to protect the Bank from the risk of doing business with any individual or entity whose identity cannot be determined or refused to provide information, or who have provided information that contains significant inconsistencies which cannot be resolved after due investigation.

INFORMATION TECHNOLOGY Branch Computerisation

The Bank has achieved 100% computerisation as on 31.03.2010 by computerising all its 2287 branches (including Foreign Branch), 66 Extension counters and various Zonal/ Field Offices. The Bank has also computerised all its Currency Chests (41).

Centralized Banking Solution (CBS)

The Bank has been implementing CBS at a very rapid pace.

969 branches/offices CBS covering 81.68% of Bank’s business.

The CBS Project Office has been established at Vashi, Navi Mumbai for monitoring the project.

Data centre has been set up at DAKC, Navi Mumbai.

Disaster Recovery Site (DRS) has been built at Lucknow.

Help Desk has been set up at CBS Project Office for assisting the CBS branches and trouble shooting for daily operations.

Internet Banking

Internet Banking, Mobile Banking, SMS Banking and e-Payment facilities for customers of CBS branches are fully operational. The customers of CBS branches can avail the facility of Internet Banking and e-payment facility through Bank’s Internet Banking website https://www.allahabadbank.in. Online fund transfer through RTGS/NEFT provided to our Internet Banking Customers.

Automated Teller Machines (ATMs)

Instant debit card facility to the customers has started during the year. The Bank has installed 211 ATMs and added 892 branches on its network. In order to broaden the customer base and facilitate wider service coverage, Bank has joined National Financial Switch(NFS), a project by M/S IDRBT Hyderabad, an institute set up by RBI, for sharing ATM network across 28 member Banks. Our Bank customers can access all VISA & NFS ATM across the country for all sorts of transaction without any charges from 01.12.2008.

The Bank is also having principal membership of VISA for issue of ATM-cum-Debit card and has issued more than 6.46 lacs ATM-cum-Debit cards including 81 thousand Instant ATM cards to customers.

Electronic Payment/Settlement System

896 branches of the Bank are participating in RBI sponsored RTGS transactions. SFMS application required for doing the RTGS inter branch transactions has been implemented in 896 branches. The Disaster Recovery Site for RTGS has been set up at DIT, Head Office, Kolkata. Server for NDS/PDO is also operational. NEFT has been made live in 897 branches.

Electronic Accounting in Excise and Service Tax (EASIEST) for Indirect Taxes

The Bank has made all of its 183 authorised branches enabled for participating in Electronic Accounting in Excise and Service Tax(EASIEST). e-Payment facility for Indirect Taxes (CBEC- EASIEST) has been launched for Tax payers.

Online Tax Accounting System(OLTAS) for Direct Taxes

The Bank has made all its 167 designated branches enabled for participating in OLTAS system. e-Payment facility for Direct Taxes(CBDT-OLTAS) has been launched for Tax payers.

Networking

39 NAPs (Network Aggregation Points) for CBS has been set up across the country.

Corporate mail messaging system LOTUS DOMINO is in the process of implementation.

271 VSATs (both offsite & onsite) has been set up for ATM connectivity.

Bank has launched its Tri-lingual website (www.allahabadbank.in) with the introduction of Vernacular language Bengali along with Hindi & English.

The Internet Server has been shifted from USA to India and was set up at Pune.

Video Conferencing

Video Conferencing System has been installed at the following 21 locations facilitating Executives in holding meetings, group discussions, conducting training programmes etc. for officers/ employees of the Bank.

SL Location No

1 Head Office

2 STC Kolkata

3 STC Lucknow

4 IRT Panchkula

5 ZO Mumbai

6 ZO Kolkata Metro

7 ZO New Delhi

8 ZO Chennai

9 ZO Lucknow

10 ZO Ranchi

11 ZO Ahmedabad

12 ZO Chandigarh

13 ZO Ludhiana

14 Treasury Branch, Mumbai

15 CBS Project Office

16 ZO Hyderabad

17 STC Hyderabad

18 FGMO Bengal

19 STC Bhubaneshwar

20 STC Patna

21 FGMO Kanpur

12 CHEQUE TRUNCATION

• The Bank has already initiated the process of implemen- tation of Cheque truncation system under National Capital Region (NCR) of Delhi as per RBI requirement. M/s NCR Crop. India Pvt. Ltd. Mumbai was selected as vendor.

• Branches are participating in live operation of RBI CTS system from service Branch New Delhi since 27.06.2008.

CTS Report

Clearing Particulars during the Month

Sl No Jan’10 Feb’10

Inward Outward Inward Outward

1.Total No. Branches 65 65

2 Branched migrated to CBS 63 63

3 Branches Participating in CTS 62 62 62 62

4 No. of Cheque Processed 176487 125926 160402 110844

5 No. of Cheque Processed through CTS 176487 125926 160402 110844

6 Amount Processed (in crores) 993.44 794.51 1221.37 885.83

7 Amount processed through CTS 993.44 794.51 1221.37 885.83

(%) of Cheques cleared through CTS 100% 100%

Achievements in the Field of Research & Technology

The Bank has set up Institute for Research & Technology at Panchkula, Haryana to impart high quality technical education to its employees and to conduct research and development in banking technology. The bank has formed a team of IT specialists for implementation, maintenance and supporting branches for development and bug fixing of HKI Banksoft Software.

INTERNATIONAL BANKING

The Bank carries out its International business through its 53 authorised / designated branches, which includes 6 International branches and 1 International cum Industrial

Finance branch. Export Credit of the Bank as on 31.03.2010 stood at Rs. 2345.61 crores. The Bank is taking steps to increase the credit flow to exporters. Exporters’ meets are arranged at various centres to explain various facilities available to them. The bank maintains correspondent relationship with prime banks abroad and Standard Settlement instructions in various currencies with 15 foreign banks. The Bank is also catering to the need of Non-Resident Indians through its branches. The Bank is having one NRI branch at Jalandhar.

Overseas presence

Bank is having one overseas branch at Hong Kong which has earned net profit in the current financial year. The branch is earning operational profit during last two years. Branch is having a Representative Office at Shenzhen, China which is eligible for upgradation into a full fledged branch.

INSPECTION AND AUDIT

Bank has a comprehensive Inspection & Audit Policy for undertaking Internal Inspection, Concurrent Audit, Revenue Audit, EDP/IS Audit, Risk Based Internal Audit(RBIA), Management Audit, Human Resource (HR) Audit and System Audit. EDP/IS Audit, RBIA, HR Audit & System Audit are carried out concurrently with regular inspection of Branches.

Branches including Large, Very Large, Exceptionally Large, Forex-cum-Treasury Branch and Dealing Rooms etc. are subjected to Concurrent Audit, that is, “simultaneous checking of transactions”, by outside Chartered Accountant Firms.

During the year 2009-10, regular inspection was carried out at 1649 branches, 42 Currency Chests, 13 Zonal Offices, 15 Head Office Departments, 03 Staff Training Centres (STC) and 02 Field Inspection Offices(FIO). Management Audit was also conducted in 32 Zonal Offices whereas Regular Inspection (Revenue Part) was covered at the 45 Zonal Offices, 08 FIOs and 06 STCs.

At Zonal Office level, Zonal Inspection Committees (ZIC) are formed with Zonal Head as convener and FIO Head as member to ensure effective monitoring of Internal control system, progress in rectification and considering closure of inspection report files. The meetings of ZIC are conducted at bi-monthly interval.

VIGILANCE

The vigilance policy followed by the Bank is in consonance with the various guidelines/directives issued by the Central Vigilance Commission, Reserve Bank of India and Ministry of Finance from time to time. Requisite steps are taken to contain and control fraud, forgery, malpractice etc, in the Bank through various preventive measures. Modus operandi of such cases, as also causative factors leading to the same, are regularly communicated to the field functionaries through Circulars, so as to educate them properly and avoid recurrence. Surprise Vigilance Inspection of fraud-prone Branches is to plug the loopholes. As measures of educative vigilance, training sessions and seminars are regularly conducted. In every training programme of duration 6 days & above, one or two sessions are incorporated on preventive vigilance. Systems improvement, whenever necessary, is taken up, to usher internal control mechanism. All these aspects are highlighted during field visits by the executives. However, punitive action is also taken against the erring officials through disciplinary proceedings, which acts as a deterrent to others. Stress is also given on measures of educative vigilance through training sessions, seminars & workshops.

Official Language

Compliance of various provisions under the Official Language Policy was ensured in order to achieve the targets stipulated in the Annual Programme. Accordingly, statutory requirements in regard to bilingual issuance of documents under Section 3 (3) of Official Language Act, reply of Hindi letters in Hindi, bilingual publication of manuals & codes, bilingualisation of stationery items was ensured. During the year, a large number of Officers & employees, not having working knowledge of Hindi, were nominated for various Hindi courses conducted by the Government of India. 86 Hindi workshops (1613 officers/ employees participated) and 78 Desk Training programmes (695 officers/employees participated) were organized, during the year.

The Parliamentary Committee on Official Language conducted an inspection of our Panna Branch under Satna Zone on 31.10.2009 regarding use of Official Language.

The Drafting and Evidence sub-Committee of the Committee of Parliament on Official Language held a discussion programme on 21.10.2009 and 19.03.2010 with Zonal Office, Hyderabad and Zonal Office, Raipur respectively through the Town Official Language Implementation Committee. The members of the Committee appreciated the efforts being made by our Bank in regard to use of Official Language.

Our General Manager (Official Language) was invited as a specialist of Banking and Law in a meeting of the Banking Glossary Standing Committee of Reserve Bank of India to finalise legal words.

The Reserve Bank of India inspected our Zonal Office, Kanpur on 29.07.2009, Zonal Office, Chandigarh on 26.06.2009 and Zonal Office, Kolkata (Urban) & Kasba Branch on 06.06.2009 and appreciated the efforts being made by our Bank in regard to use of Official Language.

Joint Director, Financial Services Department, Ministry of Finance, Government of India inspected our Head Office on 27.03.2010 and found the efforts being made by our Bank in regard to use of Official Language very satisfactory. The Deputy Director, Regional Implementation Office (Eastern Region), Kolkata, Government of India, Ministry of Home Affairs, Official Language Deptt. inspected our Zonal Office, Behala on

04.12.2010 and appreciated the efforts made by the Bank towards the use of Hindi.

The Bank observed the month of September as “Hindi Month” throughout the country. On this occasion, our Hon’ble Chairman & Managing Director called upon all the officers and employees for progressive use of Hindi, through an appeal. During the month, various competitions including “All India Essay Writing in Hindi” were organized.

The Bank received several national level prizes for outstanding performance in the area of implementation of official language; “Third Position” in linguistic region “A”under “Reserve Bank Rajbhash Shield Competition”for the year 2007-08. The Bank has also been awarded “Third Position” in linguistic region “A” for year 2008-09 under “Resereve Bank Rajbhash Shield Competition.” Also, Zonal Office, Kolkata (Metro) was awarded “First Prize” by Regional Implementation Office, Govt. of India, Ministry of Home Affairs, Deptt. of Official Language under Regional Implementation Rajbhasha Puraskar Scheme in Eastern region. Zonal Office, Guwahati was awarded “Second Prize” by Regional Implementation Office, Govt. of India, Ministry of Home Affairs, Deptt. of Official Language under Regional Implementation Rajbhasha Puraskar Scheme in North-East region. Zonal Office, Meerut was awarded “Third Prize” by Regional Implementation Office, Govt. of India, Ministry of Home Affairs, Deptt. of Official Language under Regional Implementation Rajbhasha Puraskar Scheme in Northern region.

Our Bank’s bilingual House Magazine “Triveni Dhara” received “First Prize” by the Reserve Bank of India among all the public sector banks and financial institutions for the year 2007-08 and again the “First Prize” has been announced for “Triveni Dhara” for the year 2008-09 under bilingual House Magazine Competition.

Under the Town Official Language Implementation Committee prizes, Bank’s Head Office received the “Excellency Certificate”, Staff Training Centre, Hyderabad received the “First Prize”, Zonal Office Dehradun and Zonal Office, Chennai received the ‘Second Prize’for excellent implementation of Official Language.

During the year, two meetings of Town Official Language Implementation Committee (Bank), Ranchi were organized in the convenorship of our Zonal Office, Ranchi with the participation of members in large number.

HUMAN RESOURCES DEVELOPMENT

The Bank laid prime importance on developing human capital in tune with its quest to emerge a bank of global stature. Initiatives have been taken for capacity building of human resources by focusing their competencies and maximizing their potential in critical & vital functional areas, handling international business and adequate succession plan.

Manpower

The manpower complement of the Bank is depicted hereunder:

Category 31.3.2009 31.3.2010

Officer 8,202 8,425

Clerk 7,631 8,249

Sub-staff 4,624 4,285

Total Staff 20,457 20,959

Of which

Scheduled Castes 5,130 5,506

Scheduled Tribes 1,041 1,194

Other Backward Castes 700 1,207

Women 2,260 2,560

Others (MC, PH, & XSM) 1,779 1,882

Recruitment & Promotion

During 2009-10, the Bank undertook processes for recruitment of 1,000 Officers (including Specialist Officers) & 1000 clerical cadre employees. Promotion Processes were completed in all cadres during the year starting from the lowest rung in subordinate staff cadre to the highest rank in Officers’ cadre. For the first time, three of our General Managers were elevated to the post of Executive Director in other Public Sector Banks.

Industrial Relations

In the backdrop of prevailing cordial & harmonious industrial relations climate scenario, the collective grievances and issues of mutual interest were discussed and settled in the bilateral forums with the recognized Officers’ Association and Workmen Union.

Welfare

In tune with Bank’s conviction that the Human Resources are the greatest asset of the organisation , Various welfare shemes such as i) Group Mediclaim Insurance Policy for all the Employees/ Officers ii) General Health Check up for all eligible employees /officers above 40 years & their spouse iii) Scholarship to the Wards of the Employees/Officers IV) Financial assistance to the Employees/Officers having mentally challenged children v) Death exgratia of Rs 1.00 lakh to the bereaved family of the deceased employee/ Officer dying in harness and vi) Reimbursement of Mediclaim Insurance premium to all retired employees and their spouse with a floater coverage for an amount of Rs. 1.00 lakh have been extended in the year 2009-10.

ALLBANK FINANCE LTD.

AllBank Finance Ltd. a wholly owned subsidiary of Allahabad Bank with a capital base of Rs.15 crores. The company has obtained Category-I Merchant Banking and Underwriting registration from SEBI. AllBank Finance Ltd. engaged in

Corporate Advisory Services, Project Appraisal, Issue Management, Loan Syndication Debenture and Trusteeship Underwriting. The subsidiary posted a profit of Rs.7.15 crores during 2009-10 as against Rs.9.41 crores during 2008-09.

FUTURE PLANS

The Bank has projected a business growth of around 25% during the current year.

The Bank will focus on Retail Business, Loan Syndication, Sale of Gold Coins CMS and Bancassurance etc. in addition to the core banking activities.

The Bank is looking ahead to spread out overseas. The process has already been initiated with a branch at Hong Kong and representative office at Shenzen, China. A representative office at Dhaka , Bangladesh is also being contemplated after receipt of approval from Reserve Bank of India and Government of Bangladesh.

The Bank has initiated various steps to develop a pool of knowledgeable Human Capital.

BOARD OF DIRECTORS

The Board of Directors, the Management Committee and the Audit Committee of the Board met 12, 20 and 8 times respectively during 2009-10. The Director’s Promotion Committee, Shareholders’/Investors’ Grievance Committee, IT Sub-Committee, Fraud Monitoring Committee, Customer Service Committee, Renumeration Committee and Risk Management Committee ,Nomination Committee, Share transfer Committee of the Board met 5, 2,7, 3, 4, 4,1 and 16 times during 2009-10.

Shri D. Sarkar has assumed the office of Executive Director of the Bank on 07.12.2009. Prior to his present appointment, Shri Sarkar was the General Manager (Wholesale Banking / Credit) of Bank of Baroda at Corporate Office, Mumbai. He has 27 years experience of Banking and had worked in various capacities and had worked in various capacities in Branches, Regional Office, Zonal Office and Corporate / Head Office.

Shri M.R. Nayak has assumed the office of Executive Director of the Bank on 22.01.2010. Prior to his present appointment Shri Nayak was the General Manager of Corporation Bank, Head Office, Bangalore. Shri Nayak has 39 years experience of Banking. He has worked in various capacities in Branches and Corporate / Head Office. He was instrumental in introducing gold banking import of bullion by the Bank, one of the first in banking industry in India.

Dr. Kaujalgi is deemed to be elected as Director representing shareholders with effect from 12.06.2010. Dr. Kajulgi, an M.Tech in Production Engg. from IIT, Mumbai, M.S. in Operations Research and Computer Science from Case Institute of Technology, U.S.A. and Ph.D. from IIT, Mumbai, has been serving Indian Institute of Management, Bangalore since 1975. He has over 40 publications in National & International journal. His areas of interest include Computer

Science, Information Systems, Operation Research, Statistics and Production / Operation Management. He was the Director, Central Board, State Bank of India from November 1995 to October 1998. Also, he was the Shareholder Director on the Board of Bank of India from 25.10.2005 to 24.10.2008.

ACKNOWLEDGEMENTS

The Board of Directors records its appreciation for continued support and patronage of the shareholders/investors of the Bank. The Board of Directors gratefully acknowledges the valuable and timely advice, guidance and support from the Reserve Bank of India, Government of India and other regulatory agencies and look forward to their continued support and co-operation. The Board of Directors is thankful to the customers for their continued trust and confidence on the Bank.

The Board records its appreciation for valuable contributions of the outgoing members and welcomes the new incumbents.

The Board of Directors is pleased to place on record their appreciation of the committed services of the Bank’s employees.

For and on behalf of the Board of Directors,

Yours sincerely,

Kolkata (J. P. Dua)

30th April 2010 Chairman & Managing Director

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