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Directors Report of Bank of India

Mar 31, 2015

Dear Members,

The Board of Directors have pleasure in presenting the Bank''s Annual Report along with audited statement of accounts for the year ended 31st March, 2015.

PERFORMANCE HIGHLIGHTS - FINANCIAL PARAMETERS

* ''A" Total Business (Deposit Advances) increased to Rs. 9,43,633 crores reflecting a growth of 10.60% (y-o-y).

* Operating Profit and Net Profit were at Rs. 7,488 crores and Rs. 1,709 crores respectively.

* Credit Deposit Ratio stood at 77.41% as against 78.88% during last year.

* Retail Credit as on 31st March 2015 stood at Rs. 34,153 crores, posted a growth of 15.38% constituting 11.80% of your Bank''s Gross Domestic Credit in FY 15.

* MSME Credit as on 31st March 2015 stood at Rs. 54,406 crores posted a growth of 20.68% constituting 18.79% of your Bank''s Gross Domestic Credit in FY 15.

* Net Interest Margin (NIM) for Global Operations was 2.11 % and for domestic Operations was 2.49 % during FY 15.

* Net NPA to Net Advances stood at 3.36% as against 2.00% during last year.

* Capital Adequacy Ratio (CRAR) as per Basel III stood at 10.73%.

* Net Worth improved to Rs. 26,494 crores and registered a rise of 7.95% over last year.

* Book Value improved to Rs. 398.02 from Rs. 381.69 during last year.

*Business Per Employee moved up to Rs. 20.69 crores from Rs. 19.63 crores during last year.

SOME OF THE KEY FINANCIAL RATIOS ARE PRESENTED BELOW:

(In %)

Parameters 2013-14 2014-15

Yield on Advances 8.45 8.36

Yield on Investment 8.12 8.08

Yield on Funds 7.19 7.13

Cost of Deposits 5.62 5.70

Cost of Funds 5.14 5.27

Net Interest Margin 2.34 2.11

Non Interest Income to Operating 64.06 52.33

Expenses

Other Income to Average Working Fund 0.81 0.66

Operating Expenses to Average Working 1.27 1.33

Fund

Staff Expenses to Average Working Fund 0.76 0.82

Other operating Exp. to Average Working 0.51 0.51

Fund

Asset Utilisation Ratio 1.60 1.23

Non-Interest Income to Total Income 10.17 8.88

Non-Interest Income to Net Income 28.38 27.17

Cost to Income Ratio 44.30 51.93

Return on Equity 11.82 6.70

Return on Average Assets 0.51 0.27

KEY FINANCIAL DATA

(Rs. In crore)

Particulars 2013-14 2014-15 Growth (%)

Net Interest Income 10,831 11,344 4.74

Non-Interest Income 4,292 4,233 -1.37

Operating Expenses 6,700 8,089 20.73

Operating Profit 8,423 7,488 -11.10

Provisions / Contingencies 5,694 5,779 1.49

Net Profit 2,729 1,709 -37.38

Earnings per share (Rs.) 44.74 26.57 -40.61

Book value per share (Rs.) 381.69 398.02 4.28

SEGMENT- wISE PERFORMANCE

The Bank earned an Operating Profit of Rs. 7,488 crores during the financial year 2014-15. The contribution made to Net Profit by Treasury operations was Rs. 1,510 crores, wholesale Banking was Rs. 750 crores and Retail Banking was Rs. 132 crores. Your Bank earned a profit after Tax (PAT) of Rs. 1,709 crores, after deducting Rs. 597 crores of un allocated expenditure and Rs. 86 crores towards provision for tax.

DIVIDEND

Your Bank''s Directors have recommend dividend of Rs. 5 /- per share (on the face value of Rs. 10/- per share) subject to GOI approval. The Total dividend payment will amount to Rs. 399.72 crore (including dividend distribution tax).

CAPITAL

Net worth of your Bank has increased to Rs. 26,494 crores from Rs. 24,543 crores during the financial year 2014-15. During the year, the Bank has issued 2,26,45,502 Equity Shares of Rs.10/- each at a price of Rs. 283.50 per share total amounting to Rs. 642 crores ( 2,00,00,000 equity shares to LIC and 26,45,502 equity shares to The New India Assurance Co. Ltd.).

During the year, the Bank has also issued Basel-III Compliant perpetual Additional Tier-I bonds of Rs. 2,500 crores with call option.

CAPITAL ADEQUACY

As per Basel III framework, Bank''s Capital Adequacy Ratio was 10.73% which was higher than the regulatory requirement of 9%. Details of Capital Adequacy (BASEL II & III) are shown as under:

(Rs. In crore)

Particulars 31.03.2014 31.03.2015 (Under BASEL - II)

Amount CRAR Amount CRAR (%) (%)

Tier I Capital 26,248 7.56 29,864 8.23%

Tier II Capital 11,103 3.20 11,554 3.19%

Total Capital 37,351 10.76 41,418 11.42%

Risk Weighted Assets 347,014 .... 362,726 ....

(Rs. In crore)

Particulars 31.03.2014 31.03.2015

(Under BASEL - III) Amount CRAR Amount CRAR (%) (%)

Common Equity Tier-I 23,771 6.84% 26,091 7.17%

Capital (CET 1)

Additional Tier-1 1,389 0.41% 3,618 1.00%

Tier I Capital 25,160 7.25% 29,709 8.17%

Tier II Capital 9,499 2.73% 9,289 2.56%

Total Capital 34,659 9.98% 38,998 10.73%

Risk weighted Assets 347,702 -- 363,523

AWARDS & ACCOLADES

* Bank received "Best MSME bank" and "best bank for Operational Performance" awards.

* Bank received "Outlook Money Award" for "best Home Loan Provider" under Runner up category.

* "Financial Inclusion & Payment System Award" by Elets Media at New Delhi at the hands of Minister of Rural Development.

* Bank received "PMJDY Excellence Award" from Honorable Union Minister.

* Bank received IBA Award for "best Financial Inclusion Technology Initiative" from IDRBT.

* Bank received Skoch Group "Financial Inclusion Deepening Award".

* Bank won "IT excellence award" by ETNOW and VMWare for effectively implementing Virtualization in the Bank.

* Bank received the Award CIO100 2014 for the "Product Startoken NG".

* Bank received "best HR Technology award, 2014" from Banking Frontiers at Mumbai.

Redefining banking standard with Techno Enabled Services

* ATM - Member of National Financial Switch (NFS), Banks Customer can access more than 1,40,000 ATMs across the country.

* Bank has launched chip based Debit and Credit cards.

* BOI has enabled E-commerce transactions of Rupay platform.

* Look and Feel of Internet Banking with two Factor Authentication Implemented for its clientele.

* Online Term Deposit Facility with online nomination facility.

* BOI e-Pay Payment of Utility Bills, Insurance Premia, Credit Card payments of Specified Banks Property Tax of Specified Municipal Corporations etc.

* BOI * Sandesh - on - Line SMS based alerts for ATM Financial Transactions & Internet Banking Funds Transfer.

* As per Finance Ministry Guidelines and recommendations our corporate web-site (English) has been enabled for persons with disabilities.

* Hot listing / reset / unblock / change of Debit-cum-ATM Card pin using Internet Banking Password.

* Self Service Kiosks - Bar-coded passbook printers.

* Missed call facility to know the balance in SB/CD/OD accounts.

* Online Deposit in PPF A/c using internet banking.

* Introduction of IMT - Instant Money Transfer.

* BOI ''* EazyPay - Person to Person Payment Solution launched.

* Payment Gateway Solution.

* mVisa - this is mobile to mobile payment solution from Person to Merchant.

* PayWave - Tap and go (contactless payment system)

* Introducing exclusive Youth Banking Solution with Infosys.

* RuPay Platinum Debit Cards.

* IMPS facility through Branches. * Bill payment facility in Mobile Banking.

* e-Wallet (similar to ICICI - Pocket and HDFC - Chillr).

* Virtual Cards for e-commerce.

DIRECTORS'' Responsibility STATEMENT

The Directors confirm that in the preparation of the annual accounts for the year ended March 31, 2015:

a) The applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

b) The accounting policies framed in accordance with the guidelines of the Reserve Bank of India were consistently applied. Reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit and loss of the Bank for the year ended March 31,2015;

c) Proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing banks in India for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

d) Annual accounts have been prepared on a going concern basis;

e) Internal financial controls system to be followed by the Bank were laid down and that such internal financial controls are adequate and were operating effectively;

f) Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

BANK''S SUBSIDIARY / ASSOCIATES

1. Indo Zambia Bank Ltd.

2. PT. Bank of India (Indonesia) Tbk

3. Bank of India (Tanzania) Ltd.

4. Bank of India (New Zealand) Ltd.

5. Bank of India (Botswana) Ltd.

6. Bank of India (Uganda) Ltd.

7. BOI Shareholding Ltd.

8. BOI AXA Investment Managers Pvt. Ltd.

9. BOI AXA Trustee Services Pvt. Ltd.

10. BOI Merchant Bankers Ltd.

11. STCI Finance Limited.

12. Star Union Dai-ichi Life Insurance Company Ltd.

STRATEGIC INVESTMENT / ALLIANCES

1. Central Depository Services (India) Ltd. (CDSL)

2. ASREC (India) Ltd.

3. Credit Information Bureau (India) Ltd. (CIBIL)

4. National Collateral Management Services Ltd. (NCMSL)

5. SWIFT India Domestic Service Pvt. Ltd.

6. SME Rating Agency of India Ltd. (SMERA)

ACKNOWLEDGEMENT

The Board expresses its gratitude to the Government of India, Reserve Bank of India and Securities and Exchanges Board of India for the valuable guidance and support received from them. The Board also thanks financial Institutions and correspondent banks for their co-operation and support. The Board acknowledges the unstinted support of its customers and shareholders and also wishes to place on record its appreciation of staff members for their dedicated services and contribution for the overall performance of the Bank.

For and on behalf of the Board of Directors

Sd/- Place : Mumbai (Mrs. V. R. Iyer) Date : 28th May, 2015 Chairperson & Managing Director


Mar 31, 2014

The Board of Directors have pleasure in presenting the Bank''s Annual Report along with audited statement of accounts for the year ended 31st March, 2014.

PERFORMANCE HIGHLIGHTS - FINANCIAL PARAMETERS

- Total Business (Deposit Advances) increased to Rs. 853,202 crores reflecting a growth of 26.44 % (y-o-y).

- Operating Profit and Net Profit were Rs. 8,423 crores and Rs. 2,729 crores respectively. Operating Profit registered a growth of 12.94% over last year.

- Credit Deposit Ratio stood at 78.88 % as against 76.73 % during last year.

- Retail Credit posted a growth of 32.44 % constituting 11.20% of your Bank''s Gross Domestic Credit in FY 14.

- MSME Credit posted a growth of 21.09 % constituting 17.06% of your Bank''s Gross Domestic Credit in FY 14.

- Net Interest Margin (NIM) for Global Operations are 2.34 % and for domestic Operations are 2.85 % during FY 14.

- Net NPA to Net Advances stood at 2.00 % as against 2.06 % during last year.

- Capital Adequacy Ratio (CRAR) as per Basel III stood at 9.97%.

- Net Worth improved to Rs. 24,543 crores registering a rise of 13.52% over last year.

- Book Value improved to Rs. 387.53 from Rs. 362.37 during last year.

- Business Per Employee moved up to Rs. 19.63 crores from Rs. 15.82 crores during last year.

KEY FINANCIAL RATIOS:

(In %)

Parameters 2012-13 2013-14

Yield on Advances 8.87 8.45

Yield on Investment 7.81 8.12

Yield on Funds 7.67 7.19

Cost of Deposits 5.94 5.62

Cost of Funds 5.50 5.14

Net Interest Margin 2.38 2.34

Non Interest Income to Operating 70.64 64.06

Expenses

Other Income to Average Working Fund 0.90 0.81

Operating Expenses to Average Working 1.28 1.27

Fund

Staff Expenses to Average Working Fund 0.75 0.76

Other operating Exp. to Average Working 0.53 0.51 Fund

Asset Utilisation Ratio 1.79 1.60

Non-Interest Income to Total Income 10.56 10.17

Non-Interest Income to Net Income 29.45 28.38

Cost to Income Ratio 41.69 44.30

Return on Equity (%) 13.62 11.82

Return on Average Assets (%) 0.65 0.51

KEY FINANCIAL DATA

(Rs. In Crore)

Particulars 2012-13 2013-14 Growth (%)

Net Interest Income 9,024 10,831 20.02

Particulars 2012-13 2013-14 Growth (%)

Non-Interest Income 3,766 4,292 13.97

Operating Expenses 5,332 6,700 25.66

Operating Profit 7,459 8,423 12.94

Provisions / Contingencies 4,709 5,694 20.89

Net Profit 2,749 2,729 -0.73

Earnings per share (Rs.) 47.79 44.74 -

Book value per share(Rs.) 362 387 -

SEGMENT- WISE PERFORMANCE

The Bank earned an Operating Profit of Rs. 8,423 crores during the financial year 2013-14. The contribution made to Net Profit by Treasury operations was Rs. 1,628 crores, wholesale Banking was Rs. 1,271 crores and Retail Banking was Rs. 932 crores. Your Bank earned a proft after Tax (PAT) of Rs. 2,729 crores, after deducting Rs. 286 crores of un allocated expenditure and Rs. 816 crores towards provision for tax.

DIVIDEND

During the year your Bank has paid an Interim dividend of Rs. 5/- per share (on the face value of Rs. 10/- per share). With and view to conserve capital, no final dividend is declared by the Board of Directors. During the year the total dividend payment amounts to Rs. 375.72 crore (including dividend distribution tax).

CAPITAL

Net worth of your Bank has increased to Rs. 24,543 crores from Rs. 21,621 crores during the financial year 2013-14. During the year, the Bank has issued 46,360,686 Equity Shares of Rs. 10/- each at a price of Rs. 215.70 amounting to Rs. 1,000 crores to Government of India. In addition to that an amount of Rs. 1,922 crores was transferred to Reserves from the profits earned.

During the year, the Bank has also issued Basel-III Compliant Tier-II bonds for Rs. 1,500 crores for 10 years maturity, without any call option.

CAPITAL ADEQUACY

As per Basel III framework, Bank''s Capital Adequacy Ratio was 9.97 % which was higher than the regulatory requirement of 9%.

Details of Capital Adequacy (BASEL II & III) are shown as under:

(Rs. In crore) Particulars 31.03.2013 31.03.2014 (Under BASEL – II)

Amount CRAR Amount CRAR (%) (%)

Tier I Capital 23,019 8.20 26,248 7.57

Tier II Capital 7,916 2.82 11,103 3.19

Total Capital 30,935 11.02 37,351 10.76

Risk Weighted Assets 280,637 - 346,754 -

(Rs. In crore)

Particulars 31.03.2014

Amount CRAR (Under BASEL – III) (%)

Common Equity Tier-I Capital (CET 1) 23,770 6.84

Additional Tier-1 1,389 0.40

Tier I Capital 25,160 7.24

Tier II Capital 9,499 2.73

Total Capital 34,659 9.97

Risk weighted Assets 347,702 -



MANAGEMENT DISCUSSION & ANALYSIS

GLOBAL ECONOMIC SCENARIO:

The economic growth in the emerging markets like India and in the developed economies like the USA and the Euro region continues to present divergent scenarios. The growth in India was 4.5 per cent in the financial year 2013-14, mainly on improved performance in the agriculture and allied sectors and the overall growth in emerging markets as per International Monetary Fund (IMF) was about 4.50 to 5 per cent. The average growth of 4.50 to 5.50 per cent is likely to continue in 2014- 15 in the emerging markets backed by solid domestic demand, recovery in exports, and supportive fiscal, monetary and financial conditions. Commodity prices will continue to boost growth in many low-income countries, including those in sub-Saharan Africa.

DOMESTIC ECONOMIC SCENARIO

According to Central Statistical Organization (CSO) Indian economy grew 4.70 per cent in 2013-14. However, the higher headline number came on the back of a lower base, as the CSO revised the 2012-13 growth estimate downwards to 4.5 per cent from 5 per cent estimated earlier. Gross domestic product (GDP) growth was driven by better farm output, which grew at 4.7 per cent.

OUTLOOK FOR FY 2014-15

Estimates by various agencies predicted average growth rate to be around 5.50 per cent in 2014-15, up from average 4.70 per cent in 2013- 14. Slow industrial growth in 2013-14 is likely to improve and pick up during 2014-15. Economy seems to have bottomed out but with structural bottlenecks to be overcome, it is yet to reach its potential.

An Asian Development Bank report has stated that there are weaknesses in terms of persistent inflation, fiscal imbalances, bottlenecks to investment, and inefficiencies that need structural reforms. Growth would have to be led by improved investment and consumption. Inflation will have to be contained or else a continuance of tight monetary stance is inevitable.

BANKING INDUSTRY – DEVELOPMENTS OUTLOOK

The growth of the banking sector is very closely linked to the growth of Indian economy which is estimated to grow at a rate of 5.5-6 per cent between 2015 to 2016. The banking industry will benefit from economic expansion and conducive government policies to shield the economy from ups and downs in the global economy and geo-political disturbances. Further, as per capita income grows and awareness about banking spreads, more populace comes to the banking fold.

BUSINESS REVIEW DEPOSITS

Bank''s total Deposits increased by Rs. 95,134 crores to Rs. 476,974 crores during the year and recording a growth of 24.91%. The growth in domestic deposits was to the tune of Rs. 69,523 crores or 23.64 % over previous year.

Savings Bank deposits grew by 13.12% and Current deposits logged a growth of 9.31%. The share of Low cost deposits (CASA) comprising of Savings and Current deposits to total domestic deposits is 29.97%. The Bank has a well diversifed deposit base with 12% of domestic deposits coming from rural areas, 13% from semi urban, 18% from urban and 57% from metro areas. The bank''s total clientele base of 77.34 million consisted of 71.95 million depositors and 5.39 million borrowers as on 31st of March, 2014.

ADVANCES

Bank''s gross advances increased by Rs. 83,260 crores to Rs. 376,228 crores during the year and recording a growth of 28.42%. The Gross Domestic Credit of the Bank registered a growth of 29.52 % from Rs. 204,036 crores on 31.03.2013 to Rs. 264,260 crores on 31.03.2014 as against the growth rate of 14.66 % in the last financial year 2012-13. Incremental credit disbursement to new and existing accounts in Public Sector Units & Public Sector Entities and NBFCs has contributed in higher growth.

Timely sanctions and prompt disbursements in Large Corporate, Mid Corporate, Retail, SME and Agriculture segments have been instrumental in substantial credit growth.

The Bank also set up a New Business Department during the year to help in new customer acquisition and augment quality credit growth.

Bank added 164 New Corporate customers during the financial year. Bank caters to specialised needs of Corporate/Mid corporate through 10 Large Corporate Banking Branches, 41 Mid Corporate Branches. The needs of other clients from Retail, SME and Agriculture are met through the Network of 4,646 Domestic branches. Bank''s 56 Overseas Centers across 5 continents also caters to credit requirement of exporters and overseas clients.

INFRASTRUCTURE FINANCE

During the year, Bank sanctioned Fund Based Limit of Rs. 16,626 crores and Non Fund Based Limit of Rs. 4,367 crores under infrastructure projects in New and Existing accounts covering Power, Telecommunication, Roads, Ports and other infrastructure.

Bank continued to provide support in this segment with additional disbursement of Rs. 8,863 crores of which 52 % has been to Power sector and 28 % has been to Road and Port Projects.

CORPORATE CREDIT

Bank is extending credit to Corporate Customers through specialized branches which contribute 54 % of Gross Domestic Credit.

10 Large Corporate Branches Located at Major Cities and catering to all the major corporates across country at– Mumbai, New Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad and Pune. Mid Corporate Branches covers rest of major business centers including above.

For serving corporates at other centres, 21 SME City Centres are equipped with Credit Processing Cells with direct reference to Large Corporate Credit Department at Head Office

LARGE CORPORATE

The advances through Large Corporate Branches constitutes 41 % share in total domestic advances as on 31.03.2014. Advances to Corporate segment through LCBs has increased from Rs. 84,047 crores as on 31.03.2013 to Rs. 110,651 crores as on 31.03.2014, showing a growth of 31.65 % over last year.

MID CORPORATE

Mid Corporate vertical contributes 12.91 % of the total domestic Credit portfolio. During the FY 2013-14, total Credit under Mid Corporate Branches grew from Rs. 30,949 crores to Rs. 34,923 crores registering a growth of 12.84 %.

NEW BUSINESS

During a short period of 3 months, the department has been successful in establishing relationships with large number of Public and Private sector enterprises. There has been a quantum jump in disbursements to leading Public Sector companies. As a Medium Term plan, New Business Department has embarked upon a plan to acquire substantial number of new clients in Mid and Large corporate segment. Department has shortlisted around 950 corporates after analyzing their financials and circulated the list to all the Mid and Large Corporate branches and to Zonal Offices for establishing initial contact, depending upon the geographical presence of the corporates. As a next step, the department shall provide all logistics support to branches/zones by meeting the prospective clients, understanding their needs and structuring the products as per their requirements. Going forward, department also proposes to undertake Syndication and Project Finance business to increase the fee based income of the bank.

FOREX BUSINESS

The Forex business handled by the Bank has shown decent growth on the back of need for foreign exchange from exporters and importers. During the year 2013-14, Merchant and Interbank turnover was Rs. 203,720 crores and Rs. 499,187 crores respectively. The Bank continues to be a leading player in the forex market. The aggregate turnover of Bank''s treasury Branch during the year was Rs. 702,907 crores.

TREASURY OPERATIONS

The Bank continues to play an active role in all segments of the market- Funds, Forex and Bonds during 2013-14. The Bank has churned its investments portfolio and earned profit from trading and sale of securities by taking advantage of the G sec rate movements. Bank has registered 78.08 % growth in profit from sale of securities in FY 2013-14 as compared to FY 2012-13. Bank has taken advantage of arbitrage opportunity within various market segments and could place the excess rupee funds in Certificate of deposits (CD), buy /sell foreign currency swaps, term money markets there by earning a spread of 1 % to 1.50 %. The Bank has built up a portfolio of Rs. 364 crores in CDs by borrowing in CBLO/Repo against ''T'' Bills and surplus securities thereby earning a spread of approximately 0.25 % to 0.75 %.

RURAL BANKING - PRIORITY SECTOR ADVANCES:

Priority sector advances have wide social ramifications apart from presenting a big business opportunity. With its vast network of rural and semi-urban branches and committed personnel, the Bank has always been one of the leaders in servicing to the priority and agriculture sectors. The Bank has registered an outstanding level of Rs. 82,021 crores under Priority Sector which is 40.45 % of Adjusted Net Bank Credit (ANBC).

Under Special Agricultural Credit Plan, Bank could disburse Rs. 19,130 crores during the financial year 2013-14. The outstanding position of priority sector advances under various segments is as under:

(Rs. In Crores)

As on 31st March Growth

2013 2014 Amount % age

1. Agriculture 27,041 36,071 9,030 33.39

2. Small Enterprise 28,913 35,504 6,591 22.80

3. Education 2,329 2,597 268 11.51

4. Housing 6,790 7,517 727 10.71

Total Priority Sector 65,518 82,021 16,503 25.19

FINANCIAL INCLUSION

The progress under Financial Inclusion Plan (FIP) in 2013-14 is:- - No. of Basic Savings Bank Deposit Accounts opened : 107.28 lakhs

- No. of Smart Cards issued : 22.68 lakhs

- GCC/KCC issued : 22.10 lakhs

- Business Correspondents engaged : 6072

- Channel Management Partners engaged : 105

- No. of Villages where 100% FI achieved : 14060

The Bank has achieved 100% Financial Inclusion in all 4,404 allotted villages with population above 2000 as on 31.03.2014. Robust operational systems with adequate risk mitigants and best practices have been built up and are being pursued.

REGIONAL RURAL BANKS

Bank has sponsored 4 (four) Regional Rural Banks (RRBs) namely Jharkhand Gramin Bank (Jharkhand State), Aryavart Kshetriya Gramin Bankt (Uttar Pradesh State), Narmada Jhabua Gramin Bank (Madhya Pradesh State) and Vidarbha Konkan Gramin Bank (Maharashtra State). All RRBs are profit making. All Branches and administrative offices of the Gramin Banks are now on CBS platform. These banks are enabled on RTGS and NEFT and ATM platforms. All RRBs taken together have a branch network of 1,524 outlets and have garnered a business mix of Rs. 30,891 crores.

RETAIL CREDIT

The Bank during the year 2013-14, perused the policy of building up a healthy retail credit portfolio. In the post recessionary period of FY 2013- 14 the spring buds of reviving economy gave ample opportunity for retail credit. The retail credit portfolio of the Bank increased from Rs. 22,350 crores to Rs. 29,600 crores as on 31st March, 2014. During this period the contours of retail credit were also redefined. The growth in respect of major Retail loan schemes was as under:

(Rs. In crores)

As on As on Growth & Scheme 31.03.2013 31.03.2014 %age growth

Star Home Loan 10,267 13,081 2,814 / 27 % Scheme

Star Education 2,412 2,652 240 /10 % Loan Scheme

Star Vehicle 2,037 2,351 314 /15 % loan Scheme

Star Personal 779 927 148 /19 % Loan Scheme

Star Mortgage 2,007 2,971 964 / 48 % Loan Scheme

SME - PERFORMANCE OF THE BANK UNDER MSME

- Business growth : MSME Outstanding -Rs.45,081 crores registering Y-O-Y growth of 21.04 %.

- Performance under MSE: MSE Outstanding - Rs. 38,686 crores registering Y-O-Y growth of 21.15 %.

- MSE manufacturing sector has grown from Rs. 16,031 crores (March 2013 ) to Rs. 20,095 crores ( March 2014), witnessed Y-O-Y growth of 25.35 %.

- Share of Micro sector within MSE has slightly decreased to 47.69 % as at March 2014 from 49.54 % as on March 2013.

- Growth in number of Micro accounts: 93,903 accounts have been sanctioned under Micro segment during 2013-14 registering growth of 18.60 % over accounts as at 31.03.2013 against the mandatory target of 10 %.

- Performance under CGTMSE -33,930 new accounts added under CGTMSE scheme during 2013-14 covering exposure of Rs. 2,351 crores. We continue to remain at No.1 among PSU banks in terms of total coverage under the scheme which has reached to the level of 1.51 lakhs accounts with total exposure coverage ofRs. 9,614 crores as on March 2014.

- Performance under PMEGP : 503 accounts with limit of Rs. 158 crores has been sanctioned during the year 2013-14 under PMEGP.

ASSET RECOVERY & NPA MANAGEMENT

The level of Non Performing Assets (NPA) is key to any bank''s profitability and consequently larger the efforts of a bank to minimise NPAs, the better it is in the long-term. The Bank continued its drive and focus in improving its performance in the area of NPA management in the year 2013-14 as well. NPA reduction has been given utmost priority at the Bank and this function has steadily grown in importance. Substantial measures were initiated to augment recovery and contain NPAs. Efforts were also made to maximize recovery in written off accounts and uncharged / unrealised interest in NPA accounts which contributes to the Bank''s profits significantly. The following table shows management of NPAs during last 3 years:

(Rs. in crores) Item 31.03.12 31.03.13 31.03.14 (Actual) (Actual) (Actual)

GROSS NPA (Opening) 4,812 5,894 8,765

Less:

Cash-Recovery 1,205 1,245 3,066

Upgradations 487 759 938

Write-off_ 2,415 2,415 1,767

Agr. Debt Waiver/Debt

Relief Scheme 2008 0 0 0

Total Reduction 4,107 4,419 5,771

Add:

Slippages 5,401 7,379 8,811

Less Unrealised Interest

(URI) (introduced from

F.Y 2009-10) 212 89 -63

Item 31.03.12 31.03.13 31.03.14 (Actual) (Actual) (Actual)

GROSS NPA (Closing) 5,894 8,765 11,869

Recovery in W/Off A/cs,

UCI/URI 672 1,051 878

Net NPA 3,656 5,947 7,417

% age of Gross NPA 2.34 2.99 3.15

to Gross Advances

% age of Net NPA to Net 1.47 2.06 2.00

Advances

During the year Bank sold assets with o/s Rs. 4,743 crores (Corporate as well as Retail) and both cash & SR basis in which assets sold on absolute cash basis for Rs. 11.53 crores. The component of cash & SR basis and the reserve assets is Rs. 146 crores / Rs. 2,471 crores respectively.

BRANCH NETWORK & EXPANSION

The Bank has a geographically well spread branch network in India and abroad. The Bank had 4,646 branches in India as on 31.03.2014. In the foreign countries, 25 branches and 31 representative offices keep Bank''s presence felt in all time zones and important financial centers of the globe.

During the year 2013-14, Bank opened 354 new branches including 5 Extension Counters converted into full-fedged branches.

Composition of Bank''s Branch Network is as follows :

31.03.2013 31.03.2014 Category No. of Brs. % to Total No. of Brs. % to Total

Metropolitan 787 18.34 833 17.93%

Urban 742 17.29 789 16.98%

Semi-Urban 1,165 27.14 1,258 27.08%

Rural 1,598 37.23 1,766 38.01%

Total Branches 4,292 100.00 4,646 100.00

COMPLIANCE WITH RESERVATION POLICY

The Bank is complying fully with the reservation policy of the Government of India. Special Recruitment and SC/ST Cells at Head Office / Zonal Offices are functioning to monitor the implementation of the reservation policy and redressal of grievances relating to SC/ST/OBC Employees.

REPRESENTATION OF SC/ST/OBCs IN TOTAL STAFF STRENGTH (INDIAN)

March 2014 Officers Clerks Sub-Staff Total

SC 2,958 3,025 2,736 8,719

% to total Staff in Indian Offices 16.82 16.86 35.90 20.21

ST 1,326 1,842 796 3,964

% to total Staff in Indian Offices 7.54 10.27 10.44 9.19

OBC 2,492 2,132 1,226 5,850

% to total Staff in Indian Offices 14.17 11.88 16.09 13.54

COMPLIANCE

Compliance in a regulatory context is of prime importance because of an ever-increasing number of regulations and a fairly widespread lack of understanding about what is required for an organisation to be compliant. Compliance has, thus, increasingly become a concern of corporate governance.

A Compliance Function Policy for the Bank was adopted by the Board as per Reserve Bank of India guidelines. An independent Compliance department, headed by a Chief Compliance Officer of the rank of General Manager, is functioning at Head office. Compliance of statutory, regulatory and internal guidelines of the Bank is the scope of operation of the compliance function of the Bank.

OFFICIAL LANGUAGE DEPT.

Bank''s Official Language Department successfully organized a series of Official Language conferences at Kolkata, Ahmedabad and New Delhi. Work done by our Bank has been appreciated by Govt. of India, Ministry of Home, Offcial Language Department.

Our Bank was the first to implement Rajbhasha model "Rajbhasha Prayog – Aapsi Sanwad – Sarthaki Disha" designed by Finance Ministry, Financial Services department, New Delhi by organizing this program at Lucknow (17.10.2013). A CD about this program was sent to the Head Offices of Nationalized Banks.

BANK''S SUBSIDIARY / ASSOCIATES

1. BOI Shareholding Ltd.

2. BOI AXA Investment Managers Pvt. Ltd.

3. BOI AXA Trusteeship Services Pvt. Ltd.

4. PT. Bank of India (Indonesia) Tbk.

5. Bank of India (Tanzania) Ltd.

6. Bank of India (New Zealand) Ltd.

7. Bank of India (Botswana) Ltd.

8. Star Union Dai-ichi Life Insurance Company Ltd. (SUDLife).

9. STCI Finance Limited.

10. Indo Zambia Bank Ltd. (IZB).

STRATEGIC INVESTMENT / ALLIANCES

1. Central Depository Services (India) Ltd. (CDSL).

2. ASREC (India) Ltd.

3. Credit Information Bureau (India) Ltd. (CIBIL).

4. National Collateral Management Services Ltd. (NCMSL).

5. SWIFT India Domestic Service Pvt. Ltd.

6. SME Rating Agency of India Ltd. (SMERA).

BUSINESS RESPONSIBILITY REPORTING

In terms of SEBI guidelines, text of the Business Responsibility Reporting is available on our website i.e. www.bankofndia.co.in

DIRECTORS'' RESPONSIBILITY STATEMENT

The Directors confirm that in the preparation of the annual accounts for the year ended March 31, 2014,

(a) The applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

(b) The accounting policies framed in accordance with the guidelines of the Reserve Bank of India were consistently applied. Reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit and loss of the Bank for the year ended March 31, 2014;

(c) Proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing banks in India for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

(d) Annual accounts have been prepared on a going concern basis;

(e) Internal financial controls system to be followed by the Bank were laid down and that such internal financial controls are adequate and were operating effectively;

(f) Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENT

The Board expresses its gratitude to the Government of India, Reserve Bank of India and Securities and Exchanges Board of India for the valuable guidance and support received from them. The Board also thanks financial Institutions and correspondent banks for their co-operation and support. The Board acknowledges the unstinted support of its customers and shareholders and also wishes to place on record its appreciation of staff members for their dedicated services and contribution for the overall performance of the Bank.



For and on behalf of the Board of Directors

Sd/-

Place : Mumbai (Mrs. V R Iyer)

Date : 15.05.2014 Chairperson & Managing Director


Mar 31, 2012

The Board of Directors have pleasure in presenting the Bank's Annual Report along with the audited statement of accounts and the cash flow statement for the year ended 31st March, 2012.

PERFORMANCE HIGHLIGHTS

FINANCIAL PARAMETERS

- Operating profit Rs 6,694 crore, with 24.33% growth over the previous year.

- Net Profit Rs 2,678 crore, recording 7.59% growth over previous year.

- Capital Adequacy Ratio at 11.95% as against 12.17% in previous year (under Basel-II).

- Net Worth at Rs 18,759 crore grew by 21.03% over March, 2011.

- Book Value per share Rs 326.52 (Rs 283.24 previous year)

- Gross NPA ratio at 2.34% as on 31.03.2012.

- Net NPA ratio at 1.47% as on 31.03.2012.

- Total business (Deposit Advances) reached Rs 5,69,710 crore recording a growth of Rs 54,670crore (10.61%).

- Total deposits increased by Rs 19,330 crore reached the level of Rs 3,18,216crore, a growth of 6.47%. Share of low cost deposits in the domestic deposits is 34.25% as on 31.03.2012 as against 29.18% as on 31.03.2011.

- Gross credit touched Rs 2,51,494 crore, recording a growth of 16.35%.

- Priority Sector lending constituted 36.67% of Net Adjusted Bank Credit and the share of Agricultural Credit to Net Adjusted Bank Credit was 14.54%.

- Credit to SME sector grew from Rs 30,045 crore to Rs 32,270 crore recording a growth of 7.41%.

- Schematic Retail credit grew by 14.82% from Rs 16,649 crore to Rs 19,116 crore.

- Export Credit registered a growth of Rs 791 crore, i.e., 10.50% growth over previous year to reach Rs 8,128 crore as on 31.03.2012.

NEW PRODUCTS & SERVICES

- Welcome Kits introduced for NRI Customers opening NRE/NRO accounts at foreign centers.

- Calculation of interest on Savings Bank account from 1st April 2010 has been changed from monthly product basis to daily product basis.

- As per Finance Ministry guidelines and recommendations, the Bank's corporate web-site (English) has been enabled for differently abled persons.

- The Bank has introduced a new format of Savings Bank Passbook (Horizontal Format) which will print all details of the transaction on the same page as against the existing format (Vertical Format) where the details are printed on two pages.

- As per Banking Codes and Standards Board of India (BCSBI) requirements, the Bank is printing helpline number on the passbook & statement of accounts.

- The Bank introduced issuance of insta pin for Debit- cum-ATM Card. This will resolve the customer grievance for non-receipt of Re-pin and also save the effort and expenses in generating and mailing Re-pins.

- Quarterly consolidated Statement of a/c is sent to the Diamond customers in PDF format via email.

- As a fraud prevention measure, SMS alerts - Star Sandesh are generated and provided to all customers who have registered their mobile numbers with the Bank for all Debit transactions from delivery channels (Internet banking/ATM/POS); all Debit clearing transactions of Rs 25,000/- and above; all Customer induced debit transfer & cash payments of Rs 10,000/- and above; all Debit ECS transactions of Rs 10,000/- and above; all Debit RTGS / NEFT transactions and acknowledgment on accepting the cheque book issue request.

- Enabling internet banking customers to make online Fixed Deposit with nomination facility.

- Hot Listing/Reset/Unblock/Change of Debit Cum ATM card PIN using Internet Banking password.

- Viewing of Annual Tax Statement (Form 26AS).

- Star Trade - Online share trading - Integration with Gupta Equities.

- Extended the facility of online e-Payment to the customers holding Bank's Debit-cum-ATM card. This will enable the customers to use their Debit-cum-ATM cards for e-payments in addition to credit card Internet banking account.

- Mobile Banking facility is introduced as the latest alternate delivery channel which allows customers to do banking activities virtually from the convenience of the Mobile phone at any time and from anywhere. This facility is extended to all Retail internet banking customers and includes features like Balance enquiry, last five transactions, Cheque status, Funds Transfer & Mobile Payments.

- Online Interbank Fund Transfer across banks, through Star Connect Internet Banking Services, using RTGS/ NEFT.

- BOI Star e-Pay for Auto-pay or on-line payment of various utility services / bills.

- e-Payment for Direct & Indirect, Central Excise & Service Tax.

- Star e-Share Trade to trade in shares.

- e-Freight Payment.

- Online Payment of Directorate General of Foreign Trade (DGFT) license fees.

- Online Booking of Railway & Airlines Ticket.

- Online Application for Education loan.

- Provision to make online bid-cum-application for Application Supported by Blocked Amount (ASBA) IPO issues by Retail Internet Banking Customers having account with any DPO.

- BOI-BTM (Banking through Mobile launched).

- DHAN-AADHAR CARD Launched with micro ATM & Biometric pin authentication facility.

- Introduction of Personal Accident Insurance Cover for all No Frill account holders.

- Bank has launched BOI Star Pension Aadhar Card, BOI Privilege International Credit & Debit Cards and RuPay Card as alternate delivery channels.

- For International Travellers BOI Star International Travel Card in US Currency with Visa Affiliation has been introduced.

BUSINESS INITIATIVES

- The National Banking and Wholesale & International Banking Group segments distinctly headed by the two Executive directors are functioning independently in an organised manner.

- National Banking group at Head Office level comprising of Retail, Rural including Financial Inclusion and SME Banking business units are concentrating in customer acquisition in a big way.

- Wholesale & International Banking group at Head Office level comprising of Large, Mid Corporate Banking, Project Finance including Syndication Services, International Banking and Treasury operations are catering to bulk business opportunities.

- The mapping of Large and Mid-Corporate accounts to the respective branches has been completed. This process of updation is undertaken on yearly intervals on 31st March.

- Presently 52 Rural Processing Centres are operational across 35 zones.

- Product Innovative Cells have been planned to be opened to explore new territories for penetration in agricultural business.

- All RRBs of the Bank have migrated to Core Banking Solution and are RTGS / NEFT enabled.

- Cash & Fidelity Insurance has been introduced for business correspondent channel.

- 21 Retail Business Centres are operational for quick delivery of Credit.

- Bank has introduced Star Vidhya Education Loan, BOI Star Loan against Property and Star Diamond Home Loan Schemes.

- A total of 21 SME City Centres are functioning in 20 zones. These centres have been instrumental in reduced Turn Around Time (TAT) for credit delivery.

- The 41 Mid-Corporate branches are monitored by Seven Divisional Managers.

- Bank has introduced Diamond / Platinum / Gold Customer concept for encouraging SME customers with good track record.

- Bank has launched Composite Loan Product and Demand / Term Loan Products for Medium & Small Enterprises. For SME Entrepreneurs, Star SME Contractor Credit Line, Star SME Liquid Plus, Star SME Auto Express & Star SME Education Plus Loans Schemes have been introduced.

- The 10 Large Corporate branches are directly monitored by the General Manager from Head Office.

- Lead Management System (Sales Force Automation), to generate, track and monitor leads, is stabilized and functioning satisfactorily.

- A scheme for extending financial assistance at concessional rate of 4% to select low income groups for productive endeavours under the Differential Rate of Interest (DRI) Scheme is being implemented by the Bank. The Bank has extended financial assistance to 11665 beneficiaries during the year.

- The Bank has been actively involved in implementation of the Golden Jubilee Rural Housing Finance Scheme (GJRHFS) and has achieved the target allocated by National Housing Bank for the year. During the year, Bank has sanctioned 1443 cases under GJRHFS.

- The Bank is very active in implementing programme of Financial Inclusion as a movement extending all banking products and services to all who are currently deprived from these services. So far, first step towards achievement of Financial Inclusion was opening of No- Frill Accounts and accordingly, the Bank has opened 12.63 lakh No-Frill Accounts during FY 2011-12.

- The Bank is also implementing IT solutions on end to end basis using hand held devices and smart cards. The Bank has issued/ enrolled 7.65 lakh smart cards.

- Project Finance And Syndications Group: It takes up assignments of technical appraisal, underwriting and syndication of loans. During FY 12 financial closures were done with a project cost of Rs 13,119 Crore and syndicated debt of Rs 20,957 Crore. Bank of India achieved fifth position in syndication space as per the Bloomberg Lead tables for the calendar year 2011.

- The Bank has created a new SME vertical headed by a General Manager to cater to the specific business needs of the segment. A more inclusive definition has been given for SME business to include all business activities with a turnover of upto Rs 100 crore. The vertical will look for growth not only on credit, but CASA, retail business, fee based income and third party products in the SME segment.

- Mobile Banking facility is introduced as the latest alternate delivery channel which allows customers to do banking activities virtually from the convenience of the Mobile phone at any time and from anywhere. This facility is extended to all Retail internet banking customers and includes features like Balance enquiry, last five transactions, Cheque status, Funds Transfer & Mobile Payments.

- Established Global Remittance Centre for centralizing some of the activities related to NRI Customers which would hasten turnaround time and product delivery and also enable proactive marketing strategies & grievance redressal mechanism.

AWARDS & ACCOLADES

- Bank of India has been rated by The Economic Times/ The Nielsen company survey

- The most Trusted Brand(MTB) 2011

- Under PSU Banking Category-2nd next to SBI

- Under Top Service Brands-11th

- Government of India has also acknowledged Bank's performance in lending Micro & Small Enterprises sector conferring second best performance award (next to SBI). The Bank has also recognized as "Best Performing Bank" for covering maximum number of Micro & Small accounts under collateral free lending scheme of CGTMSE.

- CIO Green IT Award.

- Bank of India, Mumbai North Zone received Third Prize for use of Official Language Hindi in Bank from Government of India, Ministry of Home Affairs, Official Language Department.

FINANCIAL REVIEW

FINANCIAL PERFORMANCE

The Bank recorded an Operating Profit of Rs 6,693.95 crore, (previous year Rs 5,384.23 crore). Net Profit stood at Rs 2677.52 crore (previous year Rs 2,488.71 crore).

Net interest income grew by 6.44% due to rise in volumes of business mix by 10.61% (from Rs 5,15,040.06 crore to Rs 5,69,710.32 crore). Non-interest income increased by 25.74% and covered 67.23% of Operating Expenses as against 52.12% in the previous year.

The Financial performance of the Bank for the year 2011-12 is summarised below:

(Amount in Rs crore)

Particulars 2010-11 2011-12 Growth (%)

Net Interest Income 7,810.69 8,313.43 6.44

Non-Interest Income 2,641.77 3,321.77 25.74

Operating Expenses 5,068.24 4,940.66 -2.52

Operating Profit 5,384.23 6,693.95 24.33

Provisions / Contingencies 2,895.52 4.016.43 38.71

Net Profit 2,488.71 2,677.52 7.59

Earnings per share (Rs) 47.35 48.98 3.44

Book value per share (Rs) 283.24 326.52 15.28

Return on Average Networth (%) 17.80 15.63 -

Return on Average Assets (%) 0.82 0.72 -

Some of the Key Financial Ratios are presented below:

(Percentage) (%)

Parameters 2010-11 2011-12

Yield on Advances 8.62 9.38

Yield on Investment 7.59 7.69

Yield on Funds 7.14 7.88

Cost of Deposits 5.03 6.01

Cost of Funds 4.57 5.58

Net Interest Margin 2.92 2.52

Non Interest Income to Operating Expenses 52.12 67.22

Other Income to Average Working Fund 0.87 0.92

Operating Expenses to Average Working Fund 1.66 1.37

Staff Expenses to Average Working Fund 1.14 0.84

Other operating Exp. to Average Working Fund 0.52 0.52

Asset Utilisation Ratio 1.77 1.85

Non-Interest Income to Total Income 10.83 10.44

Non-Interest Income to Net Income 25.27 28.55

Cost to Net Income 48.49 42.47

SEGMENT- WISE PERFORMANCE

The Bank earned an Operating Profit of Rs 6,693.95 crore during the year 2011-12. The contribution made through Treasury operations was Rs 5,909.00 crore and other banking operation earned a profit of Rs 784.95 crore. The unallocable expenditure net of unallocable income was Rs 152.98 crore during the year 2011-12.

DIVIDEND

A Dividend at the rate of Rs 7/- per share (70%) for the year, has been recommended. The total dividend payment amounts to Rs 465.98 crore (including dividend distribution tax).

CAPITAL

Net worth of the Bank has increased to Rs 18,759.40 crore from Rs 15,499.50 crore during the financial year ending 2011- 12. During the year, the Bank has increased its equity capital through Preferential Issue of Equity Shares to the Insurance Corporation of India.

CAPITAL ADEQUACY

As per Basel II framework, the Bank's Capital Adequacy Ratio of 11.95% which was higher than the regulatory requirement of 10%.

Details of Capital Adequacy (BASEL II) are shown as under :

(Rs in crore)

Particulars 31.03.2011 31.03.2012 (Under BASEL - II) Amount CRAR (%) Amount CRAR (%)

Tier I Capital 17,047 8.33 20,230 8.59

Tier II Capital 7,867 3.84 7,916 3.36

Total Capital 24,914 12.17 28,147 11.95

Risk Weighted Assets 2,04,76 - 2,35,466 _

BUSINESS REVIEW

DEPOSITS

Bank's total Deposits increased by Rs 19,330.22 crore to Rs 3,18,216.03 crore during the year recording a growth of 6.47%. The domestic deposits stood at Rs 2,48,475.30 crore and overseas deposits at Rs 69,741 crore.

Non-Resident Deposits of the Bank stood at Rs 13,778 crore which constituted 5.60% of aggregate domestic deposits.

Savings Bank deposits grew by 13.05% and Current deposits logged a growth of 3.81%. The share of low cost deposits comprising of savings and current deposits to total domestic deposits (excluding Inter Bank deposit) is 34.25%.

The Bank has a well diversified deposit base with 12% of domestic deposits coming from rural areas, 13% from semi urban, 18% from urban and 57% from metro areas. The bank's total clientele base of 54.09 million consisted of 49.90 million depositors and 4.19 million borrowers as on 31st of March, 2012.

ADVANCES

The Gross Advances of the Bank increased from Rs 2,16,154 crore as on 31.03.2011 to Rs 2,51,494 crore as on 31.03.2012, recording a growth rate of 16.4%.

Under Large Corporate portfolio, the Bank added 88 new customers and accounts, 13 Large Corporate Banking Branches, 41 Mid Corporate Branches and 9 Overseas NRI branches continue to cater exclusively to the specialised credit requirement of the Corporate borrowers/exporters.

INFRASTRUCTURE FINANCE

During the year, the Bank sanctioned fund based limits of Rs 4,654 crore and Non Fund Based limits Rs 336 crore under infrastructure projects covering power generation, telecommunications, ports, roads, construction contractors.

EXPORT CREDIT

The Bank is active in meeting the importers and exporters clients' financial requirements both in domestic and in foreign currency as well. Bank's 208 branches across the country are authorized to handle foreign exchange business and cater to the credit/ foreign exchange needs of importers & exporters. The Bank's export credit registered a growth of Rs 739 Crore i.e. 10% increase over March 2011 and reached a level of Rs 8,128 Crore as on 31st March, 2012. The share of export credit to net adjusted bank credit as at March 2012 was 5.04%.

Financial requirements of both exporters and non-exporters are met through ECB at the Bank's overseas branches and Foreign Currency loans at domestic branches. The total amount of such advances as at 31.03.2012 was USD 1405.84 million (Comprising of ECBs USD 652.12 Mn. and Foreign Currency Loan of USD 753.72 Mn.) equivalent to Rs 7,152.21 crore. The bank also extended pre-shipment and post-shipment export credit in foreign currency and the amount outstanding as at 31.03.2012 was USD 244.75 Mn. (equivalent to Rs 1,245.17 crore).

Wholesale and International Banking Group:

LARGE CORPORATE

The Large Corporate segment constitutes 47% share in total advances as on 31.03.2012. Advances to this important segment has increased from Rs 80,821 crore as on 31.03.2011 to Rs 86,703 crore as on 31.03.2012. It has been decided that large corporate share in total advances needs to be pruned gradually to around 42%, so that funds may be deployed in segments where yield is comparatively better.

With implementation of "SANKALP 10,000", Large Corporate Credit set-up has been re-designed for:.

- Separate Large Corporate Vertical has been created to cater to the large corporates having sales turnover above Rs 500 Crore. In order to have more focused attention and to reduce turnaround time, eight additional LCBs were opened during the year 2010-11 and two in the year 2011-12 taking the total LCBs to ten.

- Accounts at Large Corporate branches have been mapped with RSMs who would look after all corporate needs of the customer for cash management, forex, treasury products, trade finance, deposits, retail banking and third party products and customer will have one point contact through the Relationship Manager for all banking needs.

- Credit business at Large Corporate Branches have been segregated between Relationship Managers reporting to Branch Head and Credit Appraisal Officers reporting to Credit Team Leader as measure of Risk Management. Credit proposals processed at Large Corporate Branch are now sent directly to General Manager, Head Office, Large Corporate. This has resulted in reduction of turnaround time.

- Bank has put system in place to monitor pending Proposals / references at Large Corporate branches as well as at Head Office level. This has helped in reducing turn around time.

Strategies:

— The Bank, for reducing turn around time, has developed CAPS module for credit processing.

— Large Corporate branches, apart from meeting the credit needs of borrowers, are now taking care of entire banking needs of the corporate customers. The Relationship Managers (RSMs) have been posted at Large Corporate branches who serve as a focal point for corporate clients and canvass new business.

MID CORPORATE

Mid Corporate vertical was established in October, 2010 with the sole purpose of meeting all banking related requirements of the customer under a single roof. The purpose of setting up of separate Mid Corporate vertical is to harness the large potential in the segment which offers higher yields with wider risk spread.

Mid Corporate covers new companies with project cost of Rs 10 crore - Rs100 crore. For existing units sales turn over criteria of Rs 100 crore - Rs 500 crore applies. Mid Corporate vertical operates through 7 (Seven) Divisional Offices and 41 Mid Corporate branches. There are 12 (Twelve ) Credit Processing Centres (CPC) established exclusively for processing of the proposals.

During the FY 2011-12, the Credit business under Mid Corporate vertical grew from Rs 18,483 crore to Rs 22,234 Crore registering a growth of 20.30%. Similarly, Deposit business grew from Rs 8,360 crore to Rs 9,483 crore registering a growth of 13.40%. Mid Corporate vertical contributes 12.04% of the total domestic Credit and 4.08% of domestic Deposit business of the Bank.

PROJECT FINANCE AND SYNDICATIONS GROUP

Project Finance and Syndications Group of the bank is manned by highly experienced and qualified professionals. It undertakes appraisals of infrastructure and industrial projects.

It takes up assignments of technical appraisal, underwriting and syndication of loans. During the Year 2011-12 financial closures were done with a project cost of Rs 13,119 crore and syndicated debt of Rs 20,957 crore. Bank of India improved All India Rankings in Domestic Syndication from 6th to 5th in the Bloomberg Lead Tables for the calendar year 2011.

The bank has recruited Engineers and MBA's from the Industry with diverse experience to strengthen the technical appraisal and syndication team of the Bank.

Bank is also acting as Mandated Lead Arranger (MLA) and Joint Book Runner (JBR) for Multicurrency International Syndication loans and arranged loan in USD, JPY, EURO and GBP currencies for Indian Corporate for their expansion/ acquisition and Joint Ventures, covering a wide range of industries.

The technical appraisal department, which supports the syndication team, continued appraisal of industrial credit apart from that for syndicated loans. The team comprising of professional engineers, evaluated technology related risks for a business worth Rs 4,300 Crore for the year, enabling the bank to improve quality of industrial assets. The operations of the Technical Appraisal Department, translated into a fee based income of Rs 21.46 Crore for the Bank during the year.

TRANSACTION BANKING

Transaction Banking department is focusing on 4 business lines, with an intention to make them major revenue drivers for the Bank. They are:

- Cash Management Services,

- Channel Finance,

- Trade Finance, and

- Garnering Government Business

In the year 2011-12 Bank has made significant strides in Cash Management Services (CMS) space by adding 50 new clients and increasing the revenue from this business segment manifold.

The process for acquiring the new software system has been initiated. The system will take care of CMS, Channel Finance and centralization of trade finance. The direct customer interface through a portal will be made available through the new system. The first module of the new system is likely to be rolled out by August-September 2012. The installation will be in phases and is expected to be completed by March 2013. The new software will have integration with Bank's core system finacle with Host to Host connectivity, web access to the clients with capabilities to integrate with client ERP software. This will result in better targeting of clientele and will enhance the business volume and fee based income in addition to the sizable float balances. On standalone basis, small banks have been targeted for correspondent banking arrangements and deposit heavy clients for float.

For Bank's corporate and HNW clients, cash pick up facility (Door Step Banking) has been put in place at all NBG offices. The initiative has received positive response from target clientele who have been relieved from the worries and risks of handling and carrying huge amount of cash to Bank.

During the year 2011-12 Bank has made specific marketing efforts and has made liaison with the State Government Departments of Chhattisgarh (Raipur Zone), Jharkhand (Ranchi Zone), Uttaranchal (Ghaziabad Zone), Assam & Meghalaya (Siliguri Zone) which has yielded good results.

INTERNATIONAL BANKING

The Bank has presence across 5 continents and 19 countries covering all the major financial centres such as London, New York, Paris, Tokyo, Singapore and Hong Kong. As on 31.03.2012, bank has a network of 49 branches and offices abroad, including 5 representative offices. It also has 3 subsidiaries and 1 Joint Venture abroad.

Bank's subsidiary in New Zealand was opened on 6thOctober, 2011. Opening of subsidiaries at Uganda, Canada, Botswana and Brazil, upgradation of Representative Office to Branch in Johannesburg and Ho Chi Minh City and localisation of Kenya operations have reached an advanced stage. The Bank has a Global Processing Centre (GPC) at Singapore, thereby improving the Management Information system and the customer service. The integration of systems of overseas branches to Indian Operations will be completed by December 2012, bringing them under Finacle Core Banking platform.

Bank is acting as Mandated Lead Arranger (MLA) and Joint Book Runner (JBR) for Multicurrency International Syndication loans and has arranged loans in USD, JPY,

EURO and GBP currencies for Indian Corporates for their expansion / acquisition and Joint Ventures, covering a wide range of industries.

Bank has opened Global Remittance Centre (GRC) in Mumbai. The inward remittances, NRE/NRO Account opening of NRI customers have been centralized at GRC. For service to non resident customers in Deposits and remittances, SMS alerts for remitter as well as beneficiary for remittance from Gulf Countries have been introduced. Straight through processing (STP) for Speed Remittances has been put in place and viewing facility has been set up for offsite account details. The bank has introduced BOI Premium NR Deposit Scheme, Star e-Remit for UK based customers.

As at 31st March, 2012, total deposits at foreign branches stood at Rs 69,741 crore, registering a rise of Rs 23,818 crore (51.97%) over previous year. Total advances stood at Rs 73,544 crore recording a rise of Rs 22,537 crore (44.2%) over previous year. Investments were at Rs 4278 crore.

Operating profit of foreign branches for the year ended March 2012 at Rs 1,088 crore has shown a rise of Rs 332 crore over previous year. Correspondingly, Net profit at Rs 628 crore has also increased by Rs 133 crore over March 2011.

In terms of contribution to global business and profit, foreign branches contributed 25.1% towards global business, 16.2% and 23.5% towards Operating profit and Net profit respectively for the year ended 31.03.12.

FOREX BUSINESS

The forex business handled by the bank has shown good growth. During the year 2011-12, Export and Import turnover was Rs 52,546 crore and Rs 46,460 crore respectively. The Bank continues to be a leading player in forex market. The aggregate turnover of Bank's Treasury Branch during the year was Rs 26,60,625 crore.

TREASURY INVESTMENTS

The yield on benchmark 10 year G-Sec which was 8.01% as on 31st march, 2011 has since hardened to 8.57% as on 31.03.2012. However, movement of G-Sec yields was highly volatile and the same moved within a wide range between 8.15% to 8.98% during the year. The Bank had maintained a higher level of investments keeping a balance between interest income and market risk. The Bank had maintained SLR investments at higher level in excess of the regulatory requirement of 24% of Net Demand & Time Liabilities so that the excess SLR can be utilised for borrowing from Repo/CBLO window. The gross SLR investments were Rs 80,271 crore, (87.42% of total investments) and Non-SLR investments stood at Rs 11,554 crore, (12.58% of total investments).

The Investments are made in accordance with the comprehensive policy in this regard approved by the Board.

The policy is reviewed periodically to respond to market developments/regulatory requirements.

TREASURY OPERATIONS

The Bank continued to play an active role in all segments of the market - Funds, Forex and Bonds during the year 2011-12. Taking advantage of G-sec rate movements, bank also churned its investment portfolio and earned profits from trading and sale of securities. The Bank has taken advantage of arbitrage opportunity within various market segments and could place the excess rupee funds in Certificate of Deposits (CD), Buy/Sell Foreign Exchange swaps, term money market thereof earning a spread of 1% to 1.5%. The Bank has built up a portfolio of Rs 2,592 crore in CDs, lent Rs 850 Crore in Term Money, by borrowing in CBLO/Repo against 'T' Bills and surplus securities thereby earning a spread of approximately 1% to 1.5%.

National Banking Group (Head Office):

RURAL BANKING

1. Priority Sector Advances:

The bank has always been one of the leaders in servicing to the priority and agriculture sectors, with its vast network of rural and semi-urban branches and committed personnel. Priority sector advances, apart from presenting a big business opportunity, have wide social ramifications.

The Bank has registered an outstanding level of Rs 59,245 crore under Priority Sector which is 36.67% of Adjusted Net Bank Credit (ANBC).

Under Special Agricultural Credit Plan, Bank could disbursed Rs 13,067 crore upto March 2012.

The position of priority sector advances under various segments is as under:

(Rs in Crore) As on 31st March Growth 2011 2012 Amount Percentage

1. Agriculture 17,632 23,468 5,836 33.09

2. Small Enterprise 23,705 27,128 3,423 14.44

3. Education 1,927 2,193 266 13.80

4. Housing 5,616 6,416 800 14.25

Total Priority Sector 48,880 59,205 10,325 21.12

2. Centralized Processing Centres in focused districts:

As a part of implementation of Sankalp 10000 initiatives, Centralized Processing Centres have been established in select zones with the objective of augmenting agriculture credit. So far, 52 CPCs have been opened.

3. Kisan Credit Cards:

Kisan Credit Card Scheme aims at providing need based and timely credit support to the farmers for their cultivation needs as well as non-farm activities with an objective to bring about flexible and operational freedom in credit utilization. During the year Bank has issued 167440 new Kisan Credit Cards with aggregate limit of Rs 7,005 crore. The Bank has so far issued 1145162 Kisan Credit Cards (cumulative) involving financial outlay of Rs 8,179 crore.

4. Debt Swap :

Bank has designed 'Debt Swap' Scheme with an objective to help the indebted farmers to redeem their outstanding dues to money lenders and to mitigate acute distress faced by the farmers due to heavy burden of debt from non-institutional lenders at unrealistic interest rates. Bank has made more than 146 villages as money lender free villages and also financed more than 13000 beneficiaries.

5. Differential Rate of Interest :

A scheme for extending financial assistance at concessional interest rate of 4% to selected low income groups for productive endeavors under the name Differential Rate of Interest (DRI) Scheme is being implemented by the Bank. The Bank has sanctioned 11665 cases under DRI Scheme during the year.

6. Prime Minister's New 15 Point Programme for the welfare of Minority Communities :

With the focused attention for the welfare of minority communities, Bank has been extending finance to the minority communities of Sikhs, Muslims, Christians, Zoroastrians and Buddhists. During the year 2011-12, Bank has financed Rs 275.49 crore to the various minority communities and registered an outstanding level of Rs 8,184 crore as on March 2012.

7. Golden Jubilee Rural Housing Finance Scheme :

The Bank has been actively involved in implementation of the Golden Jubilee Rural Housing Finance Scheme (GJRHFS) and has achieved the target of Rs 72.73 crore allocated by National Housing Bank for the year. During the year, Bank has sanctioned 1443 cases under GJRHFS.

8. Micro Finance / Micro Credit :

The Scheme of Micro Credit has been found to be an effective instrument for lifting the poor above the level of poverty by providing them increased self employment opportunities and making them credit worthy.

Bank is having more than 99984 SHGs credit linked with Financial Outlay of Rs 1,631 crore. Out of this, more than 80328 women Self Help Groups are credit linked to the Bank having financial outlay of Rs 1,480 crore.

9. Solar Energy Home Lighting System :

To address the issues of electricity paucity the Bank has prepared and launched a scheme on Solar Energy Home Lighting System. The Bank extends financial assistance to the prospective borrowers for purchase and installation of Solar Energy Home Lighting System. The Bank has so far sanctioned 1072 units with financial outlay of Rs 6.17 crore.

10. Mega project - 140 villages :

The main objective of the scheme is to create awareness and bring urban amenities to rural areas including technology to rural households as available to urban clientele. So far, 140 villages spread over in 17 States and 78 districts have been covered under the Scheme. The Bank has financed to the tune of Rs 492 crore under the scheme through 51000 beneficiary accounts.

11. Lead Bank Responsibility:

The Bank has been assigned with Lead Bank responsibility in 48 districts spread over five states of Jharkhand (15), Maharashtra (12), Madhya Pradesh (12), Uttar Pradesh (7) and Orissa (2). The Bank has been successfully discharging its duties of Lead Bank in all these districts. The Annual Credit Plan (ACP) for the year 2011-12 was launched in all the Lead Districts involving credit outlay of Rs 7,483 crore for the Bank. The achievement of the Bank is Rs 7,495 crore which is 100.16% of ACP.

FINANCIAL INCLUSION

Financial Inclusion is integral to the inclusive growth process and sustainable development of the country. There has been a strategic shift in sustainable financial inclusion to the adoption of market oriented approach viewing financial inclusion as a viable business proposition. The paradigm has decidedly shifted from "CSR" to "economic viability". It has been made possible with the availability of ICT based solution to support secured and sufficiently low cost transactions required by the financial sector. The Bank is viewing these prospective banking service users through a prism of opportunity rather than obligation.

The Bank has carved out Financial Inclusion as a new Business Unit headed by General Manager to drive board approved Financial Inclusion Plan (2010-13). Bank is committed to provide banking services through Business Correspondents and ICT based hand held devices (micro ATMs) to 29000 villages, connect 125 lakh people through no frill accounts with inbuilt overdraft facilities to take care of their urgent consumption needs, extend entrepreneurship credit to eligible people to earn their sustainable livelihood, offer mobile based remittance facility to help mainly the migrant labour/ self employed to remit money to their family members and facilitate access to Bank's third party products including Micro Insurance amongst other services.

The progress under Financial Inclusion Plan (FIP) in 2011-12 is summarized as under:-

- No. of No frill accounts opened : 62.69 lakh (50.07 lakh in 2010-11)

- No. of Smart Cards issued : 7.65 lakh

- GCC/KCC issued : Rs 8,423 crore (12.44 lakh accounts)

- Business Correspondents engaged : 3813 Corporate BCs

- Channel Management Partners engaged : 81

- No. of Villages where 100% FI achieved : 10008

The Bank has achieved 100% Financial Inclusion in all 2992 allotted villages with population above 2000 as on 31.03.2011, ahead of targeted date of 31.03.2012 by GOI/ RBI. Robust operational systems with adequate risk mitigants and best practices have been built up and are being pursued.

Star Swarojgar Prashikshan Sansthan (RSETIs)

With the aim of mitigating the unemployment problem among the rural youth, the Bank took initiative to form a dedicated trust named "STAR SWAROJGAR PRASHIKSHAN SANSTHAN (SSPS)" in 2005. Two SSPS (RSETIs) were established at Bhopal and Kolhapur immediately after formation of the trust. Ministry of Rural Development, Government of India found value in the initiative and proposed to support establishment of such Institute in each district of the country to tap the rural BPL youth from the rural hinterland. The formation, nomenclature, sponsorship, management, programme structure, staffing and administration, MIS were defined. Bank was allotted 42 centres to establish institutes. Bank has established 41 such institutes in Jharkhand, Orissa, Uttar Pradesh, Madhya Pradesh, Maharashtra and West Bengal. 24968 participants have been trained and 9626 have been provided with credit inputs from these centres till date.

Bank has planned to upgrade/establish five integrated SSPS (RSETIs) at Ranchi (Jharkhand), Barabanki (Uttar Pradesh), Bhopal (Madhya Pradesh), Pen (Maharashtra) and Belgaum (Karnataka) for extending the scope of SSPS (RSETIs) to primary health care, adult literacy, comprehensive financial access and planning for growth, strengthening civil society organization, environmental sustainability. Bank would like to collaborate with and foster strategic partnership aiming at bringing diverse resources from the public, private and social sectors to bear on the challenges surrounding these areas.

Financial literacy and Credit Counseling Centres (ABHAY)

Bank has recognized the need of a common person for financial education to appreciate the complexities of financial dealing with financial intermediaries on matters relating to personal finances on a day to day basis. Further, those who suffer from financial problems due to unmanageable debts also need credit counseling to come out of the repayment obligations outside bankruptcy and also learn credit usages and improve their financial management. It is in this background that Bank has opened 5 (five) Credit counseling centres named ABHAY at Mumbai, Wardha, Gumla, Kolkata and Chennai and they are manned by senior and experienced bankers. In addition to remedial counseling on case to case basis for the distressed borrowers, preventive counseling through media, workshops and seminars are also given. So far 9370 cases of counseling were taken up and disposed off quickly bringing smile on the faces of the distressed people.

Regional Rural Banks

Bank has sponsored 5 (five) Regional Rural Banks (RRBs) namely Jharkhand Gramin Bank (Jharkhand State), Aryavart Gramin Bank (Uttar Pradesh State), Baitarani Gramya Bank (Orissa State), Narmada Malwa Gramin Bank (Madhya Pradesh State) and Wainganga Krishna Gramin Bank (Maharashtra State). All RRBs are profit making. All Branches and administrative offices of the Gramin Banks are now on CBS platform. These banks are also going to start RTGS and ATM services shortly. All RRBs taken together have a branch network of 1085 outlets and have garnered a business mix of Rs 1,17,685 Crore.

RETAIL CREDIT

The Bank during the year 2011-12, perused the policy of building up healthy retail credit portfolio. In the post recessionary period of FY 2011-12 the spring buds of reviving economy gave ample opportunity for retail credit. The Bank's retail credit portfolio increased from Rs 16,649 crore to Rs 19,116 crore as on 31st March, 2012. During this period the contours of retail credit were also redefined.

The bank has established 21 RBC's across major cities of the country to expedite the processing of retail Home Loans/ Loan Against Property and also processing of Vehicle Loans and Education Loans proposals- in case of tie-up arrangement. Home Loan segment recorded a growth of Rs 1,312(18.65%) crore from Rs 7,033crore (March, 2011) to Rs 8,345 crore (March, 2012). The Bank has formulated basic guidelines for entering in to tie-up with builders. In order to ensure that the tie-ups are encouraged only with builders with proven track record, the Zonal Managers have been empowered to scout and enter into tie-ups with builders of repute locally. The Bank is participating in the Central Govt. sponsored special Interest Subvention scheme to stimulate demand for credit to Housing in the middle and lower income segment as announced in the Union Budget.

Education loan portfolio recorded growth of 12.69% increasing from Rs 1,946 crore to Rs 2,193 crore during the year. The Bank has embraced the Interest subsidy scheme, wherein borrowers who have availed education loans during academic year 2010-11 and hailing from Economically Weaker Section are eligible for education loan interest subsidy from Government of India, Ministry of HRD, through Nodal Bank. The Bank continues to give top priority for extending credit for pursuing higher education under the Star Education Loan scheme. Towards this end, the Zonal Manager marketing teams are constantly entering into tie- up arrangements with local Institutions so that the students' requirements are speedily attended to by the Branches. Bank has also introduced a new product under Education Loan viz. BOI Star Vidya Loan to cater to students seeking admission to Premier Educational Institutions in the country such as IITs/IIMs/NIDs etc.

Autofinance segment also recorded reasonable growth of 28.92% increasing from Rs 1,408 crore to Rs 1,815 crore during the year. The strategy of tie-up arrangement with diverse reputed Auto manufacturers like Maruti Suzuki, Tata Motors, Hyundai Motors, TVS, Hero Honda. continues to provide healthy retail leads to augment Autofin portfolio.

The growth in respect of major Retail loan schemes was as under:

O/s as O/s as Growth & Scheme 31.03.2011 31.03.2012 % growth (Rs Crore) (Rs Crore) (Rs Crore)

Star Home Loan Scheme 7,033 8,345 1,312(18.65)

Star Education Loan Scheme 1,946 2,193 247(12.69)

Star Autofin Loan Scheme 1,408 1,815 407(28.92)

Star Personal Loan Scheme 649 692 30(04.53)

Star Mortgage Loan Scheme 1,495 1,632 137(09.57)

SME

The Bank has created a new SME vertical headed by a General Manager to cater to the specific business needs of the segment. A more inclusive definition has been given for SME business to include all business activities with a turnover of upto Rs 100 crore. The vertical will look for growth not only on credit, but CASA, retail business, fee based income and third party products in the SME segment.

Strategies for SME business growth, as enunciated by the Bank are:

- SME City Centres being rolled out to act as processing hubs for all SME credit business of limits above Rs 1 crore.

- 21 SME City Centres are presently operating across 20 zones.

- Credit origination and processing segregated in the City Centres as a risk management measure.

- Dedicated team for credit processing and outbound sales team for lead generation and follow up for business acquisition put in place.

- Credit processes de-layered and delegation revised upward to ensure reduced TAT.

- 4 new products launched to customize Bank's offering to SME customers.

- Pre-disbursement risk mitigation processes simplified to ensure faster disbursement.

- Simplified Application Form introduced for all SME customers irrespective of the quantum of finance.

- Master Check List formulated for obtaining information required for processing customer requests in one go.

- Tracking and Performance Management Systems introduced in the SME City Centres to bring about greater transparency in business processes.

Performance of the Bank under MSME

- Advances to Micro & Small Sector as on 31.03.2012 is Rs 27,128 Crore

- Growth over FY-2011-12 is 14.43%

- Advances to MSME (including Medium Industries) is Rs 32,270 crore

- This represents a growth of about 7.40% over FY 2010- 11.

- Growth has mainly been in Micro & Small segments in the MSME space

- NPA at 8.05% as compared to overall NPA of 2.34% of the Bank continues to be an area of concern

- Bank has put in place an OTS scheme and exhort the zones/branches to make effective use of the scheme to reduce the NPA in the current year

Strategies for achieving growth under MSME

- Formation of clusters for cluster based lending. Each Zone to identify at least 2 clusters and formulate cluster specific schemes to increase credit flow to MSME sector

- Sensitising Branches with high potential for MSME lending in order to boost credit flow, especially Micro and Small sectors

- Sensitising Branches about availability of CGTMSE insurance cover

- Conducting workshops for sales officers of SME City Centres

SANKALP 10,000

REORGANISATION OF THE BANK

Keeping its growth aspirations in mind, the Bank had in the year 2010 embarked upon a new bold vision Sankalp 10,000. This was a mammoth transformational exercise aiming at reviewing the structure, orientation, processes and the business focus. For this exercise Mckinsey and Co., the top-rated international consultants had been engaged to help identify proper growth opportunities, strategies, processes, manage the risks and above all, suggest an efficient and vibrant organisational structure which will ensure Bank's sustained and continued growth for quite some time to come Sankalp 10,000 rests on the three pillars:

- Customer First

- Building Winning Teams

- High performance Driven Culture

The organizational structure of the Bank was redesigned in two distinctly separate groups of businesses i.e (a) National Banking Group and (b) Wholesale and International Banking Group, in order to have a more focused attention to each business segment, the two groups are headed by the two Executive Directors of the Bank.

National Banking Group (Head Office) - The National Banking Group is comprised of the following Business Units:

- Rural Banking

- Financial Inclusion

- Retail Banking

- SME Banking

National Banking Group General Managers - There are 5 GMs, National Banking who head the five geographies that the country is divided into - Central, North, East, West and South. These five National Banking Group General Managers lead their respective geographies covering Rural, Retail and SME business of the Bank in the Branches/Zones.

Wholesale and International Banking Group (Head Office)

- The Wholesale and International Banking Groups are comprised of the following Business Units.

- Large Corporate Banking

- Mid-Corporate Banking

- Project Finance

- Transaction Banking

- International Banking

- Treasury

Verticals have been designed for Large Corporate and Mid-Corporate businesses to reduce Turn-Around-Time (TAT) effectively and to maximize the relationship for greater resource mobilization and augmenting fee based income also. Sourcing of Credit has been segregated from Credit appraisal and sanction to better manage risk management.

The Business Units are responsible for the entire business (end to end) and not only for credit to the respective customer/business segments. The responsibility extends to profitability of the business units and comprises of all type of banking businesses i.e Deposits, Advances, Fee Income and sale of other/third party products.

Creating Branch of the future model

Bank's Branch network remains one of the most important 'touch point' with the customer & driver of growth. To fully tap into the potential of branch network, Bank has embarked upon the plan of creating "Branch of the Future" model. The objective of the new model will be to bring about significant improvement in both customer experience and business performance. Creating a new model will also help institutionalizing the "new way of working" through the Bank.

In the Pilot phase, 5 branches, one each from NBG, have been selected vis-a-vis Chembur (NBG West), Navrangpura (NBG Central), Karol Bagh (NBG North), Bow Bazar (NBG East) and Mylapore Branch (NBG South) and converted with the new branch layout specification. The model has started yielding positive results and the bank aspires to increase number of branches manifold under this model.

The main objective of the branch of future are:

1. Redesign branch processes for account opening, passbook update, cash transactions.

2. Drive and enable customer migration to alternate channels such as ATMs, Self Service Passbook printer etc.

3. Redesign branch roles and responsibilities, staffing to have specialized sales and service roles.

4. Adopt a best-in-class activity schedule in branches.

5. New branch layout with large customer area, in-branch back office, physically separated from the customer area.

6. Automate key customer interactions (i.e., QMS, self- service passbook printer).

7. Implement new branch sales and service training.

REVIEW OF OTHER PRODUCTS & SERVICES

Card Products

The Bank is offering Five types of Credit Cards to select from to the customers. The Bank also has Two affiliate banks viz. Bank of Maharashtra and Tamilnadu Mercantile bank Ltd issuing Credit Cards under the brand name "India Card". During the year Issuing turnover witnessed a growth of -13.24% and stood at about Rs 351.45 Crore and acquiring turnover witnessed an increase of 2.2% and stood at Rs 309.27 Crore.

The Bank is also offering Five types of Debit cum ATM cards. Total Debit Cards issued as on 31.03.2012 stood at 101.42 lakh comprising of 36.41 lakh Starlinks International ATM cum Debit Cards (Visa Electron), 63.66 lakh BOI Global Debit cum ATM cards (MasterCard), 0.02 lakh Platinum Debit Cards (MasterCard), 0.15 lakh Gift Cards (Visa Electron) and 1.33 lakh Bingo Cards. Debit cards registered a growth 31.91% during the year 2011-12.

The Bank has in place bilateral and multilateral agreements with cross-section of Banks for sharing of ATMs. Thus Bank's cardholders have the privilege of accessing around 50,000 ATMs throughout the country. The Bank continues to be the settlement bank for MasterCard in India, Cash tree and Bancs networks.

Bullion Banking

Bullion banking was introduced by the Bank in November 1997. Initially the scheme was introduced at SEEPZ and Ahmedabad branches and was subsequently introduced at other branches. As on date although 9 branches are authorized to undertake bullion business only 5 branches are undertaking bullion business.

The gold is procured of consignment basis for catering to the need of Jewellery exporters and domestic jewellers. The Bank sold 11,717 kg of gold in the year 2011-12, with a turnover of Rs 2,773 crore, thereby earning an income of Rs 16.74 crore. The increase in the earning during the year was 3.93%.

STAR CASH MANAGEMENT SERVICES (STAR CMS)

The Bank has active presence in CMS space but the CMS operations have been revamped by adopting latest state of the art WEB based technology. The Bank has also entered into Correspondent banking arrangement with other Banks. Due to switch over to the WEB based software on ORACLE platform the Bank is well positioned to handle any number of transactions.

The Bank has a separate department for CMS at Head Office which monitors and controls the overall functioning of CMS. It is under the direct control of the General Manager (Transaction Banking).The CMS HUB located at M.G.Road, Mumbai takes care of the operational side of the initiative.

The Bank has over 4000 branches which are operating on CBS platform across more than 1000 cities and towns. All these branches can canvass for CMS clients for availing various CMS services.

Product-wise Capabilities

a. Local Collections:

The STAR CMS has the capability to provide location-wise daily MIS for realizations and returns. The Bank can also provide detailed listing of returns by encrypted e-mail and if required hard copy can also be mailed to the customers.

b. Bulk Collections:

Bulk collections are offered at all locations covered under local collections, but with prior approval since modalities/ systems are to be enabled. Soft copy of the details is needed for direct data upload for all Bulk collections.

c. Outstation Collections:

Day arrangements range from Day 0 - Day 21; which are always centre specific. These vary for local and upcountry cheque collection centres.

d. Physical Cash:

Physical cash can be absorbed at all locations being offered for cash management, this facility is being rolled out under Door Step banking initiative. Day arrangement will be T 1 day.

e. Payments:

Positive pay facility is available across all locations for drafts drawn on the Bank. The Bank has the facility for bulk printing of drafts/cheques and the locations can be fixed as per requirements.

f. Electronic Settlements:

The Bank has system capabilities to offer Direct Credit and Direct Debit facility. In case of Direct Debits, mandate verification is mandatory. TAT will depend upon the location of the beneficiary account.

g. Other additional services:

The Bank is open to offer services at its branches for collection of application forms for NFOs and Right Issues.

THIRD PARTY PRODUCTS

Tie-up for Life Insurance:

The Bank continued its Corporate Agency arrangement with its Joint Venture Life Insurance Company Star Union Dai-ichi Life Insurance Co Ltd. for sale of life insurance products. The Bank has around 897 employees to act as 'Specified Person' for sale of insurance products at various centres.

During the current financial year, the Bank collected premium of Rs 548 crore (Number of Policies - over 86,000) and contributed to more than 43% of the Joint Venture business.

The Bank continues to offer optional life insurance cover to its Star Home Loan and Star Education Loan borrowers under Group Policy wherein the borrowers pay subsidized premium for life cover.

Tie-up for General Insurance (Non-life) with National Insurance Co Ltd. (NICL):

The existing tie-up arrangement with NICL was converted into Corporate Agency Distribution Model in compliance with IRDA's revised guidelines covering Bancassurance Business with Distributors like Banks. The Bank has a co-branded health insurance product - BOI National Swasthya Bima Policy, which is a Family Floater Mediclaim Insurance Cover Policy available for Bank of India account holders, at a very low premium. The coverage is available for the main Account holder, Spouse and maximum of 2 Dependent Children. Entire family (Account holder, spouse and two dependent children) is covered to the extent of sum insured in as much as part of the sum insured can be availed at different times by family members individually. It has been a popular product and as on 31.03.2012 over 1.3 lakh Bank of India Account holders have taken this policy.

The total premium collected by the Bank for NICL during the financial year 2011-12 has been Rs 138 crore which earned a commission of Rs 14.51 crore.

Mutual Funds Products:

The Bank continues to be a shop for all financial needs to the customers as much as distributes various Mutual Fund products of the 9 Asset Management Companies, viz., Birla Sun Life Mutual Fund, DSP BlakhkRock Mutual Fund, Franklin Templeton Investments, HDFC Mutual Fund, IDFC Mutual Fund, ING Mutual Fund, Kotak Mutual Fund, Reliance Mutual Fund and UTI Mutual Fund.

The Bank has entered into joint venture with Bharti AXA IM to re-enter mutual fund business.

ASSET RECOVERY & NPA MANAGEMENT

The Bank continued its drive and focuss in improving its performance in the area of NPA management in the year 2011-12 as well. Reduction of NPAs is given utmost priority at the Bank and this function has steadily grown in importance. Substantial measures were initiated to augment recovery and contain NPAs. Efforts were also made to maximize recovery in written off accounts and uncharged / unrealised interest in NPA accounts which contributes to the Bank's profits significantly.

Bank has appointed Senior Executives as Nodal Officers at Five National Banking Group offices encompassing the entire Branch network for better control and recovery of NPAs.

The Bank has migrated to the identification of System Driven NPA during this year as per RBI notification.

The following table shows management of NPAs during last 3 years:

(Rs in crore) Item 31.03.10 31.03.11 31.03.12 (Actual) (Actual) (Actual)

GROSS NPA (Opening) 2,471 4,883 4,882

Less:

Cash-Recovery 622 895 1,205

Upgradations 204 1,038 487

Write-off 743 881 2,415

Agr.Debt Waiver/Debt Relief Scheme 2008 0 0 0

Total Reduction 1,569 2,814 4,107

Add:

Slippages 4,162 2,908 5,401

Less Unrealised Interest (URI) (introduced from F.Y 2009-10) 181 166 212

GROSS NPA (Closing) 4,883 4,811 5,894

Recovery in W/Off A/cs, UCI/URI 300 383 672

Net NPA 2,207 1,945 3,656

% of Gross NPA to Gross Advances 2.85 2.23 2.34

% of Net NPA to Net Advances 1.31 0.91 1.47

To boost recovery in small and soft impaired (NPA) accounts, two existing schemes have been modified as under:-

i) Star Sanjeevani Incentive Scheme for NPAs upto Rs 50 lakhs

ii) Incentive Scheme for Upgradation of accounts upto Rs 100 lakhs in sub-standard category.

The above Schemes have been introduced with intention to motivate the field level staff and reduce the dependence on Professional Enforcement Agents. This has paid rich dividends in the form of involvement of staff at every level.

Performance under Star-Sanjeevani Incentive schemes was as below:

(Rs in Crore)

Recovery during 2011-12 Amount

Recovery in LIVE NPAs 557.95

Recovery in written-off A/cs 29.58

Total Recovery 557.95

Recovery Camps and participation in LOK ADALAT for speedy resolution of small NPAs has also been undertaken in a big way at the Zones. The Bank has made recovery of Rs 142.38 Crore through LOK-ADALAT and Recovery Camps.

CREDIT MONITORING:

This is a critical area for the bank and it's importance has steadily grown, as retention of 'Asset quality' is the buzzword with rising interest rates, slowdown in the economy, high input cost squeezing profitability of various industries, besides, switching over to the system based identification and collation of NPAs form September 2011.

- The health of the advance accounts with exposure of Rs 100 lakhs and above is being monitored by the Credit Monitoring Department at Head Office, which covers approximately 70% of the domestic credit portfolio of the Bank. The monitoring is being done from various reports generated centrally from system giving alerts and fortnightly Flash Reports. These reports are being used effectively by Head Office/Zones/Branches to track and avoid delinquency. The out of order position with break-up of 30 to 60 days, 61 to 75 days & above 75 days overdue is made available to Branches for follow up & regularization. ZO/HO also monitor the progress to maintain asset quality.

- With migration of identification of NPAs by the system, slippages in small accounts with o/s below Rs 10 lakh are showing rising trend, It is a major challenge. Bank has addressed this challenge in a big way through effective follow up at all levels. The recovery culture at rural and semi urban branches has been revisited.

- Extra precautions and strict compliance in letter and spirit is ensured while take over accounts from other Banks. In deserving cases take over is approved on case to case basis after ensuring quality and comprehensive due diligence. While approving take over business, it is ensured that advances of sound and remunerative nature, with favourable financial ratios in line with entry level norms and Credit Rating of 'AAA' & 'AA' are taken over.

- To address the issues of 90 days default, the repayment schedule is fixed after making thorough study of Cash Flows which are achievable and realistic. Adequate moratorium is also reckoned on merit of the case while considering fresh term loan for new projects.

- Due diligence in respect of promoters is carried out before sanction of advance and antecedents of the applicants are ascertained through CIBIL Reports, RBI Defaulters List and ECGC Caution list and other means.

- Inspection of the securities charged to the Bank is of immense importance for ensuring end use of funds and is undertaken at regular intervals. Insurance of charged assets is given due importance for safe guarding the Bank's exposure. Timely renewal of insurance policies with adequacy of cover is not lost sight of. Renewal documents are obtained on yearly basis instead of waiting for 3 years time.

- Before parting with Bank's funds, the process of CPA is completed in all respect. Timely closure of CPA helps the bank in taking swift remedial measures wherever applicable.

- 'Stock & Receivable Audit', another important tool, is used to monitor the account. Branches undertake periodical stock & receivable audit by firm of approved Chartered Accountants so that deficiencies are known and remedial measures are undertaken in time. Closure of report is done within a reasonable time period.

- Credit Monitoring at Large Corporate/Mid Corporate Branches assumes added significance. One officer in such branches is exclusively monitoring the performance of projected Sales/Inventory/Profits of the accounts based on MSOD/QIS/Stock & Book Debt Statements and timely review of the advance accounts. The quarterly financial performance of associate companies having Large exposure is studied & remedial action taken.

- Conducting of monthly Zonal Credit Monitoring Committee meeting (ZCMC) is undertaken wherein out of order/problem accounts and items like

- Closure of CPA

- Closure of stock audit reports

- Closure of CALRM

- Account due for review

- Watch list accounts (AC 12) & Restructured accounts

- PSRS

- TOL/TOD

- Devolvement of L/C & Invocation of Guarantee not regularized

- Pending SAR & Quick Mortality cases are discussed which will help in proper monitoring and control. Similarly, meeting with GMs of SBU at H.O. with Credit Monitoring Department, HO is convened at fortnightly interval for discussing out of order/ stressed accounts for desired results.

- Extensive use of Video Conference facility at HO/ZO/ NBG level is used for follow up of out of order /stressed accounts which helps in arresting slippages.

- The marking of NPA through CBS system has been put in place w.e.f. 30.09.2011.The NPA so marked by the system are soft NPAs which attract immediate attention for recovery/ up gradation thereof so that slippages are reduced to bare minimal level.

BRANCH NETWORK & EXPANSION

The Bank has a geographically well spread branch network in India and abroad. The Bank had 4000 branches in India as on 31.03.2012. In the foreign countries, 44 branches and 5 representative offices keep Bank's presence felt in all time zones and important financial centers of the globe.

During the year 2011-12, Bank opened 510 new branches including 07 Extension Counters converted into full fledged branches.

Composition of Bank's branch network is as follows :

Category 31.03.2011 31.03.2012 No. of Brs. % to Total No. of Brs. % to Total

Metropolitan 660 18.91 722 18.05

Urban 645 18.49 709 17.72

Semi-Urban 841 24.09 1078 26.95

Rural 1344 38.51 1491 37.28

Total Branches 3490 100 4000 100

Falling in line with RBI liberalized policy of branch authorization, some branches were shifted to alternate sites and extension counters showing good performance and those with locational advantage were converted into full fledged branches. It is intended to continue this policy for the coming year as well.

RBI has further liberalized its branch aut


Mar 31, 2011

The Board of Directors have pleasure in presenting the Banks Annual Report along with the audited statement of accounts and the cash flow statement for the year ended 31st March 2011.

PERFORMANCE HIGHLIGHTS

FINANCIAL PARAMETERS

- Operating profit Rs. 5,384 crore.

- Net Profit Rs. 2,489 crore, recording 42.94% growth over previous year.

- Capital Adequacy Ratio at 12.17% as against 12.94% in previous year (under Basel-II).

- Net Worth at Rs. 15,500 crore grew by 24.43% over March 2010.

- Book Value per share Rs. 283.24 (Rs. 236.84 previous year).

- Gross NPA ratio at 2.23% as on 31.03.2011.

- Net NPA ratio at 0.91% as on 31.03.2011.

- Total business (Deposits + Advances) reached at Rs. 5,15,040 crore recording a growth of Rs. 1,13,961 crore (28.41%). Domestic business grew by 26.02% to reach the level of Rs. 4,18,110 crore.

- Total deposits increased by Rs. 69,124 crore reached the level of Rs. 2,98,886 crore, a growth of 30.08%. Domestic deposits increased by 28.68% to reach the level of Rs. 2,52,963 crore. Share of low cost deposits in the domestic deposits is 29.18% as on 31.03.2011.

- Gross credit touched Rs. 2,16,154 crore, recording a growth of 26.17% with domestic credit recording a growth of 22.16% to reach level of Rs. 1,65,147 crore.

- Priority Sector lending constituted 46.27% of Net Adjusted Bank Credit and the share of Agricultural Credit to Net Adjusted Bank Credit was 16.76%.

- Credit to SME sector grew from Rs. 29,568 crore to Rs. 35,586 crore recording a growth of 20.35%.

- Retail Credit grew by 5.70% from Rs. 15,750 crore to Rs. 16,649 crore.

- Export Credit registered a growth of Rs. 898 crore, i.e., 13.53% growth over previous year.

NEW PRODUCTS & SERVICES

- Welcome Kits introduced for NRI Customers opening NRE/ NRO accounts at foreign centers.

- Calculation of interest on Savings Bank account, from 1st April 2010, has been changed from monthly product basis to daily product basis.

- Launched Marathi version of the Banks website.

- As per Finance Ministry guidelines and recommendations, the Banks corporate web-site (English) has been enabled for persons with Disabilities.

- The Bank has introduced a new format of Savings Bank Passbook (Horizontal Format) which will print all details of the transaction on the same page as against the existing format (Vertical Format) where the details are printed on two pages.

- As per Banking Codes and Standards Board of India (BCSBI) requirements, the Bank is printing helpline number on the passbook & statement of accounts.

- The Bank introduced issuance of insta-pin for Debit-cum- ATM Card. This will address the customer grievance for non-receipt of Re-pin and also save the effort and expense in generating and mailing Re-pins.

- Quarterly consolidated Statement of a/c is sent to the Diamond customers in PDF format via email.

- As a fraud prevention measure, SMS alerts - Star Sandesh are generated and provided to all customers

who have registered their mobile number with the Bank for all Debit transactions from delivery channels (Internet banking/ATM/POS); all Debit clearing transactions of Rs. 25,000/- and above; all Customer induced debit transfer & cash payments of Rs. 10,000/- and above; all Debit ECS transactions of Rs. 10,000/- and above; all Debit RTGS transactions and acknowledgment on accepting the cheque book issue request.

- Enabling internet banking customers to make online Fixed Deposit.

- Hot Listing/Reset/Unblock/Change of Debit Cum ATM card PIN using Internet Banking password.

- Viewing of Annual Tax Statement (Form 26AS).

- Star eTrade - Online share trading - Integration with Gupta Equities.

- Extended the facility of online e-Payment to the customers holding Banks Debit-cum-ATM card. This will enable the customers to use their Debit-cum-ATM cards for e-payments in addition to credit card & Internet banking account.

- Mobile Banking facility is introduced as the latest alternate delivery channel which allows customers to do banking activities virtually from the convenience of the Mobile phone at any time and from anywhere. This facility is extended to all Retail internet banking customers and includes features like Balance enquiry, last five transactions, Cheque status, Funds Transfer & Mobile Payments.

- Online Interbank Fund Transfer across banks, through Star Connect Internet Banking Services, using RTGS/ NEFT

- BOI Star e-Pay for Auto-pay or on-line payment of various utility services/ bills.

- e-Payment for Direct & Indirect, Central Excise & Service Tax.

- Star e-Share Trade to trade in shares.

- e-Freight Payment.

- Online Payment of Directorate General of Foreign Trade (DGFT) license fees.

- Online Booking of Railway & Airlines Ticket.

- Online Application for Education loan.

- Facility to make online bid-cum-application for Application Supported by Blocked Amount (ASBA) IPO issues by Retail Internet Banking Customers having account with any DPO

BUSINESS INITIATIVES

- Keeping its growth aspirations in mind, the Bank has embarked upon a new bold vision Sankalp 10,000. Sankalp 10,000 rests on the three pillars of Customer First, Building Winning Teams & High performance Driven Culture.

- Under Project Sankalp, the organizational structure of the Bank has been redesigned in September 2010 with its division in two distinctly separate groups of businesses i.e. (a) National Banking Group and (b) Wholesale and

International Banking Group in order to have a more focused attention to each business segment. The two groups are headed by the two Executive Directors of the Bank.

- National Banking Group (Head Office) - The National Banking Group is comprised of Rural Banking, Financial Inclusion, Retail Banking and SME Banking business units.

- Wholesale and International Banking Group (Head Office) - The Wholesale and International Banking Group are comprised Large Corporate Banking, Mid- Corporate Banking, Project Finance, Transaction Banking, International Banking and Treasury.

- All accounts of Mid-Corporate and Large Corporate Branches have been mapped to respective branch RSMs.

- Fifteen Rural Centralised Credit Processing Centres (CPC) have been started at Belgaon, Ujjain, Barabanki, Mehasana, Ludhiana, Karad, Amalapuram, Tanjavur, Barasat, Hardoi, Nadiad, Ratnagiri, Nashik, Solapur & Barnagar.

- In all, 40 focused districts have been identified in 19 zones to target large and medium farmers and large institutions with high credit quality.

- Five New Retail Business Centres were launched in 5 identified Zones namely Bangalore, Chandigarh, Mumbai South, New Delhi and Pune on Pilot basis on 14.01.2011.

- Five SME City Centres at Ahmedabad, Coimbatore, Kolkata, Ludhiana, and Pune were launched on 14th December, 2010. Subsequently, seven more SME City Centres at Bangalore, Chandigarh, Hyderabad, NewDelhi, Nagpur, Mumbai North and Vadodara have started functioning.

- Mid-Corporate branches at Ernakulam, Andheri and Seepz opened.

- 10 Mid-Corporate CPCs started functioning.

- Large Corporate branches at Mumbai (Nariman Point) and Hyderabad opened.

- Lead Management System (Sales Force Automation), to generate, track and monitor leads, revamped.

- The Bank is treating financial inclusion as social cause and implementing it as a movement taking all banking products and services to those who are currently deprived from these services. So far, first step towards achievement of financial inclusion was opening of No-Frill Accounts and accordingly the Bank has opened 50.07 lakh No-Frill Accounts.

- The Bank is also implementing IT solutions on end to end basis using hand held devices and smart cards. The Bank has issued/ enrolled 6.01 lakh smart cards.

- Project Finance And Syndications Group: It takes up assignments of technical appraisal, underwriting and syndication of loans. During FY11, financial closures were done with a project cost of Rs. 26,901 crore and syndicated debt of Rs. 9,008 crore. Bank of India achieved sixth position in syndication space as per the Bloomberg Lead tables for the calendar year 2010.

- The Bank has created a new SME vertical headed by a General Manager to cater to the specific business needs of the segment. A more inclusive definition has been given for SME business to include all business activities with a turnover of up to Rs. 100 crore. The vertical will look for growth not only on credit, but CASA, retail business, fee based income and third party products in the SME segment.

- Mobile Banking facility is introduced as the latest alternate delivery channel which allows customers to do banking activities virtually from the convenience of the Mobile phone at any time and from anywhere. This facility is extended to all Retail internet banking customers and includes features like Balance enquiry, last five transactions, Cheque status, Funds Transfer & Mobile Payments.

- Established Global Remittance Centre for centralizing some of the activities related to NRI Customers which would hasten turnaround time and product delivery and also enable proactive marketing strategies & grievance redressal mechanism.

AWARDS & ACCOLADES

- The Bank has received the Winners Award in International Banking Technology Award 2010 from IBA in the Best Business Enablement Initiative category in recognition of its achievement in Banking Technology for the Year 2009.

- The Bank has been adjudged FE-EY Most Efficient Public Sector Bank 2010 by Dalal Street.

- Mumbai North Zone of the Bank has received Third Prize for use of Official Language Hindi in Bank from Government of India, Ministry of Home Affairs, Official Language Department.

- The Bank has received the consolation prize from Maharashtra State Level Bankers Committee for commendable work done in implementation of official language in Hindi.

- The Bank has received National Award for Best Bank in West Zone for PMEGP under lending to KVIC in August 2010.

- The Bank has been rated by The Economic Times/The Nielsen company survey “The Most Trusted Brands” (MTB) 2010 as follows”

- Under PSU Banking Category - 2nd next to SBI

- Under Top Service Brands-8th rank

FINANCIAL REVIEW

FINANCIAL PERFORMANCE

The Bank recorded an Operating Profit of Rs. 5,384.23 crore, (growth of 14.44% over previous year). Net Profit stood at Rs. 2,488.71Crore, recording a growth of 42.94%.

Net interest income grew by 35.70% on the backdrop of rise in volume of business mix by 28.41% (from Rs. 4,01,078.83 crore to Rs. 5,15,040.06 crore). Non-interest income increased by 0.96% and covered 52.12% of Operating Expenses as against 71.34% in the previous year.

The Financial performance of the Bank for the year 2010-11 is summarised below:

(Amount in Rs. Crore)

Particulars 2009-10 2010-11 Growth (%) Net Interest Income 5,755.94 7,810.69 35.70

Non-Interest Income 2,616.64 2,641.77 0.96

Operating Expenses 3,667.81 5,068.24 38.18

Operating Profit 4,704.77 5,384.23 14.44

Provisions / Contingencies 2,963.70 2,895.52 -2.30

Net Profit 1,741.07 2,488.71 42.94

Earnings per share (Rs.) 33.15 47.35 42.84

Book value per share (Rs.) 236.84 283.24 19.59

Return on Average Networth (%) 14.76 8.90 –

Return on Average Assets (%) 0.70 0.82 –

Some of the Financial Ratios are presented below:

(Percentage) (%)

Parameters 2009-10 2010-11

Yield on Advances 8.42 8.62

Yield on Investment 7.46 7.59

Yield on Funds 7.14 7.14

Cost of Deposits 5.16 5.03

Cost of Funds 4.84 4.57

Net Interest Margin 2.51 2.92

Non Interest Income to Operating 71.34 52.12 Expenses

Other Income to Average Working Fund 1.05 0.87

Operating Expenses to Average 1.47 1.66 Working Fund

Staff Expenses to Average Working Fund 0.92 1.14

Other operating Exp. to Average 0.55 0.52 Working Fund

Asset Utilisation Ratio 1.88 1.77

Non-Interest Income to Total Income 12.77 10.83

Non-Interest Income to Net Income 31.25 25.27

Cost to Net Income 43.81 48.49

SEGMENT- WISE PERFORMANCE

The Bank earned an Operating Profit of Rs. 5,384.23 crore during the year 2010-11. The contribution made by Treasury was Rs. 371.38 crore and other banking operation earned a profit of Rs. 5,161.12 crore. The unallocable expenditure net of unallocable income was Rs. 148.27 crore during the year 2010-11.

DIVIDEND

A Dividend at the rate of Rs. 7 per share (70%) for the year, has been declared. The total dividend payment amounts to Rs. 444.29 crore (including dividend distribution tax).

CAPITAL

Net worth of the Bank in FY 2010-11 has increased to Rs. 15,499.5 crore from Rs. 12,456 crore. During the year the bank has issued 2,13,04,870 Equity Shares of Rs. 10 each to Government of India at a price of Rs. 474.07 per share, on preferential basis, as approved by the shareholders in an Extra ordinary General Meeting held in accordance with the regulation 76(1) of SEBI (Issue of Capital and disclosure requirements) Regulations, 2009. The amount received by the bank on this account is Rs. 1,010 crore. Consequently, the Government of India shareholding has increased from 64.47% to 65.86%.

CAPITAL ADEQUACY

As per Basel II framework, the Banks Capital Adequacy Ratio was at 12.17%, which was higher than the regulatory requirement of 10%.

Details of Capital Adequacy (BASEL II) are shown as under:

(Rs. in crore)

Particulars 31.03.2010 31.03.2011 (Under BASEL – II)

Amount CRAR (%) Amount CRAR (%)

Tier I Capital 13,725 8.48 17,047 8.33

Tier II Capital 7,218 4.46 7,867 3.84

Total Capital 20,943 12.94 24,914 12.17

Risk Weighted Assets 1,61,857 – 2,04,762 –

BORROWINGS

The Bank has raised debts instrument through private placements like perpetual bonds and Upper Tier II Bonds and Medium Term Notes (MTN) through overseas borrowings. The bank has raised Rs. 300 crore through issue of IPDI and Rs. 1000 crore through Upper Tier-II instrument during the year 2010-11. The Bank has also redeemed Tier II Subordinated bonds for Rs. 450 crore.

DIRECTORS RESPONSIBILITY STATEMENT

The Directors confirm that in the preparation of the annual accounts for the year ended March 31, 2011,

- The applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

- The accounting policies, framed in accordance with the guidelines of the Reserve Bank of India, were consistently applied;

- Reasonable and prudent judgement and estimates were made so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit of the Bank for the year ended on March 31, 2011;

- Proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of applicable laws governing banks in India, and

- The accounts have been prepared on a “going concern” basis.

CORPORATE GOVERNANCE

A detailed report on Corporate Governance, being a part of Directors Report is appearing from page no. 59 to 76.

ACKNOWLEDGEMENT

The Board express its gratitude to the Government of India, Reserve Bank of India and Securities and Exchanges Board of India for the valuable guidance and support received from them. The Board places on record its deep appreciation for the services and contributions made by Shri M. Narendra (Ex Executive Director), Shri K.S. Sampath, Shri A.V. Sardesai, Shri Amit K. Motayed, Shri Indresh V. Singh, all Directors of the Bank, who have relinquished office during the year. The Board also thanks financial Institutions and correspondent banks for their co-operation and support. The Board acknowledges the unstinted support of its customers and shareholders and also wishes to place on record its appreciation of staff members for their dedicated services and contribution for the overall performance of the Bank.

For and on behalf of the Board of Directors

(Alok K Misra) Chairman & Managing Director

Place : Mumbai Date : 02.05.2011


Mar 31, 2010

The Board of Directors have pleasure in presenting the Bank’s Annual Report along with the audited statement of accounts and the cash fl ow statement for the year ended 31st March 2010.

PERFORMANCE HIGHLIGHTS

FINANCIAL PARAMETERS

- Operating profit Rs.4,705 crore and Net Profit Rs.1,741 crore.

- Capital Adequacy Ratio at 12.94% as against 10% prescribed by RBI (under Basel-II).

- Net Worth at Rs.12,456 crore, grew by 11.78% over March 2009.

- Book Value per share Rs.236.84 (Rs.211.89 previous year)

- Gross NPA ratio at 2.85% as on 31.03.2010.

- Net NPA ratio at 1.31% as on 31.03.2010.

- Total business (Deposit + Advances) reached at Rs. 401,079 crore recording a growth of Rs. 66,639 crore (19.93%). Domestic

business grew by 20.72% to reach the level of Rs.331,779 crore.

- Total deposits increased by Rs. 40,053 crore reached the level of Rs.229,762 crore, a growth of 21.11%. Domestic deposits increased by 23.26% to reach the level of Rs.196,585 crore. Share of low cost deposits in the domestic deposits is 31.75% as on 31.03.2010.

- Gross credit touched Rs.171,317 crore, recording a growth of 18.37% with domestic credit recording a growth of 17.20% to reach level of Rs.135,194 crore.

- Priority Sector lending constituted 46.39% of Net Adjusted Bank Credit and the share of Agricultural Credit to Net Adjusted Bank Credit was 16.24%.

- Credit to SME sector grew from Rs.25,441 crore to Rs.29,568 crore recording a growth of 16.22%.

- Schematic Retail Credit grew by 15.73% from Rs.8,714 crore to Rs.10,088 crore.

- Export Credit registered a growth of Rs. 602 crore, i.e., 9.98% growth over previous year.

NEW PRODUCTS & SERVICES

- All domestic branches are covered under Core Banking Solution. New domestic branches opened are directly under the CBS platform. All domestic branches are RTGS/NEFT enabled.

- Call centre facility is made operational as an alternate delivery channel to a branch set-up which would act as a “Contact” centre and is a cost effective touch point for customers.

- Bank has launched the Marathi version of its web-site.

- Bank has launched “Welcome Kit” for all new accounts opened at the select branches of Mumbai, New Delhi, Chandigarh and Ghaziabad. The kit contains cheque book, ATM card, Pin, TPIN and internet PIN, the unique feature of which is that the same are in activated status from the day one.

- A web based Customer Complaint Management System has been made live from 1st January, 2010 to reduce the response time.

- Oracle Marketing Online product has been implemented at Data Warehouse for communicating with customers via email. With this system in vogue, Bank is able to deliver emails overnight to its customers.

- SMS alert facility has been introduced and provided to all customers for all debit transactions from delivery channels, all debit clearing transactions of Rs.25,000 and above, all customer induced debit transfer and cash payments of Rs. 10,000 and above, all debit RTGS transactions and acknowledgement on accepting the cheque book issue request

- Bank of India is the fi rst PSU Bank in India to implement TWO-Factor Authentication (2FA) – Star Token for both Retail and Corporate internet banking customers as an additional security measure. Bank’s customers enjoy the convenience of “secured” Anytime, Anywhere, Anyhow hassle free Banking from the comfort of their homes and offi ces with a click of a mouse.

- Resetting or Unblocking of Internet Banking login password can be done using Debit-cum-ATM card PIN.

- Transaction under taken through Credit Card can be viewed through Internet Banking channel.

- Provision to make online bid-cum-application for Application Supported by Blocked Amount (ASBA) IPO issues by Retail Internet Banking Customers.

- Mobile Banking Services extended to all retail internet banking customers which includes features like Balance enquiry, last fi ve transactions, Cheque status, Funds Transfer and Mobile Payments.

- Bank has joined National Financial Switch (NFS) which enables customers to access more than 50,000 ATMs across the through owned as well as shared ATMs network.

- Technology has been leveraged in some important projects like Financial inclusion project for Banking the unbanked sector, Solar Power Project which is Eco-friendly for Technology Power for Rural Areas, V-sat Connectivity Project – Networking / connecting the Rural / Remote locations.

- Bank launched “Star Abhilasha Biometric Smart Cards” in Nagpur, Maharashtra in February, 2010. Installation of Biometric ATMs and ATMs with easy accessibility for the physically handicapped is being established.

BUSINESS INITIATIVES

- To strengthen our internal control system, Project STAR BOOST has been initiated by the bank to leverage technology for more effective and focussed audit. With the launch of this programme bank has established a Back Offi ce for Offsite Audit and related work and is effectively making use of CAAT (Computer Aided Audit Tools). The Audit Exception Reports (AER) are generated in advance and sent to branches for compliance before commencement of audit. This process is expected to improve the audit rating of the branches.

- Bank has opened Global Remittance Centre (GRC) at Mumbai. The inward remittances, SB NRE / NRO Account opening of NRI customers have been centralized at GRC. Bank has initiated the process for establishing a hub for the purpose of handling the documentation part of Trade Finance portfolio.

- With a view to enhance the corporate image and identity, Bank has initiated media campaigns on the existing theme “Relationships beyond Banking”. Three TVCs were produced in line with our Relationship theme viz. Old Couple, Friends and Bus which were aired on both National as well as Regional Channels.

- For building the brand image and increasing the visibility and better marketing of various products through publicity, Bank has also been advertising our products in newspapers, magazines, television, Hoardings, banners, bus panels, trains, glow signs at railway stations, events and sponsorships, leafl ets and brochures, etc.

- Introduction of Credit Application Processing Systems through software termed as CAPS which covers all major

credit segments - Retail, Corporate, MSME and Agriculture. This has been launched from 15.02.2010 on pilot basis to cover Retail loans at all 24 Retail Hubs and select 263 branches across the Zones. It will be a fully Automated system to improve credit delivery.

- Two new products, “Star Suraksha SB account” and “Star Benefi t CD account” having unparallel features were launched on the Bank’s Foundation Day on 7th September, 2009 for improving the CASA business.

- To give a boost to SME business, Bank has SME branches and also SME hubs and Nodal Offi cers at all Zonal Centres.

- Bank has devised a Composite Loan Scheme for MSE sector borrowers in Rural / Semi Urban and Urban areas for maximum exposure of up to Rs. 5 lacs per borrower. The scheme has unique features like simplifi ed application cum proposal format, hassle free minimum documentations, relaxed margin and interest rates, etc.

- MOUs have been signed with Tata Motors, M/s. Piaggio Vehicles Pvt. Ltd., M/s. Asia Motor Works, M/s. JCB India Ltd., M/s. Mahindra Navistar, M/s. Ashok Leyland Ltd., Sonalika Group of companies etc. for fi nancing vehicles / earth moving equipments.

- Credit business is receiving focus through specialised branches - 29 SME branches, 28 Mid Corporate Branches 2 Large Corporate and 13 Corporate Banking branches, 36 Commercial & Personal banking branches and ‘Retail Hubs’ at 27 centres across the country working on the concept of single window for Housing & Personal fi nance banking.

- To achieve objective of Financial Inclusion, information technology initiatives implemented and the concept of business correspondents and facilitators has been introduced throughout the country.

AWARDS & ACCOLADES

- Best Performance in Western Zone under the Rural Employment Generation Program (REGP) of KVIC.

- Bank has been rated by the Economic Times / The Nielsen Company survey as “The Most Trusted Brands” (MTB) 2009 as follows :

? Under PSU Banking Category - 2nd next to SBI.

? Under Top Service Brands - 8th.

- The Debutant - 1st time in top 100.

- NDTV Profi t Business Leadership Awards 2009- Best PSU Bank.

- Outlook money NDTV Profi t Awards 2009 - Best Education Loan Provider - Runner up.

- CIO Green Information Technology Award.

- Dun & Bradstreet – Rolta Corporate Awards 2009, Best Bank under Banking Category.

- FE-EY Most Effi cient Public Sector Bank Awards 2010 by Dalal Street.

- Second Rank for excellent performance in lending to Micro & Small Enterprises Sector by the Ministry of Micro, Small & Medium Enterprises. Also, ‘Best Performing bank’ for covering maximum number of Micro & Small accounts under collateral free lending scheme of CGTMSE

FINANCIAL REVIEW

FINANCIAL PERFORMANCE

The Bank recorded an Operating Profi t of Rs. 4,704.77 crore, (previous year Rs. 5,456.80 crore). Net Profi t stood at Rs.1,741.07 crore (previous year Rs. 3,007.35 crore).

Net interest income grew by 4.67% due to rise in volume of business mix by 19.93% (from Rs.334,440 crore to Rs.401,079 crore). Non-interest income declined by 14.26% and covered 71.34% of Operating Expenses as against 98.64% in the previous year.

The Financial performance of the Bank for the year 2009-10 is summarised below:

(Amount in Rs. Crore)

Particulars 2008-09 2009-10 Growth (%)

Net Interest Income 5498.90 5755.94 4.67

Non-Interest Income 3051.86 2616.64 -14.26

Operating Expenses 3093.96 3667.81 18.55

Operating Profit 5456.80 4704.77 -13.78

Provisions / Contingencies 2449.45 2963.70 20.99

Net Profit 3007.35 1741.07 -42.11

Earnings per share (Rs.) 57.26 33.15 -42.11

Book value per share (Rs.) 211.89 236.84 11.77

Return on Average Networth (%) 30.42 14.76 --

Return on Average Assets (%) 1.49 0.70 --

Some of the Financial Ratios are presented below :

(Percentage) (%)

Parameters 2008-09 2009-10

Yield on Advances 9.78 8.42

Yield on Investment 7.14 7.46

Yield on Funds 8.09 7.14

Cost of Deposits 5.76 5.16

Cost of Funds 5.37 4.84

Net Interest Margin 2.97 2.51

Non Interest Income to Operating 98.64 71.34

Expenses

Other Income to Average Working Fund 1.51 1.05

Operating Expenses to Average 1.53 1.47 Working Fund

Staff Expenses to Average Working 0.96 0.92

Fund

Other operating Exp. to Average 0.57 0.55

Working Fund

Asset Utilisation Ratio 2.70 1.88

Non-Interest Income to Total Income 15.73 12.77

Non-Interest Income to Net Income 35.69 31.25

Cost to Net Income 36.18 43.81

SEGMENT- WISE PERFORMANCE

The Bank earned an Operating Profi t of Rs.4,704.77 crore during the year 2009-10. The contribution made by Treasury was Rs.603.42 crore and other banking operation earned a profi t of Rs.4,751.72 crore. The unallocable expenditure net of unallocable income was Rs. 673.98 crore during the year 2009-10.

DIVIDEND

A Dividend at the rate of Rs. 7/- per share (70%) for the year, has been declared. The total dividend payment amounts to Rs.428.65 crore (including dividend distribution tax).

CAPITAL

Net worth of the Bank in FY 2009-10 has increased to Rs.12,456 crore from Rs.11,144 crore. During the year, the Bank has not increased its equity capital either by way of Public or Right or Preferential Issue of Equity Shares.

CAPITAL ADEQUACY

As per Basel II framework, the Bank’s Capital Adequacy Ratio of 12.94% which was higher than the regulatory requirement of 10%.

Details of Capital Adequacy (BASEL II) are shown as under :

(Rs. In crore)

31.03.2009 31.03.2010

Particulars (Under BASEL - II) Amount CRAR (%) Amount CRAR (%)

Tier I Capital 12466 8.91 13725 8.48

Tier II Capital 5745 4.10 7218 4.46

Total Capital 18211 13.01 20943 12.94

Risk Weighted Assets 139931 - 161857 -

BORROWINGS

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



ACKNOWLEDGEMENT

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

For and on behalf of the Board of Directors (Alok K. Misra)

Chairman & Managing Director

Place: Mumbai Date: 07.05.2010