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Directors Report of Indian Overseas Bank

Mar 31, 2017

The Board of Directors has pleasure in presenting the Annual Report together with Audited Balance Sheet and Profit & Loss Account of the Bank for the year ended 31st March, 2017.

Global Business Performance

The Indian economy is growing strongly and remains a bright spot in the global landscape. The halving of global oil prices that began in late 2014 boosted economic activity in India, further improved the external current account and fiscal positions, and helped lower inflation. In addition, continued fiscal consolidation, by reducing government deficits and debt accumulation, and an anti-inflationary monetary policy stance have helped cement macroeconomic stability.

The government has made significant progress on important economic reforms, which will support strong and sustainable growth going forward. In particular, the upcoming implementation of the goods and services tax, which has been in the making for over a decade, will help raise India’s medium-term growth to above 8 percent, as it will enhance the efficiency of production and movement of goods and services across Indian states. However, a key concern for India is the health of the banking system, which is still dealing with a large amount of bad loans, and also heightened corporate vulnerabilities in several key sectors of the economy.

As a result, the Bank continued its efforts towards rebalancing its Balance Sheet under review year also. The Bank reduced the concentration of Bulk deposits and stayed away from large scale lending during the year. As a result, the Global Business level stood at Rs.3,68,118 crore as on 31st March 2017 against Rs. 3,97,241 crore as on 31st March 2016. The global deposits and gross advances stood at Rs.2,11,343 crore and Rs.1,56,776 crore respectively as on 31st March 2017 against Rs. 2,24,514 crore and Rs. 1,72,727 crore respectively as on 31st March 2016. The demonetization gave much needed boost to the low cost deposit profile of the Bank. The Bank also went ahead with reducing the dependence on bulk deposits to reduce the concentration risk and to have a stable deposit profile. The larger focus lied towards curtailing the NPAs with concerted efforts towards containing the fresh slippages level along with recoveries from the existing NPAs. The Banks new CBS platform has been stabilized and is currently poised towards leveraging the benefits of the new software version.

Financial Performance

The overall efficiency of the Bank has seen substantial improvement during the year under review. This has helped the Bank to report a higher global operating profit of Rs.3,650 crore in 2016-17 compared to Rs.2,885 crore in 2015-16. It may also be noted that the higher level of efficiency has been obtained with a rebalanced business levels in comparison to previous years. Even though the gross NPA level has increased over the year, the growth % has been substantially brought down in comparison to the previous year. The Gross NPAs stood at Rs.35,098 crore for March 2017 as against Rs. 30,049 crore in March 2016. The resultant higher provision requirement of Rs.7,067 crore during the year forced the Bank to report a Net Loss of Rs.3,417 crore for the year. The Bank had reported Rs. 2,897 crore of loss during 2015-16.

Income and Expenditure Analysis

The year under review focused mainly on efficiency in operations and had put in place various strategies towards cost reduction at all levels. The Bank continued its efforts to reduce the bulk deposits contain fresh slippages, reduce the administrative expenses.

The domestic CASA deposits stood at Rs.75,446 crore as on 31st March 2017 as against Rs. 63,609 crore as on 31st March 2016. The CASA% stood higher at 36.78 % as on 31st March 2017 as against 29.10% as on 31st March 2016.

The higher level of CASA and reduction of the bulk deposits helped the Bank to reduce the domestic Cost of deposits which ended at 6.32% for FY 2016-17 as against 7.28% in FY 2015-16. RBI had reduced Repo rates by 50 basis points during the period under review which also helped in reducing the card rates in a gradual manner.

The Bank’s one year MCLR rate which stood at 9.70% as of 1st April 2016 was brought down to 8.65 % during the review period in line with the industry trend. Further, the incremental NPAs had higher impact on the revenues. As a result of the above factors, the yield on domestic advances came down to 8.92% for FY 2016-17 as against 9.87% in the previous year.

The domestic yield on investments was maintained at 7.36% for the whole year 2016-17 compared to 7.41% in 2015-16. The Bank was able to maintain the global Net interest margin reasonably at 2.03% in 2016-17 as against 1.94%. The Bank maintained a Provision Coverage Ratio of 53.63 % for FY 2016-17 as against 47.39% for FY 2015-16.

Capital Raised during 2016-17

The Bank issued 9,17,48,448 equity shares of Rs.10/- each for cash at issue price of Rs.28.55 per equity share (including premium of Rs.18.55 per equity share) aggregating up to Rs.261.94 crore on QIP basis and 55,57,14,797 equity shares of Rs.10/- each for cash at issue price of Rs.27.91 per equity share (including premium of Rs.17.91 per equity share) aggregating upto Rs.1,551 crore to Government of India on Preferential Basis. Hence, the paid up capital of the Bank has increased from Rs.1807.27 crore to Rs. 2454.73 crore. Government of India’s shareholding has increased from Rs.1397.33 crore (77.32%) to Rs.1953.04 crore (79.56%) and the Public Shareholding stood at Rs.501.69 crore (20.44%).

Authorized Capital

As on 31st March 2017, the Authorized Capital of the Bank is Rs.10,000 crore which was increased from Rs.3000 crore vide GOI notification dated 27th Feb 2017.

Capital Adequacy Ratio

The Bank’s capital adequacy ratio as on 31st March 2017 stood at 10.50 % as per Basel III norms.

Branch Network

During the year under review, the Bank opened 9 branches across the country. Out of these, 5 branches (55.55%) are located in Rural and Semi Urban centres, of which 3 branches are located in Unbanked Rural centres.

As on 31st March 2017, the Bank had 3,373 domestic branches, as against 3,397 branches as on 31st March 2016, comprising of 922 rural branches (27.33%), 1001 Semi Urban branches (29.67%), 692 Urban branches (20.51%) and 758 Metropolitan branches (22.47%). Besides, the Bank has 7 Zonal Offices, 49 Regional Offices, 4 Extension Counters, 20 Satellite Offices, 3 City Back Offices, 18 MSME Processing Centres and 6 Inspectorates. During the year under review, the Bank has closed 33 branches with a view to rationalize administrative costs.

Corporate Governance

Corporate Governance reflects the built in value system of the Bank in conducting its day to day affairs. The Bank lays emphasis on ensuring that, structures and processes are put in place to help in compliance of the government responsibilities.

IOB - Code of Conduct for Prohibition of Insider Trading, 2015

IOB Code of Conduct for Prohibition of Insider Trading, 2015 regulates monitors and report trading by the designated persons of the Bank.

Securities and Exchange Board of India - Listing Obligations and Disclosure Requirements Regulations, 2015 (LODR)

As per SEBI (LODR),

- The Bank is providing remote e-voting facility to its shareholders, in all Annual General Meetings/ Extraordinary General Meetings

- The code of conduct is applicable to all members of the Board and the Senior Management (i.e., General Managers of the Bank).

- The Bank is also submitting a quarterly compliance report on Corporate Governance to the Audit Committee of the Board and to Stock Exchanges.

- The Bank is submitting Quarterly Investor Grievance Report to the BSE Limited and National Stock Exchange Limited, where Bank’s shares are listed.

Investor Education & Protection Fund (IEPF)

Ministry of Corporate Affairs (MCA), Government of India has advised the Bank the process of transfer of unpaid dividend amount to the Central Government. Accordingly, Unpaid Dividend amount pertaining to 2008-09 has been transferred to IEPF by the Bank on 5th August 2016 and complied with the Government of India guidelines. The unpaid Dividend data pertaining to the years 2009-10 to 2013-14 is ported in MCA website and is also available at www.iob.in.

Bank is complying with all guidelines/regulations laid down by Regulatory authorities and Government of India. Bank regularly redresses the shareholders grievances without any time delay.

Board of Directors

Dr. Jai Deo Sharma, Officer Employee Director completed his three year term on 1st May 2016. Shri R.Koteeswaran, Managing Director & Chief Executive Officer retired on attaining superannuation on 30th June 2016. Dr.Alok Pande, Govt. Nominee Director demitted office on 21st July 2016. Shri Pawan Kumar Bajaj, Executive Director demitted office on 9th August 2016. Shri Atul Agarwal, Executive Director, retired on superannuation on 30th Sept 2016. Shri Chinnaiah, Smt. S.Sujatha and Shri A.B.D.Badushas, Parttime Non- Official Directors completed their three year terms on 12th Nov 2016, 4th Dec 2016 and 11th Dec 2016 respectively. Shri R. Sampath Kumar, Workmen Employee Director, completed his three year term on 23rd Jan 2017.

Ms.Annie George Mathew has been nominated as Government Nominee Director with effect from 22nd July 2016. Shri K.Raghu, has been nominated as Chartered Accountant Director for a period of three years from 26th July 2016 to 25th July 2019. Shri Vishnukumar Bansal, has been appointed as Additional Director from 8th August 2016 to 7th August 2018. Shri R. Subramaniakumar has been appointed as Executive Director of the Bank from 29th September 2016 to 21st Jan 2019. He has been entrusted the additional charge of MD & CEO for a period of 3 months from 11th November 2016 to 10th February 2017 and for a period of another 3 months from 28th February 2017 to 27th May 2017. Shri T.C.A. Ranganathan has been appointed as Non Executive Chairman from 16th Feb 2017 to 15th Feb 2020. Shri K. Swaminathan, has been appointed as Executive Director of the Bank from 17th Feb 2017 to 16th Feb 2020.

The Board of Directors places on record their appreciation for the valuable contributions made by the erstwhile Directors and welcomes the new Directors.

Acknowledgement

The Board of Directors are grateful for the valuable guidance and support received from the Government of India, Reserve Bank of India, Securities and Exchange Board of India (SEBI), Stock Exchanges, State Governments, Financial Institutions and all Overseas Regulators. The Board of Directors acknowledge with thanks the valued Customers, Employees Union, Officers Association, domestic and international banking group, the shareholders & other stake holders for their valued support and continued patronage with the Bank.

The Board also wishes to place on record its profound appreciation for the valuable contribution of the Bank’s Staff at all levels and looks forward to their continued involvement with commitment towards achieving the future goals.

For and on behalf of the Board of Directors

Chennai (R. SUBRAMANIAKUMAR)

17th May, 2017 Managing Director & Chief Executive Officer


Mar 31, 2015

Dear Members,

The Board of Directors has pleasure in presenting the Annual Report together with Audited Balance Sheet and Profit & Loss Account of the Bank for the year ended 31st March, 2015.

Global Business Performance

The Bank has improved its Business Mix quite significantly in the last few years which has formed a strong base for future prospects. The business level of the Bank has reached Rs. 4,25,090 crores by March 2015 as against Rs. 4,09,051 crores in March 2014 with Balance sheet total size comprising of all assets mainly including Advances and Investments to the tune of Rs. 2,85,637 crores during the year. The Bank has larger scope in improving the potential with wide spread 3381 branches in all the states of the country. The Bank has decided to migrate to a new CBS model and be aligned with a common platform as being widely used in other PSBs. The technological advancement will work as a morale booster for the Bank to effectively deliver and enhance the customer service. This is a remarkable & significant task which the Bank has scheduled to achieve in a phased manner.

The year 2014-15 has been more challenging for the Bank as a whole. There was a sluggish growth in the credit front. Accordingly, the Bank''s total deposits increased from Rs. 2,27,976 crores in March 2014 to Rs. 2,46,049 crores in March 2015 with a moderate growth of 8%. The global advances stood at Rs. 1,79,041 crores as of 31st March 2015. The domestic advances increased marginally from Rs. 1,61,992 crores in March 2014 to Rs. 1,62,838 crores in March 2015.

Financial Performance

The global operating profit has stood at Rs. 3,322 crores in 2014-15 compared to Rs. 3,997 crores in 2013-14 mainly due to constraints on interest spread during this financial year. However, the performance of the Bank in Q4 is significant resulting into a positive turnaround by achieving a net profit of Rs. 35.5 crores as against off-putting results in the preceding two quarters. As the Bank has to make bottom line provisions to the tune of Rs. 3,777 crores constituting 113% of total operating profit. However, the net loss for the whole year 2014-15 has come down to Rs. 454 crores as against Rs. 490 crores for the period April-December 2014.

Income and Expenditure Analysis

The year 2014-15 has been more challenging as far as the Bank''s profitability is concerned. Despite the constraints on interest spread the Bank has made a successful turnaround during the fourth quarter 2014-15 registering a net profit of Rs. 35 crores in Q4. This is made possible mainly on account of larger recoveries, containment of operating expenses, more control on funding costs apart from substantial treasury gains mainly in the fourth Quarter.

The Bank has taken serious measures in controlling the cost of domestic deposits to 7.68% in Q4 as against 7.93% in Q1,7.94% in Q2 and 7.81% in Q3 during the year. However, the overall domestic cost of deposits ended with 7.84% for FY 2014-15 compared to 7.81% in 2013-14. The Bank has been maintaining the card rates on term deposits in line with the market trend. As RBI reduced the repo rates favorably by overall 50 basis points in the second half of the financial year to the present level of 7.50%, the Bank is able to reduce Its domestic cost of borrowings marginally to 9.64% for the year as a whole as against 9.65% in 2013-14. As such, the domestic cost of funds ended favorably at 7.92% for the full year 2014-15 compared to 8.03% in Q1,8.02% in Q2, 7.88% in Q3 and 7.73% in Q4. This can be attributed to efficient ALM techniques which resulted in substantial growth in Bank''s average retail term deposits apart from reducing average bulk deposits excluding high cost deposits.

Although, the Bank has opened around 52 lacs CASA accounts during the year under review, the quantum of CASA deposit would stimulate only over a period. As such, domestic average CASA% was marginally lower at 23.71% compared to last year level of 24.25%, in line with the market trend.

Due to higher incremental NPAs during the year, the yield on domestic advances has come down to 10.62% as against 10.95% in last year. Despite volatile market conditions, the yield on investments was maintained at 7.38% for the whole year 2014-15 compared to 7.39% in 2013-14. This has a major impact on Net Interest Income affecting the profitability. However, the Bank has been able to maintain the global Net interest margin reasonably at 2.06% in 2014-15. Also the Bank has maintained a comfortable Provision Coverage Ratio of 50.92% in March 2015.

Capital Adequacy Ratio

The Bank''s Capital Adequacy Ratio as on 31st March 2015 has stood at 10.11% as per Basel III norms. The Bank has issued Unsecured, Non Convertible, Additional Tier I, Basel III Compliant Perpetual Bonds to the extent of Rs. 1,000 crores including the green shoe option of Rs. 300 crores to augment additional Tier-I capital and overall capital of the Bank. The entire issue was fully subscribed by the investors.

Branch Network

During the year under review, the Bank has opened 116 branches across the country. Out of these, 86 branches (74.14%) are located in Rural and Semi Urban centres, of which 28 branches are located in Unbanked Rural Centres. These new branches have enabled the Bank to enhance new relationship and spread Bank''s Network covering all states.

Further, the Bank has opened 8 Rapid Retail Centres, one City Back office and one extension counter during the year. As on 31st March 2015, the Bank has 3,381 domestic branches, as against 3,265 branches as on 31st March 2014, comprising of 1028 rural branches (30.41%), 947 Semi Urban branches (28.00%), 747 Urban branches (22.09%) and 659 Metropolitan branches (19.49%). Besides, the Bank has 7 Zonal Offices, 59 Regional Offices, 4 Extension Counters, 20 Satellite Offices, 40 City Back Offices, 41 Rapid Retail centers (RLPCs), 18 MSME Processing Centres and 6 Inspectorates.

Corporate Governance

Corporate Governance reflects the built in value system of the Bank in conducting its day to day affairs. The Bank lays emphasis on the need for ensuring that structures and processes are put in place to help in compliance of its government responsibilities.

During the year, SEBI has decided to review the provisions of the Listing Agreement with the objectives to adopt best practices on corporate governance and to make the corporate governance framework more effective. Clause 35B and Clause 49 of the Listing agreements are the main clauses amended. As per Clause 35B, the issuer agrees to provide E-voting facility to its shareholders in respect of all shareholders resolutions, to be passed at AGM/ EGM. Bank is in preparedness to provide e-voting facility to its shareholders at the time of AGM/EGM.

In compliance to the amendments of Clause 49 of the Listing Agreement, the code of conduct has been put in place by the Bank which is applicable to all members of the Board and the Senior Management (i.e upto General Managers of the Bank). The Bank is also submitting a quarterly compliance report on Corporate Governance to The Audit Committee of the Board and to Stock Exchanges.

Ministry of Corporate Affairs (MCA), Government of India has amended the Investor Education and Protection Fund (IEPF) Rules and advised the Bank the process of transfer of unpaid dividend amount to the Central Government. Accordingly, Unpaid Dividend amount pertaining to the years from 2000-01 to 2006-07 has been transferred to IEPF by the Bank and complied with the Government of India guidelines. The unpaid Dividend data pertaining to the years 2007-08 to 2013-14 is ported in MCA website and also available at www.iob.in.

Bank is complying with all guidelines/regulations laid down by Regulatory authorities and Government of India. Bank regularly redresses the shareholders grievances without any time delay.

Vision-Mission: 2013-2020

With the changing dynamics in the competitive environment, the Bank has reviewed its medium term Vision-Mission outlook for the period 2013 - 2020. The Bank has convened an exclusive meeting of the Board of Directors to discuss the Strategic Business Plan for the next year 2015-16 covering all the key aspects. Frame work analysis has been laid down in terms of growth in business, capital and profitability in the years to come. The Bank expects that the targets be well achieved with the support of migration to new CBS.

Board of Directors

Shri. M. Narendra, Chairman and Managing Director retired on superannuation on 31st July 2014 followed by Shri. A.D.M. Chavali, Executive Director on 31st October 2014. Shri. Niranjan Kumar Agarwal, Director (nominated under Section 9 (3) (g) - Chartered Accountant Category) had completed his 3 year term on 31st October 2014 and ceased to be Director. Shri. Ajit Vasant Sardesai and Prof. S. Sadagopan, Shareholder Directors had completed their 3 year term on 7th December 2014 and ceased to be Directors.

Shri. Niranjan Kumar Agarwal and Shri. Sanjay Rungta have been elected as Shareholder Directors for a period of 3 years from 8th December 2014 to 7th December 2017. Shri. R. Koteeswaran has been appointed as Managing Director and Chief Executive Officer of the Bank from 31st December 2014 to 30th June 2016. Shri. Pawan Kumar Bajaj has been appointed as Executive Director from 10th March 2015 to 30th September 2018.

The Board of Directors places on record their appreciation for the valuable contributions made by the erstwhile Directors and welcomes the new Directors.

Acknowledgement

The Board of Directors are grateful for the valuable guidance and support received from the Government of India, Reserve Bank of India, Securities and Exchange Board of India (SEBI), Stock Exchanges, State Governments, Financial Institutions and all Overseas Regulators. The Board of Directors acknowledge with thanks to the valued Customers, Employees Union, Officers Association, domestic and international banking group, the shareholders & other stake holders for their valued support, continued patronage with the Bank.

The Board also wishes to place on record its profound appreciation for the valuable contribution of the Bank''s Staff at all levels and look forward to their continued involvement with commitment towards achieving the future goals.

For and on behalf of the Board of Directors

Chennai (R. KOTEESWARAN)

May 8, 2015 Managing Director & Chief Executive Officer


Mar 31, 2014

The Board of Directors have pleasure in presenting the Annual Report together with audited Balance Sheet and Profit & Loss Account of the Bank for the year ended 31st March, 2014.

Global Business Performance

It is a matter of pride that the Bank has made a significant growth in Business Mix during the last 3½ years (business almost doubled) with a CAGR growth of 21.64%, which forms a strong base for future prospects. The business level of the Bank now crossed Rs.4,00,000 crores mark. During the same period, the Bank has opened more than 1,200 branches and crossed the milestone of 3,000 branches taking the domestic branch network to 3,265 as of 31st March 2014. This is a remarkable achievement ever made in the history of the Bank.

During the year 2013-14, there was a sluggish growth in the credit front due to slowdown in the economy as a whole. Accordingly, the Bank''s total deposits increased from Rs.2,02,135 crores in March 2013 to Rs.2,27,976 crores in March 2014 with a moderate growth of 12.78%. The total advances increased to Rs.1,81,081 crores with a growth of 10.17% from the last year level of Rs.1,64,366 crores. In terms of business mix, the Bank has been maintaining its 7th position among all the 19 nationalized banks since 2011. The market share is maintained at 2.67% for the year as a whole.

Financial Performance

The global operating profit marginally increased to Rs.3,997 crores in 2013-14 compared to Rs.3,817 crores in 2012-13. As the constraints on provisions continued during this financial year also, the Bank has to make higher provisions to a sum of Rs.3,395 crores constituting 85% of total operating profit. As a result, the Bank has posted Rs.602 crores Net Profit in 2013- 14 with a marginal growth of 6.2% compared to Rs. 567 crores in 2012-13. The Bank has already paid an interim dividend of 7% in February 2014. As a whole, the Bank has proposed to pay a total dividend of 12% for the whole year 2013-14.

Income and Expenditure Analysis

In the domestic front, during 2013-14, the cost of deposits was maintained at 7.81% compared to 7.80% in last year. This was possible despite the fact that the average domestic CASA has come down to 24.25% compared to last year level of 24.78% domestically. The Bank was maintaining the card rates on term deposits in line with the market trend. There was a moderate increase in card rates on term deposits also. The growth in average core term deposit was significant at 39% which had offset the impact of the above 0.53% CASA reduction. Though the Bank has opened around 38 lakhs CASA accounts during the year 2013-14, those CASA accounts will generate more volume in CASA only over a period of time.

There was a reduction in base rate by overall 50 basis points with effect from February 2013. As about 80% of total advances are linked to Bank''s base rate, there was an adverse impact on interest earnings to the tune of Rs.600 crores affecting the Bank''s core operating profit as well as Net Interest Margin for the year under review. However, the Bank was able to maintain the incremental yield apart from substantial recoveries. Hence, the domestic yield on advances stood at 10.95% when compared to 11.26% last year. As such, the global yield on advances for the year 2013- 14 stood at 10.04% compared to 10.34% in last year.

Despite volatile market conditions, the yield on investments was steady at 7.39% for the whole year 2013-14 compared to 7.37% in 2012-13. However, the domestic cost of borrowings increased to 9.65% in the period under review when compared to 9.17% last year mainly due to increase in repo rate to the present level of 8% compared to 7.50% earlier, Also, Bank rate & MSF increased to 9 % compared to 8.50% last year. As a result, the domestic cost of funds increased to 7.93% in 2013-14 compared to 7.90% in 2012-13. Apart from this, the constraints on Net Interest Margin continued with incremental NPAs and interest reversal on restructured advances. With this, the Bank maintained the NIM at 2.34% domestically and 2.28% globally for the year 2013-14.

Capital Adequacy Ratio

The Bank''s Capital Adequacy Ratio as on 31st March 2014 stood at 10.78% as per Basel III norms. The Bank has issued 22,97,53,015 Equity Shares, of face value Rs.10/- each, at the rate of Rs.52.23 per equity share (including premium of Rs.42.23 per equity share) amounting to Rs.1200 crores to Government of India on Preferential Basis and 8,15,00,000 Equity shares, of face value Rs.10/- each, at the rate of Rs.48.84 per equity share (including premium of Rs.38.84 per equity share) aggregating to Rs.398.05 crores to LIC of India on Preferential Basis. Hence, the Paid-up Capital of the Bank has increased from Rs.924.10 crores to Rs.1235.35 crores and Government of India''s shareholding has increased from Rs.681.96 crores (73.80%) to Rs.911.71 crores (73.80%), retaining their holding level at 73.80% as on 31st March 2014.

Branch Network

Rapid branch expansion continues to be one of the strategic initiatives taken by the Bank for augmenting its pan India branch net work and organic growth. During the year under review, the Bank opened 363 branches across the country. Out of 363 branches opened during 2013-14, 232 branches (63.91%) are located in Rural and Semi Urban centres, of which 98 branches are located in Unbanked Rural Centres. These new branches have enabled the Bank to enhance new relationships and spread our presence and net work farther and wider now covering all states. The average CASA in the new branches is about 45%.

In order to decentralize the decision making process and reduce the turnaround time for credit delivery, the Bank opened 19 Rapid Retail Centres, 9 MSME Processing Centres and 8 City Back Offices during the year. As on 31st March 2014, the Bank had 3,265 domestic branches, as against 2,902 branches as on 31st March 2013, comprising of 985 rural branches (30.17% to total branches), 904 Semi Urban branches (27.68%), 728 Urban branches (22.30 %) and 648 Metropolitan branches (19.85%). In addition, the Bank has 7 National Banking General Managers Offices, 59 Regional Offices, 3 Extension Counters, 20 Satellite Offices, 39 City Back Offices, 33 Rapid Retail centers (RLPCs), 18 MSME Processing Centres and 6 Inspectorates.

Corporate Governance

Corporate Governance refers to the system by which organizations are directed and controlled. The governance structure specifies the distribution of rights and responsibilities among different participants in the organisation such as the Board of Directors, Managers, Shareholders, Creditors, Auditors, regulators and other stakeholders and specifies the rules and procedures for making decisions in corporate affairs.

Bank''s Corporate Governance Practices are based on total commitment to ethical practices in the conduct of business, striving hard to enhance all stakeholders'' value, maintaining a high degree of disclosure levels and adhering to the Laws and Regulations. Bank has complied with the guidelines of the regulators and the same has been examined by the Statutory Central Auditors. The Bank follows a well-defined Code of Conduct, which fairly addresses the issues of integrity, conflict of interest and confidentiality and stresses the need of ethical conduct, which is the basis of good Governance. This code of conduct as approved by our Board is applicable to all the members of the Board and the Senior Management (i.e. up to General Managers of the Bank).

Bank is complying with all the norms laid down by Regulatory Authorities and Government of India. A compliance Officer under Clause 47 of the Listing Agreement is appointed to oversee the compliance with various provisions of SEBI and the Listing Agreement entered with the Stock Exchanges, where the Bank''s shares are listed. The Bank is also submitting a quarterly compliance report on Corporate Governance in compliance of Clause 49 of the Listing Agreement besides putting up the same to Audit Committee of the Board for their information. Bank also ensures that all the shareholders'' complaints are duly resolved then and there.

Vision-Mission: 2013-2020

Taking in to consideration the changing dynamics in the competitive environment, the Bank formulated its medium term Vision-Mission outlook for the period 2013 - 2020.

The Bank convened a Business Plan Conference at Chennai on 4th & 5th April 2013, The Business Plan Conference was followed by a Business Plan Review Conference on 6th & 7th November 2013. The Bank also convened an exclusive meeting of the Board of Directors on 14th March 2014 to discuss the Strategic Business Plan including products & markets, Innovation in Business and e-governance.

Awards & Accolades

- Bank won the Platinum Award for the category "Training Excellence HR Award" for the year 2011-12 from the Greentech Foundation, New Delhi.

- Bank won IPE BFSI Awards 2013 under three categories namely Best Bank in PSU Sector, Best Bank in Rural Outreach and Best CSR.

- Bank has been accorded as the Best Public Sector Bank under Priority Sector lending in Dun & Bradstreet - Polaris Financial Technology Banking Awards 2013.

- Bank has won the Skoch Awards 2013 - for High Availability of WAN and Paperless Board.

- Bank has won The Sunday Standard Best Bankers Awards 2013 under three categories namely Best Indian Bank - Large, Best Public Sector Bank - Large and Best Public Sector Bank - Customer Orientation.

- Bank was declared Runner up in the ASSOCHAM''s Social Banking Excellence Awards 2013.

- Bank won Development Leadership Award 2013 under Agriculture Leadership Awards.

- Bank won National Award for the in-house Magazine in Hindi for 2012-13 - First Prize under "C" Category.

- Bank was nominated as winner of FIPS Awards 2013 for the project of integration of Payment Gateway.

- 2 RSETIs were awarded "AA" ranking and 3 RSETIs were awarded "A" ranking in RSETI Awards.

- CIMSME gave the Bank "MSME Banking Excellence

Award 2013" in three categories namely Financial Inclusion Award, Jury Award for New Initiatives & MSME Excellence Award (Runner up)

- Bank was adjudged as the First Runner Up in the category of "Best Use of Business Intelligence" among Public Sector Banks in IBA Banking Technology Awards 2012-13 by Indian Banks Association.

- Public Relations Council of India in their Collateral Awards 2013 declared Bank winner for Wall Calendar and CSR Initiatives.

- Tamil Nadu Government declared the Bank as the Best Bank Award for Excellence in Credit Linking Self Help Groups for 2011-12.

- Bank won National Award for Outstanding Performance in Implementing PMEGP in South Zone level for 2012-13.

- India Business Journal''s IBJ Business Excellence Award 2013 - Customer Focus Award.

Board of Directors

Shri A.K.Bansal, Executive Director who retired on superannuation on 31st May 2013 ceased to be Director. Shri Atul Agarwal joined the Bank as Executive Director on 27th September 2013. Shri J. D. Sharma has been nominated as Officer Employee Director on 2nd May 2013. Shri Chinnaiah has been nominated as Part time Non Official Director on 13th November 2013. Smt. Sujatha has been nominated as Part time Non Official Director on 5th December 2013. Shri A.B.D.Badushas has been nominated as Part time Non Official Director on 12th December 2013. Shri S.L.Lakhotia, Workmen Employee Director, ceased to be Director on completion of his 3 years term on 8th August 2013. Shri R. Sampath Kumar has been nominated as Workmen Employee Director on 24th January 2014. Shri S.V Raghavan, RBI Nominee Director, demitted office on 12th March 2014. Shri Nirmal Chand has been nominated as RBI Nominee Director on 13th March 2014. The Board of Directors places on record their appreciation for the valuable contributions made by the erstwhile Directors and welcome the new Directors.

Acknowledgement

The Board of Directors acknowledge with gratitude, the valuable guidance received from the Government of India, Reserve Bank of India, Securities and Exchange Board of India (SEBI), Stock Exchanges, State Governments, Financial Institutions& Overseas Regulators. The Board of Directors is thankful to the valued Customers, Employees Union, Officers Association, its domestic and international banking community, the shareholders & other stake holders for their valued support, continued patronage and confidence exhibited with the Bank.

The Board also wishes to place on record its deep appreciation for the valuable contribution of the Bank''s Staff at all level and look forward to their continued involvement and spirited team effort towards achieving the future goals.



For and on behalf of the Board of Directors



Chennai M. NARENDRA

April 29, 2014 Chairman and Managing Director


Mar 31, 2013

The Board of Directors have great pleasure in presenting the Annual Report together with audited Balance Sheet and Profit & Loss Account of the Bank for the year ended March 31, 2013. Indian Overseas Bank developed as a major business growth centre maintaining the 7th Rank among the list of 19 nationalised banks. The banks growth in business during the year 2012-13 was more comfortable at 13.92% which helped the bank to significantly improve the market business share from 2.71% in last fortnight March 2012 to 2.74% in the ending fortnight of March 2013. The bank also reached yet another mile stone of Rs. 3,50,000 crores Business in the current fiscal. The new slogan "Touching Hearts, Spreading Smiles" has created greater enthusiasm in the organization inducing more vibrancy on the staff & customer clientele.

The Bank continued its commitment towards financial inclusion in creating more depth in the rural market. Today, Indian Overseas Bank is proud of its country wide presence with 2902 branches and 1883 ATM Centers and around 2.70 crore of customers'' trust and belief in IOB as "Good People to Grow With".

Global Business Performance

The Bank''s total deposits increased from Rs. 1,78,434 crore as at the end of March 2012 to Rs. 2,02,135 crore as of March 2013 registering a growth of 13.28 %. Most impressive was the growth in gross advances which improved from Rs. 1,43,273 crore to Rs. 164366 crore with growth of 14.72 %. As a result, the total business improved significantly by Rs. 44,794 crore to Rs. 3,66,501 crore with a growth of 13.92% over last year. This elevation has made the bank to enter into the group of Big banks entity of business mix of over Rs. 350000 crore with a sizable margin. It is noteworthy that this achievement is well recorded in average terms with a business growth of 19.01% surpassing the terminal growth. (Growth in average deposits 16.88%/ Growth in average advances 21.64%)

Financial Performance

The operating profit of the Bank went up from Rs. 3,534 crore in 2011-12 to Rs. 3817 crore in 2012-13 with a growth of 8%. The Bank has set apart a sum of Rs.3250 crore towards provisions and contingencies. Due to constrains on higher provisions, the Bank''s net profit stood at Rs. 567 crore in 2012-13 compared to Rs. 1050 crore in 2011-12. However, the Bank has proposed to pay a dividend of 20% for the year 2012-13 as the profitability trend is expected to move favorably in the near future.

Income and Expenditure Analysis

During the year 2012-13, the growth in business was significant at 19.01% in averages. This resulted in the Bank''s average Credit Deposit ratio to reach the top level of 84.25% compared to terminal CD ratio of 81.31%, as compared to 80.29% last year. This indicates the improvement in operational efficiency at the field level. Further, the bank was serious in reducing the bulk deposits with the prudent ALM techniques. The share of card plus deposits to total deposits has been successfully brought down to 14.95% as against the desired level of 15% by the Govt. The Bank took concerted efforts in opening of many new branches apart from conducting well organized CASA & Recovery Campaigns. As a result, the bank maintained the CASA% at 26.51% in March 2013 compared to 26.42% in March 2012. In the domestic front, the cost of deposits declined to 7.76% in the 4th quarter compared to 7.79% in 3rd quarter, 7.89% in 2nd quarter and 7.77% in the 1st quarter of the current year. For the year as a whole, the cost of deposit was contained at 7.80% compared to 7.39% in last year. The increase in the above cost is justified with the increase in card rates on term deposits in line with the market. The cost of domestic term deposits increased to 9.30% in 2012-13 compared to 8.91% in 2011-12. It is noteworthy that the average growth in domestic core term deposits was significant around 35% during the current year.

Also, domestic cost of borrowings decreased to 9.17% in 2012- 13 compared to 9.87 % in 2011-12 mainly due to decrease in repo rate at frequent intervals. As a result, the global cost of funds stood at 7.28% in 2012-13 compared to 7.11% in the last year.

Further, the constraints on NIM continued during the financial year due to increase in provisions on restructured advances / system generated Non Performing Assets (NPAs). The impact was higher as the bank reduced the base rate from 10.75 % to 10.50% (effective 01.05.2012) and further to 10.25% with effect from 18.02.2013. As such, the Bank''s domestic yield on advances has come down to 11.27% for the whole year compared to 11.65% last year. This has reduced the Bank''s domestic interest spread at branch level to 3.47% compared to 4.26% of last year. Hence, the Bank''s global Net Interest Income (NII) growth was marginal at 4.69% compared to 19.23% recorded last year. Consequently, the global NIM for the year 2012-13 stood at 2.43% compared to 2.75% in 2011- 12. However domestic Net Interest Margin was favorable at 2.51% during the current fiscal despite the impact of additional interest reversals during the last quarter.

Despite volatile market conditions, the domestic Yield on Investments was favorable at 7.38% during the year compared to 7.39% in last year. The Bank booked higher profit on sale of investment at Rs. 311 crore (before netting loss on the revaluation of investment) compared to a similar profit of Rs. 172 crore earned last year.

Capital Adequacy Ratio

The Bank''s Capital Adequacy Ratio as on 31.3.2013 stood at 11.85% as per Basel II norms. The Bank has issued 12,70,97,102 Equity Shares of face value of Rs. 10/- each, at the rate of Rs. 78.68 per equity share (including premium of Rs. 68.68 per equity share) aggregating to Rs. 1000 crore (Rs. one thousand crore only) to Government of India on preferential basis. Hence the Paid-up Capital of the Bank has increased from Rs. 797 crore to Rs. 924.09 crore and Government of India''s shareholding has increased from Rs. 554.86 Crore (69.62%) to Rs. 681.96 Crore (73.80%).

Branch Network

The Bank continues to step up its domestic branch expansion programme for augmenting its pan India branch network and organic growth. During the year, the Bank opened 273 branches across the country. Out of 273 branches opened during 2012-13, 188 branches (68.86%) are located in Rural and Semi Urban centres, of which 92 branches are located in Unbanked Rural centres. These new branches have enabled the Bank to enhance new relationships and spread our presence and network farther and wider. The average CASA in the new branches is about 48%. As at the end of the year, the Bank had 158 pending licenses for opening of new branches. With a view to stepping up vertical growth in advances portfolio, 5 Specialized Large Corporate Branches, 5 Specialised Mid Corporate Branches, 4 Specialised SME branches, and 22 Specialised Agricultural Credit Branches were opened during the year.

In order to decentralize the decision making process, reduce the turnaround time for credit delivery and increase efficiency in transaction handling, the Bank opened 14 Regional Offices, 10 Rapid Retail Centres, 9 MSME Processing Centres and 11 City Back Offices during the year.

As on 31.03.2013, the Bank had 2902 domestic branches, as against 2629 branches as on 31.03.2012, comprising of 849 rural branches (29.26% to total branches), 808 Semi Urban branches (27.84%), 649 Urban branches (22.36 %) and 596 Metropolitan branches (20.54%). The Bank added 50.08 lacs new relationships during the year.

Apart from 2902 branches, as on 31.03.2013, the Bank had 59 Regional Offices, 3 Extension Counters, 20 Satellite Offices, 31 City Back Offices, 14 Rapid Retail Centers (RLPCs), 9 MSME Processing Centers and 6 Inspectorates.

RBI has also approved for opening of two Overseas Branches (FCBU at Colombo and a Branch at Sukhumvit, Thailand).

Corporate Governance

Corporate Governance is based on the principles such as conducting the business with integrity and fairness, ensuring transparency in all the transactions, making all relevant disclosures as per the various Regulations in Force and complying with all the laws of the land, ensuring Accountability and Responsibility in all dealings with the stakeholders and commitment for conducting the business in an ethical and transparent manner.

The Bank has laid down a well-defined Code of Conduct, which fairly addresses the issues of integrity, conflict of interest and confidentiality and stresses the need of ethical conduct, which is the basis of good Governance. This Code of Conduct is applicable to all the members of the Board and the Senior Management (i.e. upto General Managers) of the Bank.

The Bank has complied with the guidelines of RBI, SEBI and other Regulatory Authorities for Corporate Governance, which has been examined by the Statutory Central Auditors. Bank gives high priority to good Governance, which reflects on transparent ownership structure, Management and Accounting practices of the Bank. The Board recognizes its role in promoting good Governance and in creating a framework of best practices, processes, and ethics to observe and promote high ethical standards.

The Bank is also committed to follow high disclosure standards and transparency in financial reporting so as to keep investors and stakeholders adequately well-informed and updated at frequent intervals.

The Bank is complying with all the norms laid down by the Regulatory Authorities in all its functional areas. There is an exclusive compliance officer under Clause 47 of the Listing Agreement entered into with the Stock Exchanges to comply with various provisions of SEBI and Stock Exchanges.

The Bank is submitting a "Quarterly Compliance Report on Corporate Governance" as per Clause 49 of the Listing Agreement with the Stock Exchanges besides putting up to the Board and Audit Committee of the Board (ACB) for information. As part of the good Corporate Governance, the Bank ensures that there is no investor Grievance pending for a period exceeding one week against the bank as per the records maintained by Registrar and Transfer Agent. During the period 01.04.2012 to 31.03.2013, Registrar and Transfer Agent received 616 complaints from Shareholders and all are redressed /resolved.

Salient Features: 2012-13

- The Bank''s Vision-Mission Statement formulated in 2007 was valid till March 2013. The Bank revisited the changing dynamics and came out with a medium- term Vision / Mission outlook for the period 2013 - 2020, which is as stated below:

"To be among the top five nationalised banks in terms of business volumes and sustained profitability with global recognition guided by high standards of governance and ethics; and emerge as the "Most Preferred Banking Partner" to unlock value to all its stakeholders."

- The Bank organized the Strategic Planning Conference in May 2012 .An exclusive meeting of the Board of Directors was held to discuss the Strategic Business Plan covering the innovative products to compete in the market, Innovation in Business and E- Governance.

The bank has changed the organizational setup at the Central Office level by putting in place vertical organizational structure (Agriculture, MSME, Mid corporate, Large Corporate & Retail) to provide focused implementation of strategies and for driving growth in assets and liabilities in the respective business segments which would act as profit centers for the bank.

- The Bank raised US$500 mn via sale of dollar denominated bonds for 5.5 years. This issue was oversubscribed by 10 times. The proceeds of the issue is being exclusively deployed for the Bank''s overseas operations. Further, Government cleared licenses for opening up of two overseas branches at Bangkok and Colombo respectively.

- National Award for MSME lending for 2012 was awarded to the Bank and CMD received the National Award for excellence in MSME lending (2nd Place) from His Excellency, The President of India, Shri. Pranab Mukherjee. The Bank was also conferred for its outstanding performance at South Zonal level for implementation of Prime Ministers Employment Guarantee Programme (PMEGP).

- Bank has bagged Responsible Business Awards 2012 from World Education Congress in 6 categories namely Best Bank of the year Award, Best Service Initiative Awards, Outstanding Banking Leader of the year Award, Best CSR Practices Award, Best organization with Innovation HR Practices Award, Best Security Initiative Award.

- Bank has received Best Indian Banker and Best Public Sector Banker awards in the large bank category from "The Sunday Standard FINWIZ 2012". Bank has been conferred with Gold Award in Business Intelligence and Data warehousing in the SKOCH Digital Awards 2012.

- Bank''s Chairman and Managing Director Shri. M. Narendra was awarded the JGBS Top Rankers Excellence Visionary Leadership Award by Jindal Global Business School and Top Rankers on the occasion of the 14th National Management Summit in New Delhi during January 2013.

- The history of the bank recording the 75 year journey has been brought out as a book titled "Indian Overseas Bank @75 - The Saga of Good People to Grow With". The book was released by Hon''ble Finance Minister Mr. P Chidambaram during Dec 2012.

- On 5th January 2013, Bank''s Executive Director Shri. A.K Bansal received the Skoch Financial Inclusion Award for the Bank''s exemplary work in promotion of Financial Inclusion among the Fishermen of Besant Nagar,Chennai under the project "Turning the Tide".

- The Bank was adjudged as the Top Performer for the year 2012-13 on the Central Excise Day. Bank''s Executive Director Shri. A.D.M Chavali received the certificate and memento from Justice Shri R. Sudhakar, High Court of Madras during February 2013.

- The bank has observed the year 2012-13 as the year of Retail Credit.Bank has conducted a 3 month long campaign " Touching Hearts, Spreading Smiles" with a view to increase our performance under CASA, Retail Credit, Para Banking Products, Non Interest Income, Recovery etc.

- 77th Foundation Day of the Bank was marked with a "Walk-In-Bank" campaign at all branches wherein huge number of Savings and Current Accounts were opened. The Bank also opened 77 branches across the county to mark the occasion and 1,25,000 CASA Accounts were opened.

- Bank organized Platinum Jubilee commemoration oration by Dr. D Subba Rao, Governor of RBI on 04.07.2012. On this occasion, "Banking for the Unbanked" book was released.

- The Bank has set a record premium collection of Rs. 247 crore under Bancassurance - Marketing of LIC Policies retaining No.1 position.

- In order to improve the exposure to SHGs, SHG Festival from 15.01.2013 to 15.03.2013 was celebrated to improve the credit linkage with fresh SHGs. Campaign on IO B U rban Horticulture and marketing of rural credit products was conducted during November and December 2012.

- The Bank celebrated International Women''s Day on 8th March 2013 and CMD addressed all women IOBians in a special function organized at Central Office. International Women''s day was also celebrated at Ethiraj College for Women on 16.03.2013 where women customers & SHGs participated and eminent women personalities were honoured.

- Contract for another one year with Ace Badminton player Ms. Saina Nehwal, gold medalist in Common Wealth Games & Bronze medalist in Olympics, is renewed. Her image was extensively used in print and electronic media. "Brand IOB" has been made more versatile and visible so as to reach the youth.

Board of Directors

Shri Sooraj Prakash Khatri, part time non-official director, ceased to be Director, on completion of his 3 years term on 26.10.2012. Shri K. Anand a Ku m ar. Offi ce r Employee Director, ceased to be the director, on completion of his 3 year term on 25.03.2013. The Board of Directors places on record its appreciation for the valuable contributions made by the erstwhile Directors.

Acknowledgements

The Board of Directors acknowledge with gratitude, the valuable guidance received from the Government of India, Reserve Bank of India, Securities and Exchange Board of India (SEBI), Stock Exchanges, State Governments, Financial Institutions& Overseas Regulators. The Board of Directors is thankful to the valued Customers, Employees Union, Officers Association, its domestic and international banking community, the shareholders & other stake holders for their valued support, continued patronage and confidence exhibited with the Bank. The Board also wishes to place on record its deep appreciation for the valuable contribution of the Bank''s Staff at all level and look forward to their continued involvement and abundance in team effort towards achieving the future goals.

For and on behalf of the Board of Directors

Chennai M. NARENDRA

April 29, 2013 Chairman and Managing Director


Mar 31, 2012

The Board of Directors have great pleasure in presenting the Annual Report together with audited Balance Sheet and Profit & Loss Account of the Bank for the year ended March 31, 2012.

The Bank has the pride of completing its historic delightful event of Platinum Jubilee year on 10th February 2012 during the financial year 2011-12 and crossing the milestone of Rs.3,00,000 crore mark in business. The Bank's growth in deposits at 22.86% and advances at 25.91% during 2011-12 were much higher than the Banking system's growth.

Global Business Performance

The Bank's global deposits increased from Rs 1,45,229 crore as on 31st March 2011 to Rs 1,78, 434 crore as on 31st March 2012 registering a growth of 22.86%, while global gross advances improved from Rs 1,13,791 crore to Rs 1,43,273 crore with significant growth of 25.91 %. As a result, the total business improved significantly by Rs 62,687 crore to Rs 3,21,707 crore with a growth of 24.20% over last year.

Overseas Branches

During the year, the Bank has been actively pursuing setting up of the Banking subsidiary in Malaysia, under the joint venture agreement signed with Bank of Baroda and Andhra bank. The subsidiary is expected to become operational shortly.

With an intention to expand its overseas operations, the Bank had identified 14 prospective centres abroad and entrusted the job of geographical assessment of these overseas centres to external consultant M/s. Deloitte Touche Tohmatsu India Pvt. Ltd . The consultants had submitted their Final Report, prioritizing the countries identified, under Wave 1, Wave 2 and Wave 3. The Bank will be focusing its overseas expansion plan initially, in the countries identified under Wave 1 - Kenya, South Africa, Australia and U.S.A.

The Bank is following up with Reserve Bank of India (RBI) for approval of opening another Branch at Bangkok and for upgrading its representative offices at Dubai and Guangzhou. RBI's approval is awaited for obtaining Full Bank licence for Singapore Branch.

As at the end of March 2012, the Bank had 13 establishments abroad, including 6 full fledged branches, 4 Representative offices, 2 Remittance Centres and 1 Extension counter.

The Bank has two branches in Hong Kong and one each in Singapore, Seoul (South Korea), Colombo (Sri Lanka) and Bangkok (Thailand). Representative offices are located at Guangzhou (China), Ho Chi Minh City (Vietnam), Kuala Lumpur (Malaysia) and at Al Karama, Dubai (UAE). Remittance Centres operate at Boonlay and Serangoon, Singapore and the Extension Counter is located in Sri Lanka. Financial Performance

The operating profit of the Bank went up from Rs 2,861crore in 2010-11 to Rs 3,534 crore in 2011-12 with a growth of 23.52%.

Provisions

The Bank has set apart a sum of Rs 2,484 crore towards provisions and contingencies.

Net Profit / Dividend

The Bank's net profit stood at Rs 1,050 crore in 2011-12 compared to Rs 1073 crore in 2010-11. The Bank has proposed to pay a dividend of 45% for the year 2011-12.

Income and Expenditure Analysis

During the year 2011-12, the growth in business was significant at 24.20% at par with System's growth of around 16%. This resulted in the Bank's Credit Deposit ratio to reach the level of 80.29% , as compared to 78.35% last year. Due to increase in card rates on term deposits, the domestic cost of term deposits increased from 7.40% in 2010-11 to 8.91% in 2011-12 coupled with increase in interest rate on Savings Bank deposit from 3.5% earlier to 4% effective from 01.04.2011. As a result, domestic cost of deposits increased to 7.39% for the year 2011-12. Domestic cost of borrowings also increased from 9.25% in 2010-11 to 9.86% in 2011-12 mainly due to increase in repo rate from 6.75% to 8.50% at frequent intervals during the same period. As a result, domestic cost of funds increased to 7.61% in 2011-12 as against 6.25% in 2010-11. Further, the constraints on NIM continued during the financial year due to increase in provisions on certain restructured advances / system generated Non Performing Assets (NPAs). Despite increase in Benchmark Prime Lending Rate (BPLR) / Base rate to the level of 15.50% / 10.75%, the Bank's domestic yield on advances was only at 11.65% compared to 10.43% in 2010-11. Hence, the domestic interest spread decreased to 4.26% during the financial year as against 4.48% in 2010-11. This has resulted in Year on Year increase of 67% interest payments on domestic deposit over the last year as against 54% growth in interest receipts on advances.

Despite volatile market conditions, the Domestic Yield on Investments increased to 7.39% (Net of amortization) during the year compared to 7.15% in the last year. The profit on sale of investment was higher at Rs 171 crore before accounting loss on revaluation of investments at Rs 35 crore. The profit on exchange from forex business improved to Rs 186 crore as against Rs 127 crore in last year.

On the expenses side, the increase in domestic operating expenses was at 23% and the other non-staff expenditure showed an increase of 30% over the last year, mainly due to business expansion and opening of 447 new branches during the financial year. However, the Bank's cost to income ratio was favorable at 47.23% during the year 2011-12 compared to 47.35% in the last year. The global income increased to Rs 19,578 crore with an increase of 47% whereas total expenses accounted for Rs16,044 crore, leaving an operating profit of Rs 3,534 crore with a growth of 23.52% for the whole year 2011-12. The Bank's Net Interest Income (NII) growth was at 19.20% taking the global NIM to 2.75% compared to 3.11% in the last year.

Capital Adequacy Ratio

The Bank's Capital Adequacy Ratio as on 31.3.2012 stood at 13.32% compared to 14.55% as at the end of March 2011 (as per Basel II norms). During the year 2011-12, The Bank issued 14,73,11,388 equity shares of face value of Rs.10 each at Rs 97.82 per equity share ( including premium of Rs 87.82 per equity share) to the Government of India on 30.03.2012 aggregating to Rs1441 crore, and 3,09,37,467 equity shares of face value of Rs10 each at Rs 97.82 per equity share (including premium of Rs 87.82 per share) to Life Insurance Corporation of India and its various schemes on 24.03.2012 on preferential basis aggregating to Rs 302.63 crore.

Branch Network

The Bank has stepped up its branch expansion efforts towards its pan India presence. During the year, the Bank opened 447 branches across the country, highest in the history of the Bank. The Bank had reached yet another milestone of crossing 1000 branches in Tamil Nadu State as committed to the Hon'ble Chief Minister of Tamil Nadu under MISSION TAMILNADU - PLATINUM 1000, on 10th February 2012 exactly on the concluding day of Platinum Jubilee year of the Bank. Towards reaching the said milestone, the Bank opened 147 branches in Tamil Nadu within the short span of 65 days. The Bank has joined the group of very few banks, having 1000 or more branches in a particular State.

Out of the 447 branches opened during 2011-12, 73.38% are located in Rural and Semi Urban centres. As on 31.03.2012, the Bank had 2,629 domestic branches comprising 731 Rural branches (27.81% of total branches), 738 Semi Urban (28.07%), 599 Urban (22.78%) and 561 Metropolitan branches (21.34%). Besides, the Bank had 3 Extension counters and 20 Satellite Offices, 45 Regional offices, 18 City Back Offices and 6 Inspectorates as at the end of the March 2012. These new branches will provide speedy growth of business in the years ahead. The average CASA in the new branches is about 50%.

To augment the vertical growth in advances portfolio, 3 specialised Large Corporate branches, 11 Specialised Mid Corporate branches and 8 Specialised SME branches were opened during the year 2011-12. Besides, 11 specialised Asset Recovery Management (ARM) branches and 1 Specialised Bullion Branch were also opened.

The existing Central Clearing Offices are renamed as City Back Offices (CBO) so as to strengthen the functions of back office jobs and one more CBO at Pune was opened during the year. The Bank intends to open 23 more City Back Offices across the country so that every Region of the Bank will have at least one CBO in their Region /city.

Platinum Jubilee year Celebrations

The Bank entered its Platinum Jubilee year on 10th February 2011 and celebrated this proud event by organizing a year long celebrations across the country and abroad. The Bank is translating those efforts into business results.

As a part of the year long Platinum Jubilee year celebrations, the Bank organized Four Platinum Jubilee Commemorative orations of the following eminent personalities in contemporary topics at Chennai and Hyderabad.

- By Shri Montek Singh Ahluwalia, Deputy Chairman, Planning Commission on '12th Five Year Plan - Gateway to a Defining Decade' at Chennai.

- By Dr C Rangarajan, Chairman, Economic Advisory Council to the Prime Minister on 'Economic Growth and Inflation' at Chennai.

- By Dr M Veerappa Moily, Hon'ble Minister of Corporate Affairs, Government of India on "Corporate Governance with special reference to Banking Industry" at Chennai.

- By Dr. Y.V. Reddy, former Governor of Reserve Bank of India on "Development & Regulation of Financial Sector" at Hyderabad.

A Special Platinum Jubilee function was organized by the Bank on 6th January 2012 in Chennai, in which the Hon'ble Finance Minister Shri Pranab Mukherjee participated as the Chief Guest.

- On the occasion, representatives from select Self Help Groups and Farmers Clubs were felicitated.

- Seven eminent personalities who had contributed to the society were honoured.

- The Bank's book on its Corporate Social Responsibility initiatives was launched by Hon'ble Finance Minister Shri Pranab Mukherjee.

Bancon 2011

BANCON is the Bankers' conference held every year to discuss and deliberate on a theme of paramount importance to the Banking Industry. It is hosted by different Banks at different Regions.

This prestigious event was brought to Southern Region during the year and hosted by Indian Overseas Bank BANCON 2011 was organised by the Bank, as a part of Platinum Jubilee Celebrations, on 4th, 5th and 6th November 2011 in Chennai. Top Bankers, Economists, Industrialists and renowned Speakers from the financial world participated in this Conference.

The theme of the Conference was "Competing in the Defining Decade for Indian Banking". 23 sessions involving more than 120 speakers were held during the three days. More than 600 delegates participated in the Conference. Hon'ble Union Minister of State for Finance Shri Namo Narain Meena inaugurated BANCON 2011 on 4th November 2011. Shri Anand Sinha, Deputy Governor, Reserve Bank of India delivered the valedictory address.

Financial Inclusion

Coverage of villages with banking outlet

Our Bank introduced Smart Card Banking through Business Correspondents as per the guidelines of Reserve Bank of India for providing Banking facilities in un-banked villages. Business Correspondents deliver the services at the front end by using bio-metric smart cards and Hand Held Devices. The devices are voice enabled in vernacular language and user friendly even for illiterates. This has enabled villagers even in remote locations to transact banking business at their own place. In the first phase, the Bank covered all the 1294 allotted villages with population above 2000 under Smart Card Banking across the country. In addition to the above, the Bank has also covered 115 other villages under Smart Card Banking. Smart Card Banking is now being implemented in 20 States and 2 Union Territories spread over 42 Regions.

During the year under review, the Bank has opened 7,62,268 No-frills Savings Bank accounts taking the total number of such accounts to 24,44,032. So far, the Bank has issued 1,66,237 smart cards and the number of transactions undertaken in the smart card terminal is 5,60,248.

Setting up Ultra Small Branch

As per the guidelines of Ministry of Finance, the Bank has set up Ultra Small Branches in 32 Financial Inclusion villages during the year.

Award

The Bank bagged SKOCH AWARD for Financial Inclusion which was conferred to the Bank for "Best Practices through Banking & Financial Services for promoting Inclusive growth & Poverty Alleviation from across Urban and Rural India".

Regional Rural Banks

The two Regional Rural Banks (RRBs) sponsored by the Bank, viz., Pandyan Grama Bank and Neelachal Gramya Bank performed well during the year. Pandyan Grama Bank has earned Net Profit after Tax consecutively for the past sixteen years and recorded NIL Net NPA continuously for the past nine years. Pandyan Grama Bank and Neelachal Gramya Bank have achieved 100% Core Banking Solution of all their branches. Neelachal Gramya Bank has completely wiped out the accumulated loss two years ahead of schedule.

Customer Service

The Bank is a member of Banking Codes and Standards Board of India (BCSBI) and has adopted the Code of Commitment to Bank's Customers drafted by BCSBI.

As a part of Bank's customer centric initiative, Customer Fortnight was observed in all branches during November 2011 and executives from the Central Office and Regional Offices have visited the branches and met the customers. Again, customers contact week was observed from 5.12.2011 to 10.12.2011.

The details of customer complaints received and redressed during the year 2011-12 are given below.

Sl. Details At Central At Regional No. Offices Office

1. No. of complaints pending at the beginning of the year 45 111

2. No. of complaints received during the year 1046 1542

3. No. of complaints redressed during the year 1006 1588

4. No. of complaints pending at the end of the year 85 65

Settlement Rate 92.20 96.06

Number of awards passed by the Banking Ombudsman and implemented by the Bank are as follows.

1. No. of complaints pending at the beginning of the year : 1

2. No. of awards passed by Banking Ombudsman during the year: 0

3. No. of awards implemented during the year : 1

4. No. of unimplemented awards at the end of the year : 0

The Bank is the Convenor for Customer Service Centre in Chennai City and the Bank resolved all the complaints during this year.

Customers are provided with the facility of Toll Free Teleservices by engaging an outside agency for receiving complaints. These complaints are being resolved within 48 hours. The Complaints are being received directly by Central Office and Regional Office (through letters, e-mails and telephone) and also through other channels like Reserve Bank of India, Banking Ombudsman, and Government of India. To speed up the process of redressal, an online Grievance Redressal And Monitoring System ( IOB GRAMS) was introduced which enables the Regional Offices and branches to view the complaints and resolve the same immediately. Another system viz. SMS)< REDRESS was introduced to facilitate the customers wherein the grievances of customers received through SMS are resolved immediately. The message will be received by the Regional Manager concerned, who, in turn, will contact the customer to resolve the complaint.

Retail Banking and Marketing

The Business under Retail segment showed a remarkable improvement during the year 2011-2012. The total income generated on fee based products registered a growth of 20.36% during the year.

In Life Insurance Business, the Bank continued to achieve the status of No. 1 Corporate Agent and recorded history by crossing Rs 250 crores premium collection mark in Bancassurance. Thus the Bank registered an increase of 49.80% over 2010-11 in Premium mobilization. The income through mobilization of Non Life Insurance Policies also registered a growth of 34.48% over 2010-11.

The Bank earned an income of Rs 12.79 crore from sale of Gold coins with a growth of 44.92% over 2010-11. In quantum, the Bank sold Gold Coins of 1666 kgs during 2011-12 as against 1392 kgs sold during last year.

The Bank conducted various Campaigns viz.

1. Akshaya Tritya Campaign for sale of gold coins.

2. CASA Fest for mobilizing new Savings Bank and Current Accounts.

3. Housing Loan Campaign - To increase the Housing Loan portfolio.

4. IOB Elite Campaign to mobilize Life insurance Business and increase the fee based income.

5. Non Life Insurance Mobilization Campaign.

during the year 2011-12 towards improving the retail business. Retail Loans improved by 20.34%over the previous year with Housing Loans and Educational Loans as major contributors. New product developments such as Career Dream - Loan for financing Coaching/ Tuition Fee of reputed institution in India to prepare for Professional Entrance examinations, IOB Scholar - Education Loan for the students who were kept outside the purview of Indian Banks Association (IBA) Model Scheme were developed to expand business across all segments. The Repayment periods of all the existing and new

Retail Loans were extended and rephased in order to attract more retail borrowers to the Banks fold.

Official Language Policy

The Bank has taken all efforts to implement the Official Language Policy of Government of India during the year 2011-12. During the year, 141 Staff members, who did not possess working knowledge of Hindi were trained in Prabodh, IOB Praveen and Banking Pragya Courses. 1,774 Staff members possessing working knowledge of Hindi were trained in General Hindi Workshops held during the year. Rajbhasha Sangoshti was held on 10.09.2011 for heads of Central Office departments to strengthen the Official Language Implementation in Central Office.

Miniutes of all meetings of all board level committees were translated in Hindi. As per the directives of Government of India, the Bank has enabled Hindi Unicode font in all Regional Offices and has provided the facility of downloading of the same on the intranet - IOB Online. The Bank has also provided the Banking terminology on IOB Online for the benefit of staff members. The Bank has given necessary training to 1,386 staff members for use of Hindi in computers. The Bank has provided Script Magic package in all branches for issuing passbooks, statement of account, Demand Draft and deposit receipts in Hindi. The Bank has published all the four issues of quarterly Hindi Magazine "VANI" in print as well as in digital form. The Bank's website has been made available in Hindi also.

The Bank's Hindi (In-house) Magazine "VANI" has been awarded First Prize by Department of Official Language, Ministry of Home Affairs, New Delhi in "C" Region for the year 2010-11. The award was received by the Bank's Chairman & Managing Director Shri M Narendra from Honourbale President of India Smt. Pratibha Devisingh Patil on 14th September, 2011.

Reserve Bank of India has awarded Fourth Prize for the Bank's Hindi house magazine "VANI" for the year 2010-11 in the Inter-Bank Competition for Hindi house magazines of banks and financial institutions. Regional Offices were inspected on Official Language implementation by Official Language Department, Central Office. Rajbhasha Shields were awarded to Regional Offices and branches doing good work in official language implementation.

Annual Official Language Review Meeting and Unicode training for Official Language Officers was held from19th to 21st May 2011 to assess the progress made in the area of Official Language implementation in Regional Offices.

The Third Sub Committee of Parliamentary Committee on Official Language inspected the Bank's Regional Office at Puducherry and Mandi branch. The Committee expressed satisfaction over the performance of the Bank at these centres.

As convener of Chennai Town Official Language Implemen- tation Committee, the Bank has received the Second Prize for its efforts in implementation of Official Language Policy during the year 2010-11 from Official Language Department, Ministry of Home Affairs, Government of India. The Prize was given by Shri A N P Sinha, Secretary, Department of Official Language, Ministry of Home Affairs, New Delhi on 8th December 2011. On behalf of the Committee, the Bank conducted two General Hindi Workshops, 12 Inter-Bank Hindi competitions, Joint Hindi Month Celebration function and Hindi Unicode training programme for the staff members of member banks / Financial Institutions. A special Joint Rajbhasha Samaroh was held on 13th May 2011 on the occasion of Silver Jubilee year of the Committee and Platinum Jubilee year of Bank. In addition to this two half yearly meetings were also conducted. A Souvenir on the activities of the committee was released on the occasion. Two Seminars in Hindi on Banking subject were held for the Bank's Executives and Official Language Officers. A Joint Hindi Day Celebration function was held on 13th March 2012. Annual issue of magazine of "Chennai Bharathi" was brought out.

A Revised booklet on Notings in Hindi was also published.

Corporate Governance

Corporate Governance refers to the set of systems, principles and processes by which a company is governed. They provide the guide as to how the company can be directed or controlled such that it can fulfill its goals and objectives in a manner that adds to the value of the company and is also beneficial to all its stakeholders in the long term. Stake holders would include everyone from the Board of Directors, Management, Shareholders, Customers, employees and society.

Corporate Governance is based on principles such as conducting the business with integrity and fairness, being transparent with regard to all transactions, making all necessary disclosures and decisions, complying with all the laws of the land, accountability and responsibility towards the stakeholders and commitment for conducting business in an ethical manner.

The Bank has laid down a well-defined Code of Conduct which addresses issues of integrity, conflict of interest and confidentiality and stresses the need of ethical conduct, which is the basis of good governance. This Code of Conduct is applicable to all the members of the Board and the Senior Management (i.e. General Manager) of the Bank.

The Bank has complied with the guidelines of Reserve Bank of India (RBI), Security Exchange Board of India (SEBI) and other regulatory authorities for Corporate Governance, which has been examined by the Statutory Central Auditor. The Bank gives high priority to good Governance, which reflects in transparent ownership structure, management and accounting practices of the Bank. The Board recognizes its role in promoting good governance and in creating a framework of best practices, processes, and ethics to observe and foster high ethical standards.

The Bank is complying with all the norms laid down by the Regulatory Authorities in all its functional areas. There is an exclusive compliance officer under Clause 47 of the listing agreement entered into with Stock Exchanges to comply with various provisions of SEBI and Stock Exchanges.

Pursuant to Clause 49 of the Listing Agreement, Management Discussion & Analysis Report, Report on Corporate Governance as well as certificate by the auditors regarding Compliance of the conditions of Corporate Governance, form part of this Annual report.

As part of the good Corporate Governance, the Bank ensures that there is no investor grievance pending for a period exceeding one month against the Bank as per the records maintained by Registrar and Share Transfer Agent.

The Bank is submitting a "Quarterly Compliance Report on Corporate Governance" as per Clause 49 of the listing agreement to Stock Exchanges besides putting up to Board and Audit Committee of the Board (ACB) for information.

Board of Directors

Smt.Nupur Mitra , demitted office on 31.10.2011 on her appointment as Chairman and Managing Director of Dena Bank. ShrLA.D.M.Chavali, assumed charge as Executive Director on 28.12.2011 .Dr.Vinita Kumar , Govt Nominee director, demitted office on 21.07.2011.The Government of India (GOI) nominated Dr.Alok Pande as Government of India Nominee director with effect from 22.07.2011 .Shri B.V.Appa Rao, demitted office on 28.08.2011, on completion of his tenure of three years. The Government of India (GOI) nominated Shri Niranjan Kumar Agarwal, under Chartered Accountant category, with effect from 01.11.2011 .Shri.A.K.Bhargava and Dr.Chiranjib Sen demitted office as shareholder Directors on 07.12.2011. Shri.Ajit Vasant Sardesai and Prof.S.Sadagopan elected as Share Holders Director and assumed office on 08th December 2011. Shri.A.Vellayan reelected as Share holder Director and assumed office on 08th December 2011. Shri.A.Vellayan has demitted office as Shareholder Director on 30.03.2012, consequent to the allotment of 14,73,11,388 equity shares to the GOI which took place on 30.03.2012, whereby GOI shareholding has increased to 69.62%

The Board of Directors placed on record its appreciation for the valuable contributions made by the erstwhile Directors and extended a warm welcome to the new directors. Acknowledgements

The Board of Director place on record the valuable guidance received from the Government of India, Reserve Bank of India, Securities and Exchange Board of India (SEBI) and support from Stock Exchanges, various State Governments and Financial Institutions. The Board expresses its gratitude to the Hong Kong Monetary Authority, Monetary Authority of Singapore, Financial Supervisory Services Korea, Central Bank of Sri Lanka, China Banking Regulatory Commission, Bank Negara, Malaysia, Bank of Thailand, State Bank of Vietnam and Central Bank of UAE for their support.

The Board of Directors records the continued patronage and goodwill of the valued customers, shareholders, other stakeholders and correspondents of the Bank in India and abroad. The Directors are happy that the industrial relations are very cordial on account of positive attitude on the part of Employees' Union and Officers' Association.



For and on behalf of the Board of Directors

Chennai M. NARENDRA

May 5 , 2012 Chairman and Managing Director


Mar 31, 2011

The Board of Directors have great pleasure in presenting the Annual Report together with audited Balance Sheet and Profit and Loss Account of the Bank for the year ended March 31,2011.

During 2010-11, the Banks performance is more progressive in the backdrop of growth momentum in the Indian economy. The Bank has registered higher growth rate than the banking system both in deposits and advances. The Bank has witnessed significant growth in business and crossed the business level of Rs. 2,50,000 crore mark.

Global Business Performance

The Banks global deposits increased from Rs. 1,10,795 crore as on 31st March 2010 to Rs. 1,45,229 crore as on 31st March 2011 with a growth of 31.08 % while global gross advances went up from Rs. 80,782 crore to Rs. 1,13,791 crore at 40.86 %. Hence, the total business improved to Rs. 2,59,020 crore with an excellent growth of 35.20 % over last year.

Overseas Branches

During the year, the Bank has been actively involved in the process of setting up of the office at Malaysia, in respect of the joint venture signed with Bank of Baroda and Andhra bank to open a Banking subsidiary in Malaysia. The subsidiary has obtained license from Bank Negara, the Central bank of Malaysia. The Bank is also looking ahead to expand its overseas operations by availing funds out of a Medium Term Note issue.

As at the end of March 2011, the bank had 13 establishments abroad, with 6 full-fledged branches, 4 Representative offices, 2 Remittance Centres and 1 Extension counter.

There are two branches in Hongkong and one each at Singapore, South Korea, Sri Lanka and Bangkok. Representative offices are located at Guangzhou, China, at Kualalumpur, Malaysia, at Ho Chi Minh City, Vietnam and at Al Karama, Dubai. Remittance Centres operate at Boonlay and Serangoon, Singapore and the extension Counter is located at Sri Lanka.

Medium Term Notes Issue (MTN)

The Bank embarked on the MTN programme for a total size of USD 1 billion in the beginning of January 2011. The primary objective of the programme was to raise foreign currency funds for funding the long-term assets of overseas branches. The key milestones associated in setting up the programme were obtention of second rating from Fitch, listing the issue on the Singapore Stock Exchange, finalizing extensive documentation, conducting tradeshows and deliberations with International Investors in a short span of time. The road shows were spearheaded by Chairman and Managing Director Shri.M.Narendra, Executive Director Mrs. Nupur Mitra and General Manager Shri.S.Chandrasekharan. The first tranche of the issue under the programme was successfully launched on 12th April 2011 for an issue size of USD 500 Mio in the form of Senior Unsecured Debtforatenorof 5.5years. The pricing was, concluded at a competitive pricing of 5-year US Treasury +290 BPs and the issue was over subscribed to the extent of USD 1.9 Mio. The fixed coupon rate of the bond was fixed at 5%, semi annual, with an issue price at USD 99.478.

Financial Performance

The operating profit of the Bank went up from Rs. 1,845 crore in 2009-10 to Rs. 2,861 crore in 2010-11 with a growth of 55.08 %. This attainment was all the more significant when viewed in the light of volatile market conditions leading to subdued treasury gains and increased cost of funds. Growth in operating profit can be attributed to expansion in volume of business especially in the second half of the financial year and improvement in efficiency levels.

Provisions

The Bank has set apart a sum of Rs. 1, 788 crore towards provisions and contingencies.

Net Profit Dividend

The Banks net profit increased to Rs. 1073 crore in 2010-11 from Rs. 707 crore in 2009-10 with a growth rate of 51.71%. The Bank has proposed to pay a dividend of 50 % for the year 2010-11.

Income and Expenditure Analysis

During the financial year 2010-11, the growth in total global income was favorable at 17.01 % over last year amounting to Rs. 13,327 crore. At the other end, the total expenses was controlled at Rs. 10,466 crore with a reasonable increase of 9.66 % over last year despite providing provisions towards pension and gratuity as per extant RBI guidelines and fresh recruitment. This was mainly possible due to various cost control measures taken at the micro/macro levels apart from handling of Asset Liability Management techniques effectively.

As a result, domestic cost of deposits came down to 5.95 % in 2010-11 compared to 6.36% in 2009-10 and the domestic yield on advances stood at 10.43%. The cost of domestic borrowings/others increased to 9.25 % in the current year due to higher borrowings to meet the liquidity adjustments. The increased CRR and repo rates had an impact on the domestic cost of funds, which increased to 6.46 % in Q4 of the reviewing period. The global operatingexpenses showed a reasonable increase of 4.30 % during the year amounting to Rs. 2,572 crore.

The domestic yield on investments increased to 7.15 % (net of amortization) during the year compared to 7.02 % in the last year. Profit on exchange (domestic) was also higher at Rs. 127 crore compared to Rs. 98 crore last year. Due to volatile market conditions, as said earlier, the profit on sale of investments reduced to Rs. 109 crore in 2010-11, compared to Rs. 292 crore in 2009-10. The global net interest income increased to Rs. 4208 crore with a significant growth of 32.83% compared to 10.39% in last year. Consequently, there was a perceptible improvement in global Net Interest Margin , higher at 3.11 % during the year compared to 2.74% of last year.

Thus, the operating profit showed a significant growth of 55.08 % over last year aggregating to Rs. 2861 crore in 2010-11 with improved Net interest income. Excluding the treasury gains earned under profit on sale of investments as also the impact of loss on revaluation of investments, the core operating profit increased from Rs. 1606 crore in 2009-10 to Rs. 2805 crore in 2010-11 at a growth of 74.66%.

Capital Adequacy Ratio

The Banks Capital Adequacy Ratio as on 31.3.2011 stood at 14.55% compared to 14.78% as at the end of March 2010 (as per Basel II norms). During the current financial year, the Bank had issued 7, 39,49,343 equity shares of face value of Rs.10 each at Rs. 142.53 per share (including premium of Rs. 132.53 per share) to the Government of India on preferential basis aggregating to Rs. 1,054 crore.

Branch Network

The Bank towards expanding its reach and pan India presence opened 173 branches across the country, upgraded 9 Extension Counters. As at the end of the reporting period, the Bank had 2,184 domestic branches of which 583 were Rural branches accounting for 26.7% of total branches, 558 Semi Urban (25.6%), 542 Urban (24.8%) and 501 Metropolitan branches (22.9%). The number of Extension Counters in India stood at 5.

Changes in organization set up at Central Office

Towards driving the business fruther and to have focused approach in business expansion, the bank has drawn the verticals viz. Large Corporate, Mid Corporate, Micro and Small and Medium Enterprises at Central Office. Besides the above , the Bank has integrated all its Treasury functions at Central Office. An exclusive transaction banking department was formed at Central Office for monitoring the performance in respect of Trade finance, Cash Management Services, Supply Chain Management/Channel Finance and Government business.

Platinum Jubilee year Celebrations- An image building exercise

The Bank has entered its 75th year of operations as on 10th February 2011 and the Bank inaugurated the platinum jubilee celebrations on 10th February 2011 with a grand function organised in New Delhi followed by a function in Chennai. Honble Union Ministers of State for finance Shri Namo Narain Meena and Shri S.S. Palanimanickam graced the function and inaugurated the function. Union Secretary of Finance Shri Shashi Kant Sharma, Chairmen of

Public Sector Banks and the past Chairmen of the Bank participated in the function. On this occasion, 75 branches and 75 Automatic Teller Machines (ATMs) were opened. The Bank has launched new products viz. SB Student IOB MSE Plus, Bhumilakshmi. The Bank also extended its reach of its IOB Sampoorna, an innovative rural development project and distributed scholarships to Girl Students. As a part of our Banks Platinum Jubilee Celebrations in New Delhi, a booklet titled "Success Stories... Making India grow since 1937" was released by the Honble Union Ministers of State for finance Shri Namo Narain Meena and Shri S.S. Palanimanickam. An exhibition of Self Help Groups products was also organized.

Platinum Jubilee Celebrations is being celebrated with customer and public participation in various places of the country till the end of the Platinum Jubilee year. The Bank has been translating these efforts for expanding the customer base.

The Banks image building exercise is impacting its presence well in the market. Shri M.Narendra, Chairman and Managing Director of the Bank has figured in the list of Top 10 Indian CEOs - Indias and Worlds most talked-about CEOs in March 2011 published in the press recently (Business Today magazine).

With the strong and committed staff at all levels and with the positive industrial relations climate, the Bank has been converting all the available business opportunities into results and do not foresee any threats in its business growth.

Financial Inclusion

With a view to extending banking services and products in un-banked villages (having population of over 2000) the Bank introduced Smart Card Banking through Business Correspondent as per the guidelines of Reserve Bank of India. Rural people can transact banking business at the village itself with the use of biometric smart cards and Hand Held Devices. Business Correspondents deliver the services at the front end. The devices are voice enabled in vernacular language and user friendly for illiterates.

The Bank so far covered 781 allotted villages under Smart Card Banking across the country. In addition

to the above, other 30 villages were provided with the service of Business Correspondent.ln all, smart Card Banking is being implemented in 16 States and 1 Union Territory spreading over 33 Regions. During the year under review the Bank has opened 5,38,219 No-frills SB accounts and issued 36,625 biometric smart cards.

Regional Director, Reserve Bank of India, Chennai appreciated our Banks initiative under Financial Inclusion plan in a press release that Indian Overseas Bank was the only Bank to have begun its rural operation in the State using Information and Communication Technology model in April 2010. The Executive Director, Reserve Bank of India also appreciated Banks performance by a special letter congratulating the good job done by the Bank.

The Bank bagged SKOCH AWARD for Financial Inclusion. Award was conferred to the Bank for redefining the concept of last mile banking when it took the banking services to the Kaanni Tribal hamlets in Papanasam, Tamil Nadu. On the Financial Inclusion Day (on 23.01.2011), "Smile" - Walk-in-bank campaign was launched and over 2.20 lacs No- frill accounts were opened.

Regional Rural Banks

The Regional Rural Banks (RRBs) sponsored by the Bank, viz., Pandyan Grama Bank and Neelachal Gramya Bank performed well during the year. Pandyan Grama Bank has earned Net Profit After Tax consecutively for the past fourteen years and recorded NIL Net NPA continuously for the past eight years. Pandyan Grama Bank has achieved 100% Core Banking Solution of all 203 branches. Neelachal Gramya Bank has completely wiped out the accumulated loss two years ahead of schedule.

Customer Service

The Bank is a member of Banking Codes and Standards Board of India (BCSBI) and has adopted the Code of Commitment to Banks Customers drafted by Banking Codes and Standards Board of India (BCSBI). During this year, the Cheque Collection Policy document relating to customer service, was amended by incorporating the guidelines issued by BCSBI. Customer Fortnight was observed in all branches during November 2010.

The details of customer complaints received and redressed during the year 2010-11 are given below.

Sl. Details At Central At Regional No. Office Offices

1. No. of complaints pending at the beginning of the year 58 62

2. No. of complaints received during the year 1009 1447

3. No. of complaints redressed during the year 1022 1398

4. No. of complaints pending at the end of the year 45 111

Settlement Rate % 95.78 92.64

Number of awards passed by the Banking Ombudsman and implemented by the Bank are as follows.

- No. of complaints pending at the beginning of the year 1

- No. of awards passed by Banking Ombudsman during the year 0

- No. of awards implemented during the year 0

- No. of unimplemented awards at the end of the year 1

The Complaints are being received directly by Central Office and Regional Office (through letters, e-mails and telephone) and also through other channels like Reserve Bank of India, Banking Ombudsman, Government of India etc. Customer Service Centre, for which the Bank is the Convenor in Chennai City, had resolved all the complaints during this year.

Customers are provided with the facility of Toll Free Tele services (No. 1800-425-4445) by engaging an outside agency for receiving complaints. These complaints are being resolved within 48 hours.

Retail Banking and Marketing

The business under retail banking segment showed a remarkable improvement during this year. Under fee based income, Life and General Insurance products showed tremendous growth. The income from fee-based products registered a growth of 27.26 % in 2010-11.

Distribution of life policies as a Corporate Agent of Life Insurance Corporation of India showed excellent growth both in premium mobilization as well as commission income. Bank had achieved the status of No.1 Corporate Agent of LIC of India.

Income from life insurance products grew by 39.40% over 2009-10, income from marketing of non life insurance products by 57.58% over 2009-10.insurance linked products like IOB Jeevan, IOB Healthcare Plus, Vidya Jyothi with Suraksha (insurance cover for Educational Loans) continued to register impressive growth . Distribution of non life insurance products as a Corporate Agent of Universal Sompo General Insurance had resulted in good business and income realizations.

Retail Sale of Gold coins continued to show impressive growth. The mobilization under Mutual Fund Distribution also received special focus and contributed to the fee based income of the Bank.

Retail Loans improved by 20.35% over the previous year with Housing Loans and Educational Loans as major contributors.

The following campaigns were conducted during the year 2010-11 for improving the retail business:

- Akshaya Thrithiai Campaign for Sale of Gold Coins.

- Debit & Credit Card Mobilisation Campaign.

- SB Month for Savings Account Expansion.

- "Catch them Young" for canvassing Student Accounts.

- Gold Coin Campaign for increasing retail gold coins sale.

- Platinum Jubilee Home Loan Exhibition to expand Home Loans.

- Tax Saving Month Campaign for Tax Saving Products.

- Customer Reach programmes like "Walk in Bank" and "IOB Smile" Campaigns.

New product developments such as - Special and focused products like Corporate Salary, SB Student, SB Platinum, CD Supreme, Gift Card and IOB Career Dream were developed and marketed to capture and expand business from the target segments.

All these coordinated campaigns and introduction of new products not only improved the retail business segment but also strengthened its customer base.

Official Language Policy

The Bank took all efforts to implement the Official Language Policy of Government of India during the year 2010-11. During the year, 192 Staff members who do not possess working knowledge of Hindi were trained in IOB Praveen and Banking Pragya Courses. 1,912 Staff members possessing working knowledge of Hindi were trained in General Hindi Workshops held during the year. Rajbhasha Sangoshti was held on 25.09. 2010 for heads of Central Office departments to strengthen the Official Language Implementation.

Minutes of all meetings of all board level committees were translated in Hindi. As per the directives of Government of India, the Bank has enabled Hindi Unicode font in all Regional Offices and has provided the facility of downloading the same in IOB ONLINE. The Bank has also provided the Banking terminology in IOB ONLINE for the benefit of staff members. The Bank has given necessary training to 1412 staff members for the use of Hindi in computers. The Bank has published all the four issues of quarterly Hindi Magazine "VANI" in print as well as in digital form. The Banks website has been made available in Hindi also.

The Bank has been awarded Third Prize for Hindi house magazine "VANI" for the year 2009-10 by Reserve Bank of India in the Inter-Bank Hindi Magazine Competition for Hindi house magazines of banks and financial institutions. The Bank has been awarded Consolatiion Prize under Indira Gandhi Rajbhasha Shield for the year 2009-10 for commendable work in the area of Official Language Implementation. The award was received by our Banks General Manager Shri Ashok Shankar from His Excellency Vice President of India Shri Mohd. Hamid Ansari on 14th September, 2010.

Regional Offices were inspected on Official Language implementation by Official Language Department, Central Office and Rajbhasha Shields were awarded to Regional Offices and branches doing good work in official language implementation.

Annual Official Language Review Meeting and Unicode training for Official Language Officers was held from18th to 20th June 2010 to assess the progress made in the area of Official Language implementation in Regional Offices. The drafting and evidence Sub-Committee of Parliamentary Committee on Official Language had discussions with the Chairman and heads of Banks of Town Official Language Committees at Coimbatore and Jhansi. The Bank was also included for discussion and the committee expressed satisfaction over the performance of the Bank at these centers.

As Convenor of Chennai Town Official Language Implementation Committee, the Bank has received the Second Prize for its efforts in implementation of Official Language Policy during the year 2009-10 from Official Language Department, Ministry of Home Affairs, Government of India. The Prize was given by Shri Ajay Makan, Honble Minister of State for Home Affairs, New Delhi on 22nd December 2010. On behalf of the committee, the Bank conducted two General Hindi Workshops, 12 Inter-Bank Hindi competitions, Joint Hindi Month Celebration function and Hindi Unicode training programme for the staff members of member banks / Financial Institutions. A special Seminar in Hindi on Increasing Banking business/ Human Resource Development and Importance of Marketing in banks / Prevention of frauds for Executives were held on 21.02.2011 and 12.03.2011 respectively. In addition to this, two half yearly meetings were also conducted. Two issues of half-yearly magazine of "Chennai Bharathi" were brought out.

Corporate Governance

Corporate Governance extends beyond Corporate Law. Its fundamental principle is not only fulfilling the requirement of law but also fulfilling its responsibility towards the society. The social responsibility evokes from the good governance enhances the social relevancy of a business; It is needed to create a corporate culture, openness and social responsive corporate entity.

The Bank has laid down a well-defined, Code of Conduct, which addresses issues of integrity, conflict of interest and confidentiality and stress the need of ethical conduct, which is the basis for good governance. This Code of Conduct is applicable to all the members of the Board and the Senior Management (i.e. General Manager) of the Bank.

The Bank has complied with the guidelines of Reserve Bank of India, Securities and Exchange Board of India and other regulatory authorities for Corporate Governance, which has been examined by the Statutory Central Auditor. The Bank gives high priority to good Governance, which reflects in transparent ownership structure, management and accounting practices of the Bank. The Board recognizes its role in promoting good governance and in creating a framework of best practices, processes and ethics to observe and foster high ethical standards.

The Bank facilitates good Corporate Governance by its commitment for ethical practices in the conduct of its business, to ensure transparency and efficiency. The Bank is also committed to follow high disclosure standards and transparency in financial reporting so as to keep investors and stakeholders adequately informed. It is essential for proper accountability between organization and its stakeholders.

Pursuant to Clause 49 of the Listing Agreement, Management Discussion & Analysis Report, Report on Corporate Governance as well as certificate by the auditors regarding Compliance of the conditions of Corporate Governance form part of this Annual report.

Board of Directors

Shri S.A.Bhat, Chairman and Managing Director, demitted office on 31.10.2010 on his superannuation. Shri M.Narendra assumed charge as Chairman and Managing Director on 01.11.2010. Shri Y.L. Madan, Executive Director, demitted office on 31.08.2010 on his superannuation. Shri A.K.Bansal, assumed charge as Executive Director on 01.09.2010.

Smt. Chitra Chandramouliswaran, Reserve Bank of India nominee director, demitted office on 29.07.2010. The Government of India (GOI) nominated Shri S.V.Raghavan, as Reserve Bank of India nominee director with effect from 30.07.2010.

Shri N.Sridaran, demitted office as Workmen Employee Director on 19.04.2010, on completion of his tenure of three years. The Government of India (GOI) nominated Shri Sridhar Lal Lakhotia, as Workmen Employee Director with effect from 9.8.2010.

The Board of Directors place on record the valuable contributions made by the erstwhile Directors and extend a warm welcome to the new Directors.

Acknowledgements

The Board of Director place on record the valuable co-operation received from the Government of India, Reserve Bank of India, Securities and Exchange Board of India (SEBI) and Stock Exchanges, various State Governments and Financial Institutions. The Board expresses its gratitude to the Hong Kong Monetary Authority, Monetary Authority of Singapore, Financial Supervisory Services, Korea, Central Bank of Sri Lanka, China Banking Regulatory Commission, Bank Negara, Malaysia, Bank of Thailand, State Bank of Vietnam and Central Bank of UAE for their support.

The Board of Directors records the patronage and goodwill of the valued customers, shareholders, other stakeholders and correspondents of the Bank in India and abroad. The Directors are happy that the industrial relations are very cordial and happy on account of positive attitude on the part of Employees Union and OfficersAssociation.



For and on behalf of the Board of Directors

M.NARENDRA Chairman and Managing Director

Chennai May 2 , 2011


Mar 31, 2010

The Board of Directors have great pleasure in presenting the Annual Report together with audited Balance Sheet and Profit and Loss Account of the Bank for the year ended March 31, 2010.

During 2009-10, the Banks performance is to be viewed in the backdrop of economic slow down. The Bank has grown in a balanced manner and crossed the business level of Rs. 1,90,000 crore mark. The Bank has focused its attention in consciously shedding high cost deposits, cautious credit expansion and NPA Recovery during the year.

Global Business Performance

The Banks global deposits went up from Rs. 1,00,116 crore in 2008-09 to Rs. 1,10,795 crore in 2009-10 by 10.67 %. Global gross advances expanded from Rs. 75,810 crore to Rs. 80,782 crore at 6.56 %. Total business reached Rs. 1,91,577 crore (growth at 8.90 %).

Overseas Branches

During the year the Bank has opened Representative Office at Dubai and the Office has become fully operational from February 2010. The Bank signed the joint venture with Bank of Baroda and Andhra Bank to open a Banking subsidiary in Malaysia. The subsidiary has applied for license from Bank Negara, the central bank of Malaysia.

As at the end of March 2010, the Bank had 13 establishments abroad, comprising 6 full-fledged branches (two branches in Hongkong and one each at Singapore, South Korea, Sri Lanka and Bangkok) 4 Representative offices (Guangzhou-China, Kuala Lumpur-Malaysia, Ho Chi Minh City-Vietnam and Al karama-Dubai), 2 Remittance Centres (Boonlay and Serangoon, Singapore) and 1 Extension counter in Sri Lanka.

Financial Performance

Global operating profit of the Bank was at Rs.1,845 crore in 2009-10 as against Rs.2,524 crore mainly due to lower treasury gains in the subdued market condition and increased liability for Pension, Gratuity and wage revision relating to employees of the Bank in the backdrop of ongoing wage settlement negotiation process.

Provisions

The Bank has made a total provision of Rs.1,138 crore in keeping with the guidelines issued by the RBI.

Net Profit Dividend

Net profit of the Bank was at Rs.707 crore for 2009-10 as against Rs. 1,326 crore in 2008-09 due to lower operating profit and increased provision for ageing Non Performing Assets as per RBI guidelines. Dividend for the year 2009-10 is proposed at 35 % as against 45% paid last year.

Income and Expenditure Analysis

The total income increased to Rs. 11,389 crore in 2009-10 compared to Rs.11,237 crore in 2008-09, with a marginal growth of 1.35% on account of reduction in treasury income by Rs.345 crore over last year and lower growth in credit due to global economic recession. The total interest income increased to Rs. 10,246 crore in 2009-10 from Rs.9,641 crore in 2008-09 at 6.28%. Interest income on Advances increased to Rs. 7660 crore compared to Rs.7,290 crore in the last year. Interest received on advances impacted by decline in domestic yield on advances to 10.44 % in 2009-10 from 11.13% in 2008-09 on account of downward revision in Bench Mark Prime Lending Rate by 50 basis points effective from July 1, 2009.

The commission and exchange earnings stood at Rs. 578 crore against Rs.594 crore last year. Profit on exchange was at Rs. 127crore as compared to Rs.157 crore due to volatility in the currency market. The profit on sale of investments was lower at Rs. 292 crore against Rs. 637 crore last year in the subdued market.

The increase in interest expenditure was significantly brought down to 4.52 % in 2009-10 from 28.04 % in 2008-09, due to conscious shedding of card-plus deposits and successive interest rate realignment on domestic term deposits during the year. Card- plus deposits as percentage to total domestic deposits significantly came down to 3.82 % at the end of March 2010 compared to 14.10% in March 2009. As a result, the domestic cost of deposits declined by 51 basis points from 6.87% in 2008-09 to 6.36% in 2009-10.

Total operating expenses increased to Rs.2,466 crore compared to Rs.1,942 crore last year due to increased provision for pension, gratuity and wage revision which is under negotiation at the industry level. The non-staff expenditure increased to Rs.731 crore from Rs. 670 crore mainly due to higher depreciation, rent and taxes during the year. Net Interest Income increased to Rs. 3,168 crore in 2009-10 with a growth of 10.39 %. Consequently Net Interest Margin was lower at 2.74% as against 2.84% in last year mainly due to downward revision in Bench Mark Prime Lending rate in line with the market. Hence the Banks operating profit stood at Rs.1,845 crore for 2009-10 as against Rs.2,524 crore in 2008-09.

Capital Adequacy Ratio

The capital adequacy ratio of the Bank improved from 13.20% as at the end of March 2009 to 14.78% as at the end of March 2010 as per the Basel II norms.

Branch Network

The Bank opened 65 new branches and upgraded 20 extension counters into full-fledged branches in the year ended March 2010. Total domestic branch network reached 2,002 as at the end of the reporting year. As regards population group wise break-up, rural branches numbered 589 accounting for 29.4% of the total branches, semi-urban 520(26%), urban 492(24.6%) and metropolitan 401(20%).

Customer Service

The Bank has adopted the Code of Commitment to Banks Customers as drafted by Banking Codes and Standards Board of India (BCSBI). The Code has been revised during August 2009. As part of customer education "Information to Customers" Booklet is made available at all branches. Customer Fortnight was observed in select branches in May 2009 and in all branches during November 2009.

During the year, incorporating certain provisions of USD Cheque Collection Policy, the Compensation Policy document related to customer service was amended.

The details of customer complaints received and redressed are given below.

a. Pending at the beginning of the year 47 b. Received during the year - 1291 c. Redressed during the year - 1280 d. Pending at the end of the year - 58

During the year 2009-10, 1338 complaints were handled (including the complaints carried over from the earlier year) of which 1280 complaints were resolved. The redressal rate was 95.67 % .

Number of awards passed by the Banking Ombudsman and implemented by the Bank are as follows.

a. Unimplemented awards at the beginning of the year - 2 b. Awards passed by Banking Ombudsman during the year - 1 c. Awards implemented during the year - 1 d. Appeal against the awards allowed in the High Court - 1 e. Unimplemented awards at the end of the year - 1

Customer Service Centre, Chennai City, for which the Bank is the Convener, had resolved all the complaints during the year. Customers are provided with the facility of Toll Free Tele-services (No. 1800- 425-4445) by engaging an outside agency for receiving complaints. These complaints are resolved within 48 hours. This facility is being upgraded for 24x7 model.

Retail Banking and Marketing

Income from fee-based products including Life and General Insurance Products and Insurance Linked Products, grew by 53.69 % over the previous year. Life Insurance Linked Products, IOB Jeevan, IOB Healthcare Plus, Vidya Jyothi with Suraksha performed well with wider coverage and improved income.

Distribution of life policies, as a Corporate Agent of Life Insurance Corporation of India, witnessed growth both in premium as well as commission. So also were the non-life insurance products of Universal Sompo General Insurance.

The income from marketing of life policies, life insurance linked policies, non-life policies including health care was Rs. 14.28 crore. Income from sale of retail gold coins clocked Rs.8.64 crore. Retail Loans grew at 15.5 % over the previous year with major contribution from Housing Loans.

The following campaigns were conducted during the year 2009-10.

1. CASA campaign 2. Retail Sale of Gold Coins. 3. Marketing of Healthcare Plus Policies. 4. Campaign for Asset Insurance Cover. 5. Marketing of Debit Cards. 6. Special Tax Saver Campaign

There was all round improvement in volume and increase in income in the retail-banking segment.

Official Language Policy

During the year 2009-10, the Bank has taken all efforts to implement the Official Language Policy of Government of India. During the year, 248 Staff members, who did not possess working knowledge of Hindi, were trained in IOB Praveen and Banking Pragya Courses. 2,809 Staff members, possessing working knowledge of Hindi, were trained in General Hindi Workshops held during the year. Rajbhasha Sangoshti was held on September 12, 2009 for heads of Central Office departments to strengthen the Official Language Implementation in Central Office.

Minutes of meetings of all board level committees were translated in Hindi. As per the directives of Govt, of India, the Bank has enabled Hindi Unicode font in all Regional Offices and has provided the facility of Hindi font Shusha on IOB ONLINE for downloading purpose in branches. Bank has also provided the Banking terminology on IOB ONLINE for the benefit of staff members. Bank has given necessary training to 2,445 staff members for the use of Hindi in computers. Bank has published all the four issues of quarterly Hindi Magazine "VANI" in print as well as in digital form. Banks website has been made available in Hindi also.

Bank won the First Prize under Indira Gandhi Rajbhasha Shield for the year 2008-09 for commendable work in the area of Official Language Implementation. Shri S A Bhat, Chairman & Managing Director of the Bank, received this Award from Her Excellency President of India Smt. Pratibha Devi Singh Patil on September 14, 2009.

Reserve Bank of India awarded Second Prize to the Bank for Hindi house magazine "VANI" for the year 2008-09 in the Inter-Bank & Financial Institutions Hindi in-house Magazine Competition.

Regional Offices were inspected on Official Language implementation by Official Language Department, Central Office and Rajbhasha Shields were awarded to Regional Offices and branches doing good work in official language implementation.

The drafting and evidence Sub -Committee of Parliamentary Committee on Official Language had discussions with the Chairmen and heads of Banks of Town Official Language Committees at Raipur. The Bank was also invited for discussion and the committee expressed satisfaction over the performance of the Bank at this centre.

As convener of Chennai Town Official Language Implementation Committee, the Bank has received the Second Prize for its efforts in implementation of Official Language Policy during the year 2008-09 from Official Language Department, Ministry of Home Affairs, Government of India. The Prize was given by Shri Ajay Makan, Minister of State for Home Affairs, New Delhi on October 9, 2009. On behalf of the committee, the Bank conducted two General Hindi Workshops, 12 Inter-Bank Hindi competitions, Joint Hindi Month Celebration function and Hindi Unicode training programme for the staff members of member banks / Financial Institutions. A special Seminar in Hindi on Customer Service for Managers of Scale IV was held on January 8 ,2010. In addition to this two half yearly meetings were also conducted.

Regional Rural Banks

The Regional Rural Banks (RRBs) sponsored by the Bank, viz Pandyan Grama Bank and Neelachal Gramya Bank performed well during the year. Both the RRBs recorded net profit during the year.

Corporate Governance

The Bank prides itself on its diligence in ensuring compliance with norms laid down by regulatory authorities. The Bank lays emphasis on the need for ensuring that structures and processes are put in place to help in fulfilling its governance responsibilities. The Board recognizes its role in promoting good governance and in creating a framework of best practices, processes and ethics to observe and foster high ethical standards.

The Bank has laid down a well-defined Code of Conduct, which address issues of integrity, conflict of interest and confidentiality and stress the need for ethical conduct, which is the basis of good governance. This Code of Conduct is applicable to all the members of the Board and Senior Management (i.e. General Managers) of the Bank.

High standards of reporting and disclosure are essential for proper accountability between an entity and its investors/stakeholders. Thus, the Bank facilitates and adopts good Corporate Governance by its commitment to ensuring timeliness and integrity of disclosures and financial reporting so as to keep investors and stakeholders adequately informed to ensure transparency and efficiency.

Pursuant to Clause 49 of the Listing Agreement, Management Discussion & Analysis Report, Report on Corporate Governance as well as Certificate by the auditors regarding compliance of the conditions of Corporate Governance, form part of this Annual Report.

Board of Directors

Shri G. Narayanan, Executive Director, demitted office on October 31, 2009. Smt. Nupur Mitra assumed charge as one more Executive Director on December 7, 2009 . Shri M. Ravindra Vikram, Director under section 9 (3) (g) of the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970 - Chartered Accountant Category, demitted office as director on October 10, 2009 on completion of his tenure of three years.

The Government of India nominated Shri Sooraj Khatri as a part-time non-official Director for a second term of three years with effect from October 26, 2009.

Shri J. D. Sharma, presently President of the Indian Overseas Bank Officers Association (IOBOA) demitted office as Officer Employee Director on November 30, 2009 . The Government of India nominated Shri K. Ananda Kumar, presently General Secretary of IOBOA, as Officer Employee Director for a period of three years with effect from March 26, 2010.

The Board of Directors place on record the valuable contributions made by the erstwhile Directors and extend a warm welcome to the new Directors.

Acknowledgements

The Board of Directors place on record their gratitude to the valued customers, shareholders, other stakeholders and correspondents of the Bank in India and abroad, for their goodwill, patronage and support.

The Board of Directors acknowledge with gratitude the valuable guidance and cooperation received from the Government of India, Reserve Bank of India, Securities and Exchange Board of India, Stock Exchanges, various State Governments and Financial Institutions. The Board is also thankful to the Hong Kong Monetary Authority, Monetary Authority of Singapore, Financial Supervisory Services - Korea, Central Bank of Sri Lanka, China Banking Regulatory Commission, Bank Negara - Malaysia, Bank of Thailand, State Bank of Vietnam and Central Bank of UAE for their support.

Industrial relations in the Bank have been cordial due to the positive attitude of the Employees Union and Officers Association. The Board of Directors expresses their appreciation of the contribution made by the members of the staff.

For and on behalf of the Board of Directors

Chennai S.A.BHAT April 29, 2010 Chairman and Managing Director

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