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Directors Report of YES Bank Ltd.

Mar 31, 2015

To the Members,

The Directors are pleased to present the Eleventh Annual Report on business and operations of your Bank together with the audited accounts for the year ended March 31, 2015.

Business Overview and Outlook

Your Bank performed well in Financial Year (FY) 2014-15 with a net profit ofRs. 2,005 Crores which is an increase of 24% from FY 2013-14. Your Bank posted robust growth in advances and deposits while gradually increasing diversification and granularity as reflected in higher contribution of Retail and SME advances and CASA Deposits. Your Bank has also successfully completed its Version 2.0 journey over the last 5 years, growing from a small sized bank and emerged as a meaningful entrant into the Large Bank transforming into a high quality, world-class institution in Indian banking amidst periods of global and domestic downturn. In terms of Human CapitaL strength, your Bank has achieved a significant milestone in FY 2014-15 crossing the 10,000 mark.

Given the overall optimism and the fact that the Indian economy is set to receive a major impetus owing to prudent policy reforms, your Bank is geared up to capitalize on this momentum with a renewed vigour and enthusiasm and establish itself as the ''Finest Large Bank'' in the country.

Your Bank has also now achieved a critical mass and momentum in terms of state-of-the-art branch network with 630 branches and 1,190 ATMs across all 29 states and 7 Union Territories of India. Your Bank has invested significantly in offering ''Digital Banking'' services via various channels while continuing to ramp up the existing branch network. We believe that the future of Banking lies in establishing a ''DIGICAL - Digital Physical infrastructure which consists of a fine bLend of offline and onLine channeLs employing innovation and technology combined with the effectiveness of human touch points as a means of customer service excellence.

State of the Affairs of the Bank

FY 2014-15 was a significant year in your Bank''s LifecycLe. Your Bank continued on its consistent performance with PAT growing to '' 2,005 Crores from '' 1,617 Crores resulting in a Y-o-Y growth of 24%.

In FY 2014-15, your Bank raised over USD 1.2 Billion in equity and long term debt by partnering with marquee global investors who have reposed tremendous faith in your Bank''s consistent performance and robust business model. On May 30, 2014, your Bank successfully closed a gLobaL USD 500 MiLLion OuaLified Institutions Placement (OIP) which was the FIRST significant capitaL raising by an Indian Company post formation of the new government. The Global OIP was oversubscribed 5 times with a demand of USD 2.5 billion from investors across USA, UK, Europe and Asia.

Your Bank also raised a USD 422 Million Dual Currency Loan in October, 2014 which received commitment from 21 Banks across USA, Europe, Africa, Middle East, Far East and Australia. More recently, in December, your Bank received a USD 200 Million Unsecured Loan from the Asian Development Bank which will be used to finance working capitaL and investment Loans targeted towards small farm households and rural women in Self Help Groups (SHGs). In February 2015, your Bank issued India''s 1st ever Green Infrastructure Bonds raising an amount of USD 160 Million (Rs. 1,000 Crores). The issue launched for '' 500 Crores plus green shoe option witnessed strong demand from leading investors including Insurance companies, Pension & Provident Funds, Foreign Portfolio Investors, New Pension Schemes and Mutual Funds, resulting in a total subscription of '' 1,000 Crores.

Further information on the Business overview and outlook and State of the affairs of the Bank is discussed in detail in the Management Discussion & Analysis.

There is no change in the nature of business of the Bank for the year under review.

Financial Performance

('' in Crores)

April 1, 2014 to April 1, 2013 to Particulars March 31, 2015 March 31, 2014

Deposits 91,176 74,192

Borrowings 26,220 21,314

Advances 75,550 55,633

Total Assets/Liabilities 136,170 109,016

Net Interest Income 3,488 2,716

Non Interest Income 2,046 1,722

Operating profit 3,250 2,688

Provisions and Contingencies 339 362

Profit before Tax 2,910 2,326

Provision for taxes 905 709

Net Profit 2,005 1,617

Add: Surplus/(Deficit) brought forward from last period 3,207 2,338

Amount available for appropriation5,213 3,955

Appropriations

Statutory Reserve under section 17 of the Banking Regulation Act, 1949 501 404

Capital Reserve 26 4

Investment Reserve 12 -

Proposed Dividend and Tax thereon 453 338

Adjustment to earlier year dividend and tax thereon 0 2

Surplus carried to Balance Sheet 4,220 3,207

Key Performance Indicators

Net Interest Margin 3.2% 2.90%

Return on Annual Average Assets 1.6% 1.60%

Return on Equity 19.0% 25.00%

Cost to Income Ratio 41.3% 39.40%

Your Bank posted Net Revenues (Net Interest Income and other income) of Rs.5,534 Crores and Net Profit of Rs.2,005 Crores for the FY 2014-15. The Net Revenues and Net Profit for the Financial. Year 2013-14 was Rs.4,437 Crores and Rs.1,617 Crores respectively. Appropriations from the Net Profit have been effected as per the tabLe given above. Please refer to the section on Financial and operating Performance in the Management Discussion and AnaLysis for a detaiLed anaLysis of financial data.

Dividend

Your Bank is rewarding its shareholders by way of consecutive cash dividends considering the consistent financial performance of your bankand promising future prospects while retaining capital to maintain a healthy Capital Adequacy Ratio and to support future growth. In view of the exceLLent financial performance of your Bank and in continuance of the earlier trends of cash dividends, the Board of Directors have recommended Dividend at a rate of Rs.9 per equity share for approval by the shareholders at the 11th Annual General Meeting.

Transfer to Reserves

As per requirement of RBI regulations, the Bank has transferred the following amounts to various reserves during Financial Year ended March 31, 2015-

Amount transferred to Amount in '' Crores

Statutory Reserve 501

Capital Reserve 26

Investment Reserve 12

Capital Raising & Capital Adequacy Ratio (CAR)

The Bank had raised CapitaL through OuaLified Institutional Placements (QIP) in the month of May 2014 and had received a tremendous response to the QIP, raising USD 500 Million (Rs.2,942 Crores) at a rate of Rs.550 per share. Your Bank has utilized the proceeds of the issue of equity shares under QIP for enhancing the Solvency, Capital Adequacy Ratio and for general Corporate Purposes.

The paid-up capital of your Bank has increased to Rs.417.74 Crores as at March 31, 2015 from Rs.360.63 Crores as at March 31, 2014, post raising of funds by way of QIP and exercise of employee stock options during the FY 2014-15.

Your Bank has not issued any equity shares with differential voting rights during the year.

Your Bank also raised Rs.1,000 Crores by way of ''Green Infra Bonds'' during the FY 2014-15.

In line with the RBI circular on Capital Adequacy Framework, your Bank has computed capital charge for operational, market and credit risk and its Capital Adequacy Ratio as per Basel III accord as at March 31, 2015.

Your Bank is well capitalized with a Capital Adequacy Ratio of 15.6% as at March 31, 2015 of which Tier I Capital Ratio was 11.5% and Tier II Capital Ratio was 4.1%.

Deposits

Being a banking company, the disclosures required as per Rule 8(5)(v)&(vi) of the Companies (Accounts) Rules, 2014, read with Section 73 and 74 of the Companies Act, 2013 are not applicable to your Bank.

Awards and Recognitions

During the year under review, your Bank was recognized in various ways/by various institutions and some of the awards presented to the Bank are listed below:

Your Bank has won the ''Excellence in Social Media'' and ''Best Initiative in Financial Inclusion'' Awards at the Retail Banker International Asia Trailblazer Awards 2015

Your Bank was adjudged as ''Most Promising Brand'' at the Economic Times Most Promising Brands Awards at Mumbai, 2015

Your Bank was adjudged runner-up in the ''Most Imminent Bank'' category by Outlook Money at Mumbai, 2015

Your Bank won the ''Best Private Sector Bank'' at the FPCIL Money Today Best Banks Awards, 2015

Your Bank was ranked 2nd Globally for ''Customer Engagement through Social Media'' at International Best Practice Competition, Abu Dhabi

Your Bank was awarded the prestigious AIMA RK Swamy High Performance Brand Award 2014 in Delhi in February 2015

Your Bank was awarded at the FINNOVITI Awards - 2015 - for ''Incentivizing Customers by Offering Discount Coupons on ATMs''

Your Bank has received the ''Newgen Innovation Award FY 2014-15'' - Workfl.ow automation for Trade Finance & Account opening processes

Your Bank was recognized by the Business Today KPMG India''s Best Banks 2014 as Consistent Performer and for Best Asset Quality among Large Sized Banks.

Your Bank has received multiple awards including ''Winner'' in the Mid Sized Category for ATMs & ''Special Award for Innovation in IMPS'' from NPCI.

Your Bank has received the Best Transaction Bank for Payments Award at The Banker Transaction Banking Awards 2014 in London. Your Bank was the only bank globally to have been awarded in this category in 2014.

Your Bank was awarded the Best Asset Quality (Private Sector) award at the Dun & Bradstreet Banking Awards, 2014 held in Mumbai

Your Bank has been awarded the ''Best Performer in Account Growth Rate - Rising DP'' at the NSDL Star Performers Awards 2014

Your Bank has received the ''Global Performance Excellence Award -2014'' in the Services Category by Asia Pacific OuaLity Organisation (APOO) in Chicago, Illinois, USA. Your Bank has been declared as ''World Class Organisation'' (top category award) amongst 11 other organizations around the world. Your Bank is the only Indian bank to win this prestigious global award.

Your Bank has received the Bombay Chamber Good Corporate Citizen Award 2013-14. Your Bank was awarded in the ''Banks and Financial Institutions'' category by the Bombay Chamber of Commerce and Industry (BCCI)

Your Bank has received Golden Peacock

Environment Management Award 2014 in the Banking (financial) Category at the 16th WorLd Congress on Environment Management, New Delhi.

Your Bank has received the Outstanding

Sustainable Project Financing Award at the prestigious Karlsruhe Sustainable Finance Awards, Germany, 2014. This is the 2nd year in a row that Your Bank has received this global recognition.

Your Bank has won the MasterCard Payment Innovation Awards 2014 under three of the total nine categories. Your Bank won these recognitions for introducing innovative Payment programs that present effective and convenient solutions to valued customers.

Employees Stock Option Scheme

Your Bank has instituted Stock Option Plans to enable its employees to participate in your Bank''s future growth and financial success. Your Bank provides its employees a platform for participating in important decision making and instilling long term commitment towards future growth of the Bank by way of rewarding them through Stock Options. The Stock Option Schemes also enable the Bank to hire the best talent for its senior management and key positions. The Bank has implemented five EmpLoyee Stock Option Schemes viz. Joining Stock Option Plan I (JSOP I), Joining Employee Stock Option Plan II (JESOP II), Joining Employee Stock Option Plan III (JESOP III), YBL ESOP (consisting of two sub schemes JESOP IV/PESOP I) and YBL JESOP V/PESOP II (Consisting of three sub schemes JESOP V/ PESOP II/ PESOP II -2010).

The Employee Stock Option Plans are administered by the Nomination & Remuneration Committee of the Board (earlier known as Board Remuneration & Human Capital Management Committee) of the Bank.

Sub-table 1: Any other employee who received a grant in any one year of options, amounting to 5% or more of options granted during that year under YBL JESOP V

Name of Employee Options granted

Jyoti Prasad Ratho 50,000

Kanwar Vivek 50,000

Manish Agarwal 30,000

Preeti Sinha 30,000

Aseem Gandhi 100,000

Neelesh Sarda 100,000

Sub-table 2: Any other employee who received a grant in any one year of options, amounting to 5% or more of options granted during that year under YBL PESOP II 2010

Name of Employee Options granted

Ashish Agarwal 150,000

Sanjay Palve 200,000

Subsidiary Company

As on March 31, 2015, your Bank has one Subsidiary, YES Securities (India) Limited (YSIL).

Performance and Financial Positions of YSIL

YES Securities (India) Limited successfully completed its first fuLL financial year of operations in March 2015. As on March 31, 2015, YSIL has 14,420 clients. Clients are offered 3 products from the group - A Current/ Savings Account and a Demat account from your Bank, and a Trading account from YSIL. With a view to provide customers with mobile access to its services, YSIL has launched the YES INVEST mobile application for smart phones - Android, Apple and Blackberry Systems. During the FY 2014-15, YSIL has earned a total revenue of Rs.443 Lakhs as against Rs.54 Lakhs in the previous year. YSIL has incurred a loss of Rs.793 Lakhs in FY 2014- 15 as compared to loss of Rs.652 Lakhs in FY 2013-14. YSIL monthly trading turnover has increased from Rs.10 Crores in April 2014 to approx Rs.290 Crores in March 2015. Further, Brokerage income has grown from Rs.0.32 Lakhs in April 2014 to Rs.44 Lakhs in March 2015. The overall trading volume from the institutional segment for the year ended March 31, 2015 was Rs.343 Crores.

Directors

Your Bank has Ten (10) Directors consisting of Seven (7) Independent Directors, Two (2) Non-executive Directors and Managing Director & Chief Executive Officer (MD & CEO) as on March 31, 2015.

Independent and Non-Independent Non-Executive Directors

In terms of the definition of''Independence'' of Directors as prescribed under Clause 49 of the Listing Agreement entered with Stock Exchanges and Section 149(6) of the Companies Act,2013 and based on the confirmation / disclosures received from the Directors, the following Non-Executive Directors are Independent Directors:-

1. Mr. Ajay Vohra

2. Lt. Gen. (Retd.) Mukesh Sabharwal

3. Mr. Diwan Arun Nanda

4. Mr. Ravish Chopra

5. Mr. Brahm Dutt

6. Mr. Vasant V. Gujarathi

7. Mr. Saurabh Srivastava

Woman Director

In terms of the provisions of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, a company shall have at least one Woman Director on the Board of the company. Your Bank has Ms. Radha Singh as Director on the Board of the Bank since April 2008, who is presently the Chairperson of the Bank.

Managing Director & Chief Executive Officer (MD & CEO)

Mr. Rana Kapoor has been serving as the Managing Director & CEO of the Bank since September 1, 2004, with the approval of Reserve Bank of India (RBI) and the shareholders, from time to time.

The Board of Directors of the Bank at their meeting held on April 22, 2015 has approved the re-appointment of Mr. Rana Kapoor as MD & CEO subject to the approval of the shareholders and the Reserve Bank of India. Accordingly, the approval of shareholders is being sought for his re-appointment as MD & CEO of the Bank for a period of 3 years subject to RBI approval.

Appointments/Resignations from the Board of Directors

During the year under review, Lt. Gen. (Retd.) Mukesh Sabharwal, Mr. Ravish Chopra, Mr. Brahm Dutt, Mr. Saurabh Srivastava and Mr. Vasant V. Gujarathi, were appointed as Independent Directors by the shareholders for a term of five (5) years.

Ms. Radha Singh was appointed as an Independent Director for a period of Two (2) years. Subsequently, pursuant to the recommendations of the Board of Directors of the Bank, the RBI approved the appointment of Ms. Radha Singh as the Non-Executive Part-Time Chairperson of the Bank for a period of two (2) years from the date of her taking charge i.e. from October 30, 2014 which was subsequently taken on record by the shareholders by way of Postal Ballot including approval of terms of appointment. In terms of the aforesaid approvals, she is continuing as the Non-Executive Part- time Chairperson of the Bank and she is also eligible for remuneration including sitting fee. Accordingly, she is a Non-Executive Non-Independent Director of the Bank with effect from October 30, 2014.

The proposal for appointment of Mr. Ajay Vohra and Mr. Diwan Arun Nanda, as Independent Directors is being placed before the shareholders for approval, the relevant details are forming part of the AGM notice.

There were no resignation of Directors during the year.

Appointments/Resignations of the Key Managerial Personnel

Mr. Rana Kapoor, MD & CEO; Mr. Rajat Monga, Chief Financial Officer and Mr. Shivanand R. Shettigar, Company Secretary of the Bank are the Key Managerial Personnel as per the provisions of the Companies Act, 2013 and were aLready in office before the commencement of the Companies Act, 2013.

None of the Key Managerial Personnel has resigned or appointed during the year under review.

Directors Retiring by Rotation

In terms of Section 152 of the Companies Act, 2013, Mr. M. R. Srinivasan being Longest in the office shaLL retire at the ensuing AGM and being eligible for re-appointment, offers himself for re-appointment.

Number of Meetings of the Board

Regular meetings of the Board are held to discuss and decide on various business policies, strategies and other businesses. The schedule of the Board/Committee meetings to be heLd in the forthcoming financial year is being circulated to the Directors in advance to enable them to plan their schedule for effective participation in the meetings. Due to business exigencies, certain business decisions are taken by the Board through circulation from time to time.

The Board met four (4) times during the FY 2014-15 viz. on April 23, 2014, July 23, 2014, October 30, 2014 and January 14, 2015. Detailed information on the meetings of the Board are included in the report on Corporate Governance, which forms part of this Annual Report.

Additionally, several committee meetings were held including Audit Committee meeting, which met six (6) times during the year.

Committees of the Board

The Bank has several committees which have been established as a part of the best corporate governance practices and are in compliance with the requirements of the relevant provisions of applicable laws and statutes.

The Bank has following Committees of the Board:

Audit Committee

Fraud Monitoring Committee

Risk Monitoring Committee

Board Credit Committee

Service Excellence, Branding and Marketing Committee

IT Strategy Committee

Nomination and Remuneration Committee

Stakeholders Relationship Committee

Corporate Social Responsibility Committee

Capital Raising Committee

Committee of Independent Directors

The details with respect to the compositions, powers, roles, terms of reference, etc. of relevant committees are given in details in the ''Report on Corporate Governance'' of the Bank which forms part of this Annual Report.

Corporate Social Responsibility Committee

In compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014, the Bank has established Corporate Social Responsibility (CSR) Committee and statutory disclosures with respect to the CSR Committee and an Annual Report on CSR Activities forms part of this Report as Annexure 1.

Performance Evaluation of the Board

The Nomination and Remuneration Committee at its meeting held on October 29, 2014 and the Board of Directors at its meeting held on October 30, 2014 respectively, had laid down criteria for performance evaluation of Directors, Chairperson, MD & CEO, Board Level Committees and Board as a whole and also the evaluation process for the same.

The statement indicating the manner in which formal annual evaluation of the Directors, the Board and Board level Committees are given in detail in the report on Corporate Governance, which forms part of this Annual Report.

The performances of the members of the Board, the Board level Committees and the Board as a whole were evaluated at the meeting of the Committee of Independent Directors and the Board of the Directors held on April 22, 2015.

Corporate Governance

Your Bank is committed to achieve the highest standards of Corporate Governance and adheres to the Corporate Governance requirements set by the Regulators/applicable laws. Accordingly, your Board functions as trustees of the shareholders and seeks to ensure that the long term economic value for its shareholders is achieved while balancing the interest of all the stakeholders.

A separate section on Corporate Governance standards followed by your Bank, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is enclosed as an Annexure to this report. The report on Corporate Governance also contains certain disclosures required under the Companies Act, 2013.

A Certificate from M/s. Mehta and Mehta, Practicing Company Secretaries, conforming compliance to the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement, is annexed to this Report.

Management Discussion and Analysis

The Management Discussion and Analysis Report for the year under review as stipulated under Clause 49 of the listing agreement with the Stock Exchanges in India is presented in a separate section forming part of this Annual Report.

Vigil Mechanism

The Bank has implemented a Whistle Blower Policy pursuant to which Whistle Blowers can raise concerns reLating to ReportabLe Matters (as defined in the policy) such as breach of YES BANK Code of Conduct, fraud, bribery, corruption, employee misconduct, illegality, health & safety, environmental issues and wastage/ misappropriation of bank funds/assets, etc. Further, the mechanism adopted by the Bank encourages the Whistle Blower to report genuine concerns or grievances and provides for adequate safeguards against victimization of Whistle Blower who avail of such mechanism and also provides for direct access to the Chairman of the Audit Committee, in exceptional cases. The functioning of the Vigil mechanism is reviewed by the Audit Committee from time to time. None of the Whistle Blowers have been denied access to the Audit Committee of the Board. The details of the Whistle Blower Policy are explained in the Report on Corporate Governance and also available on the website of the Bank (www.yesbank.in).

Risk Management Policy

Your Bank has Board approved various Risk Management Policies and an Internal Capital Adequacy Assessment (ICAAP) Policy wherein all material risks faced by the Bank (PiLLar l&ll risks) are identified and assessed. For each of the Risks identified in the ICAAP, corresponding controls are assessed and policies and procedure are put in place for monitoring, mitigating and reporting risk on a periodic basis.

Loans, Guarantees or Investments in Securities

Pursuant to Section 186(11) of the Companies Act, 2013 loans made, guarantees given or securities provided or acquisition of securities by a Banking company in the ordinary course of its business are exempted from disclosure in the Annual Report.

Contracts or Arrangements with Related Parties

AU related party transactions that were entered during the financial year were in the ordinary course of the business of the Bank and were on arm''s Length basis. There were no materiaLLy significant reLated party transactions entered by the Bank with Promoters, Directors, Key Managerial Personnel or other persons which may have a potential conflict with the interest ofthe Bank.

Considering the nature of the industry in which the Bank operates, transactions with reLated parties ofthe Bank are in the ordinary course of business speciaLLy w.r.t. banking transactions which are aLso on arms'' Length basis. ALL such ReLated Party Transactions are pLaced before the Audit Committee for approvaL, wherever appLicabLe. Prior omnibus approvaL for normaL banking transactions is aLso obtained from the Audit Committee forthe reLated party transactions which are of repetitive nature as weLL as for the normaL banking transactions which cannot be foreseen and accordingly the required disclosures are made to the Committee on quarterLy basis in terms of the approvaL of the Committee.

The poLicy on materiaLity of ReLated Party Transactions and aLso on deaLing with ReLated Party Transactions as approved by the Audit Committee and the Board of Directors is upLoaded on the website of the Bank and the Link for the same is (http://www.yesbank.in/ investor-reLations/corporate-governance.htmL).

Since all related party transactions entered into by the

Bank were in the ordinary course of business and were on an arm''s Length basis, form AOC-2 is not appLicabLe to the Bank.

Consolidated Financial Statements

Pursuant to Section 129 ofthe Companies Act,2013,the Bank has prepared a consolidated financiaL statement of the Bank and aLso of its Subsidiary, YES Securities (India) Limited, in the same form and manner as that of the Bank which shaLL be Laid before the ensuing 11th AnnuaL GeneraL Meeting of the Bank aLong with the Laying of the Bank''s FinanciaL Statement under sub-section (2) of Section 129 i.e. StandaLone FinanciaL Statement ofthe Bank.

Further, pursuant to the provisions of Accounting Standard (AS'') 21, Consolidated FinanciaL Statements notified under section 133 of the Companies Act 2013, read together with RuLe 7 ofthe Companies (Accounts) RuLes 2014 issued by the Ministry of Corporate Affairs, the Consolidated FinanciaL Statements of the Bank aLong with its subsidiary for the year ended March 31, 2015 form part of this AnnuaL Report.

Internal Financial Control Systems and their Adequacy

Your Bank had Laid down set of standards, processes and structure which enabLes to impLement internaL financiaL controL across the organisation and ensure that the same are adequate and operating effectively.

Auditors

(a) Statutory Auditors

M/s. S. R. BatLiboi & Co, LLP, Chartered Accountants, wiLL retire at the conclusion of the forthcoming AnnuaL GeneraL Meeting and are eLigibLe for re-appointment, subject to the approvaL of the Reserve Bank of India. The Bank has received the consent from the Auditors and confirmation to the effect that they are not disqualified to be appointed as the Auditors of the Bank in terms of the provisions of the Companies Act 2013 and ruLes made thereunder. Accordingly, the Board of Directors has recommended the re-appointment of M/s. S. R. BatLiboi & Co, LLP, Chartered Accountants, as the Statutory Auditors ofthe Bank to hoLd office from the ensuing AGM tiLL the conclusion of the next AGM on remuneration to be decided by the Board or Committee thereof to the shareholders for approvaL.

(b) Secretarial Auditors and Secretarial Audit Report

Pursuant to Section 204 ofthe Companies Act 2013, your Bank had appointed M/s BNP & Associates, Practicing Company Secretaries, Mumbai as its Secretarial Auditors to conduct the secretarial audit ofthe Bank for the FY 2014-15. The Bank provided aLL assistance and facilities to the Secretarial Auditor for conducting their audit. The Report of Secretarial Auditor for the FY 2014-15 is annexed to this report as Annexure 2.

There is no Audit Qualifications in the Statutory Auditors Report and in the Secretarial Audit Report as annexed elsewhere in this Annual Report.

Business Responsibility Report

The Securities and Exchange Board of India through its circular CIR/CFD/DIL/8/2012 dated August 13, 2012, has mandated the top 100 listed entities, based on the market capitalization on BSE Limited and National Stock Exchange of India Limited as at March 31, 2012, to include the Business Responsibility Report (BRR) as part of the Annual Report. Accordingly, your Bank''s Business Responsibility Report has been included in this Annual Report.

Material Changes and Commitment Affecting Financial Position of the Bank

There are no material changes and commitments, affecting the financial position of the Bank which has occurred between the end of the financial year of the Bank i.e. March 31, 2015 and the date of the Directors'' report i.e. April 22, 2015.

Employee Remuneration

(A) The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report. In terms of Section 136 of the Companies Act, 2013 the same is open for inspection at the Registered Office of your Bank. Copies of this statement may be obtained by the members by writing to the Company Secretary of your Bank.

(B) The ratio of the remuneration of each director to the median employee''s remuneration and other details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report as Annexure 3.

Statutory Disclosures

(1) The disclosures to be made under sub-section (3) (m) of Section 134 of the Companies Act 2013 read with Rule (8)(3) of the Companies (Accounts) Rules, 2014 by your Bank are explained as under:

(A) Conservation of Energy

Environmental stewardship in the financial sector - ISO 14001:2004 Environmental Management System (EMS) certification for the Bank ISO 14001:2004 which is world''s leading Environmental Management System certification is rare in the BFSI space with only a few international banks achieving it. In line with its commitment to achieve internal naturaL resource consumption efficiencies and minimizing its carbon footprint, your Bank became the first commercial bank in India to achieve the ISO 14001:2004 certification in 2013 getting 12 of its Locations certified. In FY 2014-15, 67 additional sites across India were certified making a totaL of 79 Locations ISO 14001:2004 certified incLuding 76 major cluster hub Branches and 3 corporate offices. The certification enabLes the Bank to rigorously measure, manage and report its carbon footprint and is a proactive step towards mitigating adverse impact on the environment.

(i) the steps taken or impact on conservation of energy;

LED tube lights project at Corporate Office at IndiabuLLs Finance Centre (IFC), Mumbai: The conventional (T5) tube lights were replaced with LED lights in IFC. The installation of 2714 LED tube lights will lead to a saving of 196,765 KWhr of energy per year.

Installation of Global Positioning System (GPS) in office runners: GPS tracking devices were installed in two wheelers across National Capital Region (NCR) region in phases to track the km running on actual & save on fuel cost.

(ii) the steps taken by the Bank for utilizing alternate sources of energy: Your Bank has explored the potential of using alternate sources of energy through pilot projects which may be considered for implementation in future and your Bank would continue to explore alternative sources of energy in future.

(iii) the capital investment on energy conservation equipments: '' 38.11 Lakhs (LED Tube lights project at IFC, Mumbai)

(B) Technology Absorption

(i) The efforts made towards technology absorption;

Technology is a key enabler and core facilitator to the key goaLs of your Bank and is identified as one of the strategic pillars of the Bank. Since inception your Bank has been at the forefront of leveraging technology to provide better products and services to its customers. Your Bank is a truly differentiated Financial Institution with world-class, state-of-the-art technology. All departments within the Bank use IT to deliver superior products and services to the customers, including innovations like Money Monitor, Mobile Banking, One view of customer relationship and most advanced voice enabled IVR.

Your Bank has adopted innovative modern technology and best in class international banking practices in respect of governance frameworks - to ensure that it renders the highest standards of service quality and operational excellence to its customers. As a new generation Bank, your Bank has deployed ''Technology'' as a Strategic Business enabler - to build a distinct competitive advantage and to achieve Superior standards of Customer Service. The technology architecture and the innovative IT Outsourcing structure has enabled your Bank to achieve high standards of Customer Service at comparatively lower cost structures.

(ii) the benefits derived like product improvement, cost reduction, product development or import substitution;

Technology has responded by being true strategic partner with business. Many first mover implementations have provided business, long lasting advantages, as also won many accolades and awards for the Bank. One of the finest direct banking pLatforms, first bank in India to offer two factor authentication, single PIN access to all electronic channels, Wi-Fi branches are some of the examples.

Innovations like Money Monitor (aggregation of customer accounts of all types across 11,000 institutions globally), Mobile Money Services, dual factor authentication, one view of customer relationship and most advanced voice enabled IVR helps the products and sales teams to offer superior products and services.

Your Bank has evaluated and implemented cutting edge technologies like virtualization, cloud computing and social media to invest in the best in class IT systems and practices, and in order to ensure that its technology platform becomes a strategic business tool for building a competitive advantage.

Apart from product development, product improvement & effective cost management, technology has also played a major role in customer acquisition & ensuring high level of service delivery & customer excellence. Your Bank has also been able to cater to Financial Inclusion needs through its award winning and globally recognized technology solution platform which offers doorstep banking services.

(C) Foreign Exchange Earnings and Outgo

The Foreign Exchange earned in terms of actual, inflows during the year and the foreign exchange outgo during the year in terms of actual, outflows.

During the year ended March 31, 2015, the Bank earned Rs.78.10 Crores and spent Rs.265.20 Crores in foreign currency. This does not incLude foreign currency cash flows in derivatives and foreign currency exchange transactions.

(2) No significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and Bank''s operations in future.

(3) Number of cases filed, if any, and their disposal under Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Your Bank has Zero tolerance towards any action on the part of any executive which may fall under the ambit of ''Sexual Harassment'' at workplace, and is fully committed to uphold and maintain the dignity of every women executive working in the Bank. The Policy provides for protection against sexual harassment of women at workplace and for prevention and redressal of such complaints.

(4) No stock options were issued to the Directors'' of your Bank.

Extracts of Annual Return

Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Companies Act 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the extracts of the Annual Return as at March 31, 2015 forms part of this report as Annexure 4.

Directors'' Responsibility Statement

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, it is hereby confirmed that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit of the Bank for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis;

(e) the directors had Laid down internaL financial controls to be followed by the Bank and that such internaL financial controLs are adequate and were operating effectively; and

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Acknowledgement

Your Directors take this opportunity to express their deep and sincere gratitude to the customers of the Bank for their confidence and patronage, as weLL as to the Reserve Bank of India, Securities and Exchange Board of India, Government of India and other Regulatory Authorities for their co-operation, support and guidance. Your Directors would like to express a profound sense of appreciation for the commitment shown by the employees in supporting the Bank in its continued robust performance on all fronts. Your Directors would also like to thank the employees for their continued support as the Bank evolves as the ''Professionals'' Bank of India'' with a vision ''To be the Finest Quality Bank of the World in India by 2020''.

For and on behalf of the Board of Directors

Rana Kapoor Radha Singh

Managing Director & CEO Non-Executive Part-time

(DIN No: 00320702) Chairperson

(DIN No: 02227854)

Place: Mumbai Date : April 22, 2015


Mar 31, 2014

The Directors have the pleasure in presenting the Tenth Annual Report on business and operations of your Bank together with the audited accounts for the year ended March 31, 2014.

Financial performance (Rs. in crore)

Particulars April 1, 2013 to April 1, 2012 to March 31, 2014 March 31, 2013

Deposits 74,192 66,956

Borrowings 21,314 20,922

Advances 55,633 47,000

Total Assets/Liabilities 109,016 99,104

Net Interest Income 2,716 2,219

Non-Interest Income 1,722 1,257

Operating Profit 2,688 2,142

Provisions and Contingencies 362 216

Profit before Tax 2,326 1,926

Provision for Taxes 709 625

Net Profit 1,617 1,301

Add: Surplus/(Deficit) brought forward from last period 2,338 1,658

Amount available for appropriation 3,956 2,959

appropriations

Statutory reserve under Section 17 of the Banking 404 325 Regulations Act, 1949

Capital Reserve 4 35

Investment Reserve - 10

Proposed Dividend and Tax thereon 338 250

Adjustment to earlier year Dividend and Tax thereon 2 1

Surplus carried to the Balance Sheet 3,207 2,338

key performance indicators

Net Interest Margin 2.9% 2.9%

Return on annual average assets 1.6% 1.5%

Return on Equity 25.0% 24.8%

Cost-to-Income ratio 39.4% 38.4%

Your Bank posted net revenues (Net Interest Income and other income) of Rs. 4,438 crore and Net Profit of C 1,617 crore for the Financial Year 2013-14. The Net Revenues and Net Profit for the Financial Year 2012- 13 was C 3,476 crore and C 1,301 crore respectively. Appropriations from the Net Profit have been effected as per the table given above. Please refer to the section on FINANCIAL AND OPERATING PERFORMANCE in the Management Discussion and Analysis for a detailed analysis of financial data.

Dividend

In view of the excellent financial performance of your Bank and encouraging future outlook as well as the objective of rewarding shareholders with cash dividends while retaining capital to maintain a healthy Capital Adequacy Ratio, to support future growth, the Board of Directors have recommended Dividend at a rate of C 8/- per equity share for approval by the shareholders at the 10th Annual General Meeting.

capital Raising & capital adequacy Ratio (caR)

The paid-up capital of your Bank has increased to C 360.63 Crore as at March 31, 2014 from C 358.62 Crore as at March 31, 2013, post exercise of employee stock options during the Financial Year 2013-14.

Your Bank also raised a sum of C 280 Crore by way of Additional Tier I perpetual bonds during the Financial Year 2013-14. Your Bank has utilised the proceeds of the issue of Additional Tier I Perpetual Bonds for strengthening the Capital Adequacy Ratio (CAR), enhancing the long-term capital resources and its regular business activities.

In line with the RBI circular on Capital Adequacy Framework, your Bank has computed capital charge for operational, market and credit risk and its Capital Adequacy Ratio as per Basel III accord as at March 31, 2014.

Your Bank is well capitalised with a Capital Adequacy Ratio of 14.4% as at March 31, 2014; of which Tier I Capital Ratio was 9.8% and Tier II Capital Ratio was 4.6%.

employees'' Stock Option Scheme

Your Bank has instituted Stock Option Plans to reward and retain employees and to enable them to participate in your Bank''s future growth and financial success. The Stock Option Schemes also enable the Bank to hire the best talent for its senior management and key positions. The Bank has five Employee Stock Option Schemes viz. Joining Stock Option Plan I (JSOP I), Joining Employee Stock Option Plan II (JESOP II), Joining Employee Stock Option Plan III (JESOP III), YBL ESOP (consisting of two sub schemes JESOP IV/PESOP I) and YBL JESOP V/PESOP II (Consisting of three sub schemes JESOP V/ PESOP II/PESOP II-2010).

The Employee Stock Option Plans are administered by the Board Remuneration & Human Capital Management Committee (earlier known as Board Remuneration Committee) of the Bank.

The details of the grants under JSOP I, JESOP II, JESOP III, YBL ESOP (JESOP IV/PESPOP I) and YBL JESOP V/ PESOP II/PESOP II-2010 respectively are as follows:

JSOP I, JESOP II, JESOP III, YBL ESOP (JESOP IV)

Total no. of options grant- Nil Nil Nil Nil ed (during FY 2013-14)

The pricing formula At par Being the Being the closing Being the closing closing price price on the price on the stock on the stock stock exchange exchange with the exchange with with the highest highest trading the highest trading volumes volumes on the trading volumes on the last last working day on the last working day prior to the date working day prior to the date of grant prior to the of grant date of grant

Options vested (during FY - - - 257,250 2013-14)

Options exercised (during 8,750 7,700 23,700 405,012 FY 2013-14)

Total no. of shares arising 8,750 7,700 23,700 405,012 as a result of exercise of option

Options lapsed/ forfeited - - - 400 (during FY 2013-14)

YBL ESOP YBL ESOP YBL ESOP YBL ESOP (JESOPI) V II 2010

Total no. of options grant- 3,750 1,020,600 Nil 3,373,500 ed (during FY 2013-14)

The pricing formula Being the Being the Being the Being the closing closing price closing price closing price price on the stock on the stock on the stock on the stock exchange with the exchange with exchange exchange highest trading the highest with the with the volumes on the last trading highest trad- highest trad- working day prior to volumes ing volumes ing volumes the date of grant on the last on the last on the last working day working day working day prior to the prior to the prior to the date of grant date of grant date of grant

Options vested (during FY 2013-14) 116,750 932,125 - 958,500

Options exercised (during 358,025 317,075 510,925 380,150 FY 2013-14)

Total no. of shares arising 358,025 317,075 510,925 380,150 as a result of exercise of option

Options lapsed/ for feited - 720,680 - 845,000 (during FY 2013-14)

JSOP I, JESOP II, JESOP III, YBL ESOP (JESOP IV)

Variation of terms of There is There is no There is no There is no varia- options no vari- variation in the variation in the tion in the terms ation in terms of the terms of the op- of the options the terms options during tions during the during the Finan- of the the Financial Financial Year cial Year ended options Year ended ended March 31, March 31, 2014. during March 31, 2014. the Finan- 2014. cial Year ended March 31, 2014.

Money realised by exercise 87,500 639,205 21,72,840 633,26,319.90 of options (during FY 2013-14) (inRs.)

Total no. of options in 251,250 275,800 32,600 329,613 force

Total no. of options grant- Nil Nil Nil Nil ed to: (during FY 2013-14)

(i) Total no. of options granted to Senior Man- agement Personnel (SMP)



YBL ESOP YBL ESOP YBL ESOP YBL ESOP (JESOPI) V II 2010

Variation of terms of There is no There is no There is no There is no variation options variation in variation in variation in in the terms of the the terms of the terms of the terms of options during the the options the options the options Financial Year ended during the during the during the March 31, 2014. Financial Year Financial Year Financial Year ended March ended March ended March 31, 2014 31, 2014 31, 2014

Money realised by exercise of options 592,27,491.25 658,54,227 659,40,493 102,374,395 (during FY 2013-14) (in Rs.)

Total no. of options in 591,975 50,421,75 18,102,75 12,136,350 force

Total no. of options grant ed to: (during 3,750 1,020,600 Nil 3,373,500 FY 2013-14)

(i) Total no. of options granted to Senior Man- agement Personnel (SMP)



JSOP I, JESOP II, JESOP III, YBL ESOP (JESOP IV)

(ii) Any other employee who received a grant in any one year of options, amounting to 5% or more of options granted during that year

(iii) Identified employees NA NA NA NA who are granted options, during any one year equa to or exceeding 1 % of the ssued capital (excluding outstanding warrants and conversions) of the Company at the time of the grant

Diluted Earnings Per Share (EPS) of the Bank after considering the effect of potential Equity Shares on account of exercise of options



YBL ESOP YBL ESOP YBL ESOP YBL ESOP (JESOPI) V II 2010

(ii) Any other employee who received a grant in any one year of options, amounting to 5% or more of options granted during that year NitinSane- Sanjay Palve 60,000 -300,000 Abhay Sapru -60,000 Narendra Kumar Dixit- 75,000 Akshay Sap- ru- 90,000 Abhishek A Bhagat- 60,000

(iii) Identified employees NA NA NA NA who are granted options, during any one year equa to or exceeding 1 % of the ssued capital (excluding outstanding warrants and conversions) of the Company at the time of the grant

Diluted Earnings Per Share (EPS) of the Bank after considering the effect of potential Equity Shares on account of exercise of options 44.35



JSOP I, JESOP II, JESOP III, YBL ESOP (JESOP IV)

Impact of the difference The Bank has charged nil, being the intrinsic value of the stock options granted for the year ended March 31, 2014. Had the Bankad- between the intrinsic val- opted the ''Fair Value'' method (based on Black- Scholes pricing model), for pricing and accounting of options, net profit after tax would ue of the options and the have been lower by Rs. 341,904 thousands, the basic earnings per share would have been Rs. 43.97 per share instead of Rs. 44.92 per share; fair value of the options and diluted earnings per share would have been Rs. 43.42 per share instead of Rs. 44.35 per share, on profits and on EPS

Weighted average price 10.00 83.01 91.68 156.36 of the shares exercised during the year (in Rs.)

Weighted average fair 10.00 86.47 91.89 194.59 values of the outstanding options (in Rs.)

YBL ESOP YBL ESOP YBL ESOP YBL ESOP (JESOPI) V II 2010

Weighted average price 165.43 207.69 129.06 269.30 of the shares exercised during the year (in Rs.)

Weighted average fair 174.68 315.92 128.50 328.15 values of the outstanding options (in Rs.)

The Securities and Exchange Board of India (SEBI) has prescribed two methods to account for stock grants namely (i) the intrinsic value method; (ii) the fair value method. The Bank adopts the intrinsic value method to account for the stock options it grants to the employees. The Bank also calculates the fair value of options at the time of grant, using Black-Scholes pricing model with the following assumptions:

March 31, 2014

Risk free interest rate 4.96% - 9.11 %

Expected life 1.5 yrs - 7.5 years

Expected volatility 25.01% - 82.76%

Expected dividends 1.13% - 1.50%

Subsidiary company

As on March 31, 2014, your Bank had one Subsidiary, YES Securities (India) Limited (YSIL).

The Ministry of Corporate Affairs (MCA), Government of India vide the General Circular No. 2/2011 dated February 8, 2011 has granted general exemption under Section 212(8) of the Companies Act, 1956 to Companies from attaching the accounts of their subsidiaries in their annual reports subject to fulfillment of certain conditions prescribed in the Circular. Pursuant to the above Circular, the Board of Directors of the Bank at its meeting held on April 23, 2014 passed the necessary resolution granting the requisite approvals for not attaching the balance sheet, profit & loss account, report of the board of directors and report of the auditors thereon of the subsidiary company to the accounts of the Bank. The Bank will make available the copies of annual accounts of the subsidiary company and related detailed information to the shareholders of the Bank seeking the same. The annual accounts of the subsidiary company will also be kept for inspection by any shareholder at the Registered Office of the Bank and that of the subsidiary company.

Further, pursuant to the provisions of Accounting Standard AS-21 prescribed under the Companies (Accounting Standards) Rules, 2006 and the Listing Agreement as prescribed by the Securities and Exchange Board of India, the Consolidated Financial Statements of the Bank along with its subsidiary for the year ended March 31, 2014 form part of this Annual Report.

Directors

In accordance with the provisions of the Companies Act, 1956, Lt. Gen (Retd.) Mukesh Sabharwal and Ms. Radha Singh, Directors shall retire by rotation at the ensuing Annual General Meeting. Mr Brahm Dutt was appointed as an additional director by the Board at its meeting held on July 24, 2013, and Mr. Saurabh Srivastava and Mr. Vasant V Gujarathi were appointed as additional directors by the Board at its meeting held on April 23, 2014 and they hold office up to the conclusion of the ensuing Annual General Meeting. Further appointment of Mr. Ravish Chopra has been proposed as an Independent Director.

The Bank has received notices in writing pursuant to Section 160 of the Companies Act, 2013 from members along with deposits of C 1,00,000 signifying their intention to propose the candidature of Mr. Brahm Dutt, Mr. Saurabh Srivastava and Mr. Vasant V Gujarathi as Independent Directors of the Bank at the ensuing Annual General Meeting of the Bank. Further, pursuant to sections 149, 152 of the Companies Act, 2013 and Section 10A (2A) of the Banking Regulation Act, 1949, approval of the shareholders has been sought for the appointment of Lt. Gen (Retd.) Mukesh Sabharwal as Independent Director not liable to retire by rotation for a period of five years, Ms. Radha Singh as Independent Director not liable to retire by rotation for a period of two years, and Mr. Ravish Chopra, Mr. Brahm Dutt, Mr Saurabh Srivastava and Mr. Vasant V Gujarathi as Independent Directors not liable to retire by rotation for a period of five years.

Mr. Rana Kapoor, with the prior approval of Reserve Bank of India (RBI), was appointed as the Bank''s Managing Director & CEO for an initial period of 5 years w.e.f. September 1, 2004. Thereafter, he was re-appointed from time to time, for further tenures, pursuant to approvals of the RBI. As per the latest approval of RBI, the tenure of Mr. Kapoor''s re- appointment as Managing Director & CEO of the Bank is up to August 31, 2015. Approval of members is sought for the re-appointment of Mr. Rana Kapoor as Managing Director & CEO of the Bank at the ensuing Annual General Meeting as per details provided in the Notice.

The brief resume and details of Directors who are to be appointed/re-appointed are furnished in the Notice for the Annual General Meeting.

corporate governance

Your Bank is committed to achieving the highest standards of Corporate Governance. Accordingly, your Board functions as trustees of the shareholders and seeks to ensure that the long term economic value for its shareholders is achieved while balancing the interest of all the stakeholders.

A separate section on Corporate Governance standards followed by your Bank, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is enclosed as an Annexure to this Report.

A Certificate from the Practicing Company Secretaries, M/s. Mehta and Mehta, conforming compliance with the conditions of Corporate Governance as stipulated under Clause 49, is attached to this Report.

auditors

M/s. S. R. Batliboi & Co, LLP, Chartered Accountants, will retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment, subject to the approval of the Reserve Bank of India. Members are requested to consider their re- appointment on a remuneration to be decided by the Board or Committee thereof for the ensuing Financial Year i.e. 2014-15.

Statutory Disclosures

The statement containing particulars of employees as required under Section 217 (2A) of the Companies Act, 1956 forms part of this report. In terms of Section 219(1)(b)(iv) of the Companies Act, 1956 the same is open for inspection at the Registered Office of your Bank. Copies of this statement may be obtained by the members by writing to the Company Secretary of your Bank.

The provisions of Section 217(1)(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption do not apply to your Bank. Your Bank is constantly pursuing its goal of technological upgradation in a cost efficient manner for delivering quality customer service.

Business Responsibility Report

The Securities and Exchange Board of India through its circular CIR/CFD/DIL/8/2012 dated August 13, 2012, has mandated the top 100 listed entities, based on the market capitalization on BSE Limited and National Stock Exchange of India Limited as at March 31, 2012, to include the Business Responsibility Report (BRR) as part of the Annual Report. Accordingly, your Bank''s Business Responsibility Report has been enclosed to this Report.

Management Discussion and analysis

Management Discussion and Analysis Report for the year under review as stipulated under Clause 49 of the listing agreement with the Stock Exchanges in India is presented in a separate section forming part of this Annual Report.

corporate Social Responsibility (cSR)

Your Bank has fairly understood its responsibility towards the society and environment in which it operate and accordingly had been working towards CSR and Sustainable Development focusing on the ''Triple Bottomline'' ethos'' since its inception. Further, in terms of Section 135 of the Companies Act, 2013, the Bank has constituted Corporate Social Responsibility Committee to monitor the CSR activities of the Bank in terms of the provisions of the Act.

Directors'' Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to the Directors'' Responsibility Statement, it is hereby confirmed that:

(I) in the preparation of the accounts for the Financial Year ended March 31, 2014 the applicable accounting standards have been followed along with proper explanation relating to material departures;

(II) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as at March 31, 2014 and of the profit of the Bank for the year under review;

(III) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities; and

(IV) the Directors have prepared the annual accounts of the Bank on a ''going concern'' basis.

Acknowledgements

Your Directors take this opportunity to express their deep and sincere gratitude to the customers of the Bank for their confidence and patronage, as well as to the Reserve Bank of India, Government of India and Regulatory Authorities for their co-operation, support and guidance. Your Directors would like to express a profound sense of appreciation for the commitment shown by the employees in supporting the Bank in its endeavour towards becoming the ''BEST QUALITY BANK OF THE WORLD IN INDIA''. Your Directors would also like to express their gratitude to the members for their trust and support.



For and on behalf of the Board of Directors

Rana kapoor M R Srinivasan

Managing Director Non-Executive Chairman and CEO

place : Mumbai

Date : April 23, 2014


Mar 31, 2013

To the Members,

The Directors are pleased to present the Ninth Annual Report of your Bank, together with the audited Balance Sheet, Profit & Loss Account and the report on business and operations of the Bank for the year ended March 31, 2013.

Financial Performance

(Rs. in crore)

April 1, 2012 to April 1, 2011 to Particulars March 31, 2013 March 31, 2012

Deposits 66,956 49,152

Borrowings 20,922 14,156

Advances 47,000 37,989

Total Assets/Liabilities 99,104 73,626

Net Interest Income 2,219 1,616

Non Interest Income 1,257 857

Operating profit 2,142 1,540

Provisions and Contingencies 216 90

Profit before Tax 1,926 1,450

Provision for taxes 625 473

Net Profit 1,301 977

Add: Surplus/(Deficit) brought forward from last period 1,658 1,115

Amount available for appropriation 2,959 2,092

Appropriations

Statutory Reserve under section 17 of the Banking Regulation Act, 1949 325 244

Capital Reserve 35 25

Investment Reserve 10 -

Proposed Dividend and Tax thereon 251 164

Surplus carried to Balance Sheet 2,338 1,659

Key Performance Indicators

Net Interest Margin 2.9% 2.8%

Return on Annual Average Assets 1.5% 1.5%

Return on Equity 24.8% 23.1%

Cost to Income Ratio 38.4% 37.7%

Non Interest Income to Net Revenues 36.2% 34.7%

Your Bank has posted net revenues (Net Interest Income and other income) of Rs. 3,476 crore and Net Profit of Rs. 1,301 crore for the Financial Year 2012-13. Net Revenues and Net Profit for the Financial Year 2011-12 were Rs. 2,473 crore and Rs. 977 crore respectively. Appropriations from the Net Profit have been effected as per the table on the earlier page. Please refer to the section on FINANCIAL AND OPERATING PERFORMANCE in the Management Discussion and Analysis for a detailed analysis of financial data.

Dividend

In view of the steady financial performance of your Bank and encouraging future outlook, the Board of Directors have recommended Dividend at a rate of Rs. 6/- per equity share. This will ensure increasing dividend for the shareholders while at the same time retaining capital to maintain a healthy capital adequacy ratio.

Capital Raising & Capital Adequacy Ratio (CAR)

The paid-up capital of your Bank increased to Rs. 358.62 crore as at March 31, 2013 from Rs. 352.99 crore as at March 31, 2012, post exercise of employee stock options during the Financial Year 2012-13.

Your Bank also raised a sum of Rs. 140 crore by way of Tier I perpetual bonds, Rs. 704.10 crore by way of Upper Tier II capital and Rs. 1059.70 crore by way of Lower Tier II subordinated bonds during the Financial Year 2012- 13. Your Bank has utilised the proceeds of the issue of Tier I Perpetual Bonds and Upper & Lower Tier II capital for strengthening the Capital Adequacy Ratio (CAR), for enhancing the long-term capital resources and its regular business activities.

In line with the RBI circular on Capital Adequacy Framework, your Bank has computed capital charge for operational, market and credit risk and its Capital Adequacy Ratio as per Basel II accord as at March 31, 2013.

Your Bank is well capitalised with a Capital Adequacy Ratio (as per Basel II) of 18.3% as at March 31, 2013; of which Tier I Capital Ratio was 9.5% and Tier II Capital Ratio was 8.8%.

Employees Stock Option Scheme

Your Bank has instituted Stock Option Plans to hire, reward and retain employees and to enable them to participate in your Bank''s future growth and financial success. The Bank has five Employee Stock Option Schemes viz. Joining Stock Option Plan I (JSOP I), Joining Employee Stock Option Plan II (JESOP II), Joining Employee Stock Option Plan III (JESOP III), YBL ESOP (consisting of two sub schemes JESOP IV/PESOP I) and YBL JESOP V/ PESOP II (Consisting of three sub schemes JESOP V/ PESOP II/PESOP II -2010).

The Employee Stock Option Plans are administered by the Board Remuneration Committee of the Bank.

The details of the grants under JSOP I, JESOP II, JESOP III, YBL ESOP and YBL JESOP V/PESOP II/PESOP II -2010 respectively are as follows:

i) Risk free interest rate 4.96% - 8.83%

ii) Expected life 1.50 yrs - 7.51 yrs

iii) Expected volatility 29.21% - 82.76%

iv) Expected dividends 1.13% - 1.50%

Directors

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Bank, Mrs. Radha Singh and Mr. Ajay Vohra shall retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

Mr. S. L. Kapur has completed the tenure approved by the Reserve Bank of India as Non Executive Chairman of the Board on April 26, 2012. Further, Mr. Wouter Kolff, Independent Director, Mr. Bharat Patel, Independent Director, Mr. S. L. Kapur, Promoter Nominee, Non Independent Director and Mr. Arun K. Mago, Independent Director, have completed the maximum permissible period of eight years prescribed under Section 10A (2A) of the Banking Regulation Act, 1949 and retired from the Board of Directors during the financial year 2012-13. Your Directors place on record their appreciation of the valuable contribution made by the aforesaid Directors in the evolution of the Bank and its growth and development.

The Board at its meeting held on October 23, 2012 appointed Mr. Ravish Chopra, Mr. Diwan Arun Nanda and Mr. M.R. Srinivasan as Additional Director(s) of the Bank. They hold office up to the date of the forthcoming Annual General Meeting and are eligible for appointment.

Corporate Governance

Your Bank is committed to achieving the highest standards of Corporate Governance. Accordingly, your Board functions as trustees of the shareholders and seeks to ensure that the long term economic value for its shareholders is achieved while balancing the interest of all the stakeholders.

A separate section on Corporate Governance standards followed by your Bank, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is enclosed as an Annexure to this report.

Auditors

M/S. S.R. Batliboi & Co., LLP Chartered Accountants will retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment, subject to the approval of the Reserve Bank of India. Members are requested to consider their re-appointment on a remuneration to be decided by the Board or Committee thereof for the ensuing Financial Year i.e. 2013-14.

Statutory Disclosures

The statement containing particulars of employees as required under Section 217 (2A) of the Companies Act, 1956 forms part of this report. In terms of Section 219(1) (b)(iv) of the Act, the same is open for inspection at the Registered Office of your Bank. Copies of this statement may be obtained by the members by writing to the Company Secretary of your Bank.

The provisions of Section 217(1)(e) of the Companies Act, 1956 do not apply to your Bank. Your Bank is constantly pursuing its goal of technological upgradation in a cost efficient manner for delivering quality customer service.

Directors'' Responsibility Statement_

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to the Directors'' Responsibility Statement, it is hereby confirmed that:

(i) in the preparation of the accounts for the Financial Year ended March 31, 2013 the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as at March 31, 2013 and of the profit of the Bank for the year under review;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities; and

(iv) the Directors have prepared the annual accounts of the Bank on a ''going concern'' basis.

Acknowledgement

Your Directors take this opportunity to express their deep and sincere gratitude to the customers of the Bank for their confidence and patronage, as well as to the Reserve Bank of India, Government of India and Regulatory Authorities for their co-operation, support and guidance. Your Directors would like to express a deep sense of appreciation for the commitment shown by the employees in supporting the Bank in its endeavour to create the BEST QUALITY BANK OF THE WORLD IN INDIA. Your Directors would also like to express their gratitude to the members for their trust and support.

For and on behalf of the Board of Directors

Rana Kapoor Radha Singh

Managing Director & CEO Independent Director

Lt. Gen. (Retd.) M. R. Srinivasan

Mukesh Sabharwal Non Independent Director

Independent Director

Place: Mumbai

Date: April 17, 2013


Mar 31, 2011

The Directors have pleasure in presenting the Seventh Annual Report of your Bank together with the audited Balance Sheet, Profit and Loss Account and the report on business and operations of the Bank for the year ended March 31, 2011.

Financial Performance

(Rs. in crore)

Particulars April 1, 2010 April 1, 2009 to March 31, 2011 to March 31, 2010

Deposits 45,939 26,799

Borrowings 6,691 4,749

Advances 34,364 22,193

Total Assets-Liabilities 59,007 36,382

Net Interest Income 1,247 788

Non-Interest Income 623 576

Operating Profit 1,190 864

Provisions and Contingencies 98 137

Profit before Tax 1,092 727

Provision for taxes 365 249

Net Profit 727 478

Add: Surplus-(Defcit) brought forward from last period 673 406

Amount available for appropriation 1,400 884

Appropriations

Statutory Reserve under Section 17 of the Banking Regulation Act, 1949 182 119

Capital Reserve 2 32

Investment Reserve - -

Proposed Dividend and Ta x thereon 101 60

Surplus carried to Balance Sheet 1,115 673

Key Performance Indicators

Net Interest Margin 2.9% 3.1%

Return on Annual Average Assets 1.5% 1.6%

Return on Equity 21.1% 23.7%

Cost to Income Ratio 36.3% 36.7%

Non-Interest Income to Net Revenues 33.3% 42.2%

Your Bank posted net revenues (Net Interest Income and Other Income) of Rs. 1,870 crore and Net Profit of Rs. 727 crore for the Financial Year 2010-11. Net Revenues and Net Profit for the Financial Year 2009-10 was Rs. 1,364 crore and Rs. 478 crore respectively. Appropriations from the Net Profit have been effected as per the table on the earlier page. Please refer to the section on Financial and Operating Performance in Management Discussion and Analysis for a detailed analysis of financial data.

Dividend

In view of the excellent financial performance of your Bank and encouraging future outlook as well as the objective of rewarding shareholders with cash dividends while retaining capital to maintain a healthy Capital Adequacy Ratio, to support future growth, the Board of Directors have recommended a Dividend at a rate of Rs. 2.50-- per equity share.

Capital Raising and Capital Adequacy Ratio (CAR)

The paid-up capital of your Bank increased to Rs. 347.15 crore as at March 31, 2011 from Rs. 339.67 crore as at March 31, 2010, post exercise of 74,79,855 employee stock options during the Financial Year 2010-11.

Your Bank also raised a sum of Rs. 225 crore by way of Tier I Perpetual Bonds, Rs. 640 crore by way of Upper Tier II capital and Rs. 306.40 crore by way of Lower Tier II Subordinated Bonds during the Financial Year 2010-11. Your Bank has utilised the proceeds of the issue of Tier I Perpetual Bonds and Upper & Lower Tier II capital to augment the long-term capital resources and to enhance the CAR for successfully implementing its growth plans.

In line with the RBI circular on Capital Adequacy Framework, your Bank has computed capital charge for operational, market and credit risk and its CAR as per Basel II accord as at March 31, 2011.

Your Bank is well capitalised with a CAR (as per Basel II) of 16.50 % as at March 31, 2011; of which Tier I Capital Ratio was 9.65% and Tier II Capital Ratio was 6.85%.

Employees Stock Option Scheme

Your Bank has instituted Stock Option Plans to reward and retain employees and to enable them to participate in your Banks future growth and financial success. The Stock Option Schemes also enable the Bank to hire the best talent for its senior management and key positions. The Bank has fve Employee Stock Option Schemes viz. Joining Stock Option Plan I (JSOP I), Joining Employee Stock Option Plan II (JESOP II), Joining Employee Stock Option Plan III (JESOP III), YBL ESOP (consisting of two sub schemes JESOP IV-PESOP I) and YBL JESOP V-PESOP II (Consisting of three sub schemes JESOP V- PESOP II-PESOP II -2010).

The Employee Stock Option Plans are administered by the Board Remuneration Committee of the Bank.

Directors

Mr. Sipko Schat, Nominee Director of Rabobank had resigned from the Board of Directors of the Bank with effect from June 22, 2010 on account of partial dilution of holding by Rabobank and consequently his alternate, Mr. Berend Du Pon was also deemed to vacate offce simultaneously.

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Bank, Mr. Wouter Kolff and Mr. Bharat Patel shall retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

Corporate Governance

Your Bank is committed to achieving the highest standards of Corporate Governance. Accordingly, your Board functions as trustees of the shareholders and seeks to ensure that the long-term economic value for its shareholders is achieved while balancing the interest of all the stakeholders.

A separate section on Corporate Governance standards followed by your Bank as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is enclosed as an Annexure to this report.

Auditors

M-s. B S R & Co., Chartered Accountants will retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment, subject to the approval of the Reserve Bank of India. Members are requested to consider their re-appointment on a remuneration to be decided by the Board or Committee thereof for the ensuing Financial Year i.e. 2011-12.

Statutory Disclosures

The statement containing particulars of employees as required under Section 217 (2A) of the Companies Act, 1956 forms part of this report. In terms of Section 219(1)(b)(iv) of the Act, the same is open for inspection at the Registered Offce of your Bank. Copies of this statement may be obtained by the members by writing to the Company Secretary of your Bank.

The provisions of Section 217(1)(e) of the Companies Act, 1956 do not apply to your Bank. Your Bank is constantly pursuing its goal of technological upgradation in a cost effcient manner for delivering quality customer service.

Directors Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to the Directors Responsibility Statement, it is hereby confrmed that:

(I) in the preparation of the accounts for the Financial Year ended March 31, 2011, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(II) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as at March 31, 2011 and of the Profit of the Bank for the year under review;

(III) the Directors have taken proper and suffcient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities; and

(IV) the Directors have prepared the annual accounts of the Bank on a going concern basis.

Acknowledgement

Your Directors take this opportunity to express their deep and sincere gratitude to the customers of the Bank for their confdence and patronage, as well as to the Reserve Bank of India, Government of India and Regulatory Authorities for their co-operation, support and guidance. Your Directors would like to express a deep sense of appreciation for the commitment shown by the employees in supporting the Bank in its endeavour to create the BEST QUALITY BANK OF THE WORLD IN INDIA. Your Directors would also like to express their gratitude to the members for their trust and support.

For and on behalf of the Board of Directors

Rana Kapoor S. L. Kapur Managing Director & CEO Non-Executive Chairman

Place: Mumbai Date: April 20, 2011


Mar 31, 2010

The Directors have pleasure in presenting the Sixth Annual Report of your Bank together with the audited Balance Sheet, Profit & Loss Account and the report on business and operations of the Bank for the year ended March 3 1,2010.

Financial Performance

(R.s. in crores)

Particulars April 1,2009 to April 1,2008 to March 31,2010 March 31 2009

Deposits 26,799 16,169

Borrowings 4,749 3,702

Advances 22,193 12,403

Total Assets/Liabilities 36,382 22,901

Net Interest Income 788 509

Non Interest Income 576 437

Operating profit 864 528

Provisions and Contingencies 137 62

Profit before Tax 727 466

Provision for taxes 249 162

Net Profit 478 304

Add: Surplus/(Deficit) brought forward from last period 406 245

Amount available for appropriation 884 549

Appropriations

Statutory Reserve under Section 17 of the 119 76 Banking Regulation Act, 1949

Capital Reserve 32 67

Investment Reserve

Proposed Dividend and Tax thereon 6 0

Surplus carried to Balance Sheet 673 406

Key Performance Indicators

Net Interest Margin 3.1 % 2.9%

Return on Annual Average Assets 1.6% 1.5%

Return on Equity 23.7% 20.6%

Cost to Income Ratio 36.7% 44.2%

Non Interest Income to Net Revenues 42.2% 46.2%

Your Bank posted net revenues (Net Interest Income and other income) of Rs. 1,364 crore and Net Profit of Rs. 478 crore for the Financial Year 2009-10. Net Revenues and Net Profit for the Financial Year 2008-09 was Rs. 946 crore and Rs. 304 crore respectively. Appropriations from the Net Profit have been effected as per the table on the earlier page. Please refer to the section on FINANCIAL AND OPERATING PERFORMANCE in Management Discussion and Analysis for a detailed analysis of financial data.

Dividend

In view of the excellent financial performance of your Bank and encouraging future outlook as well as the objective of rewarding shareholders with cash dividends while retaining capital to maintain a healthy Capital Adequacy Ratio, to support future growth, the Board of Directors have recommended maiden Dividend at a rate of Rs. 1.50/- per equity share.

Capital Raising & Capital Adequacy Ratio (CAR)

The Members of the Bank at their Fifth Annual General Meeting held on September 3, 2009 had approved the issuance of the equity shares to Qualified Institutions Buyers under Qualified Institutions Placement (QIP).The Bank had launched the QIP in the month of January 2010 and had received a tremendous response to the issue, raising US$225 Million (Rs. 1033.88 crore) at a rate of Rs 269.50 per share. Your Bank has utilised the proceeds of the issue of equity shares under QIP for enhancing the solvency, Capital Adequacy Ratio and for general corporate purposes.

The paid-up capital of your Bank increased to Rs. 340 crore as at March 3 1,2010 from Rs. 297 crore as at March 31,2009, post exercise of 43,25,630 employee stock options and allotment of 3,83,62,709 equity shares under Qualified Institutions Placement during the Financial Year 2009-10.

Your Bank also raised a sum of Rs. 82 crore by way of Tier I perpetual bonds, Rs. 93 crore by way of UpperTier II capital and Rs. 560 crore by way of LowerTier II subordinated bonds during the Financial Year 2009-10. Your Bank has utilised the proceeds of the issue of Tier I Perpetual Bonds and Upper & Lower Tier II capital to augment the long-term capital resources and to enhance the Capital Adequacy Ratio (CAR) for successfully implementing its growth plans.

In line with the RBI circular on Capital Adequacy Framework your Bank has computed capital charge for operational, market and credit risk and its Capital Adequacy Ratio as per Basel II accord as at March 31, 2010.

Your Bank is well capitalised with a Capital Adequacy Ratio (as per Basel II) of 20.6% as at March 31, 2010; of which Tier I Capital Ratio was 12.9% and Tier II Capital Ratio was 7,7%. The rating profile of your Banks exposure has resulted in an overall reduction in the risk weighted assets of your Bank and an improved Capital Adequacy Ratio under Basel (II) accord (20.6%) as compared to Basel (I) accord (17.3%) as at March 31, 2010. As at March 31, 2009, the Capital Adequacy Ratio of the Bank was 16.6% as per Basel II accord.

Employees Stock Option Scheme

Your Bank has instituted Stock Option Plans to reward and retain employees and to enable them to participate in your Banks future growth and financial success. The Stock Option Schemes also enable the Bank to hire the best talent for its senior management and key positions. The Bank has five Employee Stock Option Schemes viz. Joining Stock Option Plan I (JSOP I), Joining Employee Stock Option Plan II (JESOP II), Joining Employee Stock Option Plan III (JESOP lll),YBL ESOP (consisting of two sub schemes JESOP IV/PESOP I) and YBL JESOP V/PESOP II (Consisting of two sub schemes JESOP V/ PESOP II).

The Employee Stock Option Plans are administered by the Board Remuneration Committee of the Bank.

The details of the grants/allocations under JSOP I, JESOP II, JESOP III.YBL ESOP andYBLJESOPV/PESOP II respectively are as follows:

Directors

The Board, on nomination by the Indian Promoter; Mr Rana Kapoor, has appointed Mr S. L Kapur, currently a Director of the Bank as a Non Executive Part Time Chairman of the BankThe appointment is w.e.f. April 27, 2010.The approval of Members in this regard is being sought at the ensuing Annual General Meeting of the BankThe Reserve Bank of India vide its letter DBOD No. 14882/29.47.001 /2009-10 dated February 25,2010 has approved the appointment of Mr S. L Kapur as the Non Executive Part time Chairman of the Bank for a period of I (one) year

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Bank, Ms. Radha Singh and Mr Ajay Vohra shall retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

Corporate Governance

Your Bank is committed to achieving the highest standards of Corporate Governance. Accordingly, your Board functions as trustees of the shareholders and seeks to ensure that the long- term economic value for its shareholders is achieved while balancing the interest of all the stakeholders.

A separate section on Corporate Governance standards followed by your Bank as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is enclosed as an Annexure to this report.

Auditors

M/s. B S R & Co, Chartered Accountants will retire at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment, subject to the approval of the Reserve Bank of India. Members are requested to consider their re-appointment on a remuneration to be decided by the Board or Committee thereof for the ensuing Financial Year i.e. 2010-11.

Statutory Disclosures

The statement containing particulars of employees as required under Section 217 (2A) of the Companies Act, 1956 forms part of this report. In terms of Section 2l9(l)(b)(iv) of the Act, the same is open for inspection at the Registered Office of your Bank. Copies of this statement may be obtained by the members by writing to the Company Secretary of your Bank.

The provisions of Section 217( I )(e) of the Companies Act, 1956 do not apply to your Bank. Your Bank is constantly pursuing its goal of technological upgradation in a cost efficient manner for delivering quality customer service.

Directors Responsibility Statement

Pursuant to the requirement under Section 2I7(2AA) of the Companies Act, 1956, with respect to the Directors Responsibility Statement, it is hereby confirmed that:

(I) in the preparation of the accounts for the Financial Year ended March 31,2010 the applicable accounting standards have been followed along with proper explanation relating to material departures;

(II) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as at March 31,2010 and of the profit of the Bank for the year under review;

(III) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities; and

(VI) the Directors have prepared the annual accounts of the Bank on agoing concern basis.

Acknowledgement

Your Directors take this opportunity to express their deep and sincere gratitude to the customers of the Bank for their confidence and patronage, as well as to the Reserve Bank of India, Government of India and Regulatory Authorities for their co-operation, support and guidance,Your Directors would like to express a deep sense of appreciation for the commitment v shown by the employees in supporting the Bank in its endeavour to create the BEST QUALITY BANK OF THE WORLD IN INDIA.Your Directors would also like to express their gratitude to the members for their trust and support.

For and on behalf of the Board of Directors

Rana Kapoor Bharat Patel S.L. Kapur Arun K. Mago Managing Director & CEO Director Non Executive Chairman Director

Place: Mumbai Date: April 27,2010